Chicago’s UNO Charter Scandal Tarnishes Luster of Arne Duncan’s Hands Off Strategy

A dozen years ago, President George W. Bush and Secretary of Education Rod Paige, the former superintendent of the Houston Public Schools, brought us all the test-and-punish “Texas miracle” in the form of the No Child Left Behind Act.  We all know what happened to that so-called miracle.

Now several years into Arne Duncan’s tenure as U.S. Secretary of Education, we continue to learn more about the “Chicago miracle” brought to us by Duncan, the former Chief Executive Officer of the Chicago Public Schools, and the man who has infused into federal education policy the “miracles” of innovation and freedom from too much red tape.  These were the signatures of the school reform he presided over in Chicago in the form of Renaissance 2010, a decade-long program that closed public schools and launched a vibrant charter sector.

We can now watch the results quietly playing out in the U.S. Department of Education. According to Education Week writer, Alyson Klein, for example, yesterday San Antonio, Philadelphia, Los Angeles, Southeastern Kentucky, and the Choctaw Nation were designated as “Promise Zones.” Klein notes that future funding for this program is unsure: “The roughly $60 million Promise Neighborhood program was initially pretty popular in Congress.  But it has faced pushback, as lawmakers have questioned whether it makes sense to dole out a bunch of planning grants to finance programs that may or may not come to fruition.  So far, most communities that have gotten ‘planning grants’ haven’t made it to the implementation stage.”  There are similar questions about the effectiveness of the Race to the Top grants and the School Improvement Grants program, which is currently undergoing a formal re-evaluation.

Questions about the local impact of Duncan’s programs in Chicago have exploded into an enormous scandal around Chicago’s best-known and fastest growing local charter chain, the UNO (United Neighborhood Association) Charter Schools.  This week, Chicago Magazine published The Rise and Fall of Juan Rangel, the Patron of Chicago’s UNO Charter Schools, an extraordinary investigation of one of the biggest and supposedly most successful charter empires nurtured throughout