Minnesota should rework its financial support of charter schools to prevent abuse and self-dealing by insiders and to stop traditional school districts from hoarding unused school buildings, a leading advocate of charter schools said Thursday.
Eugene Piccolo, executive director of the Minnesota Association of Charter Schools, said at a State Capitol hearing that changes are needed to protect the public's investment and ensure accountability in the fast-growing lease-aid program, which provides rental assistance to charter schools.
He presented a broad lease-aid reform proposal that would ensure state ownership of charter schools bought or built with state money if the school were to fail. Currently the facilities are owned by private nonprofit building corporations.
A Star Tribune investigation of the program revealed that some school founders benefited from questionable fees, and showed how charter school construction projects moved forward with little of the vetting that typically accompanies other public works.
Piccolo, whose organization represents 94 of the state's 150 charter schools, said building company board members and charter school officials should be banned from receiving payment in conjunction with the construction or acquisition of facilities.
He said the building companies should be required to follow the state's open meetings law and building company insiders should be banned from selling products or services to the building company.
Sen. Kathy Saltzman, D-Woodbury, who chairs the Senate Subcommittee on Charter Schools, congratulated Piccolo for speaking out against lease-aid abuses and said his list of suggested changes is "a great start" for reforming a program currently costing taxpayers $40 million a year.
State officials said 29 charter schools have formed affiliated nonprofit building companies, enabling them to buy or build school facilities using high-fee, high-interest junk bonds. The building companies were created to circumvent a law that bans charter schools from using state money to own buildings. Currently, those companies can keep collecting lease-aid even after the bonds are paid off. If a charter school fails, the asset would be kept by the building company.
Another 14 charter schools rent property from landlords with ties to their schools, putting them in what officials with the Minnesota Department of Education called a "gray area." Lawmakers discussed the idea of making those schools subject to the same kind rules that now govern charters with affiliated building companies.
Among the 14 schools on that list are the Inver Grove Heights and Blaine campuses of Tarek Ibn Ziyad Academy (TiZA). In a lawsuit against TiZA, the American Civil Liberties Union of Minnesota has alleged that a tangle of Muslim nonprofit organizations have received excessive lease aid payments from the school in violation of the separation between church and state. TiZA is fighting the lawsuit and has denied that it promotes religion.
Over the past two years, records show that at least $315,000 in TiZA rent money went to Minnesota Education Trust, a Muslim nonprofit group that created a Duluth mosque two years ago.
The subcommittee also discussed an issue that has angered many charter school proponents: the refusal of some public school districts to rent empty buildings to charter school operators. Piccolo said traditional districts should not be allowed to discriminate against charter schools when it comes to leasing facilities.
Since 2000, at least 64 metro area school buildings have closed, and Saltzman said another 100 district school buildings may become vacant over the next several years. Sen. Gen. Olson, R-Minnetrista, said those facilities should be part of the solution to providing charter schools adequate space.
"We need to address the accessibility of school buildings already built," Olson said.
Wednesday's State Capitol hearing was the second in a series of at least four hearings aimed at offering lease-aid program solutions to the full Senate Education Committee when the Legislature convenes in early February.