The $100 Million Question: How much do we invest in charter schools.

I’m beginning to think the Texas State Board of Education is the Sarah Palin of state government bodies. Just when it seems the members have collectively strained the board’s credibility to the max and it’s time for them all to take a nice, quiet break from the media circus, they burst back onto the scene with another headline-making controversy.
The board’s latest foray into using children as the human shield behind which they launch socially-conservative firebombs relates to funding charter schools. Charter schools, as older readers may remember, came into being in Texas in 1995 as a free alternative to crappy public schools. At best, they resemble the inspiring Knowledge is Power Program schools, the largest charter chain in the U.S., frequently recognized for their exemplary learning environment and commitment to minority students. At worst, they’re “the last house on the block,” as one juvenile court judge recently described local charter schools to me, a little-monitored place to send public school cast-offs and juvenile delinquents.
Last week, perhaps bored by the lack of opportunity to call our president Barack HUSSEIN Obama, board member David Bradley (R-Beaumont), chair of the Permanent School Fund Committee, introduced a motion to use half a percent of the $23 billion Permanent School Fund to provide funding for charter school facilities. And, as is their wont, the Board passed it in the shadiest way possible.
“Charter schools are essentially fully-funded by the state,” says David Dunn, Executive Director of Texas Charter Schools Association and former chief of staff at the U.S. Department of Education, referring to the 1995 Texas Education Code provision that allocates money toward charters’ educational, operational and maintenance, “but they get zero funding from the state for facilities. Unlike school districts, charters can’t levy property tax or raise any kind of tax revenue.” They also aren’t able to secure bonds at the rate of school districts, who may use the Permanent School Fund as their bond guarantee, they pull a BBB rating to districts’ standard AAA. Dunn claims this relegates many charters into sub-par facilities like empty grocery stores, strip malls and other bizarre locales willing to offer leases to financially unproved institutions. On a recent drive-by tour of 10 local charters, there was indeed a charter housed in a lonely shopping center off Hillcrest Drive, one in a shabby two-story house, and one in what appeared to be a former small apartment complex on Blanco. Some charters, like KIPP and the Dr. Harmon W. Kelley Elementary did manage to invest in large, school-like buildings, however.
Bradley’s proposal is to use the Permanent School Fund to buy school properties and then lease them to charters. Opponents of the plan wonder if charter schools pass the muster of the legal requirement that the Board invest Permanent School Funds in minimum risk/maximum return ventures. Lawyers for the SBOE advised against the plan and outside management hired to consult on Permanent School Fund investments refused to make a recommendation. “I’m totally against this allocation, I have publicly voted against it,” said Rick Agosto (D-San Antonio), a member of the Permanent School Fund Committee and chairman of a global real estate and investment firm. Though Dunn points out that charters are on far less shaky ground then their dismal debut, with only five closing in the past two years compared to 71 total closures, many remain skeptical of their viability. “If you understand investments, you know that returns are driven by allocation ... but I don’t even know what a charter school allocation is,” said Agosto. Moreover, Agosto wondered, if you’re investing in charter schools for a maximum return, why would you choose a charter in a struggling, poor area rather than in a well-to-do area?
Agosto voted against the plan last Thursday in the committee of the full board, helping to kill the measure in a 7-7 split. He checked into Friday’s final meeting and then left due to business commitments. Little did he know the board would reverse itself while he was gone. “Friday is just an overview of the committee, there’s never any amendments,” said Agosto, still baffled. He believes Bradley and others in his conservative voting bloc saw that Agosto and fellow Democrat Mary Helen Berlanga would be absent, and with the secured vote of Rene Nunez (D-El Paso), jumped at the chance to reverse course.
Agosto and fellow board members denounced the vote. Geraldine “Tincy” Miller, (R-Dallas), who runs a commercial real estate firm co-wrote an editorial with her husband, founder of said real estate firm, warning “Purchase/leaseback real estate investments of school facilities are specialized developments in residential neighborhoods rented to typically not well-capitalized users. Additionally, funding of usually nonprofit charter schools is normally by volunteer and student contributions, making this type of investment highly unsuitable for the school fund.” Even Dunn is slightly hesitant to give the plan an enthusiastic endorsement. Noting that an Attorney General opinion must be secured before the investment plan could move forward, “obviously we are for anything that helps charter schools,” he said, “but we are not for anything that would not be in the best interest of the permanent school fund.”
Both Agosto and Miller are off the board in November, as is Cynthia Dunbar, who made the motion to adopt Bradley’s plan, and Don McLeroy, the former chairman who voted for it. Agosto noted that a new board could move not to fund this allocation, an action the local candidates I interviewed seemed interested in. Michael Soto, the Trinity University professor running for Agosto’s open seat criticized the “government-subsidized real estate scheme” in an email. On a follow-up phone call he questioned whether such financial support of charters was consistent with the free market economic theory the conservative bloc has favored in Texas Essential Knowledge and Skills standards. “It’s the kind of practice that conservatives like to belittle except when they themselves are doing it,” he said. His Republican opponent, Tony Cunningham, thought the allocation was fine, but had little else to say on the matter. Rebecca Bell-Metereau, running against Republican incumbent Ken Mercer (who could not be reached for comment), said she wouldn’t have hesitated to vote against the motion. “It’s not a matter of whether charter schools are good or bad, it’s a matter of making good, sound investments,” she said.