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September 23, 2020
                
WHO SAYS CONTINUING DISCLOSURE ISN'T IMPORTANT?
Charter School Settles with SEC After Fraud; Default
Park View School, a nonprofit charter school based in Prescott Valley, Arizona, and its former president, Debra Kay Slagle, have settled a Securities and Exchange Commission (SEC) complaint charging them with a fraudulent bond offering, on which they soon defaulted. According to the SEC’s complaint, Park View and Slagle lied to investors about Park View’s financial condition, and concealed the school’s significant operating losses and Slagle’s repeated, unauthorized withdrawals from reserve accounts designed to protect investors.

In 2011, Park View was a conduit borrower for a $6.625 million bond through the Pima Industrial Development Authority. The facilities bonds were subject to an indenture agreement that governed disbursement of the bond proceeds and repayment of the bond investors. The 2011 Indenture provided that the trustee deposit almost $250,000 of the bond proceeds into an Operating Reserve Fund.

But, beginning in May 2012, Slagle began to withdraw those funds. While she certified that each withdrawal was permissible to cover construction expenses or repair costs, she actually spent the withdrawals on payroll and other day-to-day operating expenses. By January 2016, Park View was broke and $400,000 in debt.

In April 2016 Slagle sought a second bond offering to repay the 2011 bonds. The official offering statement, posted on the Municipal Securities Rulemaking Board’s EMMA website, understated operating expenses by 20 percent, erroneously stated that Park View was profitable, and included a debt reduction program that was never implemented. Based on the false statements, investors purchased $7.6 million in bonds in 2016. By early 2017, Park View defaulted.

Accurate continuing disclosure beginning in 2011would’ve stopped, or at least created a record of Slagle’s unauthorized withdrawals and money mismanagement, making it much more difficult for investors on the second bond to be duped. Slagle will pay a $30,000 penalty and is enjoined from participating in future municipal securities offerings. SEC Settles with Charter School Operator Over Muni Bond Offering: The Agency Said Arizona’s Park View School Misled Investors About its Financial Condition, Investment News, September 14, 2020; T. Gorman, Charter School Defrauds Bond Holders, SEC Actions, September 15, 2020

ARIZONA'S BLACK STUDENTS OUTPERFORM PEERS NATIONWIDE
Open-Enrollment Charter Schools Making a Difference
Black students in Arizona rank near the top in the nation for posting academic gains year-after-year, and those who attend charter schools appear to have a competitive edge, according to an analysis by the nonprofit Arizona Center for Student Opportunity. Since 1994, Arizona’s “don’t fence me in” policy has meant students in Arizona can attend schools outside their assigned school district boundaries. Arizona also has more charter schools per capita than most states. Today, charter school students make up nearly 20 percent of the public school population in the state, with 213,000 students and 573 schools. Black charter school students in Arizona have seen higher academic gains than the state average in math and English Language Arts on the AzMERIT test since it was implemented in 2015. They also performed better than their traditional, district-school counterparts. Maricopa County has one of the highest rates for academic gains for Black students in the country among large urban areas.

While efforts to close the achievement gap must continue, Black students’ growth was 13 percent above the national average in 2019, according to the Stanford Opportunity Project. Victoria Harker, Black Students in Arizona Rank Near Top for Academic Gains, Chamber Business News, September 14, 2020

              
From left to right, Democrat Jen Mangrum is running against Republican Catherine Truitt in 2020 to become North Carolina Superintendent of Public Instruction.
THE GREAT DIVIDE: CAMPAIGN CLASH OVER CHARTER SCHOOLS LAYS OUT STARK CHOICE 
North Carolina Voters' Decision Will Impact the Sector
The Democrat says Republicans are “starving public schools” by proliferating charter school growth and she will put a stop to it, if elected as North Carolina’s State Superintendent of Public Instruction. Her Republican opponent says she is not about to back away from charters to “move the schools in the wrong direction.”  Both Democrat Jen Mangrum and Republican Catherine Truitt are former teachers hoping to replace the former Republican superintendent, who did not run for re-election. Not surprisingly, the North Carolina Education Association has contributed to Mangrum’s campaign. No polling data was available. T. Keung Hui, Is School Choice Good for NC? GOP, Democratic Superintendent Candidates Disagree, The News & Observer, September 21, 2020

           
DESTROYED BY RIOTERS, A MINNESOTA CHARTER SCHOOL GETS CREATIVE

Mall of America Hosts Temporary Classrooms Rent-Free
Minnesota Transitions Charter School opened a temporary school in the Mall of America (MOA) after its district offices and secondary school in south Minneapolis were destroyed by fires and water during the riots following George Floyd's death last spring.

