The Pennsylvania Department of Education yesterday began the process of pulling the plug on the Agora Cyber Charter School because the school's board failed to comply with the department's orders.
On June 11, the department directed the board of the Devon-based charter to cancel a contract with the school founder's management company and to resign within 10 days or the department would move to revoke the school's operating charter.
Agora's board did not act on either directive from the state.
Yesterday, the department filed documents to revoke the operating charter on grounds that the board mismanaged taxpayer funds and violated its charter by contracting with the Cynwyd Group L.L.C., a management company owned by Agora's founder, Dorothy June Brown.
A two-day revocation hearing is scheduled for Aug. 3 and 4 in Harrisburg, said Michael Race, a department spokesman.
While other cyber charters have closed, a revocation of Agora's charter would be a department first, Race said.
The department oversees the state's 11 cyber charters.
Joel L. Frank, Agora's attorney, said the school's board was not surprised by the department's action.
"It did what it said it was going to do," Frank said yesterday. "They can be expecting a forceful and prompt response from us."
Frank said Agora board members had considered both demands the department made 11 days ago and found them "unacceptable."
The cyber school's finances also are under scrutiny by the Philadelphia School District inspector general and by federal investigators as part of a widening criminal probe of charter operations.
Agora, which opened in 2005, enrolls 4,400 students across the state who receive online instruction at home.
Race said the department expected Agora to continue to operate and enroll new students for the 2009-10 academic year because the revocation and appeals process outlined in state law is lengthy.
"We do not expect any disruption," he said.
In documents filed yesterday, the department's attorneys alleged that Agora's board violated the school's operating charter by contracting with Brown's management company and then engaged in "efforts to conceal the existence of that agreement" in reports to the department.
The department alleged that Agora had used public funds to pay Cynwyd "exorbitant lease fees" for its Devon headquarters and "excessively unreasonable management fees" for "little or no discernible services."
The actual work, the department maintains, was performed by K12-Pennsylvania L.L.C., a for-profit education company.
Cynwyd was slated to receive $2.8 million from Agora's $41 million budget this academic year.
Since last month, all taxpayer money Agora receives has been deposited in an escrow account to prevent it from going to Cynwyd Group. Teachers and other employees are paid from that escrow account, officials have said.
In making the case for revoking Agora's charter, the department also contends that the school failed to complete audits and did not meet fiscal-management standards outlined in state law.
In addition, the department alleges Agora's board members breached their fiduciary responsibilities to provide independent oversight. Most members, the department says, were Brown's relatives or people who either worked at the three other charter schools she founded or served on their boards.
Frank, the Agora attorney, said he and his colleagues at Lamb McErlane P.C. in West Chester were still reviewing the lengthy, electronic filing they received from the Education Department yesterday.
He said many of the specific allegations were similar to those the department made in a suit filed in Commonwealth Court earlier this spring.
Race has said the department decided to withdraw the suit and use its administrative powers to make changes at Agora and, if necessary, close the school.