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City Controller report blames District for lack of charter oversight

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Philadelphia City Controller Alan Butkovitz held a press conference yesterday to release a 94-page report of the findings from an in-depth investigation into 13 Philadelphia charter schools, while aiming much of his criticism at the School District for its failure to keep abuses of the charter law in check.

At the request of the U.S. Attorney, the investigation “redacted the appendices for three of the 13 schools investigated.” But findings from the following charters were made public: Community Academy of Philadelphia, Franklin Towne Charter High School, Harambee Institute of Science and Technology, Imani Education Circle, Khepera, Mathematics, Civics & Sciences, Multi-Cultural Academy, New Foundations, People for People, and Preparatory Charter School of Math, Science, Technology & Careers.

Butkovitz said the investigation singled out these charters because they are the ones that appear to have an overrepresentation of the problems that existed at Philadelphia Academy Charter School, where the late CEO Brien Gardiner and Kevin O’Shea were at one point earning annually $224,500 and $206,137 respectively, and hiring relatives at six-figure salaries.

The investigation was launched more than a year ago after the U.S. Attorney discovered problems at Philadelphia Academy Charter School. Since then several charters have come under fire for wrongdoing, most recently the Harambee Institute of Science and Technology Charter School for its longstanding operation of a nightclub on the premises of the school. Superintendent Arlene Ackerman threatened to close the school if it did not cease operations. The nightclub has since been removed from the building.

Butkovitz’s review of the District’s Charter School Office and the files of the 63 charters that were operating at the time came up with disturbing findings, including the fact that 51 of the 63 charter files were incomplete and missing charter agreements, articles of incorporation, and proof of insurance, all documents required by the School Reform Commission.

Butkovitz said that the District’s charter office had no record of or communications in their files from any charter school boards of trustees and had also failed to compile annual report compliance summaries and submit them to the SRC as mandated.

The report probes charter real estate dealings and notes that the charter office does not monitor charter school leases.

“Many charter schools, through leasing agreements and associated non-profits, are transferring taxpayer funded assets to non-profits that are not accountable to the School District,” said the report. A chart shows how the total asset value of five nonprofits, each associated with a Philadelphia charter, grew by $15 million, or more than 50 percent, between 2003 and 2008.

“Each year, taxpayers provide an estimated $300 million to fund charter schools in Philadelphia (and) it is our responsibility – and the responsibility of the School District of Philadelphia – to ensure that this taxpayer money is being spent appropriately,” Butkovitz said.

“(But) there was a complete and total failure on the part of the Charter School Office to monitor charter schools and hold these schools accountable for how they spend taxpayers dollars as mandated by the Charter School law,” he said.

Benjamin Rayer, who has headed the District’s charter school office since January 2009, said he had just received the report, but responded that his office has stepped up its monitoring and expanded staff from three to seven.

“We do fulfill our function under the charter school law,” Rayer said. “We’re trying to look for how we can do better.”

Throughout the course of the investigation, Butkovitz said that his office found “highly questionable practices, suspect relationships…little oversight, weak accounting practices and few safeguards in place to ensure that taxpayers’ money was being spent wisely.”

One of the most glaring examples was that of Rhonda Sharif, a charter employee who held the title of CFO and/or business manager at three different charter schools simultaneously and earned three separate salaries totaling $183,108 in 2008 for 463 days of work. The report reveals that Sharif was also reimbursed $101,587 for “unspecified credit card” expenses from the Harambee Charter School. And while the CFO at the Mathematics, Civics & Sciences Charter School, she received $536,093 in payments for travel and conferences over a five-year period.

Butkovitz also slammed the high salaries of some charter CEO’s, which was the subject of a 2009 Notebook investigation.

Other findings of the report include the fact that:

  • Nine of the 13 schools had leasing agreements with related organizations. For example, Joseph Venditti, CEO of Franklin Towne Charter School, leased the school’s property to his for-profit entity and then subleased it back to the school.
  • The building that housed and was owned by Imani Education Circle Charter School was leased to the nonprofit Imani Foundation, also home to a number of for-profit businesses including Popeye’s, Payless Shoe Source, and Jackson-Hewitt. Since Imani was receiving rent from these for-profit businesses, it should not have been classified as a 100 percent tax-exempt property by the Board of Revision of Taxes (BRT).
  • Eight schools were found to have related-party transactions that involved maintenance, construction, and/or management contracts.

Several recommendations are also outlined in the report, including: a call for legislation to be enacted to allow for a complete audit of all fund transfers or other dealings by charter schools with associated businesses or non-profits; total transparency that would require all charters to comply with the Pennsylvania Open Records Law; and improved oversight, accountability, and management of charter schools by the District’s charter school office.

“They’re [the District’s charter office] just not doing their job. What we have in our hands is that they didn’t do their job,” Butkovitz said.