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

Wednesday, December 28, 2011

Great Miami Herald Series on Charters

The Miami Herald did a terrific series about charter schools this month; if you haven't read it, you really should.

Here's a little something for those of you who think the talk of Wall Street making money off of the charter movement is worthy of a tin-foil hat:
Despite the criticism, the Zuluetas have repeated this business strategy across Miami-Dade and Broward counties. Through similar arrangements, the Zuluetas control more than 20 land companies doing business with Academica schools. These companies received about $19 million in lease payments in 2010, records show. 
Zulueta said he and his brother hold a controlling interest in the land companies. The businesses also have minority investors, whom he declined to name. 
On average, schools leasing Zulueta-controlled properties in 2010 paid higher rents than Academica schools with independent landlords, according to a Miami Herald review of the schools’ financial audits. Academica schools renting from Zulueta companies paid an average rent of 16 percent of their income, while other Academica schools paid an average of 11 percent, records show. 
One reason for the disparity: The Zuluetas — former real-estate developers before going into the charter school business — bought and built many properties during the boom years of the mid-2000s, when land and construction costs were high. The lower-cost Academica schools are located in older, less-expensive facilities, including several schools leased from the Catholic archdiocese. 
Zulueta said he was forced to provide the land for the schools because the charters could not get land or financing on their own — a common problem for charter schools, which often lose money during their first few years, scaring off lenders. 
“If I didn’t do it, it couldn’t get done,” Zulueta said. 
Academica pays for the construction of its schools in part through bonds sold to Wall Street investors. An Academica subsidiary issued $54 million in bonds in 2004, using mortgages on the school campuses to secure the debt. In 2009 the Wall Street rating agency Standard & Poor’s rescinded its rating of the Academica bonds, citing a “lack of information” on the company. 
Zulueta said he could not recall if any school governing board had ever asked for details about the profits generated by the leases. “I don’t think they care,” he said.
Yeah, why would they? Everybody's fat and happy, taking junkets to the Bahamas (seriously - read the article).

There is no one more naive than a charter cheerleader who thinks there aren't people in the "reformy" movement looking to make a buck.


Anonymous said...

Are we surprised? Of course the Bush Family was heavily involved and making a profit from the pain of the students and citizens paying for this. However, it is not such a stretch to see NJ here.

Cerf's company used Florida's teacher pension to pay for his charter school debt. http://my.firedoglake.com/dougmartin/tag/chris-cerf/ "Jeb Bush has hyped his anti-public school operations in Indiana for years now. In 2009, he spoke at the Bill Gates-Fordham Foundation sponsored Indiana Education Roundtable, whose representatives include Carol D’Amico, a former George W. Bush-appointed National Board for Education Sciences board member. This year, Jeb picked Tony Bennett to boss his D.C.-based corporate school reform group, Chiefs for Change, alongside former Edison Schools’ Chris Cerf (now New Jersey’s commissioner of education) who profited handsomely when the then-Florida governor bought out the company’s failing stock with teachers’ retirement funding, a maneuver sticking state pensioners to this day with a $182 million investment in a company out to destroy public education and unions." -sources are embedded in the article-

So we have Florida creeping up here to NJ and leaking over into Indiana with the same player's names. Any fool who still believes there is not a for-profit agenda in all this, spearheaded by those who make policy / in government, is either in on it or in complete denial.

Stuart Buck said...

Who cares? K-12 education is a $600 billion-a-year industry in America, and any money-making involving charter schools is only a minuscule slice of the whole picture. Moreover, it's completely unsurprising that Wall Street might be involved whenever there are muni bonds, which are far more common among regular public schools (where I live, charter schools aren't even allowed to issue muni bonds the way all the other public school districts can).

Anonymous said...

Does that $600 billion figure include all the massive money wasted on NCLB, RTTT, all the massive testing imposed on schools by those 2 fiascos, charter schools and school vouchers?

Stuart Buck said...

Can you point to a legitimate estimate of the actual dollar amount supposed spent on NCLB testing each year?

Duke said...

Hey, Stuart, no worries absolutely! Everything's just fine! Why are we even bothering to question this stuff? It's not like there's a history of abuses by government contractors or anything!

Yeah, let's just relax, take a nice breath, bend over...

Duke said...

Staurt: no, I can't.

Doesn't that bother the hell out of you? Wouldn't you like to know? I would

Stuart Buck said...

Well, I'm sure that if the cost was really "massive," as opposed to a fraction of a percent, someone would have the motivation to keep track.

Anyway, it's fine to question alleged abuse. But it's not fine to pretend that abuse (if it exists) is anything new or peculiar to charter schools.

There are over 100,000 public schools in America. Do you think the buildings were put up by PTA volunteers, or by developers and contractors who made . . . wait for it . . . money.

Duke said...

I think, Stuart, there is a system of accountability in place for public schools. Sometimes it fails, but there is a system.

In NJ, and much of the country, there is NO system of accountability for charters, other than the prosecution of blatant criminal offenses. These charters often answer to no one at the local level other than themselves.

The stuff the Herald is reporting seems to be completely legal. That's the problem.