CSUSA’s Lucrative Financial Arrangements

At the December BESE meeting, the decision was made to revoke the charter for Baton Rouge Charter Academy in  Mid-City (BRCA). The charter school, started by the South Louisiana Charter Foundation, has a management contract with Charter Schools USA (CSUSA). After three years of F ratings in school performance, the school was granted a probation of one year, but failed to improve the rating.

In his blog post Take Your Excuses Elsewhere, education reform blogger, Peter Cook, brought to my attention that Jonathan Hage, CEO of CSUSA was in Baton Rouge to appeal to the East Baton Rouge Parish Schools superintendent for a Type 1 charter, under the district’s control, to keep the school open. Cook referenced this story in the Baton Rouge Advocate.

Now, I have voiced my opposition to “for profit” charter school arrangements, but this particular incident really put a bad taste in my mouth. I am a firm believer that the free market concept, applied to public education, does nothing but facilitate opportunities for taxpayer dollars, intended for the classroom, to be redirected into the pockets of the operators. I hold this belief because it has happened over and over again in the last 20 years. Just today, I came across this story about Celerity Education Group in Los Angeles which happens to have a business relationship with the three Celerity schools in Louisiana.

First, CSUSA doesn’t operate the school. The non-profit operates the schools and contracts CSUSA to manage them. Second, the contracted management doesn’t submit the charter application. They may work with non-profit as a potential client to develop the application, but the application is submitted by the non-profit. CSUSA should not be shopping for a new authorizer for the charter school. How do I know this? Well, Revised Statute 17:3983 clearly states that:

  • A non-profit organization can be formed by any group with a minimum of three (3) people holding a current and valid Louisiana teaching certificate to apply for a charter.

Surely, we would expect a charter school management company as reputable as CSUSA to adhere to the law, and they would never be guilty of soliciting a non-profit for the purpose of facilitating a “for profit” arrangement. Furthermore, the community businessman who stated that when he inquired to BESE about a charter school, his BESE member met with a group of people and steered them to CSUSA, must have been mistaking. Besides that, why would we ever think that a charter school management company would contribute $64,750 to elected officials who can effect policy that will expand its business, and surely, $10,500 wouldn’t have gone to two BESE members…well, mainly one.

CSUSA has contractual agreements with four non-profit organizations in Louisiana to manage nine schools. I thought I’d take a closer look at these arrangements. First, please note that none of these non-profit organizations have three board members with valid/current Louisiana teaching certificates. Bold board members are certified teachers.

Organization Board Schools Contract
South Louisiana Charter Foundation John Pierre
Edmond Jordan
Achilles Williams
Alvin Washington
Lynn Singletary
Melissa Sybrandt
Ryan Curtis
Baton Rouge Charter Academy, Midcity

Baton Rouge Charter Academy, South

Foundation acquired tax-free public facilities bonds to build. Ryan Companies, USA built the school, then Red Apple Development purchased the facilities and leases to the foundation for $77,753,029 over 20 years. CSUSA manages for 15% of revenues. Fee for 14-15 year was $1,933,980, combined. See here.
Shreveport Charter Foundation Ann Stokes
Melva Williams, Ph.D
Erica Bryant
Phillip Rozeman, M.D.
Delano Wilson
Cynthia Peatross
Beth Woods
Doris Samuels Robinson
Zazell Dudley
Magnolia School of Excellence

Magnolia School of Excellence, 6-12

Foundation acquired tax-free public facilities bonds to build. Ryan Companies, USA built the school, then Red Apple Development purchased the facilities and leases to the foundation for $12,216,597/yr over 20 years. CSUSA manages for 15% of revenue. Fee for 14-15 year was $1,111,092, combined. See here.
SWLA Charter Foundation Judge Gene Thibodeaux
Charles Honore’
Clyde Mitchell
Andew Ranier
Dr. Michael Kurth
Willie Mount
Sylvia Stelly
Lake Charles Charter Academy

