Implementation of i3 Education Grants Being Questioned

By Kari Harden
| Originally Published at Louisiana Weekly. October 28, 2013

Despite being the recipient of an $800,000 federal grant, John McDonogh Senior High School is having serious money problems.

In April, Future is Now (FINS), the Charter Management Organization (CMO) running the school, sent an email to board members expressing concern that without additional funding, they would not be able to make payroll.

At their October board meeting, FINS CEO Steve Barr announced a possible 20 percent salary cut across the board. And he said they may lose one of their principals. Principal Marvin Thompson makes an annual salary of $150,000. Angela Kinlaw was hired in July as the principal of the school’s incoming freshman class with a salary of $115,000. Barr makes $250,000.

This all raises some troubling questions for Raynard Sanders. Sanders, a former John Mac principal, has more than 30 years experience in education and hosts “The New Orleans Imperative,” a weekly radio show on WBOK focused on education issues.

Questions include:

How are these relatively high salaries justified? And, what happened to the $800,000 Investing in Innovation (i3) federal grant awarded to FINS specifically for the takeover of John McDonogh?

The grant is part of the $28 million in federal funds awarded in 2010 to New Schools for New Orleans (NSNO), the Recovery School District (RSD), and a the Achievement School District in Tennessee.

John McDonogh was one of the recipients chosen by NSNO.

Most of the grant money in New Orleans has been and is being spent on salaries and benefits – and not for teachers, but in large part for $60,000 + salaries for upper management.

Josh McCarty, director of advocacy and communications for New Schools for New Orleans, said that the grant program is part of the 2009 national recovery act, and intended for job creation.

He said the contracts between NSNO and all the CMO grant recipients look essentially the same, though NSNO refused to provide copies of the contracts requested, other than three not requested and chosen by McCarty.

Grant recipients are required to meet certain milestones and meet regularly with NSNO.

For FINS, McCarty said that the entire sum was not paid.

“We weren’t happy with their progress,” he said, and last spring McCarty said it was mutually agreed upon that FINS expenses would no longer be reimbursed.

According to the budget submitted by FINS to NSNO, about 55 percent of the grant was to be spent on CMO salaries and benefits, with CEO Barr receiving $137,378 or 17 percent of the grant toward his $250,000 annual salary.

The grant money was also used to pay $112,500 of Thompson’s salary, as well as benefits totaling about $6,000 per person and 45% of the following salaries: Mike Dolan, director of community outreach: $130,000, Gideon Stein, president: $150,000, Alexander Ryan, chief financial officer: $150,000 and Jessica Marshall, director of policy development: $135,000.

About $250,000 of the grant went to a “summer bridge program” at John Mac with the money allocated to pay 45 teachers for five 40-hour work weeks at $27.50/hour. According to Chris Lozier, CFO for FINS, 280 students participated. Because of a delay in the preparation of the building, Lozier said the summer program was adjusted and the first three weeks was spent on faculty preparation followed by two weeks with the students attending the program in the morning and teachers using the afternoon to plan.

Barr’s salary appears significantly higher than the average CEO of a CMO, especially since, according to Lozier, the Calif­ornia-based FINS currently does not manage any schools – just provides “advisory services to four schools, and in two cases their managing nonprofits, without charge.” The managing nonprofit for John McDonogh is FINS: New Orleans. About 300 kids currently attend the school.

Stein, Ryan, Marshall, and Dolan are no longer employed by FINS, and when they were, they were employed by the national organization, not the New Orleans one, according to Lozier.

In a 2013 CEO Compensation Study, Charity Navigator looked at almost 4,000 mid to large sized nonprofits and determined that the average CEO was $125,942.

However the relatively high FINS salaries aside, the general manner in which FINS spent the i3 grant money is aligned with other recipients.

With every CMO autonomous as its own Local Education Agency (LEA) and thus it’s own independent school district, the relatively small city of New Orleans actually has 42 different school districts.

On his radio show, Sanders regularly refers to the city’s numerous CMO’s as “publicly funded private entities.”

As Sanders looks through documents that detail how CMO’s have been spending public grant dollars in New Orleans, he said he finds problems that are ethical, budgetary, and not necessarily resulting in improved academic achievement.

A sampling of how other grant recipients spent their i3 money, spread out over two or three years, plays out as follows:

At Crescent City Schools, which received $1 million i3 grant, about 56 percent of the grant was spent on five CMO staff salaries and benefits, with the remainder spent on eight school-based leadership team positions and $3,200 on materials and supplies. The CEO salary took 13 percent of the grant.

At The Einstein Group, the entire $1 million grant was spent on salaries and benefits for four employees: the CEO, Director of Finance, Director of IT, and the principal. $315,994, or 32 percent, went toward the CEO’s $169,500 salary.

At Firstline Schools, the $1 million grant was divided in its first year between 20 different positions. The second year the grant money was divided between ten different positions, and four in its third and final year. The most significant expenditure was for the salaries and benefits for the CFO and interim CFO, totaling $223,855 or 22 percent of the entire grant.

