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13 Philly charter schools being investigated for profiteering. [View All]

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madfloridian Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-07-10 09:15 PM
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13 Philly charter schools being investigated for profiteering.
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Edited on Wed Apr-07-10 09:45 PM by madfloridian
Apparently turning schools over the private sector to run and deregulating them is not going to work much better than when we turned our economy over to the same unregulated sector.

13 Philly Charter Schools Under Investigation

The City of Brotherly Love might as well be re-named the "City of School Management Profiteers". The well-documented Edison debacle - one of the first experiments in privatization of public schools - is giving way to a second round of questionable education practices and profiteers, this time in the form of unregulated charter schools. Of course, one can only wonder how a public school managed to hold a bar/nightclub without scrutiny for such a length of time, but, then again, the public oversight of these private operators is about as effective as the SEC regulators looking over the securities industry.

Butkovitz is one of the few that recognizes the problem, and the man is taking action. 13 of the districts 67 charter schools - roughly 19% - had "significant issues", and 9 of those are also being investigated by the U.S. Attorney's Office.

More on these schools from the Philadelphia Inquirer. Looks like the US Attorney's office is conducting criminal investigations of 9 of those schools.

Butkovitz cites charter school profiteering

City Controller Alan Butkovitz's investigation of 13 Philadelphia charter schools found repeated examples of complex real estate arrangements in which charters leased or rented facilities from related non-profit organizations.

"The way the charter law is written and not enforced--there is a gigantic loophole through which people can profiteer," Butkovitz said. "This is not supposed to be a vehicle for maximizing profit for operators and related parties."

Butkovitz began his special fraud investigation of charters several months after The Inquirer reported allegations of financial mismanagement and conflicts of interest at Philadelphia Academy Charter School in April 2008.

His staff has been sharing information with the U.S. Attorney's Office, which is conducting a criminal investigation of at least nine area charter schools, according to sources with knowledge of the probe.

Interestingly enough one charter school chain even has its own real estate arm.

Some of the shenanigans of Imagine Charters are mind-boggling.

Imagine Charter Schools sells 5 schools for 44 million...will have them leased back to them.

The company (NYSE: EPR) purchased five new charter schools from Imagine Schools Inc. of Arlington, Va., at a cost of $44 million and agreed to finance expansion of two others at a cost of $4 million. Entertainment Properties Trust, which is based in Kansas City, will lease the five new schools back to Imagine Schools, a leading operator of public charter schools.

Entertainment Properties Trusts portfolio now includes 27 charter schools that Imagine Schools operates in nine states and the District of Columbia.

We are excited to add to our public charter school portfolio and enthusiastic about the prospects of Imagine and this investment category, Entertainment Properties Trust CEO David Brain said in a release.

In an interview, Brain said the Imagine Schools transaction announced Friday fulfilled Entertainment Properties 2007 commitment to make at least $200 million worth of acquisitions from Imagine. It also increases Entertainment Properties footprint in what Brain called a huge new category for private real estate investment.

Public charter schools are now a 4 or 5 percent slice of a couple trillion dollar public education real estate market, Brain said.

Imagine's own real estate arm, Schoolhouse Finance.

...But it is not only in Florida that there have been objections to, and problems with, Imagine Schools. In Texas and Nevada, concerns have been raised about Imagine Schools' finances and complex real estate deals that have led to the charters spending up to 40% of their entire publicly funded budget on rent to for-profit companies, including Imagine's real estate arm, Schoolhouse Finance, leaving them with tight budgets for necessary materials like textbooks. In the interest of comparison, many other charter schools spend in the neighborhood of 14% of their public funding on building rent. The real estate deals, where the charter run by Imagine leases the building from Schoolhouse Finance, who then sells the property to a real estate investment trust who then leases it back to Schoolhouse at a lower rate than what the charter pays, have proven very lucrative for owners and investors in the two companies. Former Imagine School principals who inquired into the real estate expenditures were subsequently fired. But, naturally, they have also drawn sharp criticism from boards of education.

Charter schools are privately run and publicly funded.

Wheeling and dealing in real estate.....being done with public taxpayer funds. It is time to pay attention.
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