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

Saturday, January 2, 2016

Return To Teachers Village, Part IV: What's It Costing Us?

Here are links to all of the posts in this series:

Part I - Introduction
Part II - The Teachers
Part III - The Students
Part IV - What's It Costing Us?

 * * *

Q: How much taxpayer money is flowing to Newark's Teachers Village?

A: Quite a bit.

All school districts, including charter schools, are required by the state to file a Comprehensive Annual Financial Report (CAFR) with the NJDOE. All of my numbers below come from these documents, but before I get to them, I'd like to point out a specific paragraph from the 2014 CAFR for Great Oaks Charter School.

Keep in mind that Great Oaks both leases space from TV for its school, and pays to put up its "tutor corps" in TV housing units. The tutors are not certificated teachers; they are recent college graduates, paid through federal AmeriCorps grants, who take on part of the instructional load at the charter.

Here's how Great Oaks sees the future of Newark, and its part in it:
The City has experienced a surge of large-scale economic development projects initiated by the private sector over the last decade. The increasing number of businesses relocating to the area is expected to result in an increase in employment level, which could result in an increased tax base, both residential and industrial, and an increase in annual daily enrollment. The period of economic development and expansion is expected to continue which suggests that the Charter School will continue to prosper. As our enrollment increases we plan to lease additional facilities at our current location and possibly in surrounding areas in the City. [emphasis mine]
I find this quite telling: this charter school sees the potential positive change in Newark's economic fortunes going hand-in-hand with its own growth. They anticipate diverting more taxpayer funds to leaseholders -- private leaseholders, if trends continue -- throughout the city. And I don't think it's a stretch to say they are implying that an influx of more affluent residents means a greater demand for their school.

As I pointed out before, Great Oaks serves fewer students who qualify for free lunches -- a proxy measure of economic disadvantage -- than the Newark Public Schools (NPS). Certainly, their FL percentage is higher than most of the surrounding suburban schools. But is Great Oaks suggesting that a turn in Newark's economic outlook will create a greater demand for charters that serve a different student population than NPS schools?

And is one of the consequences of this demand a growing amount of taxpayer funds diverted to the leaseholders of private property? If Teachers Village is any indication, the answer is clearly "yes."

Again, these figures come from the state's CAFRs. But "Comprehensive" ought to be in quotes; it's hard to get precise figures on many expenses. TEAM-KIPP, for example, in their 2014 CAFR, aggregates all of its lease patents together, so it's impossible to determine how much Teachers Village gets compared to TEAM-KIPP's other landlords -- that's why I left them out of this graph.

Still, what's here is instructive. Great Oaks and Discovery moved into TV for the 2013-14 school year. Great Oaks's 2013 lease payment was obviously an anomaly; but even accounting for that, they saw a very substantial increase in their rental payments when moving to TV.

Let me be clear: there is nothing inherently wrong with that. If Great Oaks is getting a much nicer facility with room to expand, a larger payment is, in my opinion, justified (at least so far as relates to their own fiscal responsibility). But it does suggest Great Oaks is seeing a future of expansion (unlike Discovery, a small school (less than 100 students) whose lease payment didn't change much after moving to TV).

Great Oaks had a separate facility for their high school; their last CAFR said that facility's lease was not renewed. The school is also making substantial payments to TV to house their tutors, although there is no indication the amount is inordinately high compared to what they were paying before (reportedly for housing their tutors at the Courtyard Mariott Hotel).

Let's look at these figures through another lens:

I put TEAM-KIPP back in for a comparison, keeping in mind TV is only one of many lease deals they report as an aggregated figure (also: TEAM-KIPP's 2015 CAFR wasn't available when I made this graph). Again, 2013 was an anomaly for Great Oaks, which isn't necessarily indicative of anything. Take out that year and their lease payment per student enrolled actually stays fairly flat. Discovery's goes up a bit, but again: if they're getting a better facility, it's arguably worth it. TEAM-KIPP's overall lease payments per student has dropped; I would guess they anticipated expansion earlier and are now filling up to capacity, bringing down their per pupil costs.

