Capitolwire: Report, Teachers' Unions Want Legislature to Mandate Stricter Audits of “Cash Cow” Charter School Industry
Capitolwire - October 1, by Christen Smith - A report released Wednesday insists meager state oversight has allowed charter school officials to defraud taxpayers out of $30 million over the last...
Capitolwire - October 1, by Christen Smith - A report released Wednesday insists meager state oversight has allowed charter school officials to defraud taxpayers out of $30 million over the last 17 years.
And “that's just scratching the surface of the problem,” says Ted Kirsch, president of the American Federation of Teachers' Pennsylvania chapter.
“It's only talking about what's being reported and there are other things that haven't gotten to the surface yet and they are still being investigated,” he said during an interview Wednesday. “The (fraud) problem is a lot more widespread.”
The Center for Popular Democracy, Integrity in Education and Action United authored the 15-page report last month in which it calls for a moratorium on new charters while the state Attorney General's office investigates all 174 charter schools for potential fraud. The report also pushes the General Assembly to mandate annual fraud risk assessments capable of detecting and preventing waste and abuse.
“While the state has complex, multi-layered systems of oversight in the charter system, this history of financial fraud makes it clear that these systems are not effectively detecting or preventing fraud,” the report reads. “Indeed, the vast majority of fraud was uncovered by whistle-blowers and media exposes, not by the state's oversight agencies.”
The report's index details allegations of fraud against 11 separate charter schools across the state. At least nine of the charter school officials mentioned in the report have pleaded guilty and received prison sentences.
“It’s time for lawmakers to stop providing charter industry players a blank check with little oversight and no accountability,” said Lily Eskelsen García, president of the National Education Association, the parent organization of the Pennsylvania State Education Association. “...For students in all types of schools—traditional, charter or magnet—the key is having a sound structure for oversight and accountability, while providing educators with autonomy to create great learning environments for their students. Let’s work with families, educators and community members to make sure all students can attend great schools that meet their needs.”
“What's lacking here is a process to hold the charter operators accountable,” Kirsch said. “We need some laws that govern the accounting procedures and how money is handled by charter operators. These people are making a lot of money. It's a cash cow.”
Tim Eller, spokesman for the Department of Education, criticized the report Wednesday for “failing to mention” the state uses the same accounting practices for both public schools and charter schools.
“All public schools, including charter schools, are subject to audits by the state Auditor General,” he said. “The Auditor General is charged with ensuring that public entities are using taxpayer dollars for their intended purpose.”
Auditor General Eugene DePasquale said he couldn't confirm the report's $30 million figure, but said “we have found waste in the system,” particularly related to the issues of lease reimbursement and special education funding.
The auditor general uncovered “$1.2 million in improper lease reimbursements” in an August 2013 audit of Chester Community Charter School — Pennsylvania's largest. He said Wednesday lease reimbursement fraud represents about half of the charter cases his office has uncovered.
The audit found that Chester Community Charter School's founders sold the original building to a non-profit organization for $50.7 million, then created a for-profit management company to run the charter school, all the while collecting illegal reimbursement payments from the state for the buildings.
When asked about the report’s proposals regarding more oversight, DePasquale said: “If we had more resources, certainly we could audit more schools. That's absolutely true. But we need partners at the Department of Education to respond when we do find issues.”
DePasquale also suggested the General Assembly pass charter school reform that would address fraud involving lease reimbursements.
Two separate pieces of legislation — House Bill 6188 and Senate Bill 1085 — included measures to improve transparency and accountability in charter schools, but both bills have been stalled in the opposing chambers since budget negotiations wrapped up in July.
“House Bill 618 which passed the House in September of 2013 was basically loaded with accountability measures related to governing audits and academic performance,” said Steve Miskin, spokesperson for House Majority Leader Mike Turzai, R-Allegheny. “We are hoping the Senate passes it.”
Senate leadership did not respond to requests for comment Wednesday.
