Phila.-area charter school fights revocation in court

With the state poised to pull the plug over alleged mismanagement, an online charter school based in Devon is fighting back in not just one court, but three.

One week after the Pennsylvania Department of Education began the process of revoking its operating charter, the Agora Cyber Charter School has filed lawsuits in federal, state, and county courts challenging the action and seeking the return of public money the state had diverted from Agora into an escrow account.

The litigation - filed Monday in U.S. District Court in Philadelphia, Commonwealth Court in Harrisburg, and Chester County Court of Common Pleas - is the latest salvo in a dispute over the school's management contract with a company owned by Agora founder Dorothy June Brown.

Agora, which opened in 2005, enrolls 4,400 students statewide who receive online instruction at home.

The Education Department, which oversees the 11 cyber charters in Pennsylvania, alleges that Agora's board of trustees violated the operating charter by contracting out management services. To make matters worse, state officials say, the company, Cynwyd Group L.L.C., is controlled by Brown.

Cynwyd was to be paid $2.8 million from Agora's $41 million budget this academic year - although, according to the Education Department, most of the management work was performed by another company, K-12 Pennsylvania L.L.C.

On June 11, the state told Agora's board to cancel the Cynwyd contract and to resign in 10 days. When the board did neither, charter-revocation proceedings were begun and a two-day hearing in Harrisburg was scheduled for next month.

The Education Department already had started to divert Agora's local, state, and federal funds into an escrow account, to prevent money from flowing to Cynwyd.

In court documents filed this week, Agora's board contends that education officials had known about the Cynwyd contract since 2006 but raised no objections until April 29.

Joel L. Frank, an Agora attorney, is asking the courts to halt the revocation proceedings and to return the money, which he contends was withheld in violation of state law.

"We will review the complaints and respond in a timely manner," Leah Harris, an Education Department spokeswoman, wrote in an e-mail yesterday.

School districts, she added, have been asked "to place their tuition payments to Agora into an escrow account from which the costs of the students' education will continue to be paid. All federal funds will be paid to Agora. There is no intention on the part of [the department] to withhold federal dollars from Agora."

Despite the revocation proceedings, state officials have said Agora is expected to operate in 2009-10.

Also on Monday, Agora's board sued K-12 in Chester County Court. Although the state maintains the escrow fund, the trustees contend that K-12 has had some access to the money in order to pay bills, and they are seeking an accounting.

Henry E. Hockeimer Jr., the attorney who represents K-12, said that under the escrow procedures, the state must preapprove all Agora bills paid by K-12. Any expenditures, he said, "have been for the educational needs of the students."

K-12 Pennsylvania is a subsidiary of K12 Inc., a for-profit education company in Herndon, Va.

The cyber school's finances also are under scrutiny by the Philadelphia School District inspector general and by federal investigators as part of a general criminal probe of local charter operations.