I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Thursday, March 28, 2013

The Selling Out of Camden's Schools: Part I

Here's Part II of this report.

Now that the state has officially taken control of Camden's schools, what changes are we likely to see? What's in store for the city's children and their schools?

The best place to find an answer may be right down the Delaware River. A charter school made famous in Chester, PA is setting up shop in Camden (all emphases in this post mine):
Officials on Thursday announced a newly approved public charter school in North Camden, scheduled to begin serving up to 300 elementary school students beginning as early as September.
Students at the new Camden Community Charter School — which will soon break ground at what has long been an empty lot near the intersection of 8th and Linden streets — will be provided with free laptops and at-home Internet access through a partnership between Comcast and a local charity.
The new charter school will be managed by CSMI Education Management LLC, which operates Chester Community Charter School in Pennsylvania, and whose founder and CEO, Vahan Gureghian, is one half of the foundation providing the free laptops and Internet access to students. The other half, Danielle Gureghian, serves as executive vice president and general counsel for the group.
Here's Camden Mayor Dana Redd, selling the school at its groundbreaking:

This ceremony took place just days before the state announced its takeover of the district, with nary a peep here as to CSMI's track record, nor any look into Vahan Gureghian's past. The Courier-Post, to its credit, went a little deeper:
Chester Community Charter School was investigated by the Pennsylvania Department of Education for an alleged cheating scandal at the school from 2009 to 2011.
The investigation proved inclusive, but stricter testing policies have been instituted at the school.
Recent reports indicated test scores dropped dramatically at the school after test monitoring systems were put in place. School officials attributed the drop in test scores to financial stress at the school, which then led to teacher layoffs.
Cheating?! Looks like we need to explore this a little more...

Just the other day, the Philadelphia School District announced that CSMI would not be getting a contract to run a "turnaround" school. This report by the terrific Philly schools website The Notebook explains why:
CSMI is the for-profit management company that operates Chester Community Charter School, which educates more than half the elementary-age children in Chester-Upland. That charter school, described on the company's website as "one of Pennsylvania's great educational success stories," last year was among those investigated by the state for suspicious PSSA test score patterns, including high numbers of wrong-to-right erasures, and was required to impose much stricter test security protocols in 2012. After the measures were adopted, student proficiency rates in math and reading plummeted by 30 points. A school spokesman attributed the decline to reduced funding from the state.
The company's founder, Vahan Gureghian, was Gov. Corbett's largest single campaign contributor. He has consistently declined to release information on CSMI's fee structure and profits from operating Chester Community, repeatedly arguing in court that as a private company, CSMI is not subject to Pennsylvania Right-to-Know laws.
As the New York Times reported last year, the Chester-Upland School District is in a world of hurt. This was the district that, in early 2012, famously could not pay its teachers, who worked for free until a judge ordered the state to pay stopgap funding.

