If there's any story that reminds us why good nonprofit governance matters, I believe that the Education Plus Academy Cyber Plus, in Philadelphia, is a great case in point. I would pose that this nonprofit, now in bankruptcy with closed doors and 540 students without a school designed for them, failed due to faulty governance. The board, perhaps too close to management, too out-of-touch with the financials, not listening to regulators, and void of guiding policies, failed miserably. I believe that when a board fulfills its duty of care, all of these realities can be avoided. All of course begins with the rule of prudence: doing collectively and individually what other "owners' faced with similar challenges would do including trying to avoid being faced with similar challenges. For Education Plus, there is little evidence that this board was prudent.
Here's the Philadelphia Inquirer story.
Why a cyber charter had to close its doors
When Education Plus Academy Cyber Charter closed in December, its officials laid blame at two places: districts that couldn't pay for students because of the state budget crisis, and a bank's decision to pull the charter school's line of credit.
But documents Ed Plus filed in federal bankruptcy court show that the Main Line cyber, which got into trouble for operating more like a regular school than an online one, was crippled by much bigger financial problems.
Former staffers say that the school that focused on students with learning disabilities was in turmoil for months and that the bankruptcy stemmed from questionable management decisions.
And a whistle-blower suit contends a former Ed Plus administrator lost his job after he alleged wrongdoing, including failing to provide working computers for all students, using an untested curriculum developed by the CEO's mother and spending resources on a secret learning center that was actually a homeschooling network that included the CEO's children.
"Often I felt like I was in the 'Twilight Zone,' " said Katie Ostroff, an academic coordinator who quit two weeks before layoffs were made in late August and four centers closed. "I had a very strong sense that what was going on was not in the best interests of the children, and that's why I left."
In bankruptcy documents filed right before Christmas, the Wayne-based cyber reported assets of $529,410 - including computers - to pay bills totaling $2.04 million. Virtually all assets were collateral for two bank loans.
Districts around the state owed the cyber $727,504, the filings showed. But Ed Plus acknowledged it was likely to collect only $424,141 because while the state said it was only authorized to have K-6 students, the school had billed for seventh and eighth graders.
"The money spent far outweighed what was owed to us, regardless of whether the school districts were paying or not," said one former administrator who declined to be quoted by name because he is looking for a job. "The budget just seemed out of whack."
On Dec. 2, the cyber's board voted to close immediately and surrender the school's operating charter. The move affected the families of 540 students across the state, including Elaine Vallejo, whose son had attended Ed Plus since it opened in 2012.
When Ed Plus closed its North Philadelphia center in August, Vallejo planned to transfer her son to a district school. But after attending a parents' meeting where upbeat Ed Plus officials pledged to keep the cyber open, she decided to send her son to a center in the Northeast - only to have it close right before Thanksgiving.
"It was a nightmare," Vallejo said. "My son is still dealing with the ramifications to this day."
In the wake of the parents' fury, Ed Plus backers withdrew an application for a regular charter in Philadelphia based on the Ed Plus model.
The demise of Ed Plus came after several tempestuous months, which included staff leaving after the academic director was fired last March, closing centers in phases, and laying off all staff a week before the board vote.
Carving a niche
It was an ignominious end for a school launched with a goal of pushing educational boundaries. At the outset, Ed Plus said it would carve a niche in the cyber landscape by focusing on children with special-learning needs and offering a blend of online and classroom instruction at centers across the state.
Some Ed Plus children obtained instruction online at home like those at the state's 13 other cyber charters. But most Ed Plus families were attracted by the option of sending their children to a learning or tutoring center from 7:30 a.m. to 3 p.m.
At the centers, students received individualized lessons on laptops in classrooms with teachers. Parents said the program provided an oasis for children who had been bullied and whose needs had been ignored in other schools.
In 2013-14, when the school had 750 students, Ed Plus received $7.2 million in taxpayer funds. As is the case for all cybers in the state, it did not meet the state's academic benchmarks. It scored a 50 on the Pennsylvania School Performance Profile; a 70 is the threshold for satisfactory performance.
Nicholas Torres, the former board chair of the Pan American Academy Charter School in Philadelphia and a onetime president of Congreso, a nonprofit that works in the Latino community, said the idea for Ed Plus began in 2010. Tine Hansen-Turton, whom he had met when both were Eisenhower Fellows, had a son diagnosed with dyslexia.
Torres said in an interview last year that his mother, Mary Schuler, a special-education teacher, began tutoring Hansen-Turton's son using a method she had developed over years working with similar children in Idaho.
