In charter-renewal fight, Philadelphia School District ‘paying for both sides’

One of the city’s charter-school operators has moved money from one account to another without explanation: no loan agreements, no signatures — “a shell game,” in the words of a Philadelphia School District auditor.

Now the School District is shelling out money to try to pull two charters from Aspira — whose school bills are paid by the district — in a legal fight that could end up costing taxpayers tens of thousands of dollars.

“It’s really the district paying for both sides, which is kind of insane,” said Temple University law professor Susan DeJarnatt.

“Welcome to Pennsylvania charter school law,” said Auditor General Eugene DePasquale. “It’s unbelievable.”

Three years after the district first recommended that the Aspira-run Olney and Stetson charter schools be non-renewed for reasons that included their financial management, lawyers for the school board and the charters are squaring off in weeks-long hearings that still won’t decide the schools’ fate.

Pennsylvania law requires the process. To non-renew a charter, school boards must give notice with specific reasons. Evidence must be presented at a hearing, and the board must let the charter school give testimony. After a public comment period, the board can vote on the charter — which then has the right to appeal.

Because charter schools are funded largely by school districts, taxpayers are paying not just for the district to make its case but for the charter to defend itself.

“The schools derive their revenue from federal, city, state, and grant sources and pay expenses, including legal expenses, from those revenues,” said Aspira spokesperson Nathan Cross. In 2016, $23 million of Olney’s $26 million in revenues came from the district, as did $11 million of Stetson’s $12.5 million, according to tax filings.

The hearings for Olney and Stetson began March 12 and are scheduled to continue through next week, if not longer. School board spokesperson Imahni Ellison said both the district and the charter schools asked for more dates.

“We have to provide due process to each school, and there is no specific time frame for doing that,” Ellison said.

The school board isn’t presiding over the daylong sessions. It hired attorney Rudy Garcia as hearing officer at a rate of $225 an hour, according to Ellison. Representing the School District is attorney Allison Petersen, at a rate of $200 an hour.

Garcia and Petersen also performed their respective roles for the now-defunct School Reform Commission.

Olney and Stetson are represented by Latsha Davis & McKenna, at rates ranging from $180 to $300 an hour, according to Cross. At least two attorneys from the firm have been present during portions of the hearings attended by The Inquirer.

“It’s unfortunate that after all the progress that the schools have made and all that they’ve done to meet or exceed the district’s requests over the last three years, we find ourselves in an adversarial proceeding where the schools are forced to retain counsel to defend themselves,” Cross said.

Lawyers for Aspira also have attended the hearings, including former City Solicitor Ken Trujillo. Cross declined to disclose the rates for Aspira’s lawyers, calling the question irrelevant because technically Aspira was not allowed to participate in the hearings.

Taxpayers may be paying for those lawyers as well, however. Of the $23 million in revenue Aspira reported in 2016, more than $18 million came from charter schools.

Cross said Aspira spends most of that money on its schools, 88 percent for the salaries of 240 teacher coaches, counselors, and support staff “that the schools would otherwise have to pay.”

Because charter-management companies aren’t subject to the Right-to-Know Law, how Aspira spends its money can’t be scrutinized, said DePasquale, who identified issues with the governance and finances of the Aspira-run charter schools in an audit last year.

“We get to see the money that leaves the school and goes to the company,” but “don’t have jurisdiction to follow the trail” beyond that, DePasquale said.

The hearings have focused on the district’s assessments of the academics and operations of Olney, which serves grades 9 through 12, and Stetson, which serves 5 through 8. Both previously were run by the district, but were turned over to Aspira as part of the Renaissance School Initiative — Stetson in 2010, Olney in 2011. The intent was to dramatically turn around struggling schools.

But student proficiency on standardized tests fell after the management change, according to the district. The schools also didn’t do better on tests than district schools, other charter schools, or similar schools, according to the district.

Those measures were cited in resolutions approved by the SRC in December 2017, which also listed problems with the schools’ management.

Olney’s and Stetson’s money was used for purposes besides the schools, violating the state charter law, the resolutions say. The schools were both guarantors of a $5 million mortgage loan issued to Aspira for the organization’s Antonio Pantoja Charter School, and their revenues were included in security interest for a $12.8 million loan issued to an affiliated organization.

Parents testifying in favor of Olney included Carmen Camacho, who said she was pleased with the school’s security measures: “Safety is number one for me.”

The board will receive a report from Garcia after the hearings. Even if it votes to non-renew Stetson and Olney — whose charter agreements expired in 2015 and 2016 — that doesn’t necessarily mean immediate changes for the schools. Pennsylvania allows charter schools to continue operating during appeals.

Because Olney and Stetson are Renaissance charters, the School District owns the buildings. The district “has been working on plans” since the SRC voted in 2017 to begin the non-renewal process, said school board member Chris McGinley, who also served on the SRC.

Teachers see other concerns as more pressing. At Olney last week, several dozen marched around the imposing brick school building, pushing for a contract that would reduce class sizes and increase salaries. Across the street, boys warmed up for a baseball game.

“It’s a really big school. Students are going to be here. We’re going to be here,” said Sarah Apt, the leader of the school’s teachers’ union. “It’s not like if the school board makes a decision, all the students are going to disappear.”