Finance and Facilities Committee Meeting: May 16, 2019

by Lisa Haver

The ongoing problem of poor acoustics in the Committee room has not been resolved. Board members and staff often do not speak into their mics, despite repeated requests from the audience, and do not project their voices so that the members of the public in attendance can hear. Of course, the fact that the meeting is held at 10 AM means there are not many members of the public able to attend.

Present:  Co-chairs Leticia Egea-Hinton and Lee Huang, Member Joyce Wilkerson. Member Wayne Walker participated via phone. Board member also attended and participated.

April 11 2019 Minutes were approved.

Chief Financial Officer Uri Monson gave a brief overview of next year’s budget, to be voted on by the Board at the May 30 Action Meeting.  Monson presented information on: the twenty schools in which air conditioning will be installed, charter costs, the revised 5-year plan, and the adoption of the levy of taxes by City Council at the June 30 Board Action Meeting.

Lee Huang asked when the Board will receive the ERP update (there was no explanation of what ERP stands for or what the program includes). Monson referred to a staff presentation from a few months ago and said that it will be voted on by the Board in May.

Transportation items were presented by Chief Operations Officer Danielle Floyd. There was a review of costs for both district and charter schools. Joyce Wilkerson asked about the rate paid to drivers and whether those were consistent for all companies. Floyd responded that all transportation vendors recently received a 3% increase (one received 6% because they have more routes) from the District but that the District has no control over what companies pay their drivers. Wilkerson asked whether the District imposed a minimum wage; Floyd responded “No”.  Leticia Egea-Hinton said that she has heard many complaints about poor service and problematic interactions between drivers and students.

Huang said that in the future information about woman/minority-owned businesses should be included in presentations and whether those groups are being sought.

Two proposed sales, recommended for approval by the COO, will be brought before the Board in the near future. The first is KIPP’s request to purchase the former Whittier Elementary building at 3001 N. 27th Street  in the Allegheny West neighborhood for $775, 000. Whittier was closed in its centenary year by the SRC in 2013. The building has been vacant since then. KIPP wants to move grades 5-8 from their current location at 2539 N. 16th Street, which is the former Stanton Elementary, sold to KIPP in 2014.  These grades are actually co-located at the other KIPP school there. CSO staffer Peng Chao presented current academic information about this KIPP school, although it was not stated that the sale was contingent on current academic performance. Chao stated that in its last evaluation the school was assigned an “Approaches Standard” rating in academics. Chao also stated that KIPP would have to submit an Amendment Request in order to move the students from one location to another.  Wilkerson pointed out that the Board should not “put the cart before the horse”, that is, approve the sale before the Board approved an amendment for relocation. Floyd responded that because of other legal considerations the sale would probably not take place until October 2019. McGinley said that did not change the order of the votes. Chao said that the CSO could work to bring the Amendment evaluation and the sale into alignment. Chao said that the CSO has “already been in conversation with KIPP” on the issue.

The second District property on the block is the former Belmont Elementary at 4030 Brown Street  in West Philadelphia which has been occupied by grades 1-8 of Belmont Charter since 2002 (Kindergarten is in another Karp-run building; grades 9 and 10 in yet another).  Former District CEO Paul Vallas turned over control of Belmont to real estate developer Michael Karp in 2002; Karp is Chairman of the Board of three schools in the Belmont network. (Karp attended the Committee meeting briefly but did not speak.)  Belmont would continue to operate in the building, but the District would have no control over any lease agreements for other programs, such as a day-care center. A yet-unnamed non-profit, to be created by the charter’s present board, would be the official purchaser of the building; that non-profit would lease it to the charter school. The current sale price is $2.8 million; the District would net only $1 million because of debt attached to the building.  McGinley asked how debt was accrued on the building. CFO Monson replied that bonds were issued for repairs on the building but did not specify whether that was after the time the charter moved in. Where did that debt come from if Belmont has been occupying it for 17 years? How much has Belmont been paying for maintenance and repairs, if at all? McGinley asked whether the District had listed the building for sale prior to this; Floyd responded that the District had not. The Belmont board had approached the District to buy it a couple of years ago, but since Belmont had not signed its new charter in 2017 (citing objections to conditions being placed on them) the District did not consider the offer.  Chao then informed the Board that Belmont was now willing to sign after two years; he also cited some data that said Belmont, which had failed to meet academic standards in the 2017 evaluation, had improved in the past two years. Floyd said she expected the closing for the sale to take place August 2019. None of the Board members asked how much Belmont was paying the District in annual rent, if any.

One question that did not come up: Is it in the best interest of the District and its stakeholders to sell this public building to a private organization, especially a charter organization?  Have the various District departments been working with Karp to sell his organization the building just because he asked? Karp is a wealthy developer and was appointed to serve on the PICA (Pennsylvania Intergovernmental Cooperation Authority), a pseudo-governmental agency created to oversee the City’s finances.

Karp told the SRC at its April 2019 meeting that Belmont would not be signing its new charter because he objected to the District imposing any conditions, which are actually notifications that the charter must correct any academic or financial deficiencies.  Belmont was recommended for renewal despite the fact that it received a “Does Not Meet” rating in Academics, that it failed to meet the standard in both Organization and Finances, and that the school was cited for several deficiencies, including: barriers to enrollment, failure to apprise students and parents of due process rights in disciplinary matters, Sunshine Act violations, absence of ethics statements from Belmont board members, low staff retention, food safety issues, inadequate numbers of certified and highly qualified teachers.  The CSO has not issued an updated Renewal Evaluation, so it is unclear what information the Board is looking at when considering both the renewal and the proposed sale.

The sale of both of these properties is disturbing as the public school system loses more assets to the private sector. The Board should consider the ramifications before approving.  The Whittier sale is easier to understand as the District had the building on the market for years. But the Board should reject the Belmont sale. No reason was given except that the Belmont board, led by Michael Karp, wants to buy it. The Board must look out for the interests of its constituents, not developer/charter operators looking to expand their real estate holdings in gentrifying neighborhoods.

Speaker Cecelia Thompson told the Committee that she was confused about the Belmont sale. Thompson lives near the school and is an active member of the Belmont Civic Association, but this is the first she is hearing about this sale. When she asked why the community has not been asked about this, COO Floyd responded that the building would continue to operate as an educational facility.  Thompson said the neighborhood is poor and predominately African-American and she wondered whether this kind of transaction would take place in a more affluent area without the blessing of the residents. Thompson also asked why the Board would be approving more funding for outside legal firms when the District has its own in-house legal department.

When I spoke, I pointed out that there were too many unanswered questions about the Belmont sale. I also cited information from the most recent evaluation showing the poor ratings in all major categories. I told the Board that approving a sale to a non-profit would mean the creation of one more circular lease agreement, a common method for charter investors to profit from nominally “non-profit” charters.


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