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Update: SRC tables non-renewal resolutions for Olney, Stetson

It also passed a fiscal 2016-17 budget with money for at least one nurse and counselor in every school.

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

UPDATED 8:30 p.m.

The School Reform Commission tabled action Thursday that would have set in motion the process of not renewing the charters for Stetson Middle and Olney High, both run by ASPIRA Inc. of Pennsylvania.

The SRC voted 3-1 to table the resolutions, which cited "substantial grounds for nonrenewal" and detailed numerous operational, financial, and academic deficiences in the running of the two schools.

Both are Renaissance charters — former low-performing District schools turned over to outside organizations and given the charge of rapidly improving their performance.

Feather Houstoun, the commissioner who moved to table the issue, said that the SRC wanted to more closely review reams of information that has been presented by ASPIRA. She said there was no timetable yet for scheduling reconsideration.

"We didn’t have enough time or sufficient documentation. … We realized we were unready to make a judgment," she told reporters afterward.

Houstoun, Bill Green, and Sylvia Simms voted in favor of the motion to table. SRC Chair Marjorie Neff voted no and Farah Jimenez recused herself.

The tabled resolutions would set up hearings that give the schools’ boards the opportunity to rebut the charter office’s extensive findings that back up its nonrenewal recommendations. The findings include everything from a plunge in the Olney graduation rate to inadequate internal controls and the intermingling of funds among various entities operated by ASPIRA. If the SRC votes against renewal, the members would later take another vote after hearings on whether the schools have made their case to stay open. With potential appeals to the state and the courts, any closure process could take years.

Commissioners also adopted the fiscal 2016-17 budget for next year that projects ending the next fiscal year with a $100 million fund balance in a $2.8 billion budget. The budget assures at least one counselor and one full-time nurse in every school, allots additional discretionary funds to schools, invests $32 million to update instructional materials, and sets aside more money for additional Renaissance charters and school turnarounds. The budget also counts on the Philadelphia School District getting an additional $50 million from the state, the figure proposed in Gov. Wolf’s budget, although that isn’t a certainty.

Despite this year’s fund balance, which accrued partly because the District couldn’t fill all its teaching jobs this year, the long-range outlook is shaky at best. Chief Financial Officer Uri Monson warned that the District’s expenses are rising at twice the rate of expected revenues – largely due to escalating charter school and pension costs. According to a five-year plan presented to the SRC, a deficit of nearly $600 million is forecast by 2021 without new, stable recurring revenue sources.

From the original story:

The SRC had been scheduled to vote on non-renewals for Stetson and Olney at its meeting last week, but postponed the vote after a plea from former City Solicitor Ken Trujillo on ASPIRA’s behalf.

Trujillo said that he was retained by ASPIRA to act as "oversight counsel." He asked for a week to help the organization satisfy the SRC that it is satisfactorily addressing the problems cited by its charter office.

Trujillo is a partner in the law firm Schnader Harrison Segal & Lewis LLP, which does work for the District. It was one of several firms cited in a more than $6 million authorization to hire outside counsel in a June 2015 resolution.

After the meeting last week, Commissioner Bill Green said that the SRC agreed to postpone the vote due to regard for Trujillo. Green added that Trujillo had been trying "for a month" to engage the SRC on ASPIRA’s behalf, but had been held up by "bureaucracy." The bureaucracy turned out to be the concern presented to General Counsel Michael Davis as to whether it was a conflict of interest for Trujillo to represent ASPIRA as long as his firm also represents the District.

Davis ultimately ruled that it was not a conflict, issuing a statement:

"Due to the fact that the law firm of Schnader Harrison Segal & Lewis is on the School District’s list of approved outside counsel, Ken Trujillo, a partner in the firm, properly sought a conflict of interest waiver in order to work with ASPIRA. The waiver was approved by School District’s General Counsel."

District spokesman Fernando Gallard said that Schnader has done work for the District over the past year, but would not say how much it has been paid, pending a right-to-know request. Asked on what grounds the waiver was warranted and granted, he responded: "That information is protected by the attorney-client privilege."

The District’s charter office has been citing problematic practices by ASPIRA since 2014. A year ago, Olney laid off 22 teachers and 14 instructional aides, citing a $2.7 million deficit.

A major theme in recommending the nonrenewal of Olney and Stetson was ASPIRA’s practice of using funding meant for individual charter schools to shore up other ventures within the organization. For instance, the Olney resolution finds that the school was owed "significant funds from ASPIRA and other ASPIRA-managed charter schools," including more than $2.5 million in fiscal year 2015. Most of this was owed by ASPIRA. Olney assets were used to guarantee a loan of more than $9 million to purchase the Cardinal Dougherty High School complex, which now houses Maria de Hostos charter, also run by ASPIRA. Transactions repeatedly were not approved by the schools’ boards, as required, the resolutions say.

Stetson "is a guarantor and has a security interest in debt and obligations totalling $12,750,000" of ACE/Dougherty LLC, which owns the Dougherty building. But ACE/Dougherty, the resolution notes, "does not provide services or resources that benefit Stetson."

Under state law, each charter school operates as the legal equivalent of a school district, or Local Education Agency (LEA). It is required to have a governing board that operates as a board of education would in a traditional district.

At both schools, not all teachers were properly certified and the schools failed to meet "highly qualified teacher" requirements. Stetson’s admissions policies employ barriers to entry, for instance, by asking citizenship status, which is against the state school code. And the school provided only limited times for students to enroll and transfer. As a Renaissance charter, it is supposed to operate like a neighborhood school and take students all year long.

At Olney, the enrollment packet requires Social Security numbers and information about race/ethnicity, which is not permitted.

Operational deficiencies cited for both schools included failure of the board to follow its own bylaws regarding board terms and election of officers, consistent approval of an annual budget, and approval of staff compensation. It violated the Sunshine Act with regard to announcing the purpose of executive sessions, failed to issue annual audited financial statements most years, and failed to make some required payments to the Public School Employment Retirement System. "Board meetings for all ASPIRA-managed charter schools are held concurrently with specific business or approvals by individual charter schools not clearly delineated."

On the academic side, Stetson has had lower test scores in math and reading than peer group schools in three of the last five years; for the last five years has not reached charter averages; and also lagged behind District averages for several years.

Olney improved the number of violent incidents in the school, but did not meet targets, the charter office found, and student attendance trends declined slightly. Although it has a high percentage of English language learners, Olney does not have a professional development plan for teachers. Student proficiency rates on the algebra, biology and English Keystone exams have gone down.

And the graduation rate dropped 24.3 percentage points from 2011-12 to 2013-14, from 77.5 percent to 53.2 percent.

The meeting is scheduled to begin at 5:30 p.m.

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