The fiscal problems dated back a good long time - including the many years the state ran the district - but the charter school certainly made things worse:
The district argues that the charter is receiving millions of dollars in extra special education funds. And money to the charter also goes toward fees to the private management company of $5,000 per student. The charter says the district has not paid its bills since last April, leaving it no other choice than to go to court. The state was also named in the lawsuit because it has also fallen behind by millions of dollars in payments, the charter said.
While budget cuts forced the district to slash its staff by about 30 percent and cut art, music and language classes, the charter has made no such reductions, Judge James Gardner Colins of Commonwealth Court wrote in a decision on Tuesday that ruled against immediately satisfying the charter’s claims.
Judge Colins wrote that there was no evidence that the charter had been obliged to make any cuts or had tried to renegotiate its contract with the for-profit management company “to reduce its unusually large management fee.”
So as the Chester-Upland public schools cut instruction and staff, CSMI raked in $5,000 per student. But it gets worse: the Philadelphia Inquirer, using more recent figures, puts the management fees to CSMI even higher:
The 2012 test scores and the investigation of the school for test irregularities are bound to renew long-standing questions about the school's management fees and the veil of secrecy over how much profit Gureghian is making from the charter.
Bond documents and court filings show that CSMI's contract with the charter called for it to be paid $5,873 per student last school year, and an even higher per-student payment - $6,445 - for 2012-13. That totaled more than $17.6 million due last year to CSMI. That is more than the school spent on instruction and more than a third of the school's total expenditures of $46.8 million.
In 2010-11, the latest year for which figures are available, the school spent the highest percentage of any district or charter on business expenditures, a category that includes the management fee, while spending the eighth-lowest percentage in the state on instruction.
Nice work if you can get it. But's even that isn't the only source of revenue for Gureghian:
The management fees are not all that Gureghian has received for his work at Chester Community. In 2010, he was paid $50.7 million for the purchase of the charter school's buildings by Friends of Chester Community Charter School, a nonprofit group formed to purchase the property and support the charter.
Gureghian had originally paid for the buildings' construction; a spokesman said the cost to build them was about $50 million.
Gureghian also received more than $20 million in rent for the charter-school buildings, before he sold them.
The 2010 purchase of the school buildings was financed by $57.4 million in bonds issued by the Delaware County Industrial Development Authority, an agency that underwrites bond issues for a variety of public financing purposes.
That's a lot of taxpayer money - money intended to be used to educate students - headed Vahan Gureghian's way. And to make bigger profits, CSMI cuts costs any way it can:

The teachers are relatively green, averaging about five years of classroom experience. The state average is about 12 years. Other charters average about 6.5 years.
They are also among the lowest paid in the state, averaging $39,790 last school year. The state average was $55,500; for charters, $45,435.
CCCS does, however, buck the trend of charters not serving children with special education needs; in fact, they seem to have found a way to make it work to their advantage:

Special-education students make up an unusually large percentage of school enrollment - 26.7 percent last school year, well over the state average of 15.2 percent and Chester Upland's 21.3 percent. About 40 percent of special-needs students are identified with "speech or language impairments" - generally a mild disability; the state average is 16.2 percent.
The charter gets $25,528 for every special-education student from Chester Upland - more than 2.5 times the amount it gets for district regular education children. Critics question whether the school overidentifies special-needs students to get more money.
The state conducted a special audit of the program in 2008 and initially found irregularities. The charter sued and the state agreed to accept the school's decisions.
Clark said the school screens entering children for disabilities and strictly follows state regulations. To be most effective, he said, "you really need to get a child when they first come into the school. We understand that. Our philosophy is based on that."
So that's the magic formula: cheap, inexperienced teachers; lots of special education placements, but not many (or any) that are especially severe; an aggressive legal stance against state oversight; and a private charter management company that takes one-third of every dollar the school spends. Don't, however, ask where that money goes:

The school has gone to court to block release of documents on how the money is spent and how much profit Gureghian's company makes.
Oh, dear. Well, it must all be worth it, right? CSSS must get stellar results...
Twenty-eight Philadelphia schools, out of 89 schools in Pennsylvania, have been flagged by the state for a high number of erasures on state exams, according to a 2009 study of state standardized test scores.

