It was announced yesterday that the federal Securities and Exchange Commission has opened an investigation into the UNO Charter School Network’s finances.
A look at the SEC document request suggests there are two major areas of inquiry. One is the possible conflict of interest in the D’Escoto and other charter school construction contracts, about which the Sun-Times has written extensively.
And the other is UNO’s tax-exempt bonds, which PURE highlighted in our January 2013 complaint to the Illinois Executive Inspector General.
Here’s what we wrote then:
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 held a press conference on January 17 at the Office of the Executive Inspector General (EIG) where we filed our complaint. It wasn’t until a week later that any major media outlet chose to report on it, and then only after UNO made the mistake of putting on a dog and pony show at one of their shiny new schools. The Tribune, WBBM-AM radio and Crain’s jumped on the bandwagon, though none of these reports emphasized our concern that UNO might be using its charter school students and promises of more rapid expansion as collateral for its bond debt.
At the time, the Sun-Times was clearly working on its own UNO story focused on the construction contracts, which they broke on February 4. They have been doing great work on this part of the UNO problem, but have resolutely refused (despite several e-mails to lead reporter Dan Mihalopoulos – and you have to spell his name right to e-mail him, which I did!) to mention PURE’s complaint. They even tried to take credit in March for the EIG’s investigation, again refusing to acknowledge our January complaint.
At least Crain’s gave PURE credit for helping stop the extra $35 million state Senator Heather Steans put in the Springfield pipeline for UNO. Crain’s Greg Hinz wrote, “I first heard about the story from Parents United for Responsible Education.”
Well, media rivalries aside, the point is that UNO may finally be exposed for what it really is – a real estate empire Juan Rangel (pictured above with his private plane) is building on the backs of Chicago Public School children and Illinois taxpayers.
Sadly, Gov. Quinn prematurely re-opened the barn door, choosing to kiss Rangel’s ring instead of being a responsible steward of scarce state funds. After a mere six week “timeout,” Quinn turned the cash faucet back on for UNO because “UNO mended its ways enough to deserve the next installment of $6.2 million in grant funds.” Wonder if the SEC will agree?