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Costs pile up at CPS-funded charter network over CEO who ‘acted inappropriately’

Michael Milkie, the founder and former of Chicago's Noble Network of Charter Schools.

Michael Milkie, the founder and former CEO of Chicago's Noble Network of Charter Schools. | Rich Hein / Sun-Times

Chicago’s Noble Network of Charter Schools has spent $326,000 for costs related to the sudden retirement in November of its founder and CEO, who said he’d “acted inappropriately” with recent female graduates of the city’s largest government-funded but privately run charter school network, records obtained by the Chicago Sun-Times show.

And the bills keep coming for Noble, which runs 17 high schools and one middle school, all in Chicago, with a total of about 12,000 students, 89 percent of them from low-income families and 98 percent of them from minority groups.

The costs include payments to Michael Milkie, 58, and legal fees, according to records released in response to a public records request.

Noble’s board hired a $695-an-hour labor lawyer last Nov. 6 — the day Milkie announced he was leaving. That was to investigate whether Milkie “engaged in any inappropriate conduct while interacting with females,” according to a Jan. 4 letter from a partner in the law firm that said the scope of the probe was expanding to include whether anyone at Noble knew of improprieties and to make recommendations. The letter also confirmed an increase in the top hourly rate to $725.

The charter network — whose board is peppered with high-profile names — has paid the law firm Bryan Cave Leighton Paisner about $280,000 for the first four months of work, through Feb. 28, of what it says is an ongoing investigation, records show. That includes $10,000 to draw up a contract for Milkie’s successor. Effective March 1, Noble negotiated a discount of about 10 percent on its legal fees.

Noble spokesman Cody Rogers said the money to pay for the law firm’s investigation is being drawn from private money that had been donated to the charter network and that the cost isn’t being borne by taxpayers.

However Noble chooses to account for that expense, government funding covers nearly all of its budget. Only about 10 percent of Noble’s funding comes from private donations. The remaining 90 percent comes from taxpayers through CPS, which state law requires to fund the operations of any Chicago charter school it has authorized.

For the current school year, CPS budgeted $157 million for Noble in local, state and federal funding the public school system receives.

Rogers would not make anyone from Noble available for an interview. A top staffer from the charter network told members of its board of directors, who oversee the schools, not to talk about Milkie or the investigation they authorized.

Milkie, who was paid a salary of about $232,000 a year as chief executive officer, plus bonuses in recent years of $20,000 annually, wouldn’t agree to an interview but said in a written statement: “I have previously offered an apology and continue to feel remorse for behavior that did not meet the standard of my role.”

Milkie made about $8,000 a year less than the $260,000 CPS pays its CEO, Janice Jackson, who runs a far larger school system, with about 361,000 students.

Records show he has begun drawing a government pension of $10,813 a month, or about $129,000 a year, after working first for CPS and then for Noble over nearly three decades — what he said is “the normal public pension based on my 29 years of service in the Chicago school system.”

Mark Hubbard, a spokesman for Milkie, said the one-time CPS math teacher is cooperating with the investigation by the law firm Noble hired and with a second investigation, by the CPS inspector general’s office. Hubbard would not say whether Milkie has been interviewed by either team.

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Milkie announced in early November he would retire at the end of 2018.

At the time, Noble explained his sudden decision to step down with a written statement that said he was “retiring for personal reasons.”

A week later, after two female alums and one anonymous Noble staff member spoke with WBEZ-Chicago about  complaints about Milkie, Rogers expanded on the initial explanation. In a written statement then, Rogers said: “In October of this year, it became clear to Michael Milkie’s direct reports, then-President Constance Jones and Head of Schools Ellen Metz, that he had a pattern of inappropriate behavior across several incidents, including hand-holding and an instance of slow-dancing with an alumna. Based upon this pattern, Ms. Jones and Ms. Metz voiced a lack of confidence in Mr. Milkie’s leadership. When confronted with this information, Mr. Milkie chose to retire.”

In a statement, Milkie also apologized that he “acted inappropriately toward adult women affiliated with Noble.”

The CEO didn’t have a contract, so he wasn’t guaranteed any payments upon leaving Noble. But the charter operator continued to pay him for nearly two months during which Rogers said “he was not allowed on campuses, had no official daily responsibilities, could not have contact with students and could only discuss Noble-related matters through the human resources department.”

Payments for unused “paid time off,” reimbursement for using his own car and his salary covering Nov. 7 through Dec. 31 came to about $46,000, records show.

Milkie said, “I worked on transitioning my expansive experience as leader to the organization.”

His pay accounts for about $35,000, about a quarter of which covered end-of-year holidays when school was closed.

“When serious allegations against an employee come to light, the employee is removed from their workplace and placed on leave at their normal pay rate pending the outcome of an investigation,” Rogers said. “In this case, Mr. Milkie chose to set a retirement date well before the results of any investigation would be delivered, for reasons only he knows.”

Noble paid him $11,000 for unused vacation and other time off he was owed and for driving his car on the job. In previous years, it had leased a $33,000 Honda Pilot sport-utility vehicle for him.

What’s now Noble Street College Prep, 1010 N. Noble St., was one of Chicago’s first privately managed, government-funded charter schools. | Annie Costabile/Sun-Times

Two decades ago, Milkie and his wife, Tonya Milkie, were CPS teachers — he was working at Wells High School in West Town — when they decided to open a high school nearby at 1010 N. Noble St. Opening in 1999, the Noble Street Charter School, now called Noble Street College Prep, was one of Chicago’s first charter schools.

Michael Milkie was its principal, and sometimes coached the pom squad and girls volleyball.

As Noble grew and opened new schools, aiming, according to Milkie, “to give Chicago students a better chance for college success,” he oversaw all of them as superintendent and CEO, but still coached girls basketball and taught gym.

Noble’s decision to hire the law firm came after CPS had hired another firm to investigate CPS’ handling of sexual misconduct allegations involving public school employees and volunteers. The top hourly rate that Noble is paying the firm is more than twice the $295 maximum CPS typically pays for outside lawyers.

After Noble announced that Milkie was leaving and why, Nicholas Schuler, whose office had recently taken over investigations of reports of sexual abuse at CPS schools, opened his own investigation, saying, “We think this needs independent review.”

Among Noble’s 20-member board are parents, philanthropists and business and civic leaders including John Rowe, the retired Exelon Corp. chairman and CEO, who didn’t respond to messages seeking comment about Milkie’s departure.

The board’s president, Allan Muchin, from the law firm Katten Muchin Rosenman, agreed to an interview about Milkie’s exit terms but then was described as indefinitely unavailable after a Noble official instructed board members to refer calls to Rogers.

An assistant to one board member, John Butler, who is chairman of the Iowa insurance firm Cottingham & Butler, said he was “unavailable” and, asked whether he’d be free for an interview later, said, “Nope, not ever.”

Another board member, Troy Ratliff, vice president of the Joseph Kellman Family Foundation, said: “He retired for personal reasons. If they were personal, I decided there was no need for me to know more than they were personal reasons.”

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Contributing: Robert Herguth