Overall, I don't see anything that leads me to believe TV is a bad deal for these charters relative to their previous lease payment deals. Of course, one could argue that, given the large subsidies the public has given towards the financing and construction of Teachers Village, the least the taxpayers could expect was break on the cost of the leases.

But there's another issue: Why is so much public money going to private leaseholders for charter school rents when the district's buildings are below capacity and not being properly maintained?

Both current State Superintendent Chris Cerf and former State Superintendent Cami Anderson have lamented that NPS's properties are in bad shape, and that many of the buildings are not at capacity. OK... so why are we building new facilities rather than fixing the old ones? Even if you believe in charter school expansion, wouldn't it make more sense to let the charters come into the public buildings, use the same tax breaks and public financing TV uses to fix those buildings, and then have NPS collect lease payments from the charters? Why pay to build new schools when the old schools could be fixed and occupied? 

As Bruce Baker* and Gary Miron point out in their recent brief for NEPC, when charter schools and/or their associated organizations buy up public schools, they are essentially using taxpayer money to buy buildings the taxpayers already own and transfer them to private ownership. Teachers Village takes it a step further: The taxpayers are subsidizing the development of new, privately held school properties that directly compete with properties those taxpayers already own, thus decreasing their value.

I have voiced serious reservations over the years about how Newark Public Schools is turning over its capital stock to private operators (again, using taxpayer funds). But it makes even less sense to couple that policy with one where the taxpayers essentially fund the construction of private school facilities that compete with current public facilities.

Because who would want to send their child to this school...

American History HS, Newark, NJ, 2011

When she can go here instead?

Teachers Village Gym

It's as if policy is creating a demand which devalues public assets while simultaneously increasing the value of private assets. Does this make any sense?

* * *

To wrap this up: here's what we know so far about Teachers Village, the Newark housing/retail complex that is designed to provide both rental units for teachers and space for charter schools:

- According to the developer, Ron Beit, nearly 70 percent of the residents at TV are "educators"; however, over 80 percent of those residents are either charter school teachers or tutors in a program run by Great Oaks Charter School (funded by AmeriCorps, a federal program which gives grants to pay for those tutors' housing).

- The teachers who work at TV are much younger and more likely to be white than the Newark Public Schools (NPS) teaching corps. They are also, on average, far less experienced, and also less likely to hold a standard teaching certification.

- The students at TV schools are less likely to be Limited English Proficient (LEP) than NPS students, and less likely to have a special education need. Economic disadvantage is more mixed: Great Oaks students are less likely to qualify for free lunch than NPS students, but TEAM-KIPP's FL percentage is near the median for Newark schools, and Discovery's is the highest in the city.

- The taxpayers are heavily subsidizing this project, through a series of tax credits, government bonds and loans, and government grants. All of the charter school lease payments are made with public monies, as are the payments for Great Oaks's tutors' housing.

- Which means that substantial public monies are flowing to a privately held facility, even as public facilities serving the same purpose are neglected. The taxpayers are essentially subsidizing the development of private property that devalues their own capital.

All of this begs the question: is Teachers Village worth it? Is this the best use of government monies to further interests of both the citizens and the students of Newark?

I leave it to others to weigh in on whether Teachers Village is a good example of urban development. But as an education researcher, I have serious concerns about the long-term effects of Teachers Village on both the schooling Newark children receive, and the financial health of the city's public school system. And, as always, I'm left to wonder...

Did anyone think about any of this before giving the project the green light?

Teachers Village Ground Breaking, 2012

In attendance:
Newark Mayor Cory Booker
Newark Deputy Mayor Adam Zipkin
Newark Councilman Darrin Sharif
US Congressman Donald Payne Jr.
NJ Governor Chris Christie
Joseph DiVincenzo, County Executive of Essex County

Ron Beit, founding partner and CEO, RBH Group

Nicholas Berggruen, founder and president, Berggruen Holdings

Lloyd Blankfein, CEO, Goldman Sachs

* As always: Bruce is my advisor in the PhD program at Rutgers GSE.

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