Under Florida law all charter schools must be non-profit, meaning you can’t make money by operating a charter school in this state.
But there’s nothing in the law that says you can’t make money off of the real estate that school is based out of.
It should come as no surprise, then, that some enterprising individuals have decided to do just that.
And we need to look no further than Gateway Charter Elementary School.
A recently released audit for Gateway Charter Elementary’s fiscal year 2015 contained details regarding the school’s financial situation. Of particular interest, the audit outlined the next several years’ worth of lease payments that GCE will make to operate out of the building located at 12850 Commonwealth Drive.
According to the audit, GCE will be paying $2.02M in rent during 2016 alone.
Where will that $2.02M come from? Tax payers.
Where will the $2.02M go? That’s a bit more complicated, but we’ll try to connect the dots.
Gateway Charter Elementary is owned by Charter Schools USA. The school operates out of a 95,440 square foot building located on Commonwealth Drive, as previously mentioned.
According to tax records, that building is owned by a Limited Liability Company called Lee County Community Charter Schools LLC.
Here’s where the fun starts: Lee County Community Charter Schools LLC is, in turn, owned by Charter Schools USA Inc.
And just so we can remove any doubt that these might be non-profit organizations we’re talking about, Charter Schools USA Inc. is registered as a for-profit company, incorporated in Delaware, with its headquarters in Fort Lauderdale. Lee County Community Charter Schools LLC is also for-profit.
So as we go around and around, we discover that Charter Schools USA Inc. is operating an elementary school …. that is using taxpayer dollars to make $2M+/year in lease payments… so that it can operate inside of a building … that they own themselves, through a subsidiary company.
Looking at the audit information we know that Gateway Charter Elementary got a total of $7.95M in state funding in FY2015, meaning that 25% of the funds received from the State of Florida were distributed to other areas of the CSUSA organization through building lease payments.
Now here’s where we got lost…
In trying to follow the money, the Sun found that the Gateway Charter Schools are directly linked to the following companies: Red Apple at Gateway EXP LLC, Red Apple Development LLC, Gateway School Property LLC, Southwest School Development LLC, High Skul Limited Partnership, High Skul SS Inc, Gateway High School Property LLC, Gateway Charter Associates LLC, Southwest Charter Foundation Inc, The Lee Charter Foundation Inc as well as the aforementioned Lee County Community Charter Schools LLC and Charter Schools USA Inc.
Perhaps somewhere in the myriad of interconnected companies is a valid reason for the $2M+ in annual lease payments.
Maybe that’s just market value for that building.
Or maybe not.
Commercial rents are typically advertised in price per square foot, per year. We were only able to find two buildings in Gateway with more than 5,000 square feet available for rent, and each of those could be had for $14 per square foot per year.
In Gateway Charter Elementary’s case, the school will make lease payments of $21.18 per square foot per year in 2016. Using your money.
A lot of that money is being used to repay the bonds they got issued to buy the schools, which sounds great. But what that also means is … they didn’t use much (if any) of their own money to buy the schools in the first place.
And at the end of it all, CSUSA will own the land and building at 12850 Commonwealth Drive – paid for by the taxpayers – which they can then sell for a profit in the future, making millions.
Multiply that by each of the dozens of schools that it operates, and its a formula that means CSUSA has assets worth hundreds of millions of dollars today. Perhaps even billions in the future.
Some people will feel that in a free market economy, the CSUSA corporation has figured out a way to make money by operating schools, so good for them. It’s just smart business.
Other people will feel that the education of our children should not be linked to a profit motive.
Money is vital at public schools as well, but the difference is that if the Lee County School District has a surplus one year then the public is guaranteed that all of those funds will be re-invested in schools the following year. Or theoretically, if the LCSD became awash in dollars for some reason, the funds could be distributed back to the people through tax cuts.
At CSUSA, excess profits from operating schools (both today and in the future) could go directly to those who own the corporation.
The net result being that one person could be named principal of three separate schools to save money.
Only in theory, of course…. Nobody would actually do that… Right?
Gateway Charter Elementary School had 1,140 students enrolled on June 30, 2015 according to the audit.
The audit was prepared by accounting firm Keefe McCullough and released on September 1, 2015.