The Chicago Sun-Times reports that Wall Street investors are very upset by the financial and ethical issues at the UNO charter chain in Chicago.
UNO is a politically connected charter chain. Its founder, Juan Rangel, was co-chair of Mayor Rahm Emanuel’s campaign.
UNO obtained $98 million from the state legislature to build new charters. It turns out that $8.5 million of that money went to companies owned by two brothers of UNO’s number 2 official, Miguel d’Escoto. When the scandal broke, he stepped down from his $200,000 job, then Governor Pat Quinn halted payment on the balance still owed to UNO.
In a conference call with Wall Street investors who had loaned UNO $37.5 million through state bonds, Rangel sought to reassure them. Rangel told the investors:
“We’re talking about a construction grant that has no guidelines…In our minds, there was no conflict.”
Of course, the governor did see a conflict of interest, which is why he suspended state funding.
Investors were also concerned about the recent decision by UNO teachers to unionize, because they are paid $20,000 less than teachers in the public schools.
Gee, you mean their business model does not work unless you make low paid slaves out of teachers? Not very good businessmen are they. If they are not very good businessmen how can they be educators? And if they are neither what are they doing in schools. Wall Street your problem, succors. It is about time you paid for your criminality. My only concern is for those students and parents who fell for this scam. Teachers, you walked in with eyes wide open. Never back false games or you should also pay the price. Tomorrow at LAUSD we have two more false Parent Triggers from Parent Revolution to deal with. How about on the conditions for one of them it says “Confidential, information redacted.” Have any of you ever seen a thing like this for a public school authorization that the agreement is “National Security” and we have no “Need to Know.” It must have more of “No way will parents be on the governing board” language in it as does 24th Street.
The final chapter of the unfolding UNO story is still a long long way away.
However for nearly every charter school that issues bonds, the long term financial assumptions always overestimate one or all of 3 things: the build out of the chain with new facilities (always harder to get); the future enrollment (always dependent on student performance as underperformers are removed); the future per student state fund transfers (always a political fight).
The buyers of these bonds may understand these risks especially if the ultimate purchaser is a fellow ideologue who has found a way to profit while promoting the pro-charter ideology.
Again speaking generally, the bondholders are “in on the scheme” no matter their ideological beliefs. Such communications from the schools to the bondholders are normal and usually uncontroversial but are in a polite way like Robert DeNiro in Goodfellas demanding “pay me my money.” As long as bond payments are made in full and on time, the bondholders could care less about the underlying risks or deficiencies in academics or operations.
For UNO specifically, the bonds are paying 7.125%. An outstanding return for a bond that is ostensibly simply a pass through of state education funds through UNO to the bondholder. Perhaps the high interest rate set in 2011 reflects the riskiness of UNO perhaps not.
Charter investments are the next Wall St bubble to burst leaving the rest of us paying back the banksters.
We have a FEED Market for the rich.
I am still wondering just how much those huge, red UNO letters out in front of the new “soccer-themed” high school are costing the taxpayers?! For all they’re worth, might as well spend that money on Wrigley Field upgrades.
Oh,wait. This is from the EDUCATION funding. Soooo…that money should be spent on KIDS, right?
Sounds a lot like American Indian charter schools in Oakland. After a decade plus the facade of charters is starting to crack. Resignations aren’t enough. I am waiting for indictments and restitution.
…and how do you know that investors are worried? Did you get that news when you were logged into a Bloomberg Terminal?
Oh now, I’m sure they’ll find ways to create monster turnover rates for teachers so that they can eventually destroy the union. I hope the staff sticks together and fights through the difficult time that is probably coming their way. The profiteers don’t like to share.