Charter financial analysis draws fire
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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