El Rio Community School is a charter school opening in Highland Park in September 2020. Of course charter schools in California are subject to the California Public Records Act and so last summer I hit these folks up with a request. They demurred. I filed a freaking lawsuit. And, thank goodness, last week they started to produce records!1 The stuff they handed over is all interesting, even if it’s not close to everything they ought produce, and worth your time to look at:
⚝ Bank statements — January through July 2019. A rare look into the financials of an independent charter startup.
⚝ 58 pages of emails — And also a bunch of contracts between ERCS and various vendors.
Like I said, it’s all interesting. But here I’m focusing on two particular items. The second is the bank statements, and read on for that. The first is this contract between ERCS Supreme Commander Dr. Katie Chau and a peculiarly cult-like outfit called Reframe Labs. Reframe’s founder and CEO is Russ Altenburg, famously also chairman2 of charter school astroturf conspiracy Speak UP Parents. For context, it’s worth taking a look at the Reframe Labs manifesto,3 or at least this snippet here:
In this rapidly changing world, we see a tremendous need to incubate the vanguard of the next generation of public schools that more deliberately focus on these skills, serve as beacons for what is possible, and show the field better ways to design learning experiences that prepare kids for life success. Opening amazing schools remains the most important long-term investment for increasing educational opportunity. Thus, we seek and support pioneers, the very best diverse leaders, to design, launch, and run innovative public schools—creating a powerful community of rebels with a cause who support each other on that journey.
At Reframe Labs, we run a series of staged programs—labs—that prepare aspiring school launchers to design and create breakthrough schools. Every lab is marked by a deep focus on innovation and equity, serving as on-ramps that lead to a fellowship experience complete with coaching, capital, connections, capacity, and advocacy.
Basically they train people who want to start charter schools putatively in support of some cow-pie-in-the-sky feel-good everyone-counts agenda. And their training method includes a $50,000 start-up grant paid to the trainee before the school even opens. Not only that, but the transformatively disruptive innovation training itself costs money like everything else in this world.
And Reframe Labs is a 501(c)(3) corporation, so you might think they’re raising funds for their grants and their educational efforts from the usual deep-pocket zillionaires who pour money into destroying public education like gasoline into a flame thrower and spending it to further their privatizing agendas. But it turns out that that’s not what’s going on. Not at all.
Reframe Labs actually gets paid back by its trainees — “fellows” — as they call them — and they get paid back with interest! And the payback money comes out of the public funds allocated to the charter schools that their fellows end up founding. In other words, and I know this is likely to shock, Reframe Labs is yet another charter grift, a means for diverting state education money away from children and into zillionaire coffers. According to the contract it works like this. First everyone agrees that Reframe will most likely hand over $50K and that the training is costly:
2(b) After Fellow’s assignment of this Agreement to the School Operator prior to charter submission, Reframe may, as part of the Fellowship, award Fellow a planning grant of up to $50,000 in furtherance of School launch.
2(c) Fellow acknowledges that Reframe will incur substantial costs for Fellow to participate in the Fellowship, including any startup funding provided by Reframe, costs of providing the trainings and activities described in this Section 2, as well as substantial use of Reframe’s resources over the course of the two-year Fellowship, which costs are necessary and integral to the School’s launch.
And then we get to the repayment conditions, which are onerous even at first glance. Also dry and technical as contractual language tends to be, but worth your attention, to be sure:
Upon launch of the School, Fellow shall be responsible for payment of the following fee to compensate Reframe over time for the substantial up-front costs incurred by Reframe for Fellow’s participation in the Fellowship leading to the authorization and opening of the School: one percent (1%) of the general purpose funding of the School each year for the first five (5) years of the School’s operation (“Fellowship Fee”). The Fellowship Fee shall be paid in three installments each year according to the following schedule:
i. The first payment of 50% of the estimated Fellowship Fee shall be made on or before October 1.
ii. The second payment of 75% of the estimated Fellowship Fee, less the first payment and less any necessary adjustments as determined by Reframe due to the School’s certified First Principal Apportionment (P-1), shall be made on or before March 1.
iii. The final payment of 100% of the Fellowship Fee, less the first two payments and adjusted as necessary due to the School’s certified Second Principal Apportionment (P-2), shall be made on or before July 1.
