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Report: Charter Schools Poised To Take A Much Bigger Bite Out Of NYC’s Budget

New York City charter schools may be in for a major budget boost, according to a new report from the city’s Independent Budget Office, one that puts New York City taxpayers on the hook for hundreds of millions of dollars.

The city Department of Education’s budget for charter school funding in 2018 represents an increase of $138 million over current levels, but according to the IBO, that number could rise to as much as $274 million for next school year.

Funding for charter schools is determined by a formula codified in state law, and has twice been frozen, causing spending for charter schools to lag behind that of district schools despite overall increases in education spending. In 2014, the state legislature set charter school tuition at $13,527 per student, plus a supplement of $500 this year, sending a total of $14,027 per student to city charter schools. The 2014 act expires this year, which means the tuition formula would shift to determine the new funding amount by multiplying the city’s district school spending in 2015-2016 by the percentage growth of the state’s total education spending over the last three years.

The IBO used three estimates of said growth to calculate its projections after the formula changes — spending for charter schools increases substantially on the city’s dime under each one. Mayor Bill de Blasio has long battled with the city’s charter school representatives over taxpayer’s fiscal responsibility to the schools, which are partly run using public dollars but privately managed.

Currently, charter schools in the five boroughs receive over $1.7 billion from the city DOE’s budget, used to educate over 100,000 students — a small fraction of the city’s over one million public school students. And while it’s true that charter schools have traditionally received less per-pupil funding than their district counterparts (and their funding has increased more slowly, due to tuition allocation freezes in 2009 and 2013), it’s also true that the DOE provides “non-cash resources” to the schools, which tacks on an additional $4,904 per student at charters located in DOE buildings (for schools who receive lease reimbursement and those with none, the numbers are $3,993 and $1,188 per student, respectively). This includes books, materials, transportation, food, and, in some cases, rent-free building space (or lease reimbursements). Charter schools also receive supplementary funding for special needs students, and are eligible for private funding.

When IBO accounted for charter schools that receive rent-free building space in existing DOE schools, per-pupil funding rises to $18,933 per student this school year, narrowing the disparity with district schools to a difference of 5.7 percent; traditional public schools got $20,078. The disparity is larger for a small number of charter schools that receive lease reimbursement for private space, and those who do not receive any public assistance for building space—these schools got up to 24 percent less money than district schools. Private funding to charter schools varies widely, with some major chains with hefty financial backers, while other “mom and pop” schools rely primarily on DOE funding.

Governor Andrew Cuomo, a charter school ally who has in the past received large donations from charter school supporters, most recently a $65,000 donation from the pro-charter school, Wal-Mart backed group New York Campaign for Achievement Now, has proposed to keep the supplemental funding but would shift responsibility from the state onto the city, to the tune of an additional $54 million, which is included in IBO’s estimated city tax burden. Earlier this year, he proposed lifting the city’s charter school cap, which restricts the number of new schools allowed to open each year (Mayor de Blasio is a staunch supporter of the cap).

The IBO report comes just days after President Donald Trump’s “America First” budget proposed deep cuts in federal public education spending, partly to help fund a $1.4 billion voucher program, which lets parents use public tax dollars to send their children to private schools.

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Mayoral Hopefuls Denounce School Closings and Co-Locations at Education Forum in Harlem

A crowd of more than a thousand students, parents and teachers packed First Corinthian Baptist Church in Harlem last night to hear mayoral hopefuls pitch their plans to improve the city’s fractured educational system.

The candidates continued to distance themselves from many of Mayor Michael Bloomberg’s educational policies with denouncements of school closings and co-locations.

“Are we actually trying to save and uplift each school, or are we taking the cheap way out and closing schools even though they can be saved, or co-locating schools whether it’s going to work or not?” Public Advocate Bill de Blasio, a 2013 mayoral candidate, said. “I reject those policies of the Bloomberg era. They did not work.”