The MOA donated the space, IKEA donated the furniture, and TCF Bank is funding the school’s technology. The 17,000-square-foot site on MOA’s third floor has classrooms and a common space for 150 students in grades 7-12.

While Transitions is eager to rebuild and return home, in the meantime, the partnership between the school and the mall may mean job shadowing and internships for students, as well as chances to incorporate the mall setting into curriculum. A lesson on the physics of roller coasters, for example, could include a field trip to MOA's Nickelodeon Universe. MOA has struggled financially during the pandemic, making this new arrangement a win-win for both partners. Mara Klecker, Minnesota Transitions Charter School to Open Temporary School at Mall of America, Star Tribune, August 26, 2020

SAVE THE DATE!
If  You Financed or Invested in a School Building with Charter School Bonds, Our Upcoming Webinar is Must-See TV
What do investors want to know about your charter school? Where’s the money and who’s getting it? Find out how the landscape has changed in light of COVID-19. The School Improvement Partnership Presents “The New Normal - Which is Anything But.”
  • Washington, D.C. education analyst and noted broadcaster, Tressa Pankovits discusses shifting attitudes on charter schools at the national level;
  • Nationally acclaimed finance expert Dean Lewallen in New York City analyzes why high-yield investors love charter schools - and why they sometimes don’t;
  • cultural competency expert Arthur Mitchell reports from Philadelphia on How COVID-19 and the heightened emphasis on social justice is affecting progress measurements in charter schools.
Join moderator Alan Wohlstetter, Esq., President of School Improvement Partnership and this distinguished panel on October 15, 2020 at 3 p.m. EDT for "news you can use" across the charter school spectrum of services. Look for registration details in the next issue of Charter School Investor. 
                
The founding team members of CIVICA Colorado, a charter school scheduled to open in Milliken in August 2021. From left: Craig Horton, Rex Beall, principal Sheena McOuat, Carlos Alvarez, Stephanie Podtburg and Noland Eastin. 

CHARACTER, CHARACTER, CHARACTER!
Who Can Deny that Society Could Use a Little More of What is Driving a New Charter School?
“Everything we do is character-driven!” So says Sheena McOuat, who developed CIVICA Colorado Charter School with Craig Horton, a retired Fort Collins police officer and veteran charter school founder.

CIVICA will open in 2021 in Milliken, Colorado, about an hour north of Denver. It will operate as a career technical school, and it will open with three academies: health services, northern Colorado industry, and business information systems. Students will pursue industry certification and internships so that on graduation day, they will be fully ready for college, a job or the military. The school’s pathways will be driven by public service academies and dual-enrollment opportunities with local colleges, and students will be required to graduate with an industry-recognized certificate. The founders want to "prepare kids to get out of their parents’ basements when they get out of high school, to be prepared to support themselves.”

CIVICA plans break ground in January on its first building, an 8,500-square foot all-purpose space with a gymnasium and cafeteria. CIVICA will also put up a temporary classroom building with multiple classrooms under one roof in time for opening day. At capacity in four years, CIVICA will offer about 600 grade 6-12 seats. Anne Delaney, CIVICA Colorado, a Milliken Charter School, Scheduled to Open August 2021, Greeley Tribune, September 19, 2020
 
School Improvement Partnership improves transparency and accountability in the charter school bond market. As continuing disclosure agent for more than 40 schools in six states, we enhance the form and content of secondary market information for charter school bond investors. On behalf of such investors, School Improvement Partnership performs comprehensive evaluations of charter school borrowers in transition - both pre-investment and post-investment. Please view our website or call us at 215.854.6322.
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