In the far reaches of North Austin, with Williamson County looming just across the street, the capital city’s newest charter school was still a construction site in late August. Scaffolding wrapped the large building as dozens of construction workers clambered up and down. More workers paced the rooftop, hurrying to finish the job and get students inside the new Athlos Leadership Academy for the new school year.
Like other Athlos campuses across the country, the school has big white pillars, a stately cupola and Monticello-esque wings suggesting a classical place of learning. Athlos notes in promotional materials that the Georgian architecture is designed to “evoke a patriotic feel.” In the weight room and on its basketball court and indoor turf field, students will be trained in Athlos’ signature physical fitness and character development program. For school-shopping parents, the school compares impressively to, say, the Round Rock Independent School District’s boxy, brick Wells Branch Elementary a few blocks away.
Thanks to the quirky way charter schools are regulated, this was a peculiar summer for Idaho-based Athlos. For even as it opened its seventh charter school in Texas, with thousands of students in its programs, state regulators also denied an Athlos Academy charter application—for the second time in three years.
If you’re, say, a parent or a student trying to choose between public schools, that might sound confusing. But it makes perfect sense if you work within the charter system, where you know a school’s name only says so much about who runs it.
News of the state’s rejection was a frustration, but not a deal-killer, for Athlos Academies because its schools also piggyback onto preexisting charters. A state charter for Athlos would’ve let the organization grow even faster in Texas, and perhaps most importantly, given it more of the all-important cachet it takes to succeed in the charter world.
Combined with a partner called The Charter School Fund, Athlos represents something new in the school reform movement: a developer that lets existing charter schools grow beyond their wildest dreams, then absorbs them into its family of campuses with a unique brand built on leadership and fitness.
Athlos schools have earned high marks in other states, and Texas lawmakers have made it clear that they want more high-performing charters to move in from out-of-state—so in many ways, this looked like it could have been Athlos’ year to get a charter of its own.
In Athlos Academy’s pitch before state regulators in July, its would-be board of directors made their case with a sense of urgency. The school’s Dallas-based board enthusiastically told Texas Education Agency officials how the Athlos model—”Athlos” is Greek for “feat” or “contest”—would turn out healthy, self-confident students more likely to succeed in the classroom.
Board member Todd Whitthorne was an especially fiery evangelist. “What I have seen in my lifetime, in the past 50 years, our public health numbers are frightening,” said Whitthorne, a motivational speaker and health consultant who promotes “happy pills” for workplace productivity. “They’re absolutely frightening, and I don’t believe that the way we’re operating right now in an obesogenic environment is sustainable.”
The board’s plan was ambitious: 15 campuses around Dallas-Fort Worth with a student body that would grow from 2,600 to 15,000 students within five years. (Charter school enrollment in Texas is just over 200,000 today.) The board chairman, Eddie Conger, runs another North Texas charter school, Independent Leadership Texas, that has grown fast in its first few years after partnering with Athlos. Conger spoke passionately about the transformative power of Athlos, and how many more children they’d reach with a separate charter: “If you were driving down the road and you saw a car accident, would you stop and intervene?”
But regulators seemed perplexed by connections between The Charter School Fund (the likely new landlord for the schools), Athlos Academies and a nonprofit called Complete Kids Inc., which would be allowed to nominate some replacements to the Athlos Texas board. All three shared the same downtown Boise address, along with the Hawkins Companies, a major real estate developer.
“Not only does it concern me when an out-of-state is going to be nominating your board,” TEA legal counsel Karen Johnson told the applicants, “but we have a new state law that says that a majority of all board members need to be qualified voters, which the [attorney general] says means Texas residents.” Johnson’s concerns touched on a delicate balance built into last year’s overhaul of Texas’ charter school law: while lawmakers wanted to attract out-of-state charters to Texas, they were also wary of handing control of public money to interests outside the state.
And the new Athlos school already planned to send a lot of money to Idaho: an estimated $442,395 in the school’s first year—2 percent of its state funding—to license the Athlos curriculum (with 15,000 students, the total could rise to $2.5 million a year) and $52 million over the first five years—about 18 percent of its funding—to rent from The Charter School Fund. (Charter schools’ facility costs vary widely, but, according to Texas Charter Schools Association spokeswoman Tracy Young, consultants often advise charters to keep lease costs under 20 percent.)
Mavis Knight, a Dallas Democrat on the State Board of Education, tells the Observer the arrangement just seemed odd to her, especially the board nominating process. “My mind can’t wrap around why it is necessary for two separate entities to nominate board members of another entity,” she says. (Along with Complete Kids, the nonprofit behind Independent Leadership of Texas would also nominate new Athlos Texas board members.) “Sometimes you just have to listen to your inner self, and my inner self was still not satisfied.”