At Collegiate Academies, about 70 percent of the $1.8 million grant was spent on the CMO salaries and benefits for employees not based in the schools. Over three years, $382,000 or 21 percent of the grant was spent on benefits and salaries for the CEO.

At New Orleans College Prep (NOCP), 79 percent of the grant went to four CMO staff salaries (CEO, Director of Academic Performance, Director of Development, and COO) with the remaining funds divided between salaries and benefits for the Cohen High School Principal and the Dean of Students. The CEO salary and benefits took 13 percent of the grant.

But NOCP CEO Ben Kleban, with a salary listed as $127,000, said that his staff is one of the leanest in the city. He also touted the improvements in the School Performance Score (SPS), ACT scores, and graduation rates of Cohen College Prep.

“The employees of our CMO our essential to the operation of our schools, and whether or not i3 money is used to pay for the central salaries or the textbooks in the classroom, the operations of executive leadership are necessary to build and manage a high-performing organization. If we hadn’t used i3 for these expenses, we would have had to find the resources somewhere else, which doesn’t change the net financial outcome for schools under our operation,” Kleban wrote in an email.

Kleban also said that in terms of spending money on upper management salaries, they didn’t have a choice. That was the stipulation give by NSNO, Kleban said: “Our application was in direct response to their RFP

[request for proposal], which explicitly stated ‘Funds are available for school leadership and central office personnel only.’”

Barr is entirely unapologetic for his $250,000 salary as CEO of a nonprofit. “I make a good living,” he admits. Nor is he — like Kleban or McCarty — apologetic for using federal taxpayer dollars to pay portions of executive salaries. Barr argues that in taking on a challenge like John Mac, human capital is the largest and more important investment.

He noted that the money reimbursed him for time that he and his staff “worked for free.”

“How would you have spent the money?” Barr asked.

Ann Marie Coviello, a community advocate and member of the John McDonogh Advisory Com­mittee, said that she could think of numerous other ways to spend that money. For one, she said she would only spend it on people who directly interact with the kids. With 22 years of experience as an educator in New Orleans, Coviello is the first to acknowledge that the needs of the kids at a school like John Mac are significant, and the job of teaching them no easy task. It could be used for a speech therapist, reading coach, intensive math instructor, a dance teacher, art teacher, or librarian, among other things.

And while Coviello acknowledges that $84,879 (the total i3 money allocated for Gideon Stein in salary and benefits) might be “chump change” for New York-based entrepreneur and real estate developer, it could have paid for two extra teachers.

Sanders said he doesn’t understand why the short-term grant money would be used to pay for permanent positions. It would make more sense to use the money for supplemental instruction, he said, especially targeting the students with the most significant deficiencies.

“A principal or staff member’s salary should not be predicated on a three-year grant,” he said. “What happens when that money goes away? You don’t take short term money to fund permanent positions.”

According to Kleban, “The permanent positions are now sustainable with recurring revenue streams without undue burden on the direct needs of schools. We could not have gotten to that point without the help of i3 to temporarily close the gap.”

Barr himself questioned the school’s sustainability and reliance on grants and donations in a June 27 New Orleans Advocate story in which he was quoted as saying “I can’t raise a million and a half dollars every year.”

Barr says that the questions being asked should not be about salaries but about “where all the kids are.” If schools don’t get kids, they don’t get their per-pupil funding – and Barr has repeatedly cited lower than expected enrollment as the reason for the budget problems at John McDonogh.

In terms of recruitment, Coviello said that without a doubt the filming of last year’s Oprah Winfrey Network documentary series “Blackboard Wars,” is largely responsible for the school’s enrollment woes.

Coviello wrote in an email: “What kind of parents hears the words ‘the most dangerous high school in America; and thinks, ‘That’s where I want my kid’? No parent.”

Speaking about the rest of the advisory committee, Coviello continued, “All of us agreed that that statement was an inaccurate and unfair description of the school, but even so, most parents and students would be horrified by the depiction of the school in the television show: teachers in tears, students fighting, students having temper tantrum, students having babies. Obviously this is not the way to attract students and families. The whole idea of “choice,” which the charter school movement claims to worship, implies that when parents have a choice, they will avoid certain schools and gravitate towards others. I personally do not believe markets have a place in education, but if you use a “free market” approach to schools, the charter operators must “market” their schools to parents and students. From that perspective, Black­board Wars was a publicity nightmare.”

But one elusive question that remains for many close to the school is: Didn’t the school at least profit from exploiting the deepest and darkest struggles of their students on national television?

According to Lozier, the school received a total sum $10,000 that went toward “art and band.”

But Kenneth Gill, assistant band director, said that he never heard of any money going to the school’s band – or to any program at the school. Neither did Coviello see any evidence of the money.

Considering the industry, San­ders said that amount sounds very low for the six-hour-long epi­sodes.

For the most part, the band is self-generating, Gill said. A Mardi Gras season can earn them between $10,000 and $15,000. And the band had uniforms and instruments before FINS came on board, he said. Of course, they could always find uses for an extra $5,000, he said, such as purchasing music, and cleaning instruments and uniforms.

The Oprah Winfrey Network did not reply to requests for confirmation on the $10,000.

