In the 2012-2013 school year Inspire charter Academy, one of National Heritage Academies schools in Baton Rouge La, took in 6.8 million dollars in revenue from state and federal sources according to their own records.  Of that 6.8 million, only about 1.3 million went towards teachers and their salaries.  Approximately 2.8 million was classified as instructional expenditures, or about 40%.  The remaining 60% went towards management fees, rent and profit.  For the same school year, East Baton Rouge Parish (EBR) spent 200 million on instructional expenditures out of 400 million in revenue or 50% of their budget.  Without delving too deeply it is clear that the school district spends more on their students that this charter school.

The rent on the building Inspire is leasing from itself at 5454 Foster Dr. is a little over 1 million dollars a year.  The building they acquired is valued at around 5 million according to the assessed value.  Inspire has a 5 year charter that is up for renewal for another 5 years at the EBR school board meeting tomorrow.  With the rent they have paid to themselves out of the taxpayer funded MFP and Federal Funds an ordinary school district could have purchased the building outright, and owned a 5 million dollar building.  NHA will continue to lease this building at 1 million dollars a year (or more) to itself for as long as it stays in business.  Even though some charter schools calls themselves “non-profit”, there are still plenty of ways to make money off the charter school.  For instance, if/when NHA pulls out or loses its charter the parent corporation will retain ownership of a 5 million dollar building purchased with tax payer funds (that factor in building costs and maintenance) and EBR will have nothing.

Another way charter schools like Inspire make money is by collecting money that factors in costs that they do not incur.  For example, in EBR, 7% of revenue goes towards transportation.  NHA schools make the claim they want to have neighborhood schools and so don’t provide transportation.  Here is a statement made by a board member of NHA run Willow Academy in Lafayette from the advocate.

http://theadvocate.com/home/8410250-125/story.html

The location is within walking distance for students the school targets, said Jay Miller, a member of the charter school’s board, Louisiana Achievement Charter Academies.

“We’re not providing bus service, so we felt it was essential that neighborhood kids would have an opportunity to come to school and have easy access to the school,” Miller said.

The problem with this statement is that Willow Charter Academy is in a Mall shopping center parking lot, surrounded by 4 and 6 lane highways on all sides.  There are  no nearby subdivision except for one which is blocked by an impenetrable forest.  Kids would have to walk for quite a while along dangerous and busy roads in rough parts of town to get to Willow, even if there were crosswalks and crossing guards.  Parents that want their kids to attend must drive their kids to school.  This arrangement allows NHA to pocket the money other districts spend on transportation, while also excluding the neediest students, those students without parents with reliable transportation, thus improving their demographics and lowering the higher costs associated with educating the poorest of the poor students.

I use this as an example to show how NHA operates in general.  Some schools are closer to subdivisions and some kids might be able to walk.  Most can’t walk to Inspire or to NHA Advantage at 14740 Plank Road in Baker.  Inspire does not appear to have made many efforts to make their campus accessible to the “walking” community either.

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One of the ways charter schools try to appeal to the public is by making the claim that they will improve educational outcomes for students over what they would receive in the traditional school districts.  While we can’t verify or disprove that claim for Willow Charter Academy yet, we do have some years of data for Inspire and EBR.  The district score for EBR, which loosely ties to the average of all SPS Scores, is 81 for 2014

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Inspire’s score is just above an F, and only because it received 6 of LDOE’s mysterious Bonus/Progress Points that appear to have rewarded it for declining from 2013 to 2014, while other schools that actually improved their SPS scores by more than 10 points (on their own) received no bonus/progress points.   How ironic that the schools that actually made progress received no progress points to their overall score but Inspire actually declined and got 6.

Wow.

LDOE has always been known for their creative use of math, but this seems either arbitrary or some interesting favoritism.  Remove the arbitrary Bonus / Progress / Favoritism points and Inspire had a 52 in 2013 last year and a 51  in 2014.  Now that’s some progress.

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While NHA Inspire is obviously not the worst charter school in EBR, it is worth noting that it scores 30% lower than the overall EBR system, and that with receiving “progress  points” while actually declining.  This is after 5 years so it’s not like this is a new operator taking over a failing school.  This is a new school.

So how does this scheme work I wondered?  Fortunately there are current and former employees willing to speak out.

NHA does not pay teachers or administrators very well, but promises bonuses when enrollment targets and test score targets are met.  They build schools in areas where the current schools are rated low (Inspire) so that it doesn’t take much convincing to get people to come.  But then the added bonus of a gift card for families and stipends for administrators when they meet or exceed an enrollment goal is held out there.  In my short time at Inspire, I made over $8000.00 in enrollment bonuses.

Very little money is spent on educational materials; even less on technology.  But they do like those gift cards – they send them out twice a year as employee “incentives”

In my [redacted] years in this business, I have been in a lot of schools in a lot of districts.  Very few have been as controlling as the NHA schools.  And when I asked about the lack of technology, I was told that there is no research to prove that it leads to higher test scores, so that’s not where they invest their money.

Willow has been started by a group of young administrators from Atlanta who were paid very large bonuses and housing allowances to relocate here for a year or two.  My friend is [redacted] appalled at the lack of emphasis on the children.  It’s all about the testing and meeting targets so that more money can be made.

I actually already did a story on NHA and their gift card bounty/bribery program for encouraging people to enroll in their schools.  If you would like to see some examples of their gift card scheme take a peek below.

https://crazycrawfish.wordpress.com/2014/11/14/charter-schools-are-now-paying-kids-to-try-them-out/

I found another example of how NHA saves money from this source’s information.  If you don’t spend money on computers you can pocket that money too.  Who needs computers or an education on how to use them anyway?  I hear computers are just a passing fad, so maybe NHA is right to keep kids from learning how to properly use computers in a controlled environment.