Although Hansen-Turton's son enrolled at a private school for students with language-based learning differences, Torres said they talked about the need for a similar place for families who could not afford private school.
Torres and Hansen-Turton applied to open Education Plus as a cyber that would blend online and face-to-face instruction and focus on children with learning differences.
The proposal said the cyber would use the two most-recognized methods for teaching those learning differences, as well as Schuler's program.
The state approved Ed Plus to open in 2012. Hansen-Turton was on the board; Torres was CEO.
The idea of a cyber with learning centers appealed to many families. Torres said in an interview months before Ed Plus closed: "Most parents are like: 'I don't want my kid to be home all by himself. My kid needs social and emotional support and strategization.' "
In mid-August the Pennsylvania Department of Education sent a letter to all cybers in the state reminding them that as of 2013 they could use physical sites only for testing, tutoring, and providing supplemental services, such as speech therapy.
A week later, Ed Plus officials said the state had told them they could not use centers for face-to-face learning. Ed Plus laid off several staffers and closed four of its 12 centers. Torres said the department's stance was unexpected and reflected Gov. Wolf's anti-cyber views.
An Education Department spokeswoman, however, said that Ed Plus had been told during the Corbett administration that it had to follow state rules on facilities. She said the message was later underscored after several districts complained that Ed Plus was operating as a bricks-and-mortar school.
Although Torres maintains Ed Plus complied with its charter, former staffers who had read the agreement said they knew the school was not following it and was adding grades before authorized.
Former teachers and administrators also said they were more concerned by persistent problems with computers and inequitable resources. Centers in low-income areas with the most special-needs children had fewer staff and resources and facilities had problems with heat, water, and power.
"It was my job to visit the centers, and what was so striking is that there was not equity," said Deborah Stern, a former academic director. "The kids with special needs were concentrated with the fewest resources."
Melina Kuchinov, the former head of a North Philadelphia center, said: "I had 18 kids without laptops, and they were supposed to be receiving all of their instruction on them."
Kuchinov was stunned when the head of a center in an affluent community outside Philadelphia had 20 extra laptops because when staff from the main office visited they brought more "just in case."
Students at a center in West Philadelphia waited six months before their broken computers were replaced.
A whistle-blower lawsuit filed by David Bromley, the former chief academic officer, said that by failing to provide working computers to all students, Ed Plus had violated state law.
In an email Torres said spending decisions and allocations were determined by a per-student formula based on equity. "Education Plus Academy," he wrote, "remained compliant within its charter, state, and federal laws and ensured equitable distribution of resources (staff and materials) for each student across the State of PA."
Bromley's complaint alleges he was wrongfully fired last March, immediately after he and two other administrators complained to board members about problems that Torres had not addressed.
They described the disparity in resources, Torres' "wasteful and ineffective spending decisions," and decried the secrecy surrounding one center, which was "essentially a homeschooling network" that included Torres' children. The center was not mentioned on the Ed Plus website.
The so-called "Mason Academy" operated out of the Garrett-Williamson Foundation in Newtown Square. Although its two lead teachers participated in Ed Plus training and were on the payroll, Mason Academy students did not follow the cyber's model or use its curriculum.
The secrecy around this center was so great that one former administrator compared it to the Air Force site in Roswell, N.M., that was the site of an alleged UFO incident in 1947. "That place might as well have been Area 51," he said. "You don't know what's there."
Bromley and other former staffers also said that Torres insisted on using his mother's math and reading program, even though it was not based on research and relied "on materials and training which are unwieldy and amateurish."
Even though some bills were unpaid and there were stacks of Schuler books at the main office, Ed Plus spent $9,500 for more last summer, a former administrator said.
"Everything was a shambles, but the only sure thing was every single person was to be trained on Schuler Phonics and Schuler Math," said Kellie Gilroy, the former lead teacher in West Philadelphia.
Torres declined comment on Schuler and Mason Academy.
He said that because of the way charters are funded, Ed Plus would have shown a small surplus had it been able to remain open through June.
Vision vs. reality
Former staffers said that unwise spending and management decisions doomed Ed Plus.
"The idea of it was beautiful, and it could have been really wonderful," said Sheri Newmark, who resigned as director of professional development when Bromley was fired. "The foundation was made of sand."
William A Harvey, an attorney who represented Ed Plus in the Bromley suit, said that the matter had been "amicably resolved." Terms of the settlement are confidential, he said. Bromley declined comment.
Last month, Torres launched some new ventures. He is president of the Education Tutoring Company of America L.L.C. and Education Plus Business Consulting.
On its website, the tutoring firm describes itself as "a natural outgrowth of a highly successful blended learning demonstration school in Pennsylvania."