“If the widespread allegations mentioned in the report prove to be true, then those guilty should be prosecuted to the full extent of the law,” said Bob Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, in a statement released Wednesday. “However, the report draws sweeping conclusions about the entire charter sector based on only 11 cited incidents in the course of almost 20 years, while ignoring numerous alleged and actual fraud and fiscal mismanagement in the districts over that same time period, which dwarf the charter school allegations in terms of alleged misuse of taxpayer dollars.”
Fayfich says the coalition supports mandating more stringent audits in the name of accountability, but doesn't think the public sector should be exempt.
“If the authors’ recommendations are to conduct a fraud audit of every charter school based on the actual and alleged misdeeds of a few, and initiate a moratorium on all charter schools until those audits are complete, then, in the name of intellectual integrity, the same recommendations should apply to traditional public school districts,” he said. “Fraud and fiscal mismanagement are wrong and cannot be tolerated, but to highlight them in one sector and ignore them in another indicates a motivation to target one type of public school for a political agenda.”
Renee Martin, acting communications director for the Attorney General Kathleen Kane, said Wednesday a copy of the report “has been shared with our attorneys.”
Hundreds rally in a DC church for DACA solution
Hundreds of people rallied Wednesday inside of a church near the U.S. Capitol demanding legislation to protect young, undocumented immigrants and replace the Deferred Action for Childhood Arrivals...
Hundreds of people rallied Wednesday inside of a church near the U.S. Capitol demanding legislation to protect young, undocumented immigrants and replace the Deferred Action for Childhood Arrivals program.
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The Criminalized Majority
“Everyone should go to jail, say, once every ten years,” opined novelist and poet Jesse Ball in a recent LA Times article. It may seem like Swiftian satire, but Ball’s proposal is earnest....
“Everyone should go to jail, say, once every ten years,” opined novelist and poet Jesse Ball in a recent LA Times article. It may seem like Swiftian satire, but Ball’s proposal is earnest. Addressed “to a nation of jailers,” he argues that a brief but regular stint in jail would serve as the necessary correction to make such institutions more livable–and perhaps less common. “Just think,” he writes, “if everyone in the United States were to become, within a 10-year period, familiar with what it is like to be incarcerated, is there any question that the quality of our prisons would improve?”
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Aldermen, Activists Propose City Ordinance To Raise Minimum Wage
Chicagoist - May 28, 2014, by Aaron Cynic - Supporters of raising the minimum wage introduced an ordinance at a City Council meeting today that calls for an increase to $15 an hour. The proposal,...
Chicagoist - May 28, 2014, by Aaron Cynic - Supporters of raising the minimum wage introduced an ordinance at a City Council meeting today that calls for an increase to $15 an hour. The proposal, backed by several Aldermen including John Arena, Joe Moreno and Roderick Sawyer, comes on the heels of a report released that shows a raise in the wage would benefit both workers and the City’s economy.
According to the plan, companies making more than $50 million a year would be required to first raise their minimum wage to $12.50 an hour within 90 days and then to $15 within a year. Smaller businesses would have to raise their wages at a more graduated rate, with a total of four years to get to $15. From there, the minimum wage in Chicago would rise with the rate of inflation.
“Study after study demonstrates that when you put money into the pockets of consumers, they spend it," Alderman Ricardo Munoz, who also backs the measure, told Reuters. "They don't hoard it in their mattresses.”
The recent report from the Center for Popular Democracy says a minimum wage increase would yield workers about $1.1 billion collectively, with an average annual income increase of $2,620 per individual. This would generate $74 million in personal income taxes to the state and yield $616 million in new economic activity.
At a press conference at City Hall, Tanika Smith, a fast food worker, said her current pay of $8.75 an hour, just 50 cents more than the minimum wage in Illinois, simply isn’t enough. “My car note is $500 a month, my rent is about $500, food is going up, lights are going up,” said Smith.
Raising the minimum wage is becoming a key issue with politicians statewide. Last week, Mayor Rahm Emanuel gave a panel of business, labor and civic leaders 45 days to draft a plan to raise the wage in Chicago. Gov. Pat Quinn has championed raising the state wage to $10.65 an hour, and Illinois House Speaker Michael Madigan is pushing for a referendum on the November ballot to ask voters if the wage should be raised to $10 an hour.
