PURE calls for investigation into state funding of UNO construction
PURE, Parents United for Responsible Education, held a press conference at the State of Illinois building on Thursday, January 17, to demand that the Inspector General investigate the financing of UNO schools with public money under questionable circumstance. The PURE news release follows:
Live links to references here:
http://pureparents.org/?p=20226
NEWS RELEASE *** FOR IMMEDIATE RELEASE *** January 17, 2013
CONTACT: Julie Woestehoff, Parents United for Responsible Education
(PURE) – 773-715-3989
Rosemary Sierra, President, Pilsen Academy Local School Council –
312-719-2740
Chicago parents call on Illinois Executive Inspector General to investigate UNO finances... Up to $133 million taxpayer dollars flow to politically connected charter network on shaky financial ground while neighborhood schools face massive cuts and closures
CHICAGO- Today, representatives of Parents United for Responsible
Education and Chicago Local School Councils will meet with the Illinois
Office of the Executive Inspector General to ask for an investigation of
the financial conditions of the United Neighborhood Organization (UNO)
and its use of millions in taxpayer funds. (Letter to EIG)
The Illinois General Assembly was on the verge of considering Senate
Bill 24 on January 3rd, 2013, before they adjourned the lame duck
session. Sponsored by Senator Heather Steans, the bill would give UNO
charters another $35 million appropriation beyond the $98 million they
have already received.
Parents are concerned that the legislature will approve this money
without considering the risky financial practices of UNO and its UNO
Charter School Network, even though Chicago is preparing to close as
many as 137 schools due to alleged underutilization. And things could
get much worse. Governor Quinn announced yesterday that state education
funding may have to be cut as much as $400 million.
If SB 24 is approved by the state legislature, UNO and CPS would each be
in line for the $35 million in state appropriations, which would result
in approximately $5,415 in funding for each UNO student and $2.7 million
per school, compared to approximately $89 in funding for each Chicago
Public School (CPS) student and $54,405 for each school.
“It is outrageous that UNO is slated to receive the same amount of money
as the entire Chicago school district will receive, when UNO runs only
13 schools,” said Julie Woestehoff, PURE executive director. “We call on
the Illinois Inspector General to investigate how this
politically-connected organization is able to amass such a large amount
of taxpayer dollars without accountability to the public. Certainly UNO
should not receive any more money until it is clear to the public that
the money is being used properly, for improved education for Chicago
children and not UNO’s ambitious real estate portfolio.” PURE has raised
concerns before about the state’s largess toward UNO.
UNO has received nearly $100 million in legislative earmarks, and nearly
$70 million in tax-exempt bonds to buy land, build schools and meet its
lenders’ and bondholders’ expectations for the charter operator’s growth
in enrollment and revenue. These bonds and direct state handouts were
issued for the purchase of land and construction for UNO’s rapid
expansion program, and enabled the growth needed to meet debt payments
and growth commitments to UNO’s lenders and other bondholders in a
complicated financial shell game.
“Our school has never gotten the programs and supplies our children
need. Now CPS is planning to close a lot of schools, supposedly to save
money. At the same time, UNO keeps getting millions of dollars to pull
students from our school and put us in danger of being closed,” said
Rosemary Sierra, local school council president at Pilsen Community
Academy. “We thought the state had a budget crisis, but they seem to be
able to find millions for the politically-connected people at UNO.
Meanwhile, some of UNO’s schools have the lowest rating in CPS.”
Despite massive political favoritism, tens of millions in state
subsidies and millions more in additional credit supports from bodies
such as the Illinois Facilities Fund and Local Initiatives Support
Corporation, Standard & Poor’s still rated UNO’s 2011 series tax-exempt
bonds BBB-, which is one step above “junk” status.
UNO Board Chairman Juan Rangel and Chicago Mayor Rahm Emanuel are
longtime allies. Rangel recently served as finance chairman of Emanuel’s
mayoral campaign, and he and other appointed-not elected-UNO leaders
have strung together multiple taxpayer-subsidized and tax-exempt
financial transactions to pay off private bank loans and private
bondholders. UNO is using this largesse to engineer a rapid buildup of
not only its student enrollment, but of substantial real estate holdings
as well.
A breakdown of three years of UNO tax-exempt bonds is attached. It shows
that, with each successive transaction, the financial burden has
resulted in higher debt-per-student costs as UNO has nearly no other
source of revenue other than public transfers via direct subsidies,
publicly issued bonds and government contracts. If UNO fails to secure
more buildings and more students, the growing financial burden will
likely have an adverse impact on its students as per-pupil classroom
spending will suffer due to an increasing portion of the network’s
income being diverted to cover debt payments.
We are pleased that the Office of the Executive Inspector General
recently launched a Grant Review Initiative Team to look into state
grants like these. We are meeting with an intake investigator right
after this press conference.
****
Details of UNO bonds from public sources:
Series 2006 Bonds: The Illinois Finance Authority issued $17.3 million
in tax-exempt bonds for both UNO and the Noble Network of Charter
Schools. UNO used $6 million in tax-exempt bond proceeds-plus $1.15
million in taxable bond proceeds-to finance renovations at three
properties leased from the Archdiocese of Chicago. Student enrollment
was projected to be 1,813 students for the 2006-07 year, and the
debt-per-student was calculated at $4,429 ($8,028,994 in total funds
divided by 1,813 students).
Series 2007 Bonds: The Illinois Finance Authority issued $15.8 million
in tax-exempt bonds for UNO. UNO used the bond proceeds-plus $200,000 in
taxable bond proceeds and a $1.6 million deposit from lender IFF-to
finance the acquisition and renovation of a school from the Archdiocese
of Chicago. Student enrollment was projected to be 2,376 students for
the 2007-08 year and the debt-per-student was calculated at $10,781
(Series 2006 balance of $7,658,406, plus $17,957,714 in total funds,
divided by 2,376 students). This is an increase of 143 percent from the
previous year.
Series 2011 Bonds: The Illinois Finance Authority issued $35.85 million
in tax-exempt bonds for UNO. UNO used the $35.85 million-plus $495,000
in taxable bond proceeds-to pay off a private bank loan. Student
enrollment was projected to be 5,424 at the start of the 2011-12 year
and the debt-per-student was calculated at $12,500 ($67,800,000 in
outstanding debt per the November 13, 2011 S&P Ratings Report, divided
by 5,424 students]. This is a 16 percent increase from 2007.
References:
Series 2006 Bond Statement
Series 2007 Bond Statement
Series 2011 Bond Statement
Standard and Poor report on UNO Finances
