Charter School Education in the U. S.: It's All About the Real Estate

When ignorant or purchased Ohio politicians jumped on the charter school bandwagon almost 20 years ago to "provide more choices for poor families" and to "cut bureaucratic oversight to allow educational innovation," they opened the floodgates for corruption, larceny, and educational fraud promoted under the guise of helping poor kids. 

As a result, charter kingpin, David Brennan and his White Hat Management Co. have carried off mountains of taxpayer money to fund Brennan's isolating, depressing, and cellar-performing charter storefronts. 

Finally faced with the reality over years of test results, school boards finally began to react and to demand financial transparency where there has been none.  Brennan's response to the boards has been, essentially, go to hell. 

Now the case has reached the Ohio Supreme Court, which will rule on whether or not Brennan's real estate empire built with taxpayer money belongs to him or the taxpayers.

With big implications for other corporate socialists, bottom feeders are lining up behind Brennan. 

From the Beacon Journal:

Published: August 9, 2014 - 10:46 PM | Updated: August 9, 2014 - 10:46 PM 

As for-profit White Hat Management heads to the Ohio Supreme Court to defend its position on owning public charter-school assets, another Akron-based charter-school management company has signed on as a supporter.

Summit Academy Management — a nonprofit company that operates 27 publicly funded and privately run charter schools in Ohio — filed a friend-of-the-court brief last week in support of White Hat.

The high court agreed in March to hear a case that could determine whether taxpayers or private companies — some profit-driven and located outside of Ohio — own the school property purchased with tax dollars.

The assets include the real estate, furniture and computers.

The case pits White Hat against 10 school boards that previously employed the Akron company to run their schools. As the schools produced poor academic results and the boards asked questions about White Hat’s use of public dollars, the company declined to open its books to inspection.

The boards attempted to expel White Hat, but the company responded that it owned the assets and the boards would be the ones to leave.

The school boards have until Aug. 25 to submit to the high court a final brief. Oral arguments have been scheduled for Sept. 23.

The case has implications for many companies that perform government services.

Nonprofit advocacy groups — including the Ohio Coalition for Quality Education, LeadingAge Ohio, the Ohio Association of Community Action Agencies, the Ohio Association of Nonprofit Organizations and the Ohio Community Corrections Association — also have filed briefs in support of White Hat, arguing that public dollars do not remain public when transferred to private contractors.

Should the high court rule that White Hat is not entitled to keep assets purchased with public dollars, the nonprofit groups worry that the implications could be widespread, undermining contracts with private vendors.

Summit Academy, for example, argues that a previous Ohio Supreme Court decision involving Akron’s Oriana House settles this matter, and that the school boards suing White Hat are misinterpreting that case.

“This Court [in Oriana House Inc. v. Montgomery] did not state that public funds remain public after being paid to a private entity. Rather, this Court reached the precise result demanded by the plain language of the Ohio Revised Code — private entities receiving public funds may be audited,” attorneys at Day Ketterer of Canton wrote in Summit Academy’s argument.

In that case, Summit County Republicans were attempting to force open the books of Oriana, all of Oriana’s related companies and the personal financial records of the chief executive. State Auditor Betty Montgomery, who was close to county party chief Alex Arshinkoff, launched the effort to open all of the financial records.

While the court agreed that she had a right to audit the nonprofit receiving public money, her authority ended there.

Transparency questioned

The nonprofit groups supporting White Hat add that if the legislature had intended public dollars to remain transparent in charter-school management companies, then it would have legislated so 17 years ago when the schools were created.

“And tellingly, the legislature did not define the [management] fees as public money or otherwise restrict management companies’ rights to purchase property,” wrote an attorney for the Ohio Coalition for Quality Education, a charter-school advocacy group. “Management companies are private and the money they are paid is private, just as with any other vendor that provides services to a school or some other public entity. Property purchased by a management company thus belongs to it, not anyone else.”

Summit Academy and White Hat have accumulated significant assets by receiving money transferred from local school districts.

The two companies collected $110,837,594 last year, according to the Ohio Department of Education. County records indicate Summit Academy owns at least half of the 27 schools it manages in Ohio. These properties are worth more than $7 million.

IRS tax fillings show Summit Academy has grown its total assets from $10,541,324 in 2010 to $17,372,299 in 2013.

While Summit Academy puts its name on property deeds, White Hat uses affiliated for-profit companies to purchase its school properties, then charges the school boards rent, the amount of which is not public record.

Low enrollment

In Akron, White Hat cited low enrollment as the reason for closing Brown Street Academy, a property owned by the Cleveland Diocese. It did not, however, close the lower performing University Academy, which had roughly the same enrollment but sits on Arlington Street property owned by Lumen Arlington Realty, LLC, a company of White Hat.