Both the Illinois Chamber of Commerce and Illinois Retail Merchant’s Association oppose an increase to the minimum wage. “We think it puts us at a competitive disadvantage,” Chamber CEO Theresa Mintle told Reuters. The Retailers Association has said that raising the wage would force businesses to cut both jobs and hours.
Ald. Moreno, however, disagrees.
“It’s gonna hurt the people at the top possibly. It’s not gonna hurt business. It never has. Raising the minimum wage in the United States has never, ever hurt the broader economy...Our economy has been splintered with those at the top having way more. The middle class is shrinking. We want the middle class to grow.”
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Barkin Tapped as Next President of Richmond Fed Bank
Barkin Tapped as Next President of Richmond Fed Bank
The Federal Reserve's Richmond regional bank announced on Monday that Thomas Barkin, a senior executive at global management consulting firm McKinsey & Co., will be the bank's next president...
The Federal Reserve's Richmond regional bank announced on Monday that Thomas Barkin, a senior executive at global management consulting firm McKinsey & Co., will be the bank's next president.
He will succeed Jeffrey Lacker, who resigned as the bank's president in April after revealing his involvement in a leak of confidential information in 2012 that had triggered congressional and FBI investigations.
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Nan Goldin, Activists Bring Sackler Protest to Harvard Art Museums
Nan Goldin, Activists Bring Sackler Protest to Harvard Art Museums
“Protestors threw pill bottles on the floor of the atrium, handed out pamphlets, and held banners and posters with phrases like “MEDICAL STUDENTS AGAINST THE SACKLERS,” and “HARM REDUCTION NOW/...
“Protestors threw pill bottles on the floor of the atrium, handed out pamphlets, and held banners and posters with phrases like “MEDICAL STUDENTS AGAINST THE SACKLERS,” and “HARM REDUCTION NOW/TREATMENT NOW.” A number of speakers gave speeches about the Sacklers and the opioid crisis in the atrium, including Jennifer Flynn Walker of the Center for Popular Democracy and Goldin, who began organizing against Purdue and the Sacklers, who are major donors to cultural institutions throughout the United States and Europe, following treatment for opioid addiction last year. She said she became addicted after being prescribed OxyContin in 2014 following wrist surgery.
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Anti-Trump Activists Find an Unlikely Weapon: Jamie Dimon's Salary
Anti-Trump Activists Find an Unlikely Weapon: Jamie Dimon's Salary
In the end, nearly 93% of JPMorgan Chase (JPM) shareholders approved of boosting CEO Jamie Dimon's pay to $28 million last year, an increase of 3.7%.
Among those who demurred, a common...
In the end, nearly 93% of JPMorgan Chase (JPM) shareholders approved of boosting CEO Jamie Dimon's pay to $28 million last year, an increase of 3.7%.
Among those who demurred, a common reason cited at the Wall Street bank's annual meeting in Wilmington, Del., on Tuesday was President Donald Trump, who won the electoral college decisively but lost the popular vote and has ignited criticism with an attempted Muslim travel ban and a pledge to build a wall on the Mexican border.
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One ex-banker's built-in advantage in the Fed chair race: Family ties to Trump
One ex-banker's built-in advantage in the Fed chair race: Family ties to Trump
With Gary Cohn’s chances of becoming chairman of the Federal Reserve diminished, another former banker is waiting in the wings for the coveted post: Kevin Warsh.
A veteran of both the...
With Gary Cohn’s chances of becoming chairman of the Federal Reserve diminished, another former banker is waiting in the wings for the coveted post: Kevin Warsh.
A veteran of both the central bank and Wall Street, Warsh is already high on the White House’s list of possible successors to Fed Chair Janet Yellen. But he has an enviable reference: his billionaire father-in-law, who met Donald Trump in college and is a confidant to this day.
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Black Lives Matter coalition issues first political agenda demanding slavery reparations
Black Lives Matter coalition issues first political agenda demanding slavery reparations
A coalition built on the Black Lives Matter movement has issued its first political agenda demanding reforms in the American justice system and reparations for slavery. Some 60 organisations in...
