NJ Charter School Circus: LEAPin' Lizards!

Camden's charter schools are both an educational "failure" and a fiscal disaster:

The tax-exempt status of a Camden charter school was revoked by the Internal Revenue Service following the school's failure to file proper nonprofit financial statements for three years, putting $8.5 million of bonds at risk of losing their tax exemption.

LEAP Academy University Charter School said in a statement its decision not to file the IRS annual Form 990 for a three-year period was "due to conflicting advice on the administrative need to do so as a New Jersey charter school."

Through its spokesman, James McQueeny of Winning Strategies, LEAP would not elaborate on the "conflicting advice" and declined to provide any info beyond the statement. Lynn Walker, a spokeswoman for Rutgers University-Camden — which guaranteed the bonds issued by the Delaware River Port Authority on LEAP's behalf — also would not provide information in response to a reporter's questions. [emphasis mine]

Fellas, I'm just a music teacher, but I've got some good advice for you: if you want to remain a non-profit, file non-profit tax forms. Duh.

According to a DRPA spokesman, Tim Ireland, the agency sold bonds to the securitized debt market and lent some of the money collected from the sale to various nonprofit and for-profit entities through an economic development program that ended in December 2010. Under that program, the DRPA issued $8.5 million of bonds in 2003 for LEAP to finance the school's construction and development costs. Rutgers guaranteed debt service on those bonds and TD Bank serves as the trustee, according to LEAP and DRPA.

Ireland said, "DRPA toll payers will get the money back, regardless," since Rutgers-Camden guaranteed to pay back the money with interest to DRPA so that it can pay the bondholders.

Hey, that's great: tuition-paying Rutgers students and state taxpayers will reimburse DRPA because LEAP can't get an accountant to do their taxes correctly! With interest, no less!

Well, it must have been worth it, right? LEAP must be a fount of chartery excellence:

In this last year, several Camden charter schools have faced state scrutiny. Only one has been placed on probation.

Four charter schools have not made Adequate Yearly Progress (AYP) in test scores for a few years as calculated through the federal No Child Left Behind process.

Lagging furthest behind is Distinctions in Urban Education Seasons Charter School, which did not improve test scores for several years, though it made significant progress this year. Camden Promise Charter, part of the Camden Charter School Network, and Freedom Academy Charter have each missed test improvement marks for at least three years and LEAP Academy University Charter School also has missed AYP the last two years.

[...]

Beyond poor academic performance, charter schools have come under investigation this year for fiscal mismanagement or abuse allegations.

LEAP recently paid back $136,368 to the state Education Department for payments it received for nonallowable expenses during the 2009-10 school year and submitted a plan to correct its problems. [emphasis mine]

That post is from this past July; I guess LEAP is still working those "problems" out. But don't expect them to get their act together any time soon:

In the statement, LEAP said it first became aware of the revocation of its tax-exempt status in December 2011 — more than a year after the status had been revoked by the IRS in November 2010 after the charter school failed to file Form 990s for fiscal years 2007, 2008 and 2009.

I wonder if the students at LEAP get full credit for turning in their homework late...

Ultimately, because the Education Commissioner is the sole authority for approving charters in the state, the oversight of LEAP's fiscal gymnastics fall to Chris Cerf. But this past October, it appeared that Cerf thought everything at LEAP was just swell:

Breaking every tie should always be done “in the best interest of the students,” Education Commissioner Chris Cerf said during a speech Tuesday, just days after the local board of education deadlocked on a significant vote. 

Cerf made the comment at the grand opening of a $12.5 million charter school in the heart of the city’s downtown, the Leap Academy University Charter School STEM campus.

The LEAP science, technology, engineering and mathematics school, in part, is meant to fill a void in the education available through the local school district, where 23 of the city’s 26 schools are deemed failing.

And here's the Commissioner at the event, courtesy of LEAP's website:

Yes, that's $12.5 million for a school that will serve no more than 240 students. Except, according to the report in the Philadelphia Inquirer above, LEAP was also "deemed failing"! How does expanding a "failing" charter help fill a void?

And was Cerf at all aware of LEAP's questionable tax status when he was cutting the ribbon at their opening? He certainly knew about the other incidents of fiscal mismanagement at the charter; did he direct his staff to look further into LEAP's finances? Or was he just so excited at the thought of cutting that red ribbon that it slipped his mind?

I always say this at this point in my posts about charters, and I mean it: the students and staff at LEAP should be proud of the fine work they do. The Robotics Team just won an award, and the basketball team just got their first win, which is not easy for a young school. Good things are brewing, and I wish all the teachers and students the best and congratulate them on their achievements.

But let's count all the ways in which this story is an indictment of the NJDOE under Chris Cerf, the administration of Chris Christie, and the charter school industry:

- LEAP has missed AYP for two years and yet it was allowed to expand. Meanwhile, Camden public schools, which are required to serve all students, are threatened with state-run interventions or closings, and the governor makes veiled threats about taking over the entire district. Where is the consistency?

- Somehow, the state can find $8.5 million to build a new building for LEAP, but it can't find the money to repair the crumbling Camden schools that put children in danger every day. If there's money to build a new charter, why isn't there money to fix the existing public schools?

- Has anyone looked into who financed these bonds? Were they able to take advantage of the New Markets Tax Credit available for charter expansion (I am convinced this is the most under-reproted story in education today)?

- Right down the street, a new charter complex will rise up thanks to the intervention of South Jersey Democratic boss George Norcross. The charter will be run by KIPP, a group that has a record of previous failure in Camden. When will Camden get money to build a school that must serve ALL children and not, like KIPP, only some children?

- Finally: is anyone at the NJDOE doing their job? LEAP didn't file their non-profit tax forms for three years and the NJDOE didn't notice? LEAP was allowed to expand after this oversight and a substantial financial violation? The school doesn't make AYP for two years and Chris Cerf shows up to cut their ribbon on an expansion that was financed by bonds that may well go bust?

New Jersey's charter oversight system has become a circus, and clowns are running the show. Does anyone care?