Chicago Public Schools asks court to order ex-charter school operator to show how it spent $25M

By Scott Holland | Mar 10, 2017

Chicago Public Schools is accusing former charter school operator Prologue Inc. of withholding financial documents that would reveal whether it mismanaged $25 million in public funds, according to a complaint filed March 3 in Cook County Circuit Court. 

Chicago Public Schools is accusing a former charter school operator of withholding financial documents that would reveal whether it mismanaged $25 million in public funds, according to a complaint filed March 3 in Cook County Circuit Court. 

In the complaint, the Chicago Board of Education’s Law Department details the state’s largest school district’s alleged struggles with Prologue Inc., a Chicago nonprofit agency that operated several schools and programs in the city - notably Winnie Mandela Alternative Learning Opportunity Program, as of August 2013; W.E.B. Du Bois Early College High School, as of July 2011; and Joshua Johnston Charter School for Fine Art and Design, as of July 2010. 

Though the board authorized a two-year renewal agreement for Johnston on June 24, 2015, Prologue did not execute the deal, the complaint said. On Aug. 24, 2016, CPS rescinded authority to renew the agreement. On May 19, 2016, CPS told Prologue it would not renew the Mandela or Du Bois programs. 

CPS cited contract language detailing that Prologue, as part of winding down those operations, was required to provide, without limitation, financial information such as inventory of assets, audited financial statements, bank records, contracts, general ledgers and payroll records. The board seeks this information “to determine whether Prologue properly used public funds and to account for assets that should be returned.” 

The complaint also noted it took nearly a year since a final request in May, for Prologue to provide requested student records like transcripts, enrollment documents, state test scores and discipline records. CPS representatives purportedly spoke with Prologue CEO Nancy Jackson on June 17, scheduling a facility walkthrough on June 21 and an in-person meeting June 22. But before the walkthrough, Prologue officials allegedly told CPS no one from the company would attend the meeting or allow CPS to conduct its own walkthrough. 

CPS claims it contacted the Prologue board of directors, hoping to set up a walkthrough and meeting in late June, to no avail. On July 22, Prologue allegedly sent a written response blaming a file server for failure to provide financial data and “indicating it was working on solving its massive financial issue,” per the complaint. CPS also sent a Dec. 1 letter reminding Prologue of its obligation to provide financial data. 

According to the complaint, CPS gave Prologue more than $25 million from 2012 through 2016, a total which included five annual outlays for Du Bois and Johnston, and three for Mandela. The state’s charter school laws stipulate that when charter schools don’t “expend or obligate all federal grant funds prior to the end of each fiscal year, the board may recapture any unspent grant funds.” 

Formal allegations in the complaint are breach of contract — one count for each other three schools — as well as a count asking the court to order an accounting determining what Prologue owes and whether it may capture any assets or inventory Prologue bought with state money.

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