A coalition built on the Black Lives Matter movement has issued its first political agenda demanding reforms in the American justice system and reparations for slavery. Some 60 organisations in the Movement for Black Lives endorsed the platform calling for "black liberation" that had been forged over a year of discussions.
The agenda included six demands and 40 policy recommendations, including a reduction in military spending and a focus on protecting safe drinking water.
It also called for an end to the death penalty, decriminalisation of drug-related offences and prostitution, and the "demilitarisation" of police departments. It seeks reparations for lasting harms caused to African-Americans by slavery and investment in education, jobs and mental health programmes.
The agenda by the Movement for Black Lives came hard on the heel of the Republican and Democratic national conventions, which failed to satisfy members.
"On both sides of the aisle, the candidates have really failed to address the demands and the concerns of our people," said Marbre Stahly-Butts of the Movement for Black Lives Policy Table, which crafted the agenda.
He told the New York Times. "So this was less about this specific political moment and this election, and more about how do we actually start to plant and cultivate the seeds of transformation of this country that go beyond individual candidates."
The overarching mission of the group is to halt the "increasingly visible violence against black communities". Its agenda was issued just days before the second anniversary of the killing of unarmed black teen Michael Brown by a white police officer in Ferguson, Missouri.
Brown's death and the killing of other unarmed black men by white officers was the birth of the Black Lives Matter movement.
"We seek radical transformation, not reactionary reform," said Michaela Brown, a spokeswoman for Baltimore Bloc, one of the organisations that worked on the platform.
"As the 2016 election continues, this platform provides us with a way to intervene with an agenda that resists state and corporate power, an opportunity to implement policies that truly value the safety and humanity of black lives, and an overall means to hold elected leaders accountable."
By MARY PAPENFUSS
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Wall Street Group Aggressively Lobbied a Federal Agency to Thwart Eminent Domain Plans
The Nation - January 17, 2014, by Alexis Goldstein - Despite Wall Street’s ...
The Nation - January 17, 2014, by Alexis Goldstein - Despite Wall Street’s recent gains, the foreclosure crisis that displaced 10 million Americanscontinues to wreak havoc on communities. One ongoing problem is that 10.7 million homeowners are stuck in underwater homes, in which the mortgage is more than the house is currently worth. Although the federal government doled out $700 billion to Wall Street via TARP during the 2008 financial crisis, it has not taken bold action to solve this problem. Money set aside during the bailout to help homeowners remains largely unspent, and a key federal housing regulator refused to pursue mortgage write-downs for struggling borrowers, even though their own analysis showed these loan modifications would save the agency money.
In this vacuum, several cities have begun to take matters into their own hands, as Peter Dreier reported on for The Nation. One plan by private equity company Mortgage Resolution Partners proposes that cities use eminent domain—a power traditionally reserved for seizing property for public use—to seize mortgage loans. The amount owed on the loans would then be reduced so that the borrower was no longer underwater, avoiding foreclosure. In January 2013, Brockton, Massachusetts commissioned a study and formed a working group to investigate using eminent domain to help struggling homeowners. In September 2013, the city council of Richmond, California, voted to move forward with such a plan.
One might think these small, local efforts shouldn’t be of much concern to Wall Street—after all, Richmond’s plan affects a mere 624 loans. But one of Wall Street’s most powerful trade groups, the Securities Industry and Financial Markets Association (SIFMA), has responded with ferocious urgency. SIFMA is the attack dog the largest Wall Street banks send when they don’t want their names attached to politically controversial lobbying efforts or lawsuits. The group does everything from denying that “too big to fail” still exists to drafting lengthy comment letters arguing for weaker financial regulation.
New e-mails obtained through a Freedom of Information Act request by the Alliance of Californians for Community Empowerment (ACCE) and a coalition of other community groups and shared with The Nation reveal the extent to which SIFMA has been spearheading Wall Street’s fight against using eminent domain to mitigate the foreclosure crisis. (The complete set of e-mails are available at the website of the ACLU, which sued the FHFA when the original FOIA request was ignored). When Brockton began considering using eminent domain, SIFMA employees traveled there and kept an entire section of its website, complete with an array of resources, to decrying the plans.
