Toledo Public Schools officials say a charter school that it sponsors purchased a new building in June that it doesn't really need and has been embroiled in a two-year contract dispute with TPS over more tax dollars.
TPS Treasurer Dan Romano said the dispute has cost the district $3 million at a time when school officials are considering eliminating programs.
The Toledo Board of Education is working to pare down a list of cuts as it faces a $30 million deficit next fiscal year. It could shutter several popular high schools and scale back school sports.
Phoenix Academy purchased the old Hylant Building at 1505 Jefferson Ave. in June for $1.1 million. The school and Polly Fox Academy, a charter school for pregnant and parenting students, moved in.
Together they employ 53 TPS teachers and staff and have about 800 students.
TPS says the schools had been renting and that it was sufficient for their needs.
But leaders of Phoenix say it was their right under state law to buy the building and that the two schools - both sponsored by TPS - needed to expand.
Brenda Brake, president of the Phoenix Academy board, said the school followed the state's charter school law and always consulted a lawyer.
Phoenix Academy and the Polly Fox Academy have about 800 students and 53 TPS teachers and staff at the Jefferson Avenue building downtown.
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Rather than criticize, TPS officials should be pleased with the schools' successes, she said.
The crux of the dispute is over the projected cost of maintaining the building and answering whether the schools should be allowed to seed a capital reserve fund for emergencies and future capital projects, such as building an on-site nursery for Polly Fox.
Also at issue is how much annual per-pupil state tax money - received by the charter schools - should be returned to TPS for its use.
That amount - set out in a management contract - used to come to about $2 million a year, TPS officials say.
But that contract expired two years ago, and the sides have been locked in negotiations ever since.
By law, charter schools sponsored by school districts must have management contracts in place to operate. Charter school leaders say they fear the delay in finalizing a contract could cost them.
The extra money given back to TPS, called overage, mostly comes from Phoenix Academy, which offers students online instruction. It keeps its overhead down because it doesn't require as many on-site instructors to help students.
Under the original contract, the charter schools kept $1 million a year together and then sent the overage back to the school system. The charter schools want to increase the amount kept to $1.75 million, Mr. Romano said.
"I think it was clear we didn't want them to buy the building," he said.
Because of the contract dispute, TPS didn't budget about $1.5 million in revenue this year and the same amount for next fiscal year, he said.
TPS said it's waiting this year for an annual audit of the charter schools to be completed to determine how much money TPS should get back.
TPS Superintendent John Foley said he's requested an accounting of where money has been spent and for a detailed business plan and projection of future expenses.
But the superintendent and Mr. Romano said they weren't optimistic there would be much left after the building purchase and other expenses.
Charter school officials defend the purchase, saying they needed more space and also need future money in a reserve budget for upkeep and emergency repairs, said Susan Telljohann, a University of Toledo professor and president of the Polly Fox board.
She said the school district is overreacting and exaggerating its potential losses.
She also said the building was a good investment for the future, pointing out that Polly Fox pays rent directly to Phoenix, which makes that school's budget stronger and keeps the money in the system.
She said the schools employ TPS teachers and staff that - if the schools failed - still would have to be paid even if the students and the tax dollars they represent did not return to the school system.
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