The Ohio Coalition for Quality Education and Summit Academy, which filed separate briefs, argued that the school boards, which received the state funding, entered into “arms length” agreements with White Hat, a company described as “independent” of the schools, free of conflicts of interest.

But several board members at White Hat-managed schools in Akron and Cleveland have told the Beacon Journal that the company recruited them to serve. They also said that they have not considered contracting, or hiring, any company other than White Hat.

Doug Livingston can be reached at 330-996-3792 or dlivingston@thebeaconjournal.com.

Lobbyists Making the Rounds In Tallahassee for Bill Offering More in Corporate Welfare Check for Charters

From Miami Herald:

By Kathleen McGrory and Scott Hiaasen
shiaasen@miamiherald.com

 

A legislative plan to give charter schools a cut of local school districts’ construction money would steer millions of additional dollars to large charter-school networks that are already sitting on tens of millions of dollars in cash, records show.

The charter-school industry is lobbying hard in the capital to gain a share of tax dollars raised by school districts to cover the construction and maintenance costs of traditional public schools — tax revenue that has dropped dramatically in recent years with plummeting real-estate values. Currently, school districts are not required to share these tax dollars with charter schools.

School districts say the proposal could cost them as much as $140 million a year statewide and cripple their ability to repair aging school buildings and pay debts for past construction. But charter school operators say the lesser funding for their students is inherently unfair, and argue that withholding construction money has stifled charter schools’ growth.

Earlier this month, Doug Rodriguez, the principal of the Doral Academy Preparatory Middle/High charter school, told a Senate committee that the lack of construction money has “placed a cap on our school. We’re not able to expand.”

But many charter schools, including Rodriguez’s, routinely collect more tax dollars than they spend, and sock away the unspent cash. The Doral Academy charter-school network, comprised of five Miami-Dade schools, had net assets of $13.6 million last year, much of it cash, records show.

The Doral Academy network is one of four large South Florida charter-school chains run by Academica, the state’s largest charter school operator. These four school networks — the Doral, Mater, Somerset and Pinecrest academies — had combined assets of more than $83 million last year, records show. This money is held by nonprofit companies that own the schools, which are managed by Academica, a for-profit company based in South Miami.

These schools could stand to gain millions more every year from the construction tax dollars, which would be distributed on a per-student basis. For example, the Doral, Mater, Somerset and Pinecrest academies — which now have 45 percent of all charter-school students in Miami-Dade County — would receive an additional $14.5 million from the Miami-Dade school district this year alone under the proposal.

Academica’s schools aren’t the only ones with growing reserves. The Keys Gate charter schools in Homestead, managed by Fort Lauderdale-based Charter Schools USA, have about $5 million in cash reserves, and the nearby Charter School at Waterstone, run by Charter School Associates, had $2.6 million in assets last year, most of it cash, records show. . . . .

Read more here: http://www.miamiherald.com/2012/02/19/v-print/2649278/bill-would-benefit-big-charter.html#storylink=cpy

Corporate Charter Lobbyists Go After Florida School Construction Money

With hundreds of millions already in the bank, the vulture philanthropists and their hopped-up hedge funders are looking for more cash for their corporate welfare charter schools.

Will the Florida State Legislature destroy the bond ratings of state public schools to win the next election?

From Miami Herald:

By Kathleen McGrory and Scott Hiaasen
shiaasen@miamiherald.com

 

A legislative plan to give charter schools a cut of local school districts’ construction money would steer millions of additional dollars to large charter-school networks that are already sitting on tens of millions of dollars in cash, records show.

The charter-school industry is lobbying hard in the capital to gain a share of tax dollars raised by school districts to cover the construction and maintenance costs of traditional public schools — tax revenue that has dropped dramatically in recent years with plummeting real-estate values. Currently, school districts are not required to share these tax dollars with charter schools.

School districts say the proposal could cost them as much as $140 million a year statewide and cripple their ability to repair aging school buildings and pay debts for past construction. But charter school operators say the lesser funding for their students is inherently unfair, and argue that withholding construction money has stifled charter schools’ growth.

Earlier this month, Doug Rodriguez, the principal of the Doral Academy Preparatory Middle/High charter school, told a Senate committee that the lack of construction money has “placed a cap on our school. We’re not able to expand.”

But many charter schools, including Rodriguez’s, routinely collect more tax dollars than they spend, and sock away the unspent cash. The Doral Academy charter-school network, comprised of five Miami-Dade schools, had net assets of $13.6 million last year, much of it cash, records show.

The Doral Academy network is one of four large South Florida charter-school chains run by Academica, the state’s largest charter school operator. These four school networks — the Doral, Mater, Somerset and Pinecrest academies — had combined assets of more than $83 million last year, records show. This money is held by nonprofit companies that own the schools, which are managed by Academica, a for-profit company based in South Miami.

