Sean C. Morgan
Of The New Era
The District 55 School Board voted Monday night to require the formation of a separate corporation to operate Sweet Home Charter School following an executive session in which it met with its attorney.
The board left the structure of the new corporation and its relationship with the People Involved in Education (PIE) Board of Directors open to negotiation.
PIE is negotiating a contract with the district to open a charter school in September. The issue of requiring a separate corporation operate the school has been a sticking point for both sides in the negotiation.
The district has preferred the requirement to help limit exposure to potential liability at PIE schools outside the district. PIE has opposed the requirement because its name has a track record with lenders. A new corporation would have a more difficult time getting loans.
Board members outlined various possibilities, such as the formation of a new nonprofit corporation that answers to the PIE board or the creation of a completely independent nonprofit organization.
The board’s decision didn’t set the structure of the new corporation, Chairman Scott Proctor said, but two attorneys and the district”s insurance carrier advised the district to require the new corporation to add another layer in potential legal proceedings and minimize the district’s exposure to lawsuits stemming from actions in PIE schools outside the district.
Even if the new corporation answers to the PIE board, it still adds that extra layer of protection, Proctor said.
It also helps limit the affect a lawsuit outside the district might have on the local charter school, School District attorney Peter Dassow said. If PIE were sued, for example, in Lebanon, the Sweet Home Charter School operated by PIE would also be affected.
It is possible to sue PIE in Lebanon and potentially damage all other programs in PIE, Dassow said. One program separated by an additional nonprofit corporation makes it more difficult for a plaintiff to go after the Sweet Home school or District 55.
“As lawyers, we prepare for the worst and hope for the best,” Dassow said.
PIE President and Lebanon’s Sand Ridge Charter School Adaministrator Jay Jackson, who is also a lawyer, argued that the district could rely on insurance to protect it from liability; and though probably named in legal proceedings, the district would likely be dismissed from lawsuits in other districts through a motion process.
From PIE’s perspective, the Church of Christ at 18th and Long building is only a temporary facility, Jackson said. The charter school will need to obtain a larger facility as it grows, and PIE already has preliminary approval for loans. Another corporation would have have no track record, making it more difficult to get loans.
“As much as we’d like to help you establish your credit rating,” Proctor said. “That, from my point of view, is secondary (to establishing the charter school but avoiding potential legal entanglements).”
Jackson did not think the district’s liability exposure would be high, he said. Other nonprofits operate multiple charter schools in different different districts, and nothing has arisen as a result.
In fact, using a single nonprofit provides even better insurance coverage, Jackson said. “I can’t think of a situation at Sand Ridge where someone could establish a legal claim against the district.”
Even if they did, the length of the legal process would provide years to make arrangements to do something with the schools involved, he said.
Requring a new corporation “really says we go back to square one on the whole proposal process,” Jackson said. The district would no longer be negotiating with PIE, which proposed the charter school.
“It pretty much strikes at the heart of the proposal,” he said. “We have a program that works. We’re not interested in experimenting. We’re interested in replicating what works.”
With a whole new board overseeing the new charter school, “you’re gambling on their vision,” he said. Even separate, especially if the boards are similar, plaintiffs can pierce the corporate veil and go after them anyway.
The probability of a lawsuit that could affect School District 55 is remote, Jackson said. “We can talk about insuring against a meteorite striking.”
“I think you heard it from the mouth of their attorney,” he told The New Era. “It’s open as to who they’re contracting with.”
Who School District 55 is contracting with is a blank, he said. “I represent PIE. I don’t have the authority to represent a non-existent corporation.…
“There’s really a kind of mental disconnect here: We want to hold you responsible, but we don’t want to contract with you.… I’ll try to continue working through this.”
Voting to require the formation of a separate nonprofit corporation to operate Sweet Home Charter School were Ken Roberts, Leena Neuschwander, Don Hopkins, Mike Reynolds, Proctor, Diane Gerson, Jeff Lynn and Dave VanDerlip. Jason Redick voted against the motion.