The point is, NHA and other charter operators like them, are not focused on doing any more than will keep them in the school business.  Their business model is to muddle along and vacuum up as much money as they can in the process.

I can’t go into all the schemes large scale charter operations like NHA and Charter Schools USA use to scam taxpayers.  I’m not that creative or dastardly.  However there are plenty of folks that are.  Perhaps you should attend one of the meetings like the one mentioned below to find out all the ways you can make loads of money by selling and leasing back real estate to yourself and other important education stuff.

From: “Mara Kane”

Date: January 6, 2015 at 2:02:14 AM CST
To: (deleted)
Subject: Meet Our Speakers – For-Profit Education Co.’s for PE Investors – Jan. 14 Conference 

Dear (deleted),

Investors are encouraging for-profit education companies to restructure debt, sell and lease back real estate, implement efficiency improvements…even improve relationships with regulators who worry about the cost-benefit gap of the schools’ curriculums.

In addition, investors are increasingly focusing on service providers that are targeting for-profit education — from marketing and enrollment services to course instruction and fundraising.

In short, after a rough patch, the future of the for-profit marketplace is brightening, and this Capital Roundtable conference will highlight the ways many middle-market investors are doing well.

Register Now for Private Equity Investing in For-Profit Education Companies on Wednesday, January 14.

Meet the Chairman & Our Speakers

Our chairman, Jeff Keith, is operating partner of Chicago-based Sterling Partners. He has more than twenty years of experience leading finance and operations teams, with a wide range of senior executive roles under his belt.

Jeff will be joined by 20 other senior industry professionals, including —

  • Philip A. Alphonse, Partner, Vistria Group
  • James A. Bland, Partner, HCP & Co.
  • Ryan Craig, Managing Director, University Ventures Fund
  • John M. Larson, Executive Chairman, Triumph Higher Education Group
  • Robert Lytle, Partner & Co-Head — Education Practice, The Parthenon Group
  • Malcolm P. Youngren, Dir. — Online Education, Quad College Group

Click here to see the full speaker list

Need more information? Contact Joanna Russell, at 212-832-7300, or jrussell@capitalroundtable.com.

Looking forward to seeing you,

Mara Kane
Producer, The Capital Roundtable
mkane@capitalroundtable.com
212-832-7300

Feel free to give these guys a call and let them know what you think about their “business model”; that involves our children and tax dollars.  I will give this to them.  We really are being schooled.

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8 thoughts on “National Heritage Academies makes money for themselves, but no sense for taxpayers

  1. Interesting article.

    Request the following:

    1: Article summarizing all the Charters.
    — Focus on school performance.
    —- Which of the Charters need to be renewed.
    —- Which of the Charters need to be substantially improve.
    —- Which of the Charters need to be revoked.
    Suggest that the School Board should be closing/putting new managmenet in on 10% of the bottom charters every year.

    1. I’m not sure many of those ideas are practical or legal under existing laws. As these new charters come in and create their own buildings and lease them back to themselves, how exactly would you close that school and put in a new operator? As public districts and assets disappear, future options for addressing problem schools become very limited. What staff will you use to evaluate these schools? Where will the kids go if all your schools are failing in the future? If you close schools that no longer belong to the public you create a huge capacity problem.

  2. 2: Score Sheet Critique.
    — There is a detailed score sheet for INSPIRE
    —- I had looked over it, but it is difficult to tell where they stand from the score sheet.
    —- The ‘bonus points’ were for working with, ahm, kids way behind the curve.

    —- It is unclear why their performance decreased in the last year.
    ——- Did they take in a new batch of ‘kids behind the curve’

    In return for the reduced regulation, the Charters goal is to take the ‘tier 3’ kids (their term from the score) and bring them up to spec.

    INSPIRE has 70-80 kids per grade.
    — But they still have substantial kids below grade level.
    — We would almost have to follow the progress/lack of progress of each kid.
    — Are the ‘tier 3’ kids from kindergarten now ‘tier 1’ in third grade?
    —- Probably not from the scores.

      1. It varies by type of charter. You can’t replace them if they own the building. You can approve another operator who will have to build a new school, but as this movement progresses the public will have very few options or leverage to use on charters. Then these charters will start milking these schools even more and we will have to pay, regardless of how they perform.

  3. 4: Funding of Charters/Location of Charters
    – The above ‘schooling’ is more a problem on how the School Board funds the schools and less on the Charter.

    — My understanding is that the School is given funding on a per head basis. Approximately $10,500/year/kid.

    — If a Charter is being run so that the costs are substantially less, then a percentage of those savings should go to the tax payers.

    — NHA begs the question. We are not seeking to shut down our public schools and replace them with nationally run Charters run out of foreign locations.

    — We want groups of local teachers/administrators grouping together to form a Charter to educate the kids in such a manner that the structural problems plaguing the public school system are bypassed and the kids are raised to ‘tier 1’ level.

    — If I gave someone $10,100 to educate a single child for a year in a ‘home school’… i would expect them to be brought up to their capabilities in that time period. That is a lot of money down the drain.

    — The accounting reports of the Charters need to be improved.

    1. It won’t matter. This is a business now and charter schools don’t have to do very well to keep their charters. As more and more come, it becomes that much harder to disengage and the standards will trend lower and lower. Benefits and pay will decline. These schools don’t have retirement programs or teachers with many years of experience. Being a teacher will require less and less education to fill the need for people to take teaching jobs in ever declining conditions.

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