National Heritage Academies Plans Massive Sale

In a piece for Valerie Strauss’ blog The Answer Sheet published by The Washington Post, Carol Burris, the executive director of the Network for Public Education, criticized the planned sale of by National Heritage Academies (NHA) of most of its charter schools.

NHA, which is the third-largest for-profit education management organization (EMO) in the country, is attempting to sell 69 of its 90 schools to a corporation with ties to its owner, with a total price tag over $850,000,000, according to Burris.

According to documents provided to Michigan’s Wayne County Commission for the approval of the sale of 15 of the schools, the buyer is Campus Partners 1, a corporation whose president is also general counsel to National Heritage Academies CEO J.C. Huizenga and his interests.

Incorporated in November 2020, Campus Partners 1 describes itself as a Michigan nonprofit organization, though it has not filed any requisite records with the Michigan attorney general in order to get nonprofit status and has not yet been granted tax-exempt status by the IRS, Burris reported.

Once Campus Partners 1 secures ownership of the schools, it plans to contract with the NHA’s real estate arm, Charter Development Co., for a facility maintenance contract and ground lease. In effect, control of the schools will still be in the hands of NHA, but Charter Development Co. will earn the profit off the sale and secure new contracts allowing it to continue to funnel public dollars into NHA’s coffers.

The $853,600,000 sale is being financed using municipal bonds issued by the Industrial Development Authority of La Paz County, Arizona. NHA has no charter schools in the state, but Arizona is one of three states in the country that allow the sale of municipal bonds to out-of-state entities. According to Burris, La Paz frequently issues municipal bonds to finance for-profit prisons.

NHA’s attempt to transfer over $850 million public dollars into private wealth is running into some resistance in the company’s home state of Michigan, however, where they intend to sell 46 of their schools, Burris reported. Local councilmen and school board members have voiced opposition to the sales.

In the case of local government, NHA told the Wayne County Commission’s standing committee that they would circumvent their authority by asking the localities where the schools are located for approval or by using private bonds that do not need approval, Burris wrote.

In March, Burris co-authored a report that explained NHA’s strategy of using “sweeps contracts”—which give total control over public dollars going to charter schools to private management companies—to reap large profits from its “client” schools. Now, NHA is using the control granted to it by sweeps contracts to stamp out any resistance from its schools’ boards of directors. Burris cited multiple instances where defiant school boards were told to resign, and where those who refused to do so saw their terms of office “summarily reduced.”

Burris’s report highlights the sweeping power granted to for-profit EMOs that give them the authority to dictate the terms of their own contracts, and to coerce and manipulate the boards that hire them to benefit their bottom line. The only remedy that Burris sees to this abuse of the public trust is the proposed Section 314 of the Departments of Labor, Health and Human Services, and Education 2022 appropriations bill, which, if adopted, would explicitly withhold federal funds from charter schools that contract “with a for-profit entity to operate, oversee or manage the activities of the school.”