Faced with a mountain a state debt, insufficient revenues to maintain vital services and his unwillingness to require the rich to pay their fair share in taxes, why would Democratic Governor Dannel Malloy be saying that he will not sign any new state budget that doesn’t include the taxpayer funds that Steve Perry wants in order to open his privately owned, but publicly funded charter school in Bridgeport and the money a small charter school in the Bronx is demanding so that they can save Stamford, Connecticut by opening up a charter school in his home city.
Perhaps even more incredibly, Malloy is demanding that the Democrats in the Connecticut Legislature put the extra charter school money into the budget at the same time that he wants them to adopt a budget that makes record cuts to Connecticut’s public schools, including schools in the legislators’ own districts.
It is a question that every public schools student, parent, teacher and taxpayer should be asking.
To some degree the answer appears to be that given the choice, Malloy will always go for the campaign donations rather than the needs of Connecticut’s public schools, teachers and students.
In an amazing piece of investigative journalism, the Hartford Courant’s Jenny Wilson lays bare Malloy’s relationship with some of his campaign donors who are part of the charter school elite. See Hedge Fund Managers Back Charter Schools, Democrats’ Campaigns
While Malloy’s true motivations behind holding up a $40 billion, two-year state budget, in order to funnel about $15 million a year to two new charter schools remains a mystery, the connection between the charter school industry and politicians is not.
From sea to shining sea, the corporate executives who support charter schools are pumping hundreds of millions of dollars into political campaign and with Malloy becoming chair of the Democratic Governors Association next year, those potential donors become extremely valuable.
But is funneling money to the people who run the small Bronx Charter School of Excellence worth the effort?
After all, the Bronx Charter School for Excellence appears to be a two-bit player in the charter school industry agenda.
The Bronx charter school’s Head of School, Charlene Reid, who has been urging Connecticut’s government officials to hand over the money so that she can open a charter school in the Stamford, has been being pulling down in excess of $200,000 a year since 2010.
Over the same period, although the school has had only about 300 students, until a recent expansion, the Bronx Charter School for Excellence has collected approximately $50 million in public funds.
In addition, the school has a related “non-profit” which goes by the name of “Friends of the Bronx Charter School for Excellence.” The companion company has collected another million or so in order to augment the schools budget over the past few years.
Head of Schools Charlene Reid is one of two school administrator that collects a salary from both the Bronx Charter School for Excellence and the Friends of the Bronx Charter School for Excellence.
For the most recent year in which records have been submitted, calendar year 2012, Reid received over $200,000 from the Bronx Charter School of Excellence, $20,000 from the Friends of the Bronx School of Excellence and was handed another $60,000 in a bonus from the school’s Board of Directors. The Board had previously given Reid and annual bonus of $25,000 in 2011 and $20,000 in 2010.
The “non-profit” has yet to provide its IRS form 990 for the calendar years 2013 or 2014, so the school’s present financial picture is not particularly clear.
But there is certainly something more going on than meets the eye.
To begin to see the situation more clearly, one need only read a 2013 report on charter school financing in New York.
Recall that former New York Mayor Michael Bloomberg is not only among the richest Americans but he is also one of the major players funding the charter school industry and the entire corporate education reform movement.
Bloomberg’s long-time chief adviser is now in charge of political strategy for the charter advocacy group called Families for Excellent Schools, the entity that is paying for the pro-charter school television ads that have been running in Connecticut and the group that organized the recent pro-charter school rally at the State Capital in Hartford…the one in which charter schools students and parents were bused in from as far away as New York and Boston.
As an aside, when Bridgeport Mayor Bill Finch was engaged in his failed attempt to do away with a democratically elected board of education in Bridgeport and replace it with one appointed by him, one of the out-of-state contributions to what became the most expensive charter revision campaign in history was Bloomberg. (The largest individual contribution to Finch’s effort came from Jonathan Sackler who the Hartford Courant article noted today is also Governor Malloy’s largest campaign contributor.)
But back in 2013, when Bloomberg was still Mayor of New York City, the New York City Economic Development Corporation financed $23.3 million in tax exempt bonds for the Bronx Charter School for Excellence.
But how did the tiny 300 student Bronx Charter School for Excellence claim that they had the ability to pay off the bonds?
Well, it turns out that the school was only one of the signers to the bond agreement.
The two other players in the bond deal were the Education Reform giant – The Walton Foundation (Which belongs to the family that owns Wal-Mart) and a relatively new entity called the Charter School Financing Partnership.
The New York City Economic Development Corporation had never been in the business of issuing tax exempt bonds for charter schools, but starting with the Bronx Charter School for Excellence and another school that was seeking funding at the same time, the public economic development entity became a major charter school funder in New York.
According to a report at the time,
“The Charter School Financing Partnership is a key player for using small amounts of private money (i.e. The Walton money) to get leveraged funds (i.e. debt through tax exempt bonds…)”
Five community capital organizations have formed the Charter School Financing Partnership to increase capital access for high-performing, emerging charter schools. With credit enhancement from the US Department of Education and the Walton Family Foundation, CSFP offers innovative, flexible-financing solutions for schools. Through CSFP, schools can buy down the effective rate on tax-exempt bond executions and enhance New Market Tax Credit transactions as well as other conventional financing products.”
And why would the Bronx Charter School for Excellence need such “enhancements.”
“Because even the New York Charter School Institute recent financial evaluations “dash board” release on April 30 put forward a less-than-secure assessment for Bronx Charter School for Excellence for the 2011-12 year. The key metrics from the NYCSI were: “fiscally needs monitoring”, “working capital risk: high”, “acid test ratio: high”, “debt to asset ratio risk: medium”, “months of cash risk: high.”
And as the report goes on to explain
“The school is purchasing its present facility for $7.455 million and acquiring/constructing a building attached to it for $16.773 million. In comparison the school paid $1.05 mm in “land/rent/lease” payments in 2011-12 according to CSI financial dash board, the school will pay $1.151 mm in debt payments in 2014 and $1.67 mm in 2018 to pay bondholders. In essence that is $500,000 more per year (until 2043) at a school already recognized as needing monitoring by its authorizer SUNY CSI.”
The only catch is that the Bronx Charter School for Excellence now needs to come up with at least $500,000 in revenue every year starting in 2018.
Connecticut citizens may debate why Governor Malloy is demanding that Connecticut taxpayers start handing over millions of dollars a year to a charter school company from the Bronx, but one thing is certain…
The Bronx Charter School for Excellence needs to come up with an extra $500,000 a year to pay off its bond holders in New York and since charter school management companies can skim off 10% of a Connecticut charter school’s revenue by way of a “management fee,” the Connecticut taxpayer money Malloy wants to hand over will certainly come in handy.