These schools could stand to gain millions more every year from the construction tax dollars, which would be distributed on a per-student basis. For example, the Doral, Mater, Somerset and Pinecrest academies — which now have 45 percent of all charter-school students in Miami-Dade County — would receive an additional $14.5 million from the Miami-Dade school district this year alone under the proposal.

Academica’s schools aren’t the only ones with growing reserves. The Keys Gate charter schools in Homestead, managed by Fort Lauderdale-based Charter Schools USA, have about $5 million in cash reserves, and the nearby Charter School at Waterstone, run by Charter School Associates, had $2.6 million in assets last year, most of it cash, records show.

Lynn Norman Teck, spokeswoman for the Florida Consortium of Public Charter Schools, said charters should not be cut out of construction funding because some schools have managed to save money.
“Their reserves are for a rainy day,” Teck said. “I don’t think it is fair to penalize a group of charter schools for being financially savvy.”

Andreina Figueroa, chairwoman of the Somerset Academy charter-school network, said her schools put money away to safeguard against funding cuts. The 31 Somerset schools in Miami-Dade and Broward have more than 10,000 students and $25 million in assets, records show.

“We can’t control what the Legislature does,” Figueroa said. “We need to know that if the state of Florida cuts us, we can continue to educate our students.”

In contrast, many smaller, independent charters don’t have cash reserves, and struggle to pay for maintenance and construction under the current financing rules, Teck said.

The proposed legislation would allow charters to spend the new tax dollars on construction and related expenses, and facility leases. Many South Florida charters lease their school buildings from companies with ties to their for-profit managers.

Sen. Stephen Wise, R-Jacksonville, a sponsor of the proposal, said the issue is fairness: Under today’s rules, charter schools receive less money per student than traditional public schools. While some schools have large cash reserves, “the mom-and-pops have nothing,” he said. “We’re going to make all the kids equal.”

But opponents of the measure say it will mainly benefit the large charter-school operators with high enrollment and robust balance sheets.

“These are not the mom-and-pop charter schools that are pushing for this. These are the big management companies,” said Georgia Slack, a lobbyist for the Broward County School District.

At the moment, the fate of the proposal remains uncertain. A Senate education committee approved Wise’s bill. But the sponsor in the House of Representatives was unable to tack on similar language to the House version of the bill last week. Observers believe the provision will resurface in a later draft.

Slack said the proposal would cost the Broward school system at least $20 million a year. Miami-Dade officials estimate that the funding change would cost $37 million in the next school year, and $45 million the following year.

The school districts say they can’t afford to lose the tax money, most of which goes not to construction costs but to pay the debt on bonds. Nearly one-third of Florida’s school districts use all of their construction taxes to pay down debt.

The Miami-Dade School District is expected to collect about $267 million next year through the tax, but $182 million of that would have to go toward paying off bonds — leaving only a fraction for maintenance and construction. Overall, the capital budgets of the Miami-Dade and Broward school districts have dropped more than 70 percent in the past five years, as sinking property values dragged down tax revenues.

Maintenance needs, meanwhile, continue to grow. Miami-Dade — where half the school buildings are more than four decades old — has more than $1.7 billion in outstanding capital needs, from air conditioners that need replacing to leaky pipes and electrical upgrades.

The Broward school system, which has $1.8 billion in capital needs, can’t buy new computers for classrooms, Slack said. “We have stopped all cosmetic painting,” she told lawmakers.

Last week, the Fitch bond-rating agency warned that diverting local tax money to charters would put a significant strain on school districts — a hint that school districts’ credit ratings could suffer as a result.

“We need to slow the train down and look at the very serious implications for charter schools and traditional public schools,” said Sen. Bill Montford, D-Tallahassee, the bill’s most vocal opponent. Montford is also the CEO of the Florida Association of School Superintendents. . . .

Read more here: http://www.miamiherald.com/2012/02/19/v-print/2649278/bill-would-benefit-big-charter.html#storylink=cpy

Rendell Mans Up to Charter School Real Estate Swindle

A clip from the Philadelphia Inquirer on Gov. Rendell's courageous veto of education bill:

. . . .Charter schools are typically exempt from property taxes, although some districts have sought to tax them in recent years. The provision in question would have extended the exemption to their property owners, if the owners were nonprofits.

Rendell said it might spur for-profit landlords to convert to nonprofit foundations in order to exploit the tax break - and thus, in the end, prevent school districts from collecting needed revenue.

He also questioned whether such foundations would be "purely public charities" as required for an exemption under state law. And he said it would give them a break that churches, senior centers, and other nonprofits don't get. "It would give a small handful of nonprofits special access to tax breaks and encourage others to create new nonprofit corporate entities in order to game the system," he said.. . .

Read more: http://www.philly.com/inquirer/local/pa/20101023_Rendell_vetoes_education_bill_over_charter-school_tax_break.html#ixzz13DMdwyG6