It doesn’t take a crystal ball to see where all this reforminess at the urging of corporate interests is intersecting with the school closures. The ongoing struggles in Phila and Chicago around mass closures are rightly getting the headlines. But the smaller scale urban districts and their shuttering of small number of schools show what is in store. The school will close, a charter operator will obtain the building and property, the operator will apply for bond financing, then contract out the school management to an unaccountable EMO or CMO and the neighborhood school is transformed into a ‘privilege school’ with private selectivity policies and public money.
A slightly different story is unfolding in Gary, IN in the case of the 21st Century Charter School as told in the very large PDF linked here.
I am unsure if the charter was application an initiative of the board or of the management company. One of the surest indicators of possible financial mismanagement is the backwards arrangement of an operator selecting the board and leasing the facility to the board’s school a la Imagine Schools.
But the confluence of the managers and school board founders is curious.
A member of the founding team is Arlene Colvin, “the director for Community Development for the City of Gary and is the former Chief of Staff for the past four mayors of Gary. She has served as city planner, economic director and city attorney.” Colvin is now the Secretary Treasurer of 21st Century Charter School. Colvin should be asked how this deal makes sense in light of the considerable debt burden now on the school and the circumstances and due diligence around purchase of the building from the management organization, GEO Foundation.
What about GEO Foundation? The intrepid Indiana blogger Craig Martin said this in 2011 about GEOF:
When Indianapolis Mayor Greg Ballard announced he was closing the Fountain Square Academy charter school last month because of low performance, he focused the blame solely on the Greater Educational Opportunities Foundation, which received a $1 million grant from the U.S. Department of Education less than a year ago.
If we peer into GEO Foundation CEO’s history, we get a hint at the group’s mindset. As a former member of the Heritage Foundation, the Reason Foundation, the Reagan Office of Public Liaison, and other rightwing groups, Kevin Teasley has been a figure in the voucher/charter movement in several states from the get-go.
While at the Reason Foundation in California, Teasley was associated with the voucher group Excellence Through Choice-in-Education League (EXCEL), which was funded by Indiana’s own Dan Quayle, William Bennett (who once desired to dismantle the U.S. Department of Education and has recently radio-interviewed the very proud Indiana Superintendent of Public Instruction Tony Bennett), and Milton Friedman (whose Foundation for Educational Choice is in Indianapolis now), a group which then-California State Superintendent of Public Instruction Bill Honig said was attempting to use taxpayer money to breed “cult schools.” The voucher measure, on the November 1992 ballot, did not pass.
Former Domestic-Policy Adviser to Dick Cheney and implementer of No Child Left Behind for the Bush U.S. Department of Education, Nina Rees also helps run GEO. If this were not enough to set off sirens, Rees also is Senior Vice President for Strategic Initiatives and is responsible for early-childhood education and after-school tutoring for Michael Milken’s Knowledge Universe.
The outline of the bond transaction and use of bond proceeds also suggests more than meets the eye. The $13.5 million raised will put $3.5 m to the purchase of the building from GEO Foundation; $7.55 m to build a new facility (“the construction and equipping of a new 50,000 square foot building facility on land donated by the City of Gary”); $1.01 m in a reserve fund not to be spent on any school operations; and the remaining in fees.
First about the present building, the board is taking on a lot of debt paying 6% and 6.25% on two tranches to buy out the present landlord GEOF. The local newspaper in December wrote a piece about the transaction that said
Kevin Teasley, founder and president of Indianapolis-based GEO Foundation, which is the management company for 21st Century Charter School, said the school has been leasing the space since it opened eight years ago. For the first four years, the board leased the building for $300,000 a year and then paid $360,000 per year for most of the remaining years after an addition was made to the building.
Teasley said the foundation borrowed $7 million more than eight years ago to construct two new schools — the 21st Century Charter School in Gary and one in Indianapolis. He said the school buildings are identical, and they cost more than $3.5 million each to construct.
"It actually cost us about $4 million to construct and we discounted it to the school," Teasley said. "We spent another $250,000 when we added a music room above the cafeteria four years ago. It was the decision of the board at 21st Century to buy the building because it will save them money as opposed to continuing to pay rent on the building."
Teasley and School Treasurer Dana Johnson said the school is paying roughly $12 per square foot, which is “pretty reasonable.”
Teasley also said the management company is not making any money off the sale. He said it has acted as a “pass through” agent.
"We (the foundation) took the risk by borrowing the money and simply passed the cost on to the school," he said.
Added Johnson, “We have not really made anything. We have essentially been paying a loan we received from the bank. The rent was set based on the amount owed to the bank.”
In a supplemental audit report released by the independent auditors nearly a week later on Dec. 12, auditors criticized the charter school for not following several accounting guidelines.
That’s pretty rich. What do you think GEOF could get for the building in Gary on the open market without the insider deal to its tenant?
What savings will the school get now that they aren’t paying rent? In fact they will pay $841,000 in interest only in 2014, $1.01 million in 2015 and more than a million per year until 2043.
That second building on donated land will generate some income for 21st Century - because it will be leased to another charter school called Gary Middle College. And Gary Middle College hires GEO Foundation to serve as management organization.
This is the new pattern where elected and appointed officials simply stop supporting its public schools and instead enable access to (or worse participate in the turnover of) buildings and land that fuel the financialization of school buildings and services.