by Pat Hall and Sue Legg
Pat Hall and her League committee have been digging deep. They want to understand where tax money goes when charters are managed by for-profit companies. There is gold in those excavations. Unfortunately, the children are not profiting. This report is detailed and was given to the League Board. For those of you with a head for business, it is worth careful scrutiny. You will see why the League is so concerned about the free wheeling charter industry. Key points follow. Read more to really understand the business process. It is your money, and it is a lot of money, that is not being spent on students.
ANALYSIS OF CHARTER SCHOOL USA REAL ESTATE BUSINESS PRACTICES
Florida now educates more than 230,000 students at more than 650 publicly funded charter schools. While many of these schools are providing good educational opportunities, we have found that the fundamental structure of the for-profit management companies, specifically Charter Schools USA, must be questioned. The following outline summarizes a very detailed report given the LWVF Board this past summer.
1. CSUSA has six non-profit school boards that operate 49 schools in 12 urban counties in Florida. Additionally, CSUSA operates 17 schools in 6 other states.
2. The six governing school boards cover the 49 charters and are run by CSUSA; they are not independent of the management companies.
3. Inter related affiliated businesses include Red Apple Development, Ryan Construction Company, the Florida Charter Education Foundation and Connex (curriculum software). Furthermore, we found over 300 limited liability companies (LLCs) initiated by CSUSA.
4. Facilities financing incorporates all aspects of land acquisition, site clearing, construction, bond financing and multimillion dollar lease fees. CSUSA charges the Hillsborough County School district at one of their four schools more than $30/square foot, significantly higher than downtown Tampa skyscrapers!
5. Tracking expenditures of taxpayer monies is impossible due to for-profit business practices which are not transparent.
6. Long term lease agreements, after flipping (changing deeds from one related company to the next) from Ryan Construction to Red Apple Development, are charged out 40 years, and charge rent and interest amounts on top of the lease payments. Most CSUSA lease fees in Hillsborough County take 25% of all taxpayer dollars designated for educating children. Some are even higher.
7. Another 13% to 15% is charged by CSUSA for management fees, hence 40% of public money is not spent instructing children. State auditors have questioned how these costs are reported.
8. Evidence exists of real estate “flipping” by CSUSA in Hillsborough County. This results in new real estate appraisals to increase value. Lease and rent costs use these values to justify cost charged to charter budgets.