PURE, LSC members call for investigation of UNO charter network finances



CONTACT: Julie Woestehoff, Parents United for Responsible Education (PURE) – 773-715-3989

Rosemary Sierra, President, Pilsen Academy Local School Council – 312-719-2740

Chicago parents call on Illinois Executive Inspector General to investigate UNO finances


Up to $133 million taxpayer dollars flow to politically connected charter network on shaky financial ground

while neighborhood schools face massive cuts and closures


CHICAGO- Today, representatives of Parents United for Responsible Education and Chicago Local School Councils will meet with the Illinois Office of the Executive Inspector General to ask for an investigation of the financial conditions of the United Neighborhood Organization (UNO) and its use of millions in taxpayer funds. (Letter to EIG)

The Illinois General Assembly was on the verge of considering Senate Bill 24 on January 3rd, 2013, before they adjourned the lame duck session. Sponsored by Senator Heather Steans, the bill would give UNO charters another $35 million appropriation beyond the $98 million they have already received.

Parents are concerned that the legislature will approve this money without considering the risky financial practices of UNO and its UNO Charter School Network, even though Chicago is preparing to close as many as 137 schools due to alleged underutilization. And things could get much worse. Governor Quinn announced yesterday that state education funding may have to be cut as much as $400 million.

If SB 24 is approved by the state legislature, UNO and CPS would each be in line for the $35 million in state appropriations, which would result in approximately $5,415 in funding for each UNO student and $2.7 million per school, compared to approximately $89 in funding for each Chicago Public School (CPS) student and $54,405 for each school.

“It is outrageous that UNO is slated to receive the same amount of money as the entire Chicago school district will receive, when UNO runs only 13 schools,” said Julie Woestehoff, PURE executive director. “We call on the Illinois Inspector General to investigate how this politically-connected organization is able to amass such a large amount of taxpayer dollars without accountability to the public. Certainly UNO should not receive any more money until it is clear to the public that the money is being used properly, for improved education for Chicago children and not UNO’s ambitious real estate portfolio.” PURE has raised concerns before about the state’s largess toward UNO.

UNO has received nearly $100 million in legislative earmarks, and nearly $70 million in tax-exempt bonds to buy land, build schools and meet its lenders’ and bondholders’ expectations for the charter operator’s growth in enrollment and revenue. These bonds and direct state handouts were issued for the purchase of land and construction for UNO’s rapid expansion program, and enabled the growth needed to meet debt payments and growth commitments to UNO’s lenders and other bondholders in a complicated financial shell game.

Our school has never gotten the programs and supplies our children need. Now CPS is planning to close a lot of schools, supposedly to save money. At the same time, UNO keeps getting millions of dollars to pull students from our school and put us in danger of being closed,” said Rosemary Sierra, local school council president at Pilsen Community Academy. “We thought the state had a budget crisis, but they seem to be able to find millions for the politically-connected people at UNO. Meanwhile, some of UNO’s schools have the lowest rating in CPS.”

Despite massive political favoritism, tens of millions in state subsidies and millions more in additional credit supports from bodies such as the Illinois Facilities Fund and Local Initiatives Support Corporation, Standard & Poor’s still rated UNO’s 2011 series tax-exempt bonds BBB-, which is one step above “junk” status.

UNO Board Chairman Juan Rangel and Chicago Mayor Rahm Emanuel are longtime allies. Rangel recently served as finance chairman of Emanuel’s mayoral campaign, and he and other appointed-not elected-UNO leaders have strung together multiple taxpayer-subsidized and tax-exempt financial transactions to pay off private bank loans and private bondholders. UNO is using this largesse to engineer a rapid buildup of not only its student enrollment, but of substantial real estate holdings as well.

A breakdown of three years of UNO tax-exempt bonds is attached. It shows that, with each successive transaction, the financial burden has resulted in higher debt-per-student costs as UNO has nearly no other source of revenue other than public transfers via direct subsidies, publicly issued bonds and government contracts. If UNO fails to secure more buildings and more students, the growing financial burden will likely have an adverse impact on its students as per-pupil classroom spending will suffer due to an increasing portion of the network’s income being diverted to cover debt payments.

We are pleased that the Office of the Executive Inspector General recently launched a Grant Review Initiative Team to look into state grants like these. We are meeting with an intake investigator right after this press conference.


Details of UNO bonds from public sources:

Series 2006 Bonds: The Illinois Finance Authority issued $17.3 million in tax-exempt bonds for both UNO and the Noble Network of Charter Schools. UNO used $6 million in tax-exempt bond proceeds-plus $1.15 million in taxable bond proceeds-to finance renovations at three properties leased from the Archdiocese of Chicago. Student enrollment was projected to be 1,813 students for the 2006-07 year, and the debt-per-student was calculated at $4,429 ($8,028,994 in total funds divided by 1,813 students).

Series 2007 Bonds: The Illinois Finance Authority issued $15.8 million in tax-exempt bonds for UNO. UNO used the bond proceeds-plus $200,000 in taxable bond proceeds and a $1.6 million deposit from lender IFF-to finance the acquisition and renovation of a school from the Archdiocese of Chicago. Student enrollment was projected to be 2,376 students for the 2007-08 year and the debt-per-student was calculated at $10,781 (Series 2006 balance of $7,658,406, plus $17,957,714 in total funds, divided by 2,376 students). This is an increase of 143 percent from the previous year.

Series 2011 Bonds: The Illinois Finance Authority issued $35.85 million in tax-exempt bonds for UNO. UNO used the $35.85 million-plus $495,000 in taxable bond proceeds-to pay off a private bank loan. Student enrollment was projected to be 5,424 at the start of the 2011-12 year and the debt-per-student was calculated at $12,500 ($67,800,000 in outstanding debt per the November 13, 2011 S&P Ratings Report, divided by 5,424 students]. This is a 16 percent increase from 2007.


Series 2006 Bond Statement

Series 2007 Bond Statement

Series 2011 Bond Statement

Standard and Poor report on UNO Finances


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Julie Woestehoff is PURE's executive director. Julie's work has earned her a Ford Foundation award and recognition as one of the 100 Most Powerful Women in Chicago.