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Charter financial analysis draws fire

By Bill Turque

Tom Nida was on the hot seat in late 2008 when a Washington Post investigation revealed his financial connections to the schools he regulated as chairman of the D.C. Public Charter School Board.

The Post reported that while he was chairman, the bank where he worked as a loan officer lent more than $55 million to charter schools, their developers or landlords. It meant, in essence, that as those charter schools thrived, so did United Bank's loan portfolio. Nida denied any wrongdoing, citing his recusals on some votes. D.C. Attorney General Peter Nickles found that he did not violate District conflict of interest laws, although he recommended that the board tighten up its ethics guidelines.

It nevertheless caused some heartburn when Nida, who stepped down from the board in February, unveiled what amounted to a collective balance sheet for the 57 publicly funded, independently operated charters, as a way of showing their financial strengths and weaknesses. In an Oct. 28 keynote address to the D.C. Association of Chartered Public Schools, he said:

"If the D.C. public charter schools were a single entity, this entity would have total assets exceeding $521 million, of which more than $354 million represent fixed assets owned: This excludes the values of leased facilities. Total debt approaches $356 million, of which more than $333 million is long-term debt related to facilities. Total capital (net worth) exceeds $165 million. Gross revenues are almost $439 million, of which 54.8 percent, over $240 million, is payroll, and more than $44 million is spent for occupancy (mortgage payments, rent, utilities and maintenance). Our hypothetical single entity has a positive current ratio of more than 2X (current assets cover current debt by 2:1) and a debt-to-worth ratio of 2.15x (total liabilities are just over two times the net worth). As a banker, I would describe the balance sheet of this entity as one of adequate liquidity, with moderate leverage, and good capitalization."

The schools turned a collective net profit of $24 million in 2009. But Nida said 92 percent of that was generated by just six schools, and 58 percent by one charter alone -- none of which Nida named. He said the have-and-have-not picture underscores the need to improve access to credit markets for charter schools which -- unlike DCPS schools -- have no centralized capital budget or construction program and must rent buildings or seek private financing. Nida called on charters to lobby Congress for a change in federal regulations to allow access to certain loan guaranties that would open up access to credit markets.

The debate over equity in the funding of public and public charter schools continues to simmer and is likely to get more attention in a Gray administration. Nida's banker's-eye view of the charter sector did not sit well with some school advocates, who said private financing and public schools are a toxic brew. Mark Simon, a DCPS parent, an education policy analyst at the Economic Policy Institute, said he found Nida's speech "abhorrent."

"This is the same Tom Nida, the banker who headed up the D.C. charter board while retaining his position as a bank vice president overseeing a profitable increase in his bank's mortgage portfolio due to mortgages extended to charter schools he was helping to oversee," Simon said. "The two concepts of private profit and public education should not be intertwined as Mr. Nida is wont to do. ... He represents what is wrong with mixing private profit and the management of public education."

Nida responded: "I would expect that kind of comment. I think the issue here is if charter schools had access to the same funding and facilities that DCPS did we wouldn't have to worry about funding."

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By Bill Turque  | November 4, 2010; 11:36 AM ET
 
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Comments

"I would expect that type of comment." And so you should! Your conflict of interest are so blatant they are corrupt.
The point is that profiteering at the expense of schools amounts to some being successful and some going down the drain. The article points out that very few accrued that profit. Is he saying that the profitable schools should share the profits with the less/non-profitable operations? Or is he being disingenuous so that he can kick start a new stream of money to make his bank profitable?
Scum. Scum. Scum. I had the same impression when this story first broke. Now you have the audacity to act as if this is a great thing. Money and greed produces money and greed.

Posted by: zebra22 | November 4, 2010 1:46 PM | Report abuse

Nida: "I think the issue here is if charter schools had access to the same funding and facilities that DCPS did we wouldn't have to worry about funding."

Translation: Replace public schools with charter schools.

No, Tom Nida. No.

Rather than continuing to allow private donations to fund part of public education, we need to go back to the old system -- in which public tax dollars fund public schools and private money funds private schools.

"Public charter" schools are NOT PUBLIC SCHOOLS. They are privately operated schools that have been granted a public charter.

Since nonprofit organizations generally operate charter schools, they have extensive private fund-raising capabilities on their own. If they are, indeed, successful at educating children, then charter schools should be able to generate sufficient private money to go completely private and continue to do their good work.

