After the revelations about Philly's online schools, news rolls out that one of the biggest charter operators in that city owes millions to its schools.
August 29, 2013

That's Philadelphia Mayor Nutter trashing teachers because they don't pay for their health care benefits under their current union contract. Here's my question for Mayor Nutter: Why aren't you trashing charter management organizations who suck up taxpayer dollars with absolutely ZERO accountability for where they go?

ASPIRA is the charter school operator I wrote about in June when they were out spending taxpayer money to fight union organizing in one of its Philadelphia charter schools. Now there's a new report out which indicates they're playing a bit of a shell game with taxpayer funds.

Aspira Inc. of Pennsylvania owed large sums of money to four Philadelphia charter schools it runs, according to an independent audit of the organization’s finances as of June 30, 2012, that was obtained by City Paper. According to the report, which was produced for Aspira and completed in April, the nonprofit was running a deficit of $722,949 as of last June and owed the publicly financed schools $3.3 million. That’s in addition to millions of dollars in lease payments and administrative fees filtered to Aspira and entities it controls with no oversight.

Why no oversight?

For reasons that aren’t clear, millions of dollars have moved between the network of charter schools, their parent nonprofit and two property-management entities. The School District is charged with overseeing city charters, but “does not have the power or access to the financial records of the parent organization,” according to District spokesperson Fernando Gallard. “We cannot conduct even limited financial audits of the parent organization.” That’s despite the fact that charters account for 30 percent of the District’s 2013-’14 budget. Aspira declined to comment.

The $3.3 million that the four brick-and-mortar charters apparently have loaned to Aspira are in addition to $1.5 million in lease payments to Aspira and Aspira-controlled property-management entities ACE and ACE/Dougherty, and $6.3 million in administrative fees paid to Aspira in 2012.

Yet another pyramid, similar to the one Trombetta built with his online schools. Create a local entity, sign contracts with a national entity, move taxpayer funds between entities and just like that, there are no audits that can actually track what that money is used for. Beef up the profit margins with some management fees, and you've got a recipe for corruption.

And there's more. Because when it comes to corruption, there's always more. Not only are Pennsylvania taxpayer dollars moving from a locally controlled entity to a nationally controlled entity, but there are also issues with the properties they're using for charter school facilities.

Further, the controller notes, “Properties that are being paid for with taxpayer funds are being either transferred [to] or controlled by nonprofits with no accountability to the school district or taxpayers.” State lease reimbursements are not supposed to be used to support the acquisition of property.

Real-estate acquisitions have played a large part in Aspira’s growth. ACE/Dougherty purchased Cardinal Dougherty High School for $8.5 million in 2011, and the network’s combined real-estate holdings increased from $13.34 million in 2011 to $23.15 million in 2012, according to the audit.

“What happens if the charter ends?” asks Masch. “Then, Aspira still owns the building even though it was 100 percent paid for with taxpayer money.”

What a way to acquire some prime city real estate with no money out of pocket! Buy the school property and then move ownership around into an entity that is eligible for state funding for lease payments! At the end, the property is an asset of ASPIRA that the city sold to them and the state paid for.

Adding insult to injury, Republicans in the state have successfully stripped the Auditor General's office of the resources needed to audit these schools.

The state Auditor General, which has seen its staff reduced by 24 percent in recent years, doesn’t have the capacity to audit all the new charter schools that have opened in the past five years. Only three Philadelphia charter schools have been audited since 2008. Aspira’s five charters are not among them.

How very convenient. No audits, no accountability, and even if an independent audit is conducted, there's no access to the books of the national group which is receiving taxpayer money to operate these schools.

The PA Cyber indictment speaks volumes about the schemes charter operators have hatched to starve public education of funds while skimming funds for personal gain to the operators. If you don't see shades of that scheme in the ASPIRA news here, I urge you to read it again. It's the very same structure.

ASPIRA, Inc of Pennsylvania has management contracts with ASPIRA, Inc, the national organization. ASPIRA, Inc of PA pays ASPIRA-owned ACE $1.5 in lease payments on properties and ASPIRA of Pennsylvania receives state (taxpayer) reimbursement for those lease payments because technically they do not own the properties even though they control the entities who do own them. On the other side, the charter management contracts yield fees paid by the charter to the national organization of about $6.3 million for 2012 alone. That money escapes oversight of the entities making those payments and cannot be subject to audit.

Where is Mayor Nutter's outrage about that? Instead he shames teachers because their health care benefits are paid for under their contracts?

Priorities are seriously whacked in Philadelphia.

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