Recently, I came across one more way investors are making large profits through charter schools. New York State passed a law requiring charter schools to be nonprofit. Although that is certainly making policy in the right direction, when it comes to real estate, don't ever underestimate how real estate interests can rip off the taxpayer.
The NYC school system is required by state law to reimburse charter schools for the cost of its leases if the Department of Education cannot house the charter school in a DOE facility. No other school district in the state is required to house or reimburse charter schools, just the city. Garvin Healy, a CEC2 member, has written an expose of these leases. Per NYS law, 30 percent of a charter school's per pupil funding can be spent on real estate and facility needs. This amounts to almost $5,500. The more students, the higher the real estate budget and the amount per pupil has more than doubled since 2014.
So an LLC buys a building, leases it to a charter school and receives a bundle - your tax levy dollars at work. And of course, at $5,500 a student, if the cost of real estate is cheap (such as the South Bronx), the more money for the owner. It all relates to a higher return on investment. Garvin Healy writes "The development of this real estate project is a firm called Barone Management. Barone boasts of an “educational portfolio” of a dozen charter schools in NYC with close to 6,000 students, plus several more schools in development...Barone’s chief financial officer projected total returns on a $100,000 investment in the school to be over $219,000 over the course of four years.." So the "rental assistance" DOE provides charter schools can go directly into the pocket of the real estate interests of this city. One more way the state has damaged the city's interests.
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