CPS Parents File Formal State Complaint Against UNO Charter Schools Updated
January 18, 2013 5:35pm | By Ted Cox, DNAinfo Reporter/Producer
(DNAinfo/Ted Cox)
CHICAGO — Education-reform groups, including the president of a Pilsen Local School Council, have filed a formal complaint with the state against the UNO Charter Schools Network.
Julie Woestehoff, executive director of Parents United for Responsible Education, and Rosemary Sierra, president of the Pilsen Academy LSC, filed the complaint in Chicago Thursday asking Illinois Executive Inspector General Ricardo Meza to probe UNO’s school finances.
The complaint charges that the United Neighborhood Organization, a Hispanic community group since the 1980s, has overleveraged its charter schools and is using more than $70 million in state-approved tax-exempt bonds in part to pay off private loans rather than fund education.
“I wondered what they were doing with all that money,” Woestehoff said Friday. “We found that they’re very overextended in their debt.”
The complaint cited $17.3 million in bonds for UNO and the Noble Charter Schools arranged through the Illinois Finance Authority in 2006. The IFA approved another $15.8 million in bonds for UNO in 2007 and an additional $35.9 million in 2011, which Woestehoff suggested went in part to pay interest on a reported $65 million loan UNO arranged with the help of Ald. Edward Burke (14th) in the darkest days of the financial collapse in 2008.
According to official nonprofit filings by UNO Charter Schools in 2011, it posted $69.6 million in overall assets and $71.2 million in liabilities for a net debt of $1.7 million. It claimed $61.9 million in mortgages and notes owed to third parties, with $2.9 million in interest paid for the year.
UNO has 13 charters in the Chicago Public Schools, and 12 received funding increases in the 2013 budget for a total outlay of $55.6 million. That’s tied directly to school attendance, but Woestehoff suggested that’s part of the problem, that UNO uses students as “collateral” in its loans.
A Standard & Poor’s report in September 2011 gave the school bonds a BBB- rating, warning of “considerable growth risk with two schools opening.” It made clear that UNO’s ability to repay was based on school population.
“That money they’re getting that’s supposed to be for children is being used to pay their debt,” Woestehoff charged. “That doesn’t seem like a healthy situation.”
Asked to comment, UNO spokesman Ray Quintanilla invited media to visit the construction site of a new UNO high school on the South Side on Tuesday. “We will be happy to expand on other concrete measures UNO has taken to address student overcrowding at that time,” he added by text.
Ald. Daniel Solis (25th) is an UNO co-founder, and the agency has abundant political ties.
As a nonprofit agency, UNO is not allowed to play a role in political campaigns, but Chief Executive Officer Juan Rangel has skirted that by saying he makes endorsements as a private citizen, not as an UNO representative. He was co-chairman of Mayor Rahm Emanuel’s campaign in 2011, and he backed Burke’s brother, Dan, in his state representative campaign against Rudy Lozano, Jr., with Rangel citing Lozano’s opposition to charter schools.
According to 2011 non-profit filings, Rangel has a salary of $207,000, and UNO’s chief operating officer, senior vice president, vice president and director of operations all make more than $100,000 each. They’re cited as officers with the UNO Charter Schools as well, which also pays two school directors over $100,000. The filing for UNO that year also posted $125,000 paid to the Edelman public relations firm for consulting.
UNO received $98 million from the state in 2009, the largest taxpayer subsidy to a single charter network. “There are no other charter networks getting anywhere near that money,” Woestehoff said.
According to Woestehoff, UNO was up for another $35 million state grant during the recent lame-duck session of the General Assembly, but it didn’t go through, although it’s pending. She said her complaint was filed in part to draw attention to UNO and encourage legislators to reconsider their support.
Cole Kain, chief of staff in the Office of Executive Inspector General, said he was forbidden to comment on any complaint filings or ongoing investigations.
“We have watched them grow into a political powerhouse,” Woestehoff said of UNO. “We looked at how they started and got into the charter school business, and when I say business, I mean business.”
Diane Ravitch's blog 
This kind of fiscal sleight of hand is the status quo in public school districts as well. I believe this is why the privateers have targeted public ed funds–because they see the bureaucrats laughing all the way to the bank while the paying public vents on the teacher corps … it is so Orwellian that you really can’t make this stuff up. View the documentary, “The Cartel,” on netflix.com or where you can find it. This documentary will give an insight into what has happened to public funded education over the past 50 years or so. For those inclined to delve further, I suggest going to your local municipal website and accessing the budget–look at the overall budget and the education budget. Chances are there is no line by line itemization but if there is then look and see where the money is spent. The classroom is not the priority for funding–the layers above the classroom get a disproportionate share of the grants and public fund allocations. But the real question is: when are the collective “we” going to wake up? It is our kids and our money at stake–kind of a priority, yes?
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“UNO spokesman Ray Quintanilla invited media to visit the construction site of a new UNO high school on the South Side on Tuesday. “We will be happy to expand on other concrete measures UNO has taken to address student overcrowding”
“Student overcrowding”? This BS is going on while neighborhood public schools are being closed left and right by CPS supposedly due to “under-utilization.”
Rahm is regularly photographed with the UNO CEO. This “new UNO high school” must be why they really suddenly took high schools off the slated for closing table. They had said it was due to students crossing gang turf, probably because of recent published complaints about how that has resulted in increased violence.