Former New York City Comptroller Bill Thompson, and current NYC Comptroller John Liu are vying to become mayor in 2013 as well, and both said they will press for a moratorium on school closings and co-locations. Mayor Bloomberg’s Panel for Educational Policy was set to rule on this year’s round of co-location proposals earlier this month, but that date has been pushed back until Dec. 20 due to Hurricane Sandy.

The four-ton elephant in the sanctuary last night was the beef over privately managed public schools, better known as charter schools — an issue that New Yorkers for Great Public Schools, the coalition which hosted the forum, argues is linked to the proliferation of school closings and co-locations. De Blasio was the first and only candidate to address the issue head-on at the event.

“StudentsFirst sounds nice, but I’m not interested in taking their money,” de Blasio said.

NYGPS, a coalition which the UFT teacher’s union is a part of, released a report in August that accused StudentsFirstNY, the New York subsidiary of national ed-reform organization StudentsFirst, of being an astro-turf movement funded by wealthy right-wing conservatives seeking to capitalize off of public education funds. StudentsFirstNY identifies itself as a grassroots community-led organization seeking to find alternative and new solutions to the problems plaguing the country’s education system.

Liu was the first candidate to refuse campaign money from StudentsFirstNY — as the organization is pushing to keep Mayor Bloomberg’s current educational policies in place after he leaves office. City Council Speaker and fellow mayoral hopeful Christie Quinn said she will accept money from both the teacher’s union and StudentsFirstNY. Thompson has been non-committal thus far.

With the deadline on school closings and co-locations approaching, parents expressed concern about the impact such decisions will have on their child’s education.

“When you put two schools in a building and one has private funding plus public funding, the other one is basically getting bled to fail — to make space for another school,” Miriam Aristy-Farer, mother of a third-grader who attends P.S. 314 in the Bronx, tells the Voice. “We’re tired of being courted by charter schools…There’s a way to privatize education and involve the private sector. Allowing them to use [public schools] as an investment arena is not right.”

Kercena Dozier — a member of First Corinthian Baptist Church, which is a part of the NYGPS coalition, said that co-location can have a divisive effect on communities.

“I have been at co-location meetings, and I’ve seen parents who live on the same block pitted against one another,” Dozier said. “And, it is not that they are parents who do not want to see other parents’ children succeed.”

Quinn, who holds a sizable lead over her opponents in early polls, didn’t outright bash co-location policies. Some critics fear that a Quinn administration will simply be an extension of Bloomberg’s tenure. But when it comes to education, she expressed some decidedly different philosophies. In fact, she proposed alternative solutions to closing schools and to the system’s over-reliance on high-stakes testing as a measure of progress.

“We need to put in place a new system that deals with schools that aren’t doing well, not a system that comes in at the end and seems gratified when we close the school. But a system that’s a red flag warning system,” Quinn said.

She cited her work with the city council, several NYGPS member organizations, the UFT and others to raise $25 million in council funds to help beef up resources and promote improvement at 51 struggling middle schools across the city.

Liu says there needs to be a radical reworking of how the New York City Department of Education approaches its duties and services.

“DOE is not a corporation making money,” Liu said “The Department of education has to stop thinking that teachers are assembly line workers, that students are widgets piling onto the assembly line, that parents are just annoying customers that [the DOE] can ignore….When we get rid of the high-stakes testing, when we stop playing shell games with all the school co-locations and closures and so called new schools, when we stop that factory mentality…then we can get down to the old business of educating.”

The Reverend Michael Walrond, pastor of First Corinthian, urged those in attendance to persistently demand a concrete plan on education from whichever candidate they decide to cast their vote for. He also cautioned them be wary of that 4-ton elephant in the room.

“There will be forces that oppose this kind of gathering tonight. There will be forces that oppose these kinds of gatherings in the future, and they will come with money. Our mayor right now is developing at the grassroots level, a gathering of people, of money, to maintain his policies in hopes that they continue after he leaves offices,” Walrond said. “[But,] organized people always overcome organized money.”