Grace Ross, Coordinator of the Massachusetts Alliance Against Predatory Lending and one of the members of Brockton’s eminent domain working group, said she was “shocked by the huge amount of resources SIFMA threw at this small study process in Brockton. While pursuing a plan like this would be deeply meaningful to Brockton, with up to 2,300 households that could have been directly affected, it’s small potatoes” for an industry as large as Wall Street. In April 2013, by a vote of 7-5, Brockton’s eminent domain working group concluded that the City did not have the legal authority to pursue an eminent domain plan.
SIFMA also made sure to send its careful notes and observations to a key staffer at the Federal Housing Finance Agency (FHFA), General Counsel Alfred Pollard. The FHFA is the regulator who oversees Fannie Mae and Freddie Mac, which have been under federal government control since the 2008 financial crisis. In 2008, Congress also charged the FHFA with implementing “a plan to maximize assistance for homeowners.” But not only has FHFA failed to meaningfully help homeowners, in an August 2013 statement, the agency threatened to take legal action against localities that used eminent domain to restructure mortgages, and it raised the possibility that Fannie Mae and Freddie Mac would be ordered to stop doing business altogether in areas that pursued eminent domain plans.
Through e-mails obtained by the ACCE’s FOIA request, we now know that SIFMA urged the FHFA to take precisely this course of action. In a March 25, 2013, e-mail to FHFA’s General Counsel Pollard, Richard Dorfman, then-head of SIFMA’s Securitization group, writes that “a federal solution would be the only way to quell this menacing concept.” Dorfman goes on to insist that the FHFA disallow Fannie Mae and Freddie Mac “to acquire, guarantee, securitize or otherwise transact in any loan” that could even hypothetically be subject to an eminent domain plan. And that is exactly what the FHFA did four months later.
In response to a request for comment on whether SIFMA’s e-mails influenced the FHFA’s actions, an FHFA spokesperson said, “FHFA first expressed concerns about the use of eminent domain when it requested public input on August 8, 2012.” The spokesperson noted that the August 2013 statement “reflected FHFA’s analysis of input provided, legal matters, and safety and soundness concerns for its regulated entities (Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks).” The spokesperson also said that the statement was “influenced by legal research and robust public input, including 75 letters from a variety of stakeholders.”
But SIFMA did not stop at demanding the FHFA’s help in threatening cities that pursued eminent domain mortgage seizures; it also asked FHFA staff to drum up local opposition. In the March 25 e-mail to Pollard, Dorfman writes, “Councilor Tom Brophy…is a key participant in the eminent domain working group in Brockton. [He] wants to speak with you by telephone pertinent to the matters I have raised…. I am accordingly asking you to agree. Please agree to do so, and we will make the arrangements.”
Brophy ultimately voted with the majority to scuttle the eminent domain plan on the grounds that Brockton did not have the legal authority to seize mortgages. Reached for comment, Brophy said that he does not recall any specific conversation with anyone from the FHFA, and the FHFA declined to comment on whether or not Pollard and Brophy ever talked on the phone. Whether or not that particular conversation took place, however, the e-mails reveal the active role SIFMA took in lobbying federal agencies to intervene in the Brockton vote, and they raise a question about how much influence SIFMA had on the outcome.
In addition to the comfort level displayed in their requests, the sheer volume of e-mails from SIFMA employees to General Counsel Pollard is significant. There is a formal comment process, yet SIFMA appears to have the capacity to supplement this process with these informal, previously private, e-mails to Pollard. When asked if e-mailing General Counsel Pollard directly is something that is available to all stakeholders, an FHFA spokesperson noted, “The Office of General Counsel email address is available to all stakeholders on the FHFA website.” But the e-mail provided on that website is OGCPublic@FHFA.gov. In the FOIA response, the e-mail used by SIFMA to contact Pollard is different: Alfred.Pollard@fhfa.gov.
