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:


CONTACT: Julie Woestehoff, Parents United for Responsible Education

(PURE) – 773-715-3989

Rosemary Sierra, President, Pilsen Academy Local School Council –


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.


Series 2006 Bond Statement

Series 2007 Bond Statement

Series 2011 Bond Statement

Standard and Poor report on UNO Finances


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