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Willard Lanham, Former DOE Consultant Who Stole Millions, Hit With Three-Year Prison Sentence

Willard “Ross” Lanham, 58, learned yesterday that embezzling millions of dollars in funds meant to bring Internet access to kids is not only a despicable thing to do, but it will also earn you more than three years in prison.

A Manhattan federal court judge sentenced Lanham to 37 months in jail for orchestrating an embezzlement scheme that netted him $1.7 million from the New York City Department of Education.

Lanham served as a consultant for the DOE from 2002 to 2008 on three projects designed to upgrade the technological infrastructure in city public schools. It was through the Power Connect project, which the DOE launched to bring Internet access to city public schools, that Lanham devised a scheme to skim the city out of the large sum of money.

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Lanham set up his own — unauthorized and unnecessary — consulting company, hired out its consultants to contractors and subcontractors working on the Power Connect project, and had these companies bill one another (and ultimately the DOE) at high rates for the shadow company’s consultant “services.” This web of deceit made him millions in profits over the course of his tenure as the Power Connect point man.

“The Department of Education entrusted [Lanham] with the vitally important task of helping young students get connected to the Internet — thereby connecting them to the world around them and the infinite resources that can be found online,” Preet Bharara, U.S. Attorney for the Southern District of New York, said in a statement obtained by Voice. “Instead, Lanham chose to steal precious dollars from DOE to help underwrite his lifestyle, and he will now pay for his crimes.”

This lifestyle included the purchase of a large plot of land in East Northport — where he built high-end homes and amassed a collection of luxury cars worth an estimated $600,000 (the collection included a Lexus, Corvette, Porsche, Cadillac Escalade, and a Mercedes, according to the investigator’s report).

You might think that the $200,000/year salary Lanham received from the DOE, which was part of the roughly $1.4 million in total pay for his work with the department, would’ve been enough. That, apparently, is not the case.

Lanham was hired in 2002 by a consultant company the DOE hired to oversee its entire technology upgrade initiative. Through a complex billing process — between Lanham, the two main contractors for the project, Verizon and IBM, and numerous subcontractors — Lanham was able to skim millions from the DOE.

According to court documents, Lanham’s scam was pretty elaborate — he set up his own consulting company, Lanham Enterprises, of which the DOE had no knowledge. In one such scenario, Lanham told one of the subcontractors to hire two consultants for the work they’d be doing on Project Connect, pay them, and then bill Lanhman Enterprises for reimbursement for a rate of $70/hour and $30/hour, respectively. This is in spite of the fact that the two consultants didn’t provide the subcontractor with any direct services — and really were just pawns of Lanham’s.

Lanham then instructed a different subcontractor to pay the same two consultants $187.50/hour and $125/hour, respectively. The subcontractor paid the consultants, but unlike the other subcontractor, it billed one of the main contractors instead of Lanham Enterprises. The main contractor then billed the DOE at rates up to 15 percent higher than what the subcontractor normally billed.

Thus Lanham was able to profit from the large difference between what Lanham Enterprises had to pay in reimbursements and what the second subcontractor paid the two consultants. When the main contractor grew suspicious of the payment system, Lanham assured the company that the DOE had authorized the billing process.

In all, from 2002 to 2008, the two consultants made $3.2 million dollars from the scheme —
much of that went to Lanham. Lanham perpetrated similar forms of his scheme during his time working on the project. He eventually added more consultants — including his brother — and changed how and in what way the subcontractors and contractors passed through the unauthorized payments.

In calculating the sum of these unauthorized profits, Lanham Enterprises made $5.3 million, and only paid out $1.7 million. Yesterday, the court ordered Lanham to forfeit his more than $1.7 million in salary earnings and pay back more than $1.7 million dollars to the DOE.