Class Size Matters: The Cost to New York City of Paying Rent for Charter School Facilities

Oct 22, 2019 by

Diane Ravitch –

Leonie Haimson and her colleagues Patrick Nevada and Emily Carrazana of Class Size Matters released a report on the cost that New York City pays for charter school facilities, even for richly endowed charters like Success Academy. The city is now spending more than $100 million a year to pay the rent for charters. This includes almost $15 million a year paying for rent where the charter or its management organization is the landlord!

In 2014, Governor Andrew Cuomo advanced legislation that required the City to pay the rent for charter schools in private buildings when the city was unable to provide suitable space in public school buildings. At the time, he declared himself the champion of charter schools, which helped him raise campaign funds on Wall Street. Charter students are 4% of the state’s students, and 10% in the City.

Here is the press release:

On Monday, October 21, Class Size Matters released a new report revealing how the NYC Department of Education has spent more than $377 million on charter school facility costs from FY 2014 to FY 2019.  This amount includes both matching funds for facility upgrades for public schools, co-located with charter schools that spent more than $5000 for this purpose, and on paying the rent for new and expanding charter schools in private space. Nearly $15 million of that total since FY 2015 was spent by DOE to help charter schools to help pay for their space, even though their buildings are owned by their Charter Management Organization, affiliated foundation or LLC.

In FY 2019, DOE spent about $25 million last year on matching funds to public schools co-located with charter schools.  Yet between FY 2014 and FY 2019, more than $22 million in charter school expenditures on facility upgrades were not matched in 175 public schools that shared their buildings, according to spreadsheets provided by DOE, in apparent contradiction to astate law passed in 2010. By FY 2019, only one third of co-located DOE schools received their full complement of matching funds.  

The two schools which experienced the largest shortfalls were both District 75 schools that serve students with serious disabilities: Mickey Mantle School (M811), located in two sites in Harlem, which lacked $1.5 million, and P.S 368 (K368), located  in two sites in Brooklyn, which lacked about $1.2 million. All four sites are co-located with different branches of the Success Academy Charter schools.

Mindy Rosier is the UFT chapter delegate from Mickey Mantle School, which enrolls students with multiple disabilities, including autism, emotional/behavioral difficulties and/or significant language and communication disorders.  As Mindy pointed out, “The $1.5 million in matching funds for facility upgrades would have been incredibly helpful to our school.  Our District 3 site needs new wiring, since the internet is very slow, and much of our curriculum is online. Our site in District 4 needs new bathrooms and water fountains, and nine classrooms out of ten badly need repainting.”

The DOE currently holds leases for 12 private buildings that house 15 charter schools, with a cost to the city of $17.1 million during FY 2019 alone. In addition, there are 88 charter schools that receive a per student “lease subsidy” to help pay for their own private space, which has increased by 72 percent since FY 2017. In 2019, DOE was projected to spend about $83.6 million in lease subsidies for charter schools, with an estimated $50 million of that total reimbursed by the state.

By analyzing property records, charter school financial reports, and sales records, the authors found that the payments made by DOE included $14.8 million for eight charter schools which are housed in buildings owned by related parties of these schools, that is, their own Charter Management Organization or an affiliated LLC or foundation.  

For example, DOE provided lease subsidies of $2.2 million in FY 2019 for two Success Academy charter schools even though the Success CMO owns their space in the Hudson Yards complex on the west side of Manhattan, reportedly the most expensive real estate development in US history. In another case, the city paid $461,965 in lease subsidies in FY 2019 towards the rental costs of Beginning with Children II charter school, despite the fact that the Beginning with Children Foundation bought this Brooklyn building for only ten dollars in 2017 from the Pfizer Corporation. More examples are provided in the report.

Carol Burris, Executive Director of the Network for Public Education said: “It is outrageous that the taxpayers of New York City and the state are required to pay $2.2 million a year to house two Success Academy charter schools located in a building in the Hudson Yards that the Success Academy Charter Management Organization owns. And Success is not alone. This report documents eight charter schools for which taxpayers are footing the facilities bill in buildings owned by the charters themselves or affiliated organizations. The Network for Public Education has studied all of the various charter laws and their loopholes.  I have never seen any other that requires the district to cover the costs of private facilities like this one does. One wonders whether this is about educating children or building a real estate empire at taxpayer expense.” 

NYC has more than 500,000 students in overcrowded public-school buildings, as well as class sizes far higher on average than classes in the rest of the state.  Yet we are also the only district obligated to cover the cost of private space for charter schools, or offer them space in public school buildings,said Leonie Haimson, one of the co-authors of the report. “The cost of providing space for charter schools in private buildings has risen sharply over the last five years.  If the current trend continues, the amount spent annually may soon exceed the cost of the payments that the city spends to finance the construction of new public schools.”  

Concluded Diane Ravitch, celebrated education historian, “The findings of this report, if validated, should shock the conscience of the Governor and Legislature.  They should amend the law as soon as possible so that the city is no longer forced to subsidizethe acquisition of private space by charter schools, even as our public schools continue to be badly underfunded and overcrowded. “

The powerpoint can be downloaded here.

Source: Class Size Matters: The Cost to New York City of Paying Rent for Charter School Facilities | Diane Ravitch’s blog

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