Minnesota, Home of the Charter School Bailed Out by Taxpayers
Race to the Slop
By DANIEL WEILThe charter school saga gets more sordid and pernicious from city to city, day by day. The new fiasco involving taxpayer bailouts to Wall Street and the role of junk bonds in financing charter school ‘start-ups’ came to light in Minnesota in November of this year; Minnesota, ironically being the home of the first charter school law in the US in 1991.
Originally, charter school funding in Minnesota offered no extra money for start-up facilities to charter schools, just general aid payments per student. Former state Senator Ember Reichgott Junge, who wrote the 1991 law, said the intent was to keep charter schools focused on education and out of the real estate business. Of course many advocates of public schools in opposition to the new law had put a jaundiced eye on the whole mess from the beginning, arguing it was the first step towards the privatization of education. Never mind, for business and charter support for a ‘lease aid program’ for charter school start-ups crystallized in 1998, after lawmakers discovered many new charter schools were operating in cheap retail storefronts that lawmakers said were unfit for young children (See “State charter schools program is 'out of control',” Tony Kennedy, Minneapolis Star-Tribune, November 29, 2009. In their largesse, they would now begin a formal private sector partnership that would prove to be devastating for Minnesota schools and their citizens.Charter Schools, owning property and the Minnesota Law
Minnesota state law prohibits charter schools from owning property. Seedy politicians and Wall Street firms and their consultants and lawyers, found a legal loophole in the law allowing charter proponents to use millions of dollars in public money to build these schools even though the properties would remain in the hands of private non-profit corporations. Yet another brilliant scam in the ongoing yarn of the American charter school and neo-liberal capitalism.
Here is how it worked. The state has a lease aid program, which it created 11 years ago that it said would help stimulate ‘competition’ in public education by offering rental assistance to charter groups promoting alternatives to district schools. The charter proponents argued the schools needed money for new facilities due to the fact that at their inception many charters sprang up in malls or strip malls, as they were not conversion charter schools. How would they finance the construction of these new start-up charter schools? By turning to Wall Street and the money-changers, of course. According to the Star Tribune:
In the past decade, 18 charter schools have been built with $178 million in junk bonds, with financing costs on some projects chewing up nearly a quarter of the funds raised. Twelve more charter schools have taken steps to buy or build facilities, and the state projects annual spending on lease aid to reach $54 million in 2013, up from just $1.1 million in 1998 (State charter schools program is 'out of control'. Tony Kennedy, Star Tribune Last update: November 29, 2009.
In order to lure the investors they needed for new charter start-up buildings, the administration abandoned the small campus idea which stimulated the movement close to 20 years ago in favor of building large factory style schools that delight in mirroring the more conventional institutions that the families were fleeing from in the first place. Again, never mind, for that is where construction money is to be made, in large concrete buildings, whether they house kids or stock goods. With education reduced to simply a ‘commodity vehicle’ for junk bond lenders and developers the interests of students and families become secondary interests while the huge construction financing costs became paramount.
Start-up financing
It all began in the year 2000 when American Express purchased $8.3 million dollars in bonds from the state. They said the bonds would be used to convert an old Science Museum in Minnesota into a charter school. It would be called, ironically, the Minnesota Business Academy and what