TEA denied the Athlos application for “multiple reasons,” according to spokeswoman Debbie Ratcliffe, including an insufficient budget for “required activities”—board members had promised their fundraising skills would help make up the difference—and too many other issues the school would have to work out before opening.
Joseph Hoffer, a San Antonio attorney who represented the Athlos Texas board, tells the Observer the decision was disappointing, and a little mysterious. “The states’s talking about scaling [out-of-state charters], yet they’re worried about corporate operators coming in that they can’t control,” Hoffer says. “They say that’s what they want, and then they don’t approve it. … The commissioner was told by the Legislature that he could grant up to 10 charters, and he’s not doing that.”
Politically, the mood does seem right in Texas for an out-of-state operation with a good reputation. Earlier this year, Education Commissioner Michael Williams went to great lengths to let Arizona-based Great Hearts Academies expand into Dallas despite a veto from the State Board of Education. And according to emails obtained through state open records laws, Gov. Rick Perry has been especially interested in out-of-state charter applicants. “What is the big hold up for recruiting out of state charters form y’all perspective,” Perry’s education policy adviser Whitney Broughton asked TEA in March.
Part of Athlos’ trouble may be that, unlike Great Hearts or Arizona-based BASIS Charter Schools, it can’t claim an academic track record of its own. Though it may be hard to tell from the outside, each Athlos school—like North Austin’s Athlos Leadership Academy—is actually an independent charter that licenses the Athlos curriculum.
“It’s like they’re the hand and then Athlos becomes the glove,” Hoffer explains.
But University of California at Berkeley professor Janelle Scott—whose research covers the growing charter school market—says Athlos’ promotional material doesn’t make the distinction clear. “It’s at least misleading. As I was reading the Athlos website, it does appear to me that those were schools under their management,” Scott says. “They don’t say they’re not the holders of the charter. The charter holder is the one that has fiduciary and pedagogical responsibility for the school.”
Licensing the Athlos curriculum tends to entail a total rebranding: new school name, new marketing style, and a place on Athlos’ list of schools, all of which can make it hard to tell, from the outside, whose charter school it is. Hoffer compares it to franchising with McDonald’s. A similar arrangement lets the online chain K12, Inc., operate in Texas. As a for-profit firm, K12 could never get a charter of its own here, but it can simply contract with a local charter-holder instead. Watch one of their ads on TV, and you’d never know the difference. Should K12’s school perform poorly on state tests—as K12’s Texas campus did for years—it can simply take its business to another charter-holder and start over with a clean slate. That’s exactly what it did in 2011 when it jumped from Southwest Schools to Lewisville-based Responsive Education Solutions.
Athlos and The Charter School Fund don’t dictate an academic curriculum but they provide something more concrete—literally—than K12: an impressive school facility to complement whatever a charter does in its classrooms. Along the way, Athlos extends its message, grows its brand and pads its bottom line. As the nationwide charter school market grows, so does the market for creative arrangements like this. Charter-specific firms occupy a small but growing niche in the real estate world, alongside the Turner-Agassi Charter School Facilities Fund—as in Andre Agassi—and EPR Properties, which also owns movie theaters and water parks.
Athlos began in 2006, according to its site, when an Idaho dentist named Ryan Van Alfen sold his practice and teamed with a real estate developer named Jason Kotter. They set up Athlos Academies—a nonprofit—and teamed with Hawkins Companies, a developer of ubiquitous retail spots like Walgreens stores and strip malls, to create The Charter School Fund.
Like Hawkins, the fund is a for-profit corporation. But Hoffer—to whom Van Alfen referred our interview request—makes a distinction here: “They’re not a nonprofit, they’re a social venture. They’re not a developer either,” Hoffer says.
In Texas, charter schools don’t get public funding to lease buildings or build new ones; finding and paying for facilities can be one of the biggest stresses in running a charter school. Hoffer says The Charter School Fund helps alleviate that stress. “What they bring is unique in that they’ve designed the facilities around the educational model, and they’ve also brought in the investors—they’ve leveraged their resources to bring in the investors so a charter school can also have a facility.”
Scott, the Berkeley researcher, says it’s common for players in the charter school market to work through a nonprofit arm. “People are still skeptical of having for-profits in education,” she says, so there’s a P.R. benefit to appearing charitable. Scott says The Charter School Fund’s marriage of real estate and physical education seems unique. “But what is common is this idea of a hybridized organization—an arm that’s nonprofit, an arm that’s for-profit, and those arms kind of taking care of teach other.”
On its website, The Charter School Fund claims a record of “$324 million invested in market driven education.” And Kotter and Van Alfen sound like true believers in the power of the private sector to improve public schools. Van Alfen explains in a 2013 Idaho Business Review article:
“We have a solution to the largest obstacle in bringing market-driven education to scale, which we feel strongly is the only way to transform education. We like to challenge the status quo; it drives me crazy to see how this education topic has been demagogued to death. No, it’s not about the kids. It’s about unions protecting union members.
