WAPO: DC Charter Schools: Public Role, Private Gain - The Diigo Meta page

• 29 Dec 08
  

  Clay Burell

  Devastating investigation into the corruption and conflicts of interest plaguing Charter School Boards in DC.
  
  The question is, are public schools similarly corrupt? I don't know.

  charters choice education change schoolreform politics duncan

  • The Post's review found conflicts of interest involving almost $200 million worth of business deals, typically real estate transactions, at more than a third of the District's 60 charter schools.
  • In the 12 years since Congress authorized charter schools in the District to spur competition and improve urban education, charters have burgeoned into an independent and parallel public school system. They are private, nonprofit businesses operating under a public "charter" and largely funded by taxpayer dollars. D.C. students can attend for free. An independent seven-member charter board now oversees about 26,000 students, more than one-third of the city's public school population.
  • 11 more annotations...

  • • Nida, who joined the board in 2003, is the official with the most extensive financial links to schools he regulates. Since he went to work for United Bank, it has lent more than $55 million to charter schools, their developers or their landlords, records and interviews show. As a public official, Nida has voted repeatedly to increase student enrollment -- and thus taxpayer funding -- for charter schools that borrow money from his bank, records show.

      Nida recused himself from a handful of votes affecting charter schools or developers doing business with his bank but participated in dozens of other votes and actions involving bank customers, records show.

    • Before he was on the board, Nida wrote a banking industry primer on how to profit from charters by using their flow of public funding as loan collateral. According to a charter developer's Web site, Nida told bankers: "After 25 deals, I've had no losses or even late payments. The loans give me my largest margins and they are the most profitable piece of my portfolio."
    • Nida said United Bank pays him an annual bonus based in part on how much loan business he generates. He said he did not receive any commission on the loan to Elsie Whitlow Stokes or any other charter school. "Did I personally benefit? No," Nida said. "United Bank does not compensate that way to anybody."
    • Building With Tax Dollars
      

      Since 1996, the District has spent more than $2 billion in local and federal funds to build and operate charter schools. Much of that public money has gone to buy, lease and renovate school buildings that are now in private hands. Charter schools typically finance their property purchases or renovations with multimillion-dollar loans from banks and other lenders. They repay those loans using their guaranteed funding from the city. In addition to funding charters' educational operations, the District is one of the few jurisdictions in the country to provide charters with a per-child cash "facilities allotment."

      The system has provided some charter students with new buildings that are among the best-equipped in the city. It also has benefited charter schools' landlords, developers, bankers and investors while taxpayers fund two separate school infrastructures.

      "They are using public money to finance private real estate development," said Anne Dougherty, a community activist who opposed locating a charter school in a neighborhood where two traditional public schools were closing.

    • Charter schools are overseen by unpaid political appointees on two panels created by Congress.

    • Nida is not the only member of those bodies whose private business interests intersected with a public role, The Post's review found.

      Barbara "Bobbie" Hart, who chairs the credit enhancement committee, which has awarded $47 million in taxpayer financing in the past seven years to private ventures involving charters, is also a vice president at Adams National Bank and markets loans to charter schools. Since she was appointed to the committee in 2006, it has repeatedly awarded funding to Hart's loan customers, records show. Hart has recused herself from all but two votes involving applicants that had given her loan business or were about to, records show. Hart declined to comment.

    • Another public official whose private business overlapped his public position was Karl Jentoft, a developer who has served on both the credit enhancement committee with Hart and on the public charter board with Nida. Jentoft became a charter school developer seven years ago with the help of a bank loan he secured through Nida.

      Jentoft joined the credit committee in 2006, and last year moved to Nida's charter board. In that capacity, he reviewed and recommended a lease benefiting a controversial charter school project opposed by residents in the Brady Hall neighborhood, not far from Catholic University. Within weeks, the developer hired Jentoft as a consultant on that and another charter project and began paying him $14,000 a month.

      Once hired, Jentoft tried to assuage the concerns of residents who feared that moving two charter schools to a single building in their neighborhood would lead to a big increase in traffic and noise. He logged on to a local Internet discussion group last March and introduced himself as the "owners' representative" on the project. "We are working to resolve some of the obvious traffic flow issues," Jentoft wrote.

      A stunned homeowner, Steve Lowe, shot back questions: Was he the same Karl Jentoft who sat on the charter board? If so, "why did you fail to mention this?"

      "I did not include this or additional hobbies/projects because I do not think they are relevant to the current project," Jentoft responded. "I am not acting in my capacity as a Public Charter School board" member on this project.

    • Nida also had ties to the Brady Hall project. He was an unpaid board member for the developer, the Charter Schools Development Corp. His bank, United Bank, also was financing the project with loans that eventually totaled $9.2 million.

      The charter board green-lighted the Brady Hall project in May, with Jentoft and Nida recusing themselves.

    • Jentoft, who recently resigned from the charter board and moved to London, said in an e-mailed response to questions from The Post: "Any potential conflicts of interest were discussed with the organizations involved, have been documented as part of the public record, and have been acted on appropriately."

      • 

        Clay Burell on 2008-12-30

        Nice work, Jentoft. Take the money and run - to London.
    • More Kids, More Cash
      

      For all their educational goals, D.C. charter schools are businesses navigating market realities. For each child it enrolls, a charter school receives a minimum of $11,879 annually in tax money. The need to borrow large sums to buy or renovate real estate drives many charter operators to expand as quickly as possible to maximize taxpayer funding: more kids, more cash.

    • The growth of charter schools coincided with a decline in the number of school-age children in the District. Competition from charters accelerated the exodus from the traditional public school system and left school buildings with acres of empty classrooms.

      Some District school officials have been resistant to sharing space with charters, and some charter operators preferred to find their own buildings to avoid the city bureaucracy. As a result, only about 25 percent of charter school campuses lease space in public schools or other government buildings. Most of the rest bought their own buildings or lease from private landlords.

      Some charter school critics have complained that the system allows taxpayer funds to be used for private gain. The D.C. Council responded two years ago with a requirement that if a charter closes down, its net assets, including real estate, must be turned over to the city. However, the law contains so many loopholes that District taxpayers are unlikely to recoup their expenditures. It also does not prevent a charter from selling its building, keeping the proceeds and moving somewhere else.

      The law also protects banks and other creditors, mandating that outstanding loans be repaid before any assets are returned to taxpayers.

Public Stiky Notes

• 
  Clay Burell on 2008-12-30
  Nice work, Jentoft. Take the money and run - to London.

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