Timely donations to Gov. Lee spark rise of Tennessee charter operator with dubious ties

During the winter of 2021, Noble Education Initiative’s chances of opening a third charter school — this time, in Rutherford County — looked bleak.

But in the weeks leading up to a crucial vote that would effectively decide the project’s fate, Gov. Bill Lee’s reelection campaign received $43,000 in donations from executives affiliated with Noble Education Initiative (NEI). 

The charter school’s fortunes were about to change.

For several years, school boards in Davidson and Rutherford counties had denied NEI’s expansion, often citing the company’s links to Charter Schools USA, a prohibited for-profit charter organization, and Hamlin Capital Management, a Connecticut-based hedge fund specializing in profiting off charter schools‘ real estate transactions.

After Lee assumed office, he proposed a new law: create a new statewide body of nine members appointed by himself to have final say on charter school decisions.

Tennessee’s education reform groups, who have increased their power in state politics by collecting millions of dollars from wealthy individuals and filling the coffers of lobbying firms, nonprofit executives, marketing specialists, real estate groups and politicians, backed the new law. 

The commission law was relatively simple but profoundly impacted who made the final decision about charters and their impacts on a local school system’s budget. If school boards denied a charter school’s application, it could go above local officials to the Lee-appointed board, as NEI was poised to do.

Previously, the state education board had this power, but its staggered appointments meant it would take longer for Lee to appoint enough members to give himself majority control. 

Before the commission vote, the board’s executive director, Tess Stovall, and her staff wrote a 16-page analysis of NEI’s Rutherford proposal, recommending the commission deny the operation because the application “lacked detail in critical areas, such as board structure, facilities and staff recruitment.”

“The proposed budget lacked sufficient information to demonstrate that Rutherford Collegiate Prep would be financially viable while also not impacting the financial stability of Nashville Collegiate Prep,” Stovall wrote in her recommendation referring to another school run by NEI.

Despite Stovall’s analysis, the commission’s board ruled against her recommendation, approving Rutherford Collegiate Prep in a 4-3 decision.

An analysis of Stovall’s recommendations shows that the commission’s board almost always follows her advice, concurring with her recommendations on 25 of 29 occasions since the board went into effect in 2021. 

Lee’s ties to NEI extend beyond political contributions. NEI hired his former deputy education commissioner as the school’s latest Vice-President this summer and in October Lee appeared at a groundbreaking ceremony for the Rutherford school — something he rarely does for new charter schools in Tennessee. Another charter school groundbreaking ceremony Lee attended was in 2021 for NEI’s other school, Nashville Collegiate Prep. 

The Lookout asked a Lee spokesperson about the donations, the appearances and whether he lobbied state charter commission board members to approve NEI’s Rutherford school. The spokesperson did not provide answers, instead sending a statement:

“The public charter application process is managed independently by the Tennessee Public Charter School Commission, and Lee is not involved in the process whatsoever,” Lee’s spokesperson, Elizabeth Lane Johnson, said. 

“Additionally, to be very clear, political campaign activity is entirely separate from state operations and would have nothing to do with the charter commission’s process.”

But in the months after the Rutherford vote and a second one dealing with another NEI school that resulted in a similar action, Lee chose not to reappoint the two commission members who voted against the school on both occasions.

Good intentions

Tennessee’s charter school movement, which began nearly two decades ago, is rooted in the idealistic hope of providing an alternative to public school systems that don’t work for every student. 

J.C. Bowman, the executive director of the Professional Educators of Tennessee, said initially charter schools appealed to those on both sides of the political aisle as a way to “foster innovation” in low-performing schools.

“The left’s support has wavered in recent years due to the removal of local districts as the sole charter authorizers,” Bowman said. “The failure to innovate and close underperforming charter schools has led some conservatives to shift their support to voucher programs instead.” 

At its foundation, a charter school is a publicly funded school run by a private board. Under Tennessee law, the school receives a direct grant from the budget of the public school system or county tied to the state, federal and local tax dollars it spends per student.

State education data shows Rutherford County’s school system spends around $10,000 per student, meaning NEI’s 470-student Rutherford Collegiate Prep, set to open for the 2024-25 school year, could pull $4.7 million from the county school budget of $518 million. 

Outside of public funding, charters are set up much like private schools, often offering alternative curriculums, smaller classrooms or specializing in certain types of teaching that may not be available in the local public school system. 

For many, charter schools have become synonymous with opposition to public education. But when charter schools took hold in Tennessee in the early 2010s, the industry enjoyed a period of bipartisan support from prominent advocates, like former Democratic Nashville Mayor Karl Dean and former Republican Gov. Bill Haslam.

As part of Tennessee’s bipartisan focus on education reform, this early era produced dozens of charter schools, mainly in Nashville and Memphis, with varying results; Nashville Classical, founded by Charles Friedman and operating in East Nashville, has been pointed to as a success. (Editor note: Friedman has no relation to the articles author.)

Since opening as a K-8 school in 2013, Nashville Classical has consistently outperformed other Nashville public schools. 

“In Nashville, charter schools serve a higher percentage of Black, Hispanic, and economically disadvantaged students than traditional district schools and, after the pandemic, achieved rates of growth that doubled traditional district schools,” Friedman said.

“In other words, the question isn’t whether these schools should exist but how to cultivate and sustain them for the next 20 years by providing fair and rigorous authorization practices, equal access to facilities, accessible enrollment policies, and the types of housing and transportation options that make quality choices possible for all, not just families who can afford homes in certain neighborhoods or school zones.” 