Lake Charles College Prep

Southwest La. Charter Academy

Foundation acquired tax-free public facilities bonds to build. The general contractors on these schools were local. Ryan Companies USA’s involvement, if any, hasn’t been determined, yet. CSUSA manages the facilities for 15% of revenue. Fees for 14-15 were $2,289,778, combined. See here.
Lafayette Charter Foundation Dr. Mary Louella Cook
Carlos Harvin
Karen Miller
Virginia Jones
Fernando Perez-Viart
Erica Williams
Jeremy Howard
Katherine Roy
Corey Jack
Acadiana Renaissance Charter Academy

Lafayette Renaissance Charter Academy

Foundation acquired tax-free public facilities bonds to build. Ryan Companies, USA built the school, then Red Apple Development purchased the facilities and leases to the foundation for $61,520,696 over 20 years. CSUSA manages for 15% of revenue. Fee for 14-15 year was $1,059,640, combined. See here.

Now that you know a little about the contracts that these schools have with CSUSA, let’s take a closer look at the companies. In each relationship, except Southwest Louisiana Charter Foundation, you have three businesses involved. Typically, Red Apple Development helps to secure funding for the non-profit through tax-exempt bonds issued by the Louisiana Public Facilities Authority. Once funding is secured, the facility is built by Ryan Companies to the standards set forth by CSUSA. After the facility is complete, the non-profit then sells the facility to CSUSA, and they enter into a lease agreement over 20-30 years with 10% interest. In addition, the law requires that when a charter goes belly up, any assets acquired while operating automatically revert to BESE. If ownership transfers to CSUSA, then Hage now has real property that he can use to entice another charter, or sell outright.

The icing on this particular cake is that all three of these companies are owned by Jonathan Hage, CEO of CSUSA. What? Yes. Mr. Hage enjoy a three tiered revenue scheme on almost all contract agreements with charter schools. The exception, in Louisiana, is the Southwest Louisiana Charter Foundation retained ownership and sought additional funding from financial institutions for expansion. I don’t know about you, but it doesn’t give me a warm fuzzy feeling to know that millions and millions of tax dollars are going into the pockets of Jonathan Hage. Charter school revenue is limited to funds from the MFP and whatever grants they can secure. They don’t enjoy the benefits of additional local funding; therefore, they are operating with less funding and giving a huge portion of it away to a profiteer. Here are some other campaign contributions that are interesting.

These are a couple of questions that need to be answered, and I hope someone in the legislature, Attorney General’s office, or Governor’s office, picks up on these.

  1. Is it legal for CSUSA to utilize his three tiered strategy to secure tax-exempt bonds, then acquire the property and become landlord, in addition to charging millions to “manage” the schools?
  2. Since the acquired bonds are for “public facilities” and the charter schools are “public schools,” are the non-profit organizations violating public bid laws by entering into contractual relationships for construction without accepting bids?

If you agree with me on these arrangements, please sign the Petition to Gov. John Bel Edwards asking him to halt approval of schools that do not meet the legal requirements.

11 thoughts on “CSUSA’s Lucrative Financial Arrangements”

  1. First off this is incorrect information. The schools in Lake Charles were built by Lemoine Construction and Pat Williams construction. Try doing a little more thorough research next time.

    1. Thanks for the information. It was obvious that the Lake Charles agreement was different from the others, but the information in the audit wasn’t as clear as in the others. I’m happy to edit, if you can provide me a link to verify it.

      1. However, it could be a bit more fair to the BESE member you reference in your piece if you noted that said member, in fact, voted to close CSUSA’s Baton Rouge Academy at Mid City last month over the organization’s objections.

        1. Fair enough, although I wasn’t in attendance, nor have I reviewed the video or minutes. Not that it isn’t relevant to the current situation. My focus was more on CSUSA’s business practices. As for BESE, I’m so used to them voting with ulterior motives, I suppose it went unnoticed.

  2. Nice piece, Ganey. I get the impression that the LAE/Iberville case is generating some activity in the charter community.

  3. Please post a list of your references in order for appropriate response. There is inaccurate information within your article; the chance to respond with accurate information and correct your incorrect conclusions would be a fair practice.

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