Michigan's Republican US Senate race really illustrates everything that's wrong with our politics right now. The two candidates battling it out for the nomination are Pete "SpenditNow" Hoekstra and a Tea Party Express-endorsed charter school head by the name of Clark Durant.
Durant is bathed in all sorts of hero gel for setting up charter schools in urban Detroit, but closer examination of the records reveals a brilliant illustration of everything that's wrong with charters and why candidates like Durant have a vested interest in being elected to the United States Congress. With people like Durant in office, billionaires don't even have to pay lobbyists. They just elect one of their buddies whose strings they've already been pulling for years, and just like that, their will be done.
Here's a clip of CNN's glowing report on Durant's charter schools -- Cornerstone -- and how the generosity of billionaires is making urban charter schools possible:
Cornerstone Schools Association had $12 million in assets on June 30, 2010, according to the 990 form filed. An affiliated non-profit called The New Common School Foundation had $15 million in assets at the end of 2010. The Cornerstone schools serve 1,500 children in the Detroit area, according to their website. The Detroit Public School system, by comparison, serves over 75,000 students.
Those statistics are supplied to illustrate this point: While it's noble that Cornerstone schools are educating pre-tested and admitted children whose families in some cases pay up to $3,000 per year for their education at the non-charter school, Detroit public schools are struggling to stay afloat, especially after Governor Snyder placed the system under the control of an Emergency Financial Manager who has unilaterally terminated teachers' union contracts and mandated class sizes of up to 60 students in some cases.
Cornerstone Schools are also Christian schools. If Michigan were to go the way Louisiana is going, for example, those schools could see a very large infusion of taxpayer money. You think maybe Clark Durant has some financial incentives to run for office? In case there's any doubt, let's have a look at how he's faring now.
Genesis Foundation
The Genesis Foundation was originally created to raise money for the Cornerstone charter schools. In 2005, there was $35,000 in the bank and the following statement was attached to the filing:
The Genesis Foundation has accomplished the mission of receiving and administering funds for various charitable, educational, religious, and scientific purposes and discontinued doing active business during 2001. The activity in 2005 relates to the remaining investments of the Foundation. These investments plan to be liquidated and disbursed in 2006 according to the Foundation's mission.
No 2006 returns were filed. But in 2008, it came roaring back. Durant was no longer a director, though he was an officer. Two very rich men -- Bruce Becker and William Pulte -- gave $620,000 in donations in 2008. $608,000 was spent to "research and develop alternative school and learning models, operate three urban schools, maintain fundraising opportunities for scholarships, create funding for renovation of school facilities, help develop strategic options for sustainability of three school, and for expansion."
In other words, spend a whole lot of money on a whole lot of nothing. And who received that money in 2008? We don't actually know the answer to that, since they spent it but evidently not in chunks larger than $50,000 to any one person. Had anyone been paid more than $50,000, they would have been required to report it on Part VIII, question 2 of the form 990. But their answer was "None." The same is true for section VIII, question 3 relating to independent contractors. Again, they answered "None." As a result, we have no idea where the 2008 $608,000 was actually spent. For all we know, it could have been money that was paid out to school choice candidates in 2008 because there is zero disclosure on their reports.
In 2009, Becker, Pulte and a new donor, Richard Rohr, gave $730,000 between them. And in 2009, we actually have some expenditure data. In that calendar year, the foundation paid Clark Durant $403,000.00 and his daughter, Hope Loomis, $147,000.00 as independent contractors. In 2010, $494,000 was received in donations and $475,000 paid to Durant and $147,000 to Loomis. Also in 2010, Clark Durant was listed as President of Genesis Foundation with no compensation.
In 2009, $20,000 was paid in student scholarships. Otherwise there were no grants from the organization to anyone else.
In review, a private foundation created by Clark Durant was unwound in 2006 only to be revived in 2008 by some wealthy donors who, in the span of three years, donated $1,832,000, of which $897,000 was paid directly to the President of the foundation, Clark Durant, and $294,000 paid to his daughter, Hope Loomis. $1.8 million in, and $1.2 million out with $352,000 in the bank at the end of 2010.
Oh, and one $20,000 scholarship. There are no reports that I can find of innovative creative ways to provide for sustainability and expansion of charter and/or independent Cornerstone schools. I do note, however, that Durant was not paid a salary for his service as Chairman of Cornerstone. The only compensation he receives from Cornerstone is a retirement plan contribution.
What could possibly go wrong with this? Well, for starters, Michigan Democrats are all over it, demanding that the IRS audit Genesis and possibly even Cornerstone.
Durant defended himself on CBS radio last week with the claim that because he did not serve as a board member, self-dealing was not an issue.
Durant claimed the structure is completely legal and explained saying, “If Mark would look at the IRS regulations — one of the things that they look for in self dealing is, number one, is there an independent board. I did not serve on the board of The Genesis Foundation. The majority of the board was made up of Bruce Becker and Bill Pulte, because it was their money. Number two, it had to be consistent with the charitable purposes that the foundation was setup to do …”
Except that Durant was the President, and also provided some sort of independent contracting services which are sort of blurry and difficult to discern. And of that nearly $2 million, only $20,000 found its way into scholarship funding, which seems a little out of balance.
Without question, this op-ed published in the Detroit News highlights the issues quite clearly, not only with regard to the Genesis Foundation, but also with regard to the insane amount of money flowing into private or privately managed schools without almost no accountability:
The Senate candidate's school job is two-fold: He oversees operation of the Cornerstone Schools — with its 1,500 current students — and he oversees fundraising, which has totaled over $100 million dollars in the 21 years since he founded the system.
Three schools, at least one which requires a minimum tuition payment of $3,000 per year because, in Durant's opinion, paying something means they'll actually "appreciate it." $100 million dollars raised for three schools which serve, at peak enrollment, 1,500 students per year. And for that, Durant is paid nearly $500,000 per year?
Just for perspective, the headmaster at Cranbrook School, Mitt Romney's alma mater, makes under $400,000 per year. And their endowment is about $500 million.
Yes, I'd say there's something rotten about this, from the standpoint of running charters and not-for-profit education as well as from the standpoint of using a non-profit organization to funnel funds directly into the hands of its creator.
Durant wants to be a United States of Teabagistan Senator. It sure looks like he has the qualifications.