While other high-performing charter schools throughout Tennessee join Nashville Classical, there’s the other side of the coin: schools like NEI that use lobbying and political donations to curry favor.

Running in the same circles

There are 11 education reform and pro-charter groups registered to lobby Tennessee’s state lawmakers, often hiring the same firms. 

NEI switched in August to McMahan Winstead Richardson, a firm that is employed by the think tank Tennessee Charter School Center and charter school advocacy group Tennesseans for Student Success. 

McMahan Winstead Richardson represents over 40 clients, ranging from tobacco giant Altria to gun manufacturer Smith and Wesson, but has been at the center of the charter school movement since these groups started showing up in the early 2010s. 

NEI entered Tennessee’s charter school landscape in 2019 to rescue Knowledge Academies, a South Nashville charter school with many financial problems, but NEI’s board members have a more extended history in Tennessee. 

Sherry Hage formed NEI in Fort Lauderdale, Fla., to operate an Indiana charter school two years prior to coming to Tennessee. Hage was familiar with the charter industry, which is what concerned school boards in Nashville and Rutherford County. Her husband, Jon Hage, runs Charter Schools USA, a for-profit charter management company also based in Fort Lauderdale. 

Charter Schools USA first appeared in Tennessee politics in 2013, advocating for the state to repeal its ban on for-profit charter schools.

It almost worked. Tennessee House lawmakers advanced a bill allowing for-profit charters. But, after a last-minute push from Nashville Mayor Dean, former Tennessee House Speaker Beth Harwell used a rare legislative maneuver to kill the legislation before it reached the House floor.

“We still are in our infancy in public charters in this state, and I don’t want the financial aspect of for-profits to enter into what I think our ultimate goal is — to provide quality public schooling for our children,” Harwell said to The Tennessean following the vote. 

The push to allow for-profits continues today. 

After the bill failed, Charter Schools USA stopped lobbying, but the people affiliated with it returned with NEI after the election of Lee. 

A local school board has never approved any of NEI’s plans. The state education board approved its takeover of Knowledge Academies and the start of Nashville Collegiate Prep, which eventually transitioned into a school run by the charter commission. 

NEI has come before the charter commission three times, winning approval of the Rutherford school and an emergency expansion of Nashville Collegiate Prep.

One time, the commission’s board denied NEI’s request, which came earlier this year when it sought to open a high school on its Nashville Collegiate Prep campus. 

Several commission board members pointed out that Nashville Collegiate Prep students performed worse on test scores than average Metro Nashville Public Schools students and, therefore, were against its expansion. 

The commission’s board voted 5-4 against the school.

Real estate and for-profit elements in charter schools

Despite Tennessee law banning for-profit charter schools, companies can make money off these schools, particularly in real estate. 

The highest expense for a charter school is often the building it operates in, especially if it buys land for a new building. To build the facility, the charter school has to pledge future revenue, like from the number of students it plans to have, and borrow the money from somewhere else like a hedge fund. 

During the charter commission’s vote on NEI’s Rutherford school, Parker Stitzer, a partner of Hamlin Capital Management, a hedge fund specializing in charter schools bonds, spoke in support of NEI, adding he had a commitment letter to provide $50 million to support the school. 

“Behind that $50 million, there is another $100 to $150 million of private funds from our investors that we would like to put to work,” Stitzer said in the meeting. 

The details on whether this was a loan are murky, with Jeremi Roux, a lawyer for Hamlin, denying the firm had “financed any projects for NEI or any bonds where the borrower is a Tennessee charter school.”

“Each Hamlin Capital Management partner and employee is free to compliantly support causes which he or she believes in, including Lee’s pro-school choice education policies,” Roux said in response to questions emailed by the Lookout. 

A representative with ReThink Forward, the Tennessee-based brand for NEI, also denied it had any ties to Hamlin Capital.

“Neither ReThink Forward nor NEI has ties to Hamlin capital,” said Dan Boone, the chairman of ReThink Forward’s board. “They are an organization that provides tax exempt bond financing to charter schools all over the country to finance facility costs to build charter schools. This is necessary because charter schools are not included in the capital funds raised by local property taxes that support building of other public schools, so charter schools must rely on private financing to acquire their buildings.’

But, these denials run contrary to two situations. 

NEI founder Sherry Hage, Charter Schools USA CEO Jon Hage, and two other Hamlin partners donated the maximum of $8,600 to Lee’s reelection two weeks before the commission’s Rutherford approval vote. Stitzer and his wife each gave $4,300 to Lee. The majority – 80% – of the political donations to Lee arrived on the same day from the Hages and two Hamlin partners. 

Then in June 2022 NEI asked the charter commission board to increase its student body from around 700 students to nearly 1,300 because it couldn’t afford the new building it planned to hold its middle school without the revenue from more students. 

The request perplexed Wendy Tucker, a state charter commission board member at the time. 

“I just want to make sure I understand the issue isn’t driven by a need to serve students, therefore, we’ll build a building?” Tucker asked the commission staff during the public meeting. “It’s a need to build a building, therefore, we need more students?”

Beth Figueroa, the director of authorizing with the charter commission staff, confirmed Tucker’s assertion and told the board that Hamlin Capital was financing the project. 

Like its Rutherford decision, NEI’s enrollment request passed by a narrow margin, this time 4-3. Tucker voted against the request as she had done in NEI’s Rutherford debate. 

Tucker, who previously served on the state education board and as an advisor in Dean’s administration as a conduit between Democrats and Republicans on the charter issue, was one of the commission board members Lee chose not to reappoint. 

The $27.1 million clash between education reform and public school advocates