Three interconnected charter school networks will remain open next year despite scrutiny of payments and loans totaling at least $17 million to a company owned by the charters’ highest-ranking employee.

HISD board members voted 5-4 to authorize renewal of the district’s contracts with the three charter networks, drawing applause from roughly 50 students, parents and teachers from the school in attendance. If trustees voted against the authorization, the three networks — Energized For Excellence, Energized For STEM and Inspired For Excellence academies — likely would have shuttered operations and displaced about 4,000 students ahead of the 2019-2020 school year.

HISD trustees typically have reauthorized in-district charter contracts by wide margins, but the split vote Thursday reflected concerns about the deep financial ties between the trio of charters and a company owned by their head of schools, Lois Bullock. Financial records show Bullock’s company has been paid $10.8 million in rent and $2 million in management fees over the past five years from the three charters. Bullock’s company also received a $4.2 million loan in 2015 from Energized For Excellence.

Trustees voting in favor of keeping the charters open found the unusual financial arrangements — which HISD administrators have not prominently flagged or criticized — did not warrant shutting down schools. Board President Diana Dávila said she has seen strong academic results during multiple visits to the campuses. Trustee Sue Deigaard expressed concern about whether HISD could accommodate displaced students. Trustee Wanda Adams questioned whether the charters have been unfairly targeted, with other organizations getting less scrutiny.

“As I sit here and listen to the parents whose kids actually go there, they like the school, they’re doing well in their schools, they can’t go back to their home schools,” Trustee Jolanda Jones said.

Other trustees argued the charters’ financial practices and their well-below-average share of students receiving special education services — about 2%, compared to 7% district-wide — merited closure.

“To continue to allow these folks to profit off the backs of our students, we’re actually saying it’s OK to continue to operate in this manner,” Trustee Sergio Lira said.

HISD administrators, who are responsible for day-to-day oversight of their relationship with the three charter organizations, said financial ties between the networks and Bullock’s company were “not unlawful.” District leaders said they were not aware of why Bullock’s company received a loan from her employer.

Board members on Thursday directed HISD administrators to insert more specific language into charter contracts about academic performance, financial integrity and long-term viability. However, trustees did not require new conflict-of-interest requirements. District officials were not made available for comment Thursday on the upcoming negotiations.

Bullock declined to comment on the vote when reached by phone Thursday night. She has not spoken publicly about her financial agreements with the charters she operates. In a statement last week, the charter schools’ top leaders said they “adhere to the laws and regulations governing nonprofits in the state of Texas and to generally accepted accounting principles.”

An unnamed individual associated with the charter organizations declined to comment and directed parents not to speak to the Houston Chronicle after the meeting.

The three nonprofits, founded by Bullock between 2001 and 2009, are governed by three-person boards responsible for financial oversight and hiring their top administrator. Over the past several years, the nonprofits have engaged in multiple financial transactions with Bullock’s company, Educational Learning and Enrichment Center.

Some of the charter campuses are located in facilities owned by Bullock’s company, resulting in lease payments totaling about $2 million per year. Bullock’s company also receives about $400,000 per year for her “labor and job benefits,” roughly equivalent to the HISD superintendent’s compensation.

The Energized For Excellence governing board also approved a $4.2 million loan to Bullock’s company in 2015, requiring no principal payments until 2030 and 5 percent loan. HISD officials said they are not aware of the reason for the loan. Neither Bullock nor Energized For Excellence leaders have commented on the loan.

Supporters of the Energized and Inspired charters did not address the financial ties on Thursday, instead focusing on their positive personal experiences.

One elementary-age student, Joan Cruz, told trustees that “I learn so much at school” from teachers who “work endless hours to make sure we are prepared each and every day.” A classmate, Jisel Aguilera, pleaded to trustees: “Please don’t shut the doors in my face.”

If HISD trustees opted against contract renewal, the resulting enrollment losses could have cost the district millions of dollars through an increased payment of “recapture,” the state’s method of creating equity between property-wealthy and property-poor districts.

jacob.carpenter@chron.com

twitter.com/chronjacob