“Jason helped pioneer a financial model that worked. We develop a structure, lease it to the 501(c)(3) charter school until they stabilize with their enrollment financially, and then they buy it from us. Then we just roll that forward in not-for-profit fashion, into the next project. We bring the equity; we personally guarantee the debt. Nobody is taking more risk on a project’s success than we are.”
As stewards of public money, charters must typically submit their construction projects for competitive bidding. (Another charter school chain, Harmony Public Schools, has drawn fire for using the same few Turkish-owned contractors outside the usual bidding process.) But by leasing a finished product from The Charter School Fund, schools come in too late to worry about who did the work. These projects tend to come with a consistent cast of supporting players, including Idaho-based Pacific Properties and Engineered Structures, Inc. The campus plans often come from Boise-based BRS Architects.
All schools—charter or not—send lots of public money into the private sector. But thanks to their small enrollments and freedom to experiment, charters have become a gateway to the education market for all sorts of new players with unorthodox arrangements.
Van Alfen has explained the Athlos character curriculum was developed with California-based Velocity Sports Performance, a nationwide chain of personal training franchises that maintains a connection to new Athlos schools, and helps to recruit and screen coaches for Athlos schools. Coaches may also use the school gym after-hours for private, fee-based training sessions, according to news stories from Brownsville, Texas, and Arizona. Velcocity and its corporate partners get a privileged position within the schools: Velocity’s website even advertises its gym locations at charter school addresses. The walls of some Athlos school gyms bear a big Velocity Sports Performance logo and according to one handbook, the only corporate logos staff can wear are those of Velocity or its partners like Under Armour. (Athlos Apparel, which Kotter and Van Alfen also own, sells the student uniforms.)
It’s been eight years since Van Alfen sold his dental practice, and despite the recent rejection in Texas, his gamble may finally be paying off. Athlos’ school network spans three states and promises more growth soon. In fall 2011, the Legacy Traditional Schools network in suburban Phoenix opened the Athlos Leadership Academy, the first of at least five campuses they’ve now built with The Charter School Fund. Last fall, New Visions Academy—one of Minnesota’s oldest charter schools—moved into a grand new building on a grassy hill built by The Charter School Fund, then reopened as Athlos Leadership Academy. A group led by a dentist and a former dental assistant school owner has applied to open a new Athlos charter in Nampa, Idaho, in fall 2015.
Like most charter schools, Jubilee Academic Center started small. Its first campus opened in 2000, with 60 students inside a San Antonio church. Each time the school added a campus it could fit another 200 or 300 students, but growing Jubilee was always a delicate balancing act. Charter schools in Texas don’t get public money for rent or construction. Many rely on grants to cover the cost of new facilities, but Jubilee director Tom Koger was wary of the influence outside foundations might expect in exchange for their money.
Instead, when Koger and the Jubilee board wanted to go big, they enlisted The Charter School Fund, which agreed to build three new school buildings, each far bigger than Jubilee could build on its own—including Jubilee’s Athlos Leadership Academy in North Austin. Jubilee would lease the new buildings, and hopefully buy them someday. The fund, in turn, would use money from the sale to build more schools, which Jubilee could rent to accommodate even more students.
On the same day Jubilee’s board approved the deal in January 2014, it voted to boost its enrollment from 5,550 to 17,276.
Gymnasiums, tracks and fields are luxuries many charter schools can’t afford, but at these new schools they’re integral to the Athlos program, which Jubilee also decided to license. At Jubilee, according to Koger, the connection between The Charter School Fund and Athlos is incidental—both programs fit alongside what his school was already doing. “Jubilee’s always had an emphasis on character … so we feel like it’s win-win for us,” Koger says. Plus, the real estate terms were more favorable than what Jubilee could get anywhere else, which Koger chalks up to a sense of mission among the folks in Boise.
“The thing with these guys from The Charter School Fund,” Koger says, “once you get to know them, they truly are on a crusade to stamp out diabetes and obesity.”
Hoffer says he’s looking forward to next year’s charter school class, when Athlos can once again apply for its own charter from Texas. But until then, Athlos already has more schools in Texas than any other state, with three new Jubilee Academy campuses under the Athlos banner this year, and ILTexas campuses “powered by Athlos” in North Texas. Thousands of Texas students will learn the Athlos model this year, from the Rio Grande Valley to the Dallas suburbs, in big new schools built by The Charter School Fund. With or without the state’s help, the Athlos crusade marches on.
Correction Nov. 5: This article has been corrected—Wells Branch Elementary is in Round Rock ISD, not Austin ISD.