The Notebook, a Philadelphia education newspaper that originally broke the story, reports that roughtly 60 schools had "suspicious results due to multiple statistical irregularities" on the tests. The statistics do bring up questions of why there are so many erasures on the exams, where wrong answers were changed to correct answers, however the report says the numbers are not definitive proof of cheating. 
Chester Community Charter is one of the local schools flagged the most for high numbers of erasures in the report. In addition to erasures flagged in the report, the school reported 65.4 percent of eighth graders were proficient in math in 2009, according to the Notebook. That’s one year after only 22 percent scored proficient in 2008. [emphasis mine]
Oh, my. Well, what happened after this report was released?
Standardized-test scores have dropped precipitously at Chester Community Charter School, the state's largest charter, after an investigation of possible past cheating brought new scrutiny to the school's testing practices.
Results for 2012 state tests released last week show that, schoolwide, scores fell about 30 percentage points in math and reading, with double-digit drops in every grade. Some fell more than 40 percentage points.
The school's 2011 scores had been above or close to state academic proficiency benchmarks; in 2012, they are well below them, even discounting that the state raised the thresholds for this school year.
The drop in scores came after the state Education Department imposed new testing security measures on Chester Community and dozens of other schools statewide when the tests were given this spring, making cheating at those schools much more difficult.
This doesn't look very good for CCCS, does it? So did the Pennsylvania Department of Education do a thorough investigation into possible cheating at CCCS?
According to a September 2012 letter from PDE’s Dumaresq to the school, CCCS was flagged for having “a very high number of students with a very high number of wrong-to-right erasures in 2009, 2010, and 2011.” The department launched its probe “based on the statistical improbability that the students made these erasures themselves.”
But the letter notes that “after discussions with PDE, CCCS then conducted its own investigation,” which “did not yield clear conclusions, notwithstanding the overwhelming evidence of testing irregularities.” The letter says that state investigators returned to “complete” their investigation after the internal investigation concluded, but it does not indicate what they found.
Neither state officials nor a CCCS spokesperson would comment on the “discussions” that led PDE to turn the investigation over to CCCS staff.
However, documents on the state’s website show that in October 2011, PDE sought a contract with the law firm Pepper Hamilton for help handling potential probe-related lawsuits.“Some schools may resist PDE’s investigation, and litigation may ensue,” the contract says.
Two months later, in December 2011, invoices from Pepper Hamilton obtained under Pennsylvania’s Right to Know law show that while the attorneys were researching CCCS, they were also looking into PDE’s authority to subpoena documents or compel schools to cooperate.
Asked if CCCS was considering suing the state over the investigation, school spokesperson Bruce Crawley said he did not know, but added that the state was surely aware that CCCS had separately hauled it and the Chester Upland School District into court over finances.“Maybe they [thought that] if they were doing things worthy of a filing, there would be a filing,” Crawley said.
They know that this is a school that defends itself in a court of law.
So PDE backed off of an investigation of possible cheating at CCCS, and they backed off on charges that the school was artificially inflating its special education numbers.  Why weren't any of Pennsylvania's politicians calling for PDE to continue to look at CSSS anyway? Why didn't they care to get to the bottom of all these irregularities at Gureghian's school?
CCCS was founded by Gladwyne lawyer and entrepreneur Vahan Gureghian, who is also the founder and CEO of Charter School Management, Inc. (CSMI), a for-profit management company that operates CCCS under contract. The school has attracted attention in part because Gureghian is an influential power broker in both Delaware and Montgomery counties and a major Republican campaign donor. 
According to the National Institute on Money in State Politics, Gureghian has in recent years contributed almost half a million dollars to state Republican candidates and committees, including over $300,000 – more than any other individual donor – to the campaign of Gov. Tom Corbett. A strong proponent of charter expansion and school choice, Gureghian played a significant role on Corbett’s transition team, including as a member of its education committee.
Gureghian’s access to Pennsylvania Republican leaders is evidence of his considerable influence in the state capitol, said Lawrence Feinberg, founder and co-chair of the Keystone State Education Coalition, a public education advocacy group consisting primarily of locally elected volunteer school board members from across the state.
"If you were to ask around Harrisburg as to who is setting education policy in the state of Pennsylvania, the short answer would [include] Mr. Gureghian," said Feinberg. 
And there you have it: Vahan Gureghian bought himself an enormous amount of influence in Harrisburg; he now pockets millions in taxpayer funds and took over the investigation of his own schools after allegations of cheating. It's worth noting that Republicans in the Pennsylvania legislature have repeatedly tried to pass exemptions from right-to-know laws for charter school vendors; Gureghian's interests are well-protected by beneficiaries of his political largess.

And that's made Gureghian a very, very rich man. I'd show you a picture of his $13.5 mansion in Pennsylvania, but he actually threatened legal action against an 18-year-old blogger who had posted a picture of Gureghian's spread. Perhaps Gureghian will allow photos of his Palm Beach mansion, currently being built on a $28.9 million dollar lot, when construction is completed.

For more on Gureghian's escapades in Pennsylvania, I suggest this update from the great Susan Ohanian. But let's turn now to CSMI's activities New Jersey, and why this charter management company is coming into Camden; stand by for Part II...

