Step 1: Gather Up Large Amounts of Money.
Like a bank, a charter company lends out funds to charter schools to help finance construction and expansion. But a charter company needs to gather up capital to loan out to its customers. Because they are a non-profit corporation, a charter company has access to reserves normal lenders can’t tap into. Here are the listings of several “Investment Partners” of of one charter company’s website.
The Community Development Financial Institutions Fund, administered by the Department of Treasury:
Credit Enhancement For Charter School Facilities Program administered by the Department of Education.
All these grant/low interest loans are alloted under the principal of a non-profit entity doing good works to improve the community.
Step 2: The Charter Company Repackages these Funds as Loans For Charter School Construction –
The charter company uses these non-profit funds to facilitate charter school construction. These are offered as loans or grants with “imputed interest” taken as a write-off. “Imputed interest” is the difference between what the money actually fetched, and what it would have fetched at a normal rate. The “Imputed Interest” is then written off as a grant and is thereby used as a credit against the company’s tax load. One charter company keeps one school on its books charging a whopping 12% interest in its effort to set the level to maximize the imputed interest it can then report.
Step 3: Charter Operators – Including FOR-PROFIT Operators – Move into Real Estate Owned by the Owners of Charter Companies.
The Charter Company is an offshoot of another Real Estate Company. One with the same owner. The Charter Company finds a for profit operator to move into its brother company’s facility, and pay that brother company rent. The charter company makes no profit and keeps its tax status intact. The rent money goes to the owner however but all that lands in another LLC. For example Pencader paid in rent close to $900,000 to Chris Castagno. In 2012, Moyer paid close to $410,000 to ReInvestment II. Now, thanks to HB 165 state money for improvements, especially targeted to expansion, can now flow into the charter company who hires another brother company’s construction firm, to do the work. The charter company pays the construction firm. The construction firm pays its bills then pockets the remainder in its own LLC, but one that is owned by the same owner as the charter company, and the real estate firm receiving rent. The same owner then creates a charter school management company. This runs the school, and receives startup funds from the charter company. This is a for profit company, and the proceeds it makes, go into it’s own LLC, which is owned by you can guess who…
Step 4: The Tax Payer Foots The Bill.
You, the taxpayer pay two ways. It is your money going to the loaning organizations, be they Sallie Mae, the Department of Treasury, the Department of Education, and now, THE STATE OF DELAWARE THANKS TO HB 165. Your money is being used as the money up front to build, expand, organize, structure, and continue charter schools. The owners if clever put up nothing.
The different LLC’s then though they can’t take in money for the non profit portion, the loans they pay back are far, far lower than ones available in the private market, and that difference increases the profits off the other three prongs. The construction firm takes it’s profit, the real estate takes it’s profit, and the school management system takes it’s profit, all with no money down.
And from what do they get this profit off of? You, you pay them with your school tax assessment. All their income is coming in from you. You are the ones paying them with your property tax assessment…. And what are we getting from this investment?
What HB 165 has now allowed in Delaware, is someone with no investment money lost of their own, raking tens of millions off the teaching of your kids. And statistics show, those kids will most likely get a worse education than if they’d stayed in public schools… Public schools where those very same millions would be invested in children’s learning, not the pockets of friends of people in high places….
No different than Halliburton using government money to build the compounds, then using government money to run the compounds, and taking their excessively high non-competitive bid profit off the top.
Wedding Charter Schools and Public Schools together is like marrying a mail order bride who agrees to do it if she receives $5,000 a month. She can say all the right words and you can paint her up pretty, but she is still basically a whore… she’s there only for money. And you’re still paying her, right?