Cashing in on Kids

Charter School in PA using facilities to funnel cash away from instruction

Apple Core and Dollars

A recent article on outlines a few of the ways charter schools use facilities funding to divert public money. This includes expensive bond transactions, related party deals, and lining the pockets of consultants. As Rutgers education professor Bruce Baker put it: “public policy permits a bad deal for the public — one that essentially gives away a public asset while charging transaction fees along the way.”

According to Auditor General Eugene DePasquale, half of the charter schools the state has audited rent their building from a related entity. These schools can then use the state Charter School Lease Reimbursement Program to collect back a part of their rent payments. In recent years, “reimbursements rose 79 percent — to $6.8 million annually — while the number of charter schools increased by just 20 percent, state records show. Only a fraction goes to schools that rent their buildings from unrelated owners.”

Some of the bad examples cited include:

• String Theory rents its new building from DeMedici II, a nonprofit controlled by two String Theory board members. The rent is helping to pay off a $55 million bond deal to renovate the building, which is bankrupting the school. The excessive payments are forcing the school to cut transportation and some education programs.

• The school district has maintained Durham Elementary for almost a hundred years until Independence Charter School issued a $18 million bond to purchase the building. Taxpayers are now helping the charter school pay off those costs.

• Walter D. Palmer Leadership Learning Partners Charter School defaulted on its bond debt during the 2014-15 school year. The school used $6 million to pay off that debt, but the building will have to be sold to pay the rest of the bond, leaving taxpayers with nothing for their money.

Lax oversight over charter schools in Philadelphia is being promoted by the Walton Foundation who've funded advocacy groups that have stopped these loopholes from being closed.