In the first year of the School’s operation, the “estimated Fellowship Fee” shall be calculated by Reframe based on the School’s 20 Day Attendance Report. After the first year of the School’s operation, the “estimated Fellowship Fee” shall be calculated by Reframe based on the School’s most recent Advance Principal Apportionment.
Isn’t it shady, by the way, that even though Reframe Labs pitches its expenses as being based on the cost of training and the fixed cost of the $50K grant, what they’re calling repayment is based on the school’s general purpose funding, which is paid to the charter on a per kid per year basis? That is, Reframe Labs gets paid proportionally to the school’s enrollment, which is clearly unrelated to their costs. And this is a lot of money we’re talking about. Charters get about $8K per kid per year according to the California Department of Education, although the precise amount depends on the students’ grade levels. The precise amounts are:
|Grade level||$ per kid per year|
And here’s El Rio’s projected five year enrollment, from page 22 of their charter petition:
Combining this data as shown in the table below we arrive at a total payment to Reframe Labs of about $95K:
|Five year enrollments combined|
|Group||Kids||$/kid/yr||Total $||$ to Reframe Labs|
|5 yr total||$95,181|
This works out to an annual interest rate of about 13.7% on the $50K if we assume annual compounding.4 But some of the money is supposedly repaying Reframe for the cost of the training and that lowers the interest rate. The rules regulating 501(c)(3) finance are completely beyond me, and I can’t tell if this setup is legal or not, but I can surely tell that nothing is worth paying almost $100K in public money to Reframe Labs in exchange for $50K up front.
This is nothing more than pure grift and, despite Altenburg’s kids-first rhetoric, this money is stolen from the very kids he claims to want to educate. And it’s even worse than that. The money that El Rio Community School Commander Dr. Katie Chau is using to pay this $100K to Reframe Labs is money allocated by the State of California for educating children.
But there’s no requirement that she spend the $50K she got from Reframe on education. In fact, she’s spending it on all kinds of random non-educational things, as a close look at her school’s bank statements will reveal. So not only does Altenburg’s scheme funnel education money into zillionaire coffers, it also converts money away from the public education it’s earmarked for into other unrelated expenses.
Now let’s just take a quick look at these bank statements. Chau opened the account in January 2019 and right away Reframe deposited $15,000. By February they’d put in the remaining $35,000. And Chau started spending it. On February 15 and 19 she paid $145.96 to Southwest Airlines. And then in March 2019, starting on the 11th, she really cut loose!
She’s eating out on the card multiple times per day starting on March 11 and also paying thousands of dollars to some ritzy hotel in Sacramento. On March 13 alone she spent more than $200 at restaurants. This looks like nothing more than some kind of conference! And it might be a coincidence, I don’t have hard evidence, but isn’t it interesting that the California Charter School Association held its 2019 annual conference in Sacramento?
And that it was in March 2019? And in particular that it ran from March 11 through March 14? And that her biggest payment to the ritzy hotel, for $1420.35, cleared on March 15, which is likely to be the day she checked out or maybe the day after? In other words, it really, really looks like Dr. Katie Chau took a good chunk out of of her $50K planning grant, $2163.65 to be exact, more than four freaking percent, and spent it on attending the 2019 CCSA annual conference and also eating in a lot of fancy restaurants.
And don’t forget that she’s paying that $50K back out of money meant to educate children. So money meant by the taxpayers of California for the sole purpose of educating kids is instead going to pay for Chau to gorge her body and mind on sushi and propaganda. Not that I have proof, but I would be surprised if this is where the people of California thought their money was going when they voted to allow charter schools to exist.