The FHFA spokesperson also stated, “FHFA’s General Counsel routinely communicates with a variety of interested parties on numerous issues affecting Fannie Mae, Freddie Mac and the Federal Home Loan Banks.” Of the personal e-mails revealed by the FOIA, twenty-four are from SIFMA, and the rest are primarily from other Wall Street stakeholders (The additional listeddocuments are court filings or public comment letters—some of which were sent via e-mail and are thus listed as “comment e-mails”). And while the October 2013 FOIA did ask specifically for e-mails between Wall Street stakeholders and FHFA, it also included a much broader request for “all documents,” correspondence and meetings “regarding the City of Richmond’s offer to buy underwater mortgages from residents.” One would expect to see e-mail exchanges to Alfred Pollard from non–Wall Street stakeholders about Richmond, if FHFA truly had as close a relationship with others as they appear to have with SIFMA.
Perhaps one of the most damning e-mails is one forwarded to Pollard by SIFMA’s Dorfman on February 15. In it, Kimberly Chamberlain—managing director and associate general counsel of state government Affairs at SIFMA—laments the lack of bankers on Brockton’s Eminent Domain Working Group. Chamberlain concedes that there is an Oppenheimer representative, Stephen Bernard, on the working group. But it appears that to Chamberlain, Bernard’s industry credibility is in question, due to his association with the NAACP. Chamberlain writes, “The list does not appear to include local bankers or local mortgage bankers. The Oppenheimer representative he previously alluded to is Stephen Barnard [sic], who is also a Past President of the Brockton NAACP. At first blush, it would appear we have our work cut out for us with this group” [emphasis added].
It remains unclear why an affiliation with the NAACP is relevant for SIFMA to note, especially before stating that “this group” will require more work on their part. In response to a request for comment on the e-mail, a SIFMA spokesperson stated: “The e-mail from Ms. Chamberlain simply restates the information in Mr. Stewart’s original e-mail, which notes the affiliations of the working group members. SIFMA had been told, prior to the working group being formed, that the group would include several financial services representatives who could speak firsthand about the negative impact of eminent domain on mortgage credit. Without this firsthand experience, SIFMA felt it would be important to spend time educating working force members.”
In some e-mails, SIFMA also appears dismissive of the scale of the foreclosure crisis. In the March 25 e-mail, Dorfman calls the eminent domain plans “tedious.” In a March 8 e-mail to Pollard, Chris Killian, managing director and head of securitization at SIFMA, insults Brockton’s eminent domain committee, writing “the current ‘committee’ carries many markings of a charade.”
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SIFMA’s concern is not the plight of these cities—but rather the time and money SIFMA has lost fighting eminent domain plans. In the February 15 e-mail, Dorfman writes to Pollard about eminent domain plans in Brockton and in Phoenix, Arizona: “One of the City Council members has found a messianic calling in the eminent domain scheme, so we are once again investing time and resources in this matter,” time that he laments should instead be focused on the “flurry of regulatory activity derived from Dodd Frank.”
The re-focusing of SIFMA’s attention from federal regulations to the actions of a few small cities trying to creatively solve their foreclosure crisis tells us that these eminent domain plans are a significant threat to Wall Street. SIFMA is terrified that this idea will spread. As SIFMA’s Killian wrote on March 8, “one of these places where there is smoke will soon catch fire.” If there is one thing SIFMA does not want, it is for banks to have to go to court, in multiple cities, to try and fight seizures of mortgages via eminent domain.
As of January 6, 2014, the FHFA has a new head—Mel Watt, who until recently served as a Democratic Representative from North Carolina. SIFMA has hardly made it a secret that it is expecting Watt to continue FHFA’s war on eminent domain plans. When Watt’s nomination was first announced, SIFMA released a statement insisting Watt “explicitly address the continued threat” of plans using eminent domain to seize mortgages. One of the first questions the public should ask is: Will the FHFA under Watt continue this tradition of using its power to act as a proxy for SIFMA? Or will Watt support cities’ searching for new and novel approaches to foreclosures?
Given that it’s been five years since the crisis and the federal government has done appallingly little to help homeowners, the least the FHFA could do is stay out of the way.
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