Speculating on Education (a WTF moment)

[ensho]

http://counterpunch.com/


The Charter Schools Gamble


"We’re not speculators. We’re investors.” So says the CEO of a real estate trust that recently sunk some $170 million into 22 charter schools.

-snip-

It turns out the buyer, Entertainment Properties Trust (EPR), buys real estate nationwide, with its total portfolio worth about $2.6 billion. Over half of that is in megaplex movie theaters. EPR’s stated goal is to be "the nation's leading destination entertainment, entertainment-related, recreation and specialty real estate company."

So why charter schools?

According to EPR's website: "We understand that education is among the most vital experiences of life. Movie theatres and charter schools are very different in many ways, but they are alike in this respect: People choose to patronize them. Our experience in financing specialized real estate enables us to capitalize on properties that people choose to visit."

-snip-

EPR, based in Kansas City, Missouri, consists of sixteen full-time employees. David Brain, President and CEO, says his favorite part of the job is: "solving problems and crafting a deal, and creating something really new." The deals that EPR crafts follow corporate policy: their tenants must sign a long-term mortgage or something called a triple-net lease where they (the tenants) pay "substantially all expenses associated with the operation and maintenance of the property." EPR’s charter schools have these triple-net leases. EPR is the landlord; the tenant pays for maintaining the buildings and running the classrooms.

In this case, the tenant is a charter-school operator called Imagine. Founded in 2004, it now runs 74 schools from New York to Arizona involving some 36,000 students. Imagine says its goal is “giving the families quality educational choice” by establishing “independently operated public schools.”

Charters are public schools in that the funding comes from state and local school taxes. Imagine gets a certain amount of money for each of its charter students based on the home district’s per-student expenses. The more kids Imagine enrolls, the more money it gets (and the less goes to traditional public schools.) Over the last few years, charters have been successfully attracting more and more students: in central Ohio, for example, Imagine’s budget doubled in 2005-06 and doubled again the next year.

The money pays for teachers, supplies, maintenance, etc. But the problem charter schools have is getting the capital to buy or lease buildings. The vice-president of policy for the National Alliance for Public Charter Schools calls it “the biggest challenge.”

What Imagine did was start a real estate arm: Schoolhouse Finance LLC. In central Ohio, for example, this financial arm purchased a building for $1.5 million with a $4.6 million mortgage. But tying up their money in property ends up limiting how much charter schools can expand. So Imagine turned around and sold its buildings as part of a larger sale-lease transaction with a company called JER Investors Trust Inc. This brought in $5.6 million over Imagine’s original purchase price.

Imagine did a similar deal in Indiana, where its real estate arm made $2.6 million on an old YWCA it bought for $1.9 million. In fact, real estate plays a key role in Imagine’s charter school operations: its investments in buildings went from $19 million in 2005 to $297 million in 2008 -- suggesting that charter schools can turn the challenge of finding classrooms to their advantage.

-snip explains previous scams that got them to charter schoold -

Imagine ran a Nevada school called the 100 Academy of Excellence, which -- based on the local per-student cost -- received about $3 million from the state each year. Half of that, the story reports, went to running the school and half went back to the operator, Imagine. Of the $1.5 million Imagine got, it paid almost all of it -- $1.4 million -- to Joe Robert’s company to cover its lease.
-snip-
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puke

[joeycola]

1. Arne Duncan is pushing the charter schools.

[ensho]

2. not good - we should keep a bright light shining on him

nt

[joeycola]

3. he is mainly under the radar in the news last few months, but I have

read several articles of him touring the country advocating these schools.

[joeycola]

4. The Wal-Mart Model of Education .........

I have read articles about how wal-mart is investing in charter schools but I do not subscribe to this journal so I have not read it.


http://counterpunch.com/

The Wal-Mart Model of Education

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