Now, I do understand that people need to go to conferences for work, and that it’s totally reasonable for work to pay. Let’s take a comparative look at how LAUSD handles this kind of thing. My analysis is based on this 2018 LAUSD travel policy document. The first requirement for LAUSD covering conference attendance is that it has to further LAUSD’s institutional goals:
Employees must ensure all District attendance at conferences, conventions, meetings or trainings is necessary, appropriate and aligned with the Superintendent’s Strategic Goals. Per Board Rules, the attendance must benefit the District through achievement of the following outcomes:
1. Attendance leads directly to the professional or technical growth of the individual and to the improvement of District programs.
2. Attendance is important to the interests and welfare of the District.
3. Attendance leads directly to the improvement of efficiency in the operations of the District.
4. Attendance leads directly to the expansion and improvement of the District resources.
And also don’t forget that the CCSA is a lobbying group. It’s not a group of educators, not people who know how to teach kids, but people who manipulate politicians and politics to further their political goals. Take a look at the conference program. Sure, there are occasional sessions on pedagogy, but not many. Mostly the sessions are on how to game the system.5 There’s nothing here that matches any of the four elements required before LAUSD will pay for an employee to attend a conference.
And yet Dr. Chau spends her public money on it without a second thought.6 And given the high effective rate of interest Chau agreed to pay Reframe, it ends up being significantly more than $2,163.65 she’s wasting here. Not only that, not only, but even if for some reason it were of some public benefit to use money meant for public education to pay for Chau to attend a conference to learn how to more effectively destroy public education, she’s spending far more than the LAUSD would allow. Which is certainly ironic given how charter advocates will go on and on about the efficiency of the private sector compared to the government.
LAUSD allows $300 per night for hotels, so her charge there is in line with their rules, but they only allow $49 per diem for meals, and this is where Chau really deviates, having spent what looks like more than $500 for at most five days,7 more than twice the allowable rate. She spent over $200 on March 13 alone. And of course this last analysis is all assuming attending this conference somehow furthered actual educational goals which, of course, it did not.
And that, friends, is the story I have for you. The story of how privatizing pirate Russ Altenburg cooked up yet another scheme for diverting public money away from education and into his money-filled swimming pool. The story of how putative innovative educational disrupter Dr. Katie Chau gleefully wastes the public money entrusted to her for the sole purpose of educating children on sushi and propaganda and most of all on paying off Russ Altenburg. The story, repeated and repeated and repeated, of charter school finance. Isn’t it time to put an end to this waste?
Image of Katie Sobczak Chau is ©2020 MichaelKohlhaas.Org and there is this moodsy-artsy little tidbit to consider as well.
- This isn’t just good because these records are important and interesting or because it’s good for publicly funded entities, even or really especially these privatizing freebooters, to actually comply with the damn law. Not just those reasons make it good but also the fact that the lawsuit induced them to produce records means that we’ve already won in the sense that that’s the legal standard for putting them indisputably on the hook for my legal fees.
- I don’t use the word “chairman” myself. I prefer “chair” although “chairperson” is also fine with me. So I’m using it here in cryptic mockery of these paladins of privatization, where “cryptic” in this context means I haven’t thought about it enough to be able to articulate it or even to assert that it’s articulable.
- “Manifesto” is their word, proving that their either culty or commie and they are NOT commie.
- This calculation doesn’t take into account the fact that El Rio’s annual payment is expected to increase even though the principal they’re repaying goes down with each payment they make. That tends to increase the effective interest rate but I’m not sure how to calculate it so I’m taking 13.7% APR as a lower bound.
- I mean, OK, maybe “game” is a kind of loaded word but so what? You know, I know what we’re talking about. If you want superficial lack of bias read the damn L.A. Times or something.
- Being rhetorical here, for effect. Obviously I have no idea what Dr. Chau is thinking, if anything, and therefore am both unequipped and unwilling to make statements of fact regarding her thought processes. For all I know she did have, maybe even is still having, any number of second thoughts. Although I guess technically it’s not possible to have more than one second thought because after the second thought you’d be on to the third thought and so on.
- It’s not possible to determine the full amount she spent on food from the records I have. I’m assuming that all the miscellaneous charges paid to the hotel are room service, meals charged to room, minibar, whatever. These days no one pays a hotel for using the phone, so what else could they be?