Posted by: Kathy8 | November 4, 2010 2:39 PM | Report abuse

The comments here are obviously from people who know nothing about charter schools, how they are financed and what they offer DC families. What people, including Bill Turque, have missed is that loans to charter schools HELP charter schools exist and serve students - just like mortgage loans helps families live in homes they otherwise could not afford to buy with cash. Tom Nida was among the first bankers in DC to take a chance on charter schools, thereby opening the floodgates for other banks to follow suit. Without this, there would be far fewer charter schools and there would be more families living in Mo. County and No. Va. and even more languishing in failing DCPS schools. Lives have been changed and saved because of Tom Nida's banking. This analysis from a charter school parent, who actually knows something about this subject.

Posted by: DCcomm | November 5, 2010 9:54 AM | Report abuse

@Kathy8, your comment borders the sublime. Thje overwhelming numbers of charters receive no philanthropic support.

Bill, you should not have written an article based on the printed remarks of TOm Nida. Tom was simply using a corporation as a metaphor. Non - profit organizations do not make profits, although they can have a surplus for reserves. This makes sense in order for it to pay for emergencies like roof and boiler repairs...these can cost millions to repair or replace.

Posted by: topryder1 | November 5, 2010 3:09 PM | Report abuse

@Kathy8, your comment borders the sublime. Thje overwhelming numbers of charters receive no philanthropic support.

Bill, you should not have written an article based on the printed remarks of TOm Nida. Tom was simply using a corporation as a metaphor. Non - profit organizations do not make profits, although they can have a surplus for reserves. This makes sense in order for it to pay for emergencies like roof and boiler repairs...these can cost millions to repair or replace.

Posted by: topryder1 | November 5, 2010 3:11 PM | Report abuse

@Kathy8, your comment borders the sublime. Thje overwhelming numbers of charters receive no philanthropic support.

Bill, you should not have written an article based on the printed remarks of TOm Nida. Tom was simply using a corporation as a metaphor. Non - profit organizations do not make profits, although they can have a surplus for reserves. This makes sense in order for it to pay for emergencies like roof and boiler repairs...these can cost millions to repair or replace.

Posted by: topryder1 | November 5, 2010 3:15 PM | Report abuse

As a DC taxpayer I want to thank both Bill Turque and Mr. Nida for this disclosure:

"If the D.C. public charter schools were a single entity, this entity would have total assets exceeding $521 million, of which more than $354 million represent fixed assets owned . . . The schools turned a collective net profit of $24 million in 2009. But Nida said 92 percent of that was generated by just six schools.

The following debate between Diane Ravitch and the CEO of NYC Charter Schools is also enlightening. There is a long pause in the middle where the station went to commercial break. Be patient as the closing arguments are enlightening . . .

http://www.ny1.com/content/118229/story

Posted by: mrpozzi | November 6, 2010 7:54 AM | Report abuse

This article gets to the heart of the "reform" movement; it's all about money. Soon everyone will know but by that time the Wall Street types will be long gone and the taxpayers will be left holding the bag. Of course none of this will touch middle class white kids.

But the poor children of color will not be abandoned. When all the dust is settled, "Miss Jones" will still be waiting for them in her classroom.

Posted by: Linda/RetiredTeacher | November 6, 2010 11:44 AM | Report abuse

Education as a business model--lots of money to be made; witness student loans and the Post's Kaplan Schools.
But education is not a business, it isn't about making money, its about an investment by society in its future members; about learning, providing the opportunity, support and protection that people need to learn so they can "pursue their happiness."

Mr. Nida appears to be the type of person who feels most comfortable justifying human activity in terms of dollars and cents, from the point of view of budgets, functions, departments, etc., from a business perspective.

One of the fundamental misconception that we in the ‘developed’ world make is mistaking the economy for society. There’s nothing wrong with economic success per se, or for that matter with being able to participate in an active economy. However, in the US and now in the East as well, and to a lesser extent perhaps in Europe, instead of society dictating the rules of the economy, the economy dictates the rules for society

This misconception is compounded when we organize our school system around the purpose of an ‘education’ that is dictated by the needs of the economy and businesses rather than by society. We mistakenly engineer the educational system to produce people with ersatz ‘education’ so they can fill the job slots prescribed by businesses. The consequences of this mistake cannot be underestimated. Many of the identified deficiencies in students and society in general can be attributed to the abuse of our children (and adults) in the hands of a misdirected education system.

Posted by: joelgingery | November 6, 2010 12:48 PM | Report abuse

I wonder how many of the profit making schools are former parochial schools converted to "public charters" two years ago. By converting to public charter status, the Catholic Church managed to begin receiving market rental payments from the DC education budget.
That would make their situation profitable.

