In Partnership with 74

Magnolia schools remain open but relationship with Accord changes

Vanessa Romo | July 31, 2014

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In ruling last week that two Magnolia schools may remain open after LA Unified had ordered their closure due to financial questions, Superior Court Judge Luis A. Lavin set a few tough conditions.

One is that the parent company, Magnolia Public Schools (MPS), can no longer do business for the two schools with its primary educational service vendor, a non-profit called Accord Institute for Education Research.

That effectively changes a close business relationship. A very close business relationship.

Magnolia Public Schools, the parent of the two troubled charters, Science Academy 6  and Science Academy 7, is located at 13950 Milton Avenue in Westminster, Suite 200A. Accord is located at 13950 Milton Avenue in Westminster, Suite 200B.

Close ties are also evident in two of Accord’s three board members who previously served on the board for MPS and were intimately involved in launching a few of the charter schools.

The Accord website says current board president Ertan Salik was a “key figure in the charter school development team for Magnolia Science Academy, where he served as the board president from 2002 to 2005.”

Another Accord board member, Suat Utku Ay, was on the board of directors for Magnolia Science Academy 1 in Reseda from 2005 to 2007. He was also the lead petitioner for Magnolia Science Academy 2 in Van Nuys.

In ruling against LA Unified, which wanted to close the schools over financial concerns, Lavin listed six conditions that could not be violated for the schools to remain open. One was an end to MPS’s outsourcing core administrative services for two two schools to Accord.

Accord provided professional training, human resource and financial support, curriculum development, teacher evaluations and other academic support services for MPS. LA Unified contended that transferring those responsibilities called into question MPS’s accountability in the operations of its schools.

While Lavin did not explain his reasoning for insisting on the breakup, in a June 27 letter to MPS, Jose Cole-Gutierrez, head of LA Unified’s Charter School Division, said the overlap of services provided by MPS and Accord “raises the question of the purpose of (MPS) and the management fees it receives from the schools when it appears that Accord is providing wholesale operations to the school.”

LA Unified concluded that MPS spent nearly 30 percent of its total 2012 spending in payments to Accord and 26 percent in 2013. Between 2010 and February of 2014, the district said MPS paid Accord about $3 million.

MPS denies all accusations of impropriety and argues that the $3 million represents a only 2.75 percent of the parent company’s five year, $110 million revenue stream, according to Mekan Muhammedov, Chief Finance Officer of MPS.

But Mehmet Argin, MPS CEO, told LA School Report, “We will comply with all the conditions” set by Lavin. “I believe the judge made a fair decision.”

Lavin’s prohibition against the MPS-Accord business relationship struck at least one other charter executive as curious.

David Hyun, Chief Financial and Operating Officer for Alliance College Ready Public Schools, which will operate 26 district charter schools when schools open in August, says Alliance would avoid the perception of a conflict interest but that there is nothing inherently illegal in what MPS is doing.

“I don’t think the location matters; I think it’s about control,” he told LA School Report. “If the Accord board members are not on the board of Magnolia anymore, and they are two separate legal entities, then I don’t see where the conflict lies. Now if that board member was on Magnolia and Accord, at the same time, then I see the conflict.”

It is unclear whether MPS or another outside company will now assume the responsibilities once performed by Accord.


* Clarifies Judge Lavin’s injunction

Previous Posts: Breaking News: Judge allows Magnolia charters to remain open; Magnolia Charter troubles in LAUSD highlight larger concerns; Magnolia going into court to keep 2 of its charters open

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