So for now, they are focusing on closing elementary schools: “193 Chicago Elementary Schools Not Safe from Closing” http://www.suntimes.com/news/education/17660372-418/193-chicago-elementary-schools-not-safe-from-closing.html
Thank you PURE!
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NO, “This kind of fiscal sleight of hand is the status quo in public school districts as well” it’s not. Please cite sources that would bolster your opinion, Brutus, other than “The Cartel”.
From Wiki (and I paraphrase) “The Cartel” is a far right neo-liberal propaganda piece supposedly focusing on the imagined problems of the public school system in NJ.”
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Exactly. In most major cities, political leaders long ago took over school districts, with their appointed puppet (mostly non-educator) “superintendents” and school boards. They are in collusion with privatzers and repeatedly close neighborhood schools so that for-profiteers and non-profiteers can open them as charter schools. The mayor has been in control of the schools in Chicago for 18 years, yet continues to blame teachers and unions for FAILED MAYORAL CONTROL “REFORMS.” THAT is the status quo.
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I know that the documentary “The Cartel” is seriously flawed. Whenever one reads or views information, it is necessary to assess critically. My point is that “The Cartel” accurately, in my view, exposes the huge administrative bureaucracy and how it deprives the classroom of much needed resources. This is where the solution lies–the management structure of our public schools needs to be overhauled and if we get it right, a lot of problems will start to dissipate.
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I disagree. Virtually every time a new “superintendent” has been appointed in our district, they’ve pointed out how the system was bloated with administrators and they cut administrative positions. Sometimes, they’ve also pointed out how the system has been losing money by renting out buildings for $1, and yet it is common practice today for them to rent neighborhood schools for $1 to charter schools.
All fingers should be pointing to these politicians and their robber baron cronies who make six figure salaries, which are considerably higher than any public school administrator (not even one public school teacher makes a six figure income here).
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Brutus,
I was just talking today with an administrator about the fact that most people have no clue whatsoever about things like “span of control” and comparative positions in public education and the business world.
I didn’t start teaching until I was thirty eight so I do have a bit of experience outside the education realm. The fact is that in public education the average span of control is one supervisor for every 20 or so employees. In the private business sector that span of control is one supervisor for every five employees (now that was a study from the nineties but I would bet it hasn’t changed that much since then). And the fact is that for the responsibilities that a public school administrator has would net said administrator at least 4-5 times as much in salary and perks.
So actually the public school realm is a hell of a lot more efficient than the private sector when it comes to administrative costs.
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perks in the private sector
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I’ve seen charters with 25% of their money spent on “administrative fees”. Yes, it costs a lot of money to fund your mansion.
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If there is something shady going on it is going to come out, it is just a matter of when. For people like Bobby Jindal who we all know wants to be president at some point in time, you would think would want to distance himself from all this cheating, data doctoring and more then likely out and out illegal activity. This is all built on a house of cards and is going to come down at some point. Am I wrong in thinking these are not stupid people or do they really believe what they are spewing?
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The charter/voucher plot thickens every day!
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Is it too early to ask for a charter school bailout? Probably better to let them suck money into the void for a few years, so that can rack up a bill to match the housing and mortgage industry.
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I think we need to let the charters grow for a while, then bail them out when they’re “too big to fail”. Hell, it worked for Wall Street.
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Don’t give them any ideas, the will use more money from the public schools or make some more great real estate deals to fill in the gaps.
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I have formed my opinion as expressed from my experience as a teacher in New Haven, Ct. Previous to becoming an educator, I ran my own business and before that I was mentored by a scientist who participated in the Los Alamos project and did things like search for the Loch Ness monster using dolphins with mounted electronic flash units. I have worked closely with impressive people who got the job done. Whether it was calculating the efficiency of the first fission bomb tests or solving the problem of photographing enemy troops at night using infra-red film from airplanes, these people were the real deal. In my experience with public school administrators, I have not seen anywhere near the same quality of individual. What I have seen was political patronage, jobs for sex, alcoholism, and people promoted to the level of their incompetence. To be fair, I have seen a few good admins, but not many. There are simply too many bosses (admins) and not enough workers (teachers and paras). Add in the plethora of consultants and retired admins who are also consulting or double-dipping and you have a situation where libraries are not staffed, teachers spend far too much of their own money on supplies, copy machines are not fixed, substitute teachers are scarce because nobody wants to work for $50 per day and the list goes on and on. If you are a teacher then you know that the number one problem is that teachers are not supported by their admins both in building and central office. And you also know that no one wants to be on the radar screen in case of a lawsuit by an irate parent who is trying to get a few thousand out of the BOE. It is utterly disgraceful that our schools are out of control and those who make 6 figures with great pensions escape all accountability and nothing improves year after year. I’ll stop but I will wager that any classroom teacher that reads this knows exactly my point.
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“…and before that I was mentored by a scientist who participated in the Los Alamos project and did things like search for the Loch Ness monster using dolphins with mounted electronic flash units.”
I’m sorry, was this meant to bolster your credibility?
BTW, I’m pretty sure those dolphins weren’t terribly happy in Loch Ness.
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I think I smell a cover up about to take place. Rahm doesn’t want any negative publicity about his charters. He most likely has ties to the same people who “investigated” (NOT) Rhee.
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Just look at other charters like Aspira, they have new bureaucratic management but still they are changing money from the budget they get to supposedly pay the education of the poor students to making a new school on Mulwaukee and Centralpark, still they have not give teachers a raise for almost 3 years!! This people are thefts (specially the COO and the board members) , that’s why I quit there.
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