As Nida indicates. Charter schools can be a very good real estate investment, even if they have very poor educational outcomes.

Posted by: grooft | November 6, 2010 5:18 PM | Report abuse

The Gulen Charter schools are guilty of Visa Fraud, their schools Magnolia Science Academy, Horizon Science Academy, Harmony Science Academy and Sonoran Science Academy are bringing foreign teachers without credentials to the USA under h1-b fraud. American Tax payers are footing this bill, you will note that they have more h1-b visas for teachers than the largest school district in the USA (LAUSD)
At a time when great American Teachers are getting pink slipped the Islamic Gulen Movement is dismantling the American Public School System one state at a time. The Gulen Charter Schools have robbed American Taxpayers of over $1 billion in Educational funds over the span of the last 10 years. Throught the network of Gulen Foundations, and bribes via their interfaith dialogue, they have managed to snow job members of congress, local politics, local religious leaders, and local academia. Free dinners and free trips to Turkey to side step their true agenda which is to dominate and control American Education, politics, interfaith dialog, police, media and military. As Fethullah Gulen has done world wide and in his native Turkey which got him exiled for attempting to overthrow a secular government.
http://www.h1bwage.com/index.php?q=science%20teacher
http://perimeterprimate.blogspot.com/2010/07/gulen-schools-and-their-booming-h1b.html

Posted by: SalesA1 | November 6, 2010 5:50 PM | Report abuse

I wonder how many of the profit making schools are former parochial schools converted to "public charters" two years ago. By converting to public charter status, the Catholic Church managed to begin receiving market rental payments from the DC education budget.
That would make their situation profitable.

As Nida indicates. Charter schools can be a very good real estate investment, even if they have very poor educational outcomes.

Posted by: grooft | November 6, 2010 6:17 PM | Report abuse

I'm forever dumfounded as to why we should make a profit off education at taxpayer's expense? Does the public even realize these profits are their own tax dollars? Shouldn't the extra money be used for programs for students rather than lining charter school profiteer's pocket's? If private enterprise wants to open up schools and make a profit, that's their business along with the parents who pay tuition for their child to attend said school. Tax dollars should not be used to make a "profit" in education. Invest in programs not profits!

Posted by: chicogal | November 7, 2010 1:55 AM | Report abuse

A discussion on the cost and profits of charter schools is a good topic. The problem is we can do it in isolation of results.

One would assume that those making larger profits or holding more assets would have the stronger records of success. Is that true? We don't know from just this report. Conversely, those struggling financially: does that show up in classroom performance? I would like to discuss that type of anlaysis.

And what does public OR charter success look like to us? That is THE most important question that DC citizens must answer over the next few months so that mayor-elect Gray (and whatever Deputy Mayor of Eduction he selects) can compose plans, budgets and implement programs that will help us achieve those measures. This is not just a data/statistic excercise: this is about the future of our children. Can they be successful in life? In the end, I don't care what the DC CAS average is. Can youth get a job and keep it? Can they get into college and be successful? That's what I care about. I don't know any college admissions application that asks about the state-wide CAS scores!

Let's focus on the entire range of options for our youth to be fully successful - charters have to be one of them.

I am going mention another reform that I will be advocating over the next year: longer school days and/or year! If we are to reach EVERY child in the City, this will be a requirement. We can't be successful with the agricultural based school year that exists. I don't know about you, but my kids have never had to take the summer off to plant the crops! Time to change. Are you ready for real reform and real change??

Posted by: MYDKids | November 7, 2010 8:42 AM | Report abuse

Bill Turque:
Please spend a few hours in conversation from some liberal folks from the business page of your paper. They'll help you understand Nida's remarks. You are evidently clueless.
Further, with the greater interpretive freedom to contextualize Charter Schools, you could have given background on how Nida came to be so important: the role DCPS refusal to let vacant and unerutizied space to charter schools had in driving them to become real estate risk managers dependent on the guidance of a banker.

Posted by: incredulous | November 9, 2010 2:01 AM | Report abuse

Bill Turque:
Please spend a few hours in conversation from some liberal folks from the business page of your paper. They'll help you understand Nida's remarks. You are evidently clueless.
Further, with the greater interpretive freedom to contextualize DC Public Charter Schools, you could have given background on how Nida came to be so important: the role DCPS's refusal to let vacant and unerutizied space to charter schools had in driving them to become real estate risk managers dependent on the guidance of a banker.

Posted by: incredulous | November 9, 2010 2:04 AM | Report abuse

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