Regardless of the unaccounted for “Blackboard Wars” money and FINS budgetary woes, Sanders has concern about how NSNO is divvying up all of the i3 millions.

“It all raises a few questions, to say the least,” Sanders said. “Generally speaking, this i3 grant is designed to improve schools and make schools that are not working work better. NSNO has basically chosen a single method to make them better – chartering them.”

According to the U.S. Depart­ment of Education’s (DOE) website on the i3 program the goal is to, “. . . expand the implementation of, and investment in, innovative practices that are demonstrated to have an impact on improving student achievement or student growth, closing achievement gaps, decreasing dropout rates, increasing high school graduation rates, or increasing college enrollment and completion rates.”

While the grant money is supposed to go toward innovation, many of the recipients are replicates of the same “zero tolerance,” “no excuses” model in which critics say children are criminalized as soon as they set foot in the building and are indoctrinated with bizarre cult-like behavior and chants.

The grant recipients Collegiate Academies, NOCP, and Firstline and KIPP claim all seven of the spots for schools with the highest out-of-school suspension rates. GW Carver Collegiate Aca­demies, the highest, suspended 68.85 percent of their students at least once during the 2012-2013 school year.

The model also myopically stresses college as the only path to success. Some argue that in the current economy with skyrocketing tuition rates and a highly specialized and competitive job market, for at least some kids, pursuing well-paying vocational paths and two-year college programs (automotive repair, health care, plumbing, etc.) may provide a brighter future as opposed to becoming forever shackled by student debt in order to obtain a four-year degree that does not guarantee employment upon graduation.

And even if NSNO has unequivocally decided that chartering a school is the best way to improve it, Sanders doesn’t buy McCarty’s job creation argument justifying most of the money to be spent on top-tiered salaries.

It doesn’t hold water, Sanders said. “Hiring a principal is not job creation. Those are the jobs you need regardless.”

As to the amounts of the salaries, Sanders said he finds them “extraordinarily high.” Compared to his long tenure as an administrator, Sanders said the post-Katrina staffs are top heavy both in the numbers of administrators and the amount they are paid.

McCarty said that as long as the CMO’s who applied for the i3 grant have what NSNO considers to be a strong plan for their school (s) and meet objectives, NSNO is “not going to dictate how they allocate their resources.”

When Sanders was principal, he had about 900 kids. When that went up to about 1,300 kids, he added one assistant principal – those are legitimate measurements for increasing staffing, he said. And of course the salaries then were nowhere near what FINS administrators are making today.

It’s part of a national trend in breaking the traditional salary schedules in education and “making education like a business,” Sanders said. And the high salaries aren’t unique to the privatized part of the public sector. Sanders alluded to former Louisi­ana Department of Edu­cation Superintendent Paul Pastorek’s salary of $377,000.

Current Superintendent John White makes about $275,000.

But while administrators are getting paid “three times more,” Sanders said that the results are not improving at a proportional rate.

While the state-calculated School Performance Scores (SPS) have not yet been officially released, The Lens reported in August that John Mac’s preliminary School Performance Score (SPS) for the 2012-2013 school year was calculated at 9.3 out of 150. On that scale, schools below 50 are considered failing.

However schools under new management don’t receive an official letter grade in their first year.

Only three other schools in New Orleans are in the single digits for the 2012-2013 school year, and all three are alternative schools, according to The Lens.

McCarty notes that other schools that received grants have shown better progress. Harriet Tubman, part of Crescent City Schools, will be receiving a “C” SPS for 2012-2013 after two years as a failing school, McCarty said. He also pointed to Algebra scores at Carver Prep and Carver Collegiate, (two of Collegiate Academies’ schools), that were just behind some of the top-performing schools in the city.

But Sanders isn’t seeing a measure of improvement across the city that would justify the exorbitant salaries, top-heavy administrations, or spending the grant money primarily outside the classroom.

“It doesn’t equate. It does not equate ethically, it does not equate in terms of budget, and it does not equate educationally,” he said.

With NSNO’s supreme power of the purse strings, Sanders also expresses concerns about a conflict of interests in that there are NSNO board members that also serve on the boards of CMO’s receiving the i3 money.

Stephen Rosenthal, (brother-of pro-charter champion Leslie Jacobs), chair of the NSNO board, also serves on the finance committees for KIPP and Firstline.

NSNO Board Member Ruth Kullman is a founding member and continues to serve as secretary on the board of New Orleans College Prep. Her husband, Lawrence Kullman, is the chair of the Firstline board.

Sarah Usdin, founder of NSNO, serves on its board as well as the Orleans Parish School Board.

Dana Peterson, now deputy superintendent of the RSD, served on the Firstline Board when they won the i3 grant.

The DOE would not say how much NSNO receives for administering the $28 million, saying that despite being public money, that figure is not public information. NSNO ignored the question.

The way the grant money is being spent makes the schools unsustainable, is unethical and makes it clear that the needs of the students are not the focus, Sanders said.

“They act like private companies that don’t have to answer to the public. They are ripping off these communities.”

This article originally published in the October 28, 2013 print edition of The Louisiana Weekly newspaper.