ADDING: I had forgotten that Bruce Baker has done work on Chester-Upland, CCCS, and special education funding:
Chester Upland School District’s expenditure budget for its own students is now approximately $54 million (after transfers to charters).  Note that if Chester Upland had received special education revenue from the state based on actual percent special education, the district would have received about $2 million more in revenue to spend, some of which would have been transferred to charters for serving special education kids. But let’s assume that about half should have stayed with the district. So, there’s a $1 million hit to start. Then there’s the big double hit, which amounts to $4.8 million!
So, we’re talking about a cumulative hit of, oh… hypothetically… about $5.8 million, or over 10% of the district’s budgeted expenditures (in other words, they should have received and kept roughly an additional million in state special education funding and should pay out a simulated/estimated $4.8 million less to charters for special education students).
And that, my friends, colleagues, co-bloggers, tweeters and avid readers is the Commonwealth Triple-Screw!
Keep in mind: Chester-Upland takes this hit because of state-level policies.

Remember this?
"If you were to ask around Harrisburg as to who is setting education policy in the state of Pennsylvania, the short answer would [include] Mr. Gureghian," said Feinberg. 
You, gentle reader, may draw your own conclusions...

Here's The Selling Out of Camden's Schools, Part II.


Unknown said...

"I Rob Banks Because That’s Where the Money Is."
-Willie Sutton

CCCS, CSMI, Vahan Gureghian, Jake Der Hagopian:
Willie Sutton arrives in Camden.

Chilling exposé:
Who's Killing Philly Public Schools? | Philadelphia City Paper | 05/03/2012

"Chester Upland is the canary of school districts," says Michael Churchill, a lawyer at the Public Interest Law Center representing the district. "They're just the first one to go. Most of the school districts around the state, except the rich suburban ones, are really suffering. And I don't see any solution that anyone is proposing in terms of legislative help. I don't see what the endgame is from the Corbett administration."

On the other hand, the outcome for Chester Community Charter School — which enrolls more than half the district's K-8 students — seems to be quite lucrative: $16.7 million of the charter's budget (more than 41 percent) will go to CSMI, the company that administers the school, according to the Inquirer. Where does that money go? Some point to the likes of CSMI's chief executive Vahan Gureghian — wealthy businessman, Montgomery County Republican Party powerhouse and a major Corbett donor. Last year, he spent $28.9 million on a Palm Beach oceanfront property.

CSMI's president, Jake Der Hagopian, is no better. He maintained numerous business ties to Leonardo Pelullo — described by the New Jersey State Commission of Investigation as a "key organized crime associate."

Der Hagopian, who did not respond to calls from CP, spent much of the 1980s and '90s in Miami as executive vice president of the Royale Group. Pelullo ran the firm, and was convicted of defrauding Royale and the American Savings and Loan bank of $2.2 million partly to pay off a debt to an associate of vicious Philly mob boss Nicky Scarfo.

There is more: In 1990, Pelullo and his associates were accused of stealing $1.8 million from Transcom Trucking soon after they took over. Transcom's assets were turned over to another company, PIE Nationwide, where Der Hagopian sat on the board. Der Hagopian was never indicted. But former Assistant U.S. Attorney Ronald G. Cole, who prosecuted Pelullo, says the two were close: "Pelullo ... would bring Der Hagopian to be his muscle. I don't care about his title. There wasn't really anything going on in the Royale Group."

Unknown said...

What You Need to Know about Chester Upland | Diane Ravitch's blog
This is a district that allocates 1/3 of its scarce budget to a for-profit charter school that pays its owner a management fee of $16 million. Oh, and one other thing: First Lady Michelle Obama invited a teacher from Chester Upland to sit with her during the State of the Union Address earlier this year, presumably to acknowledge the staff’s decision to work without salaries while the district was in deep trouble.

It is not accidental that this is happening in the poorest school district in the state, with the highest African American percentage in the state, with the worst test results of any district in the state, and where there has been an elected school board in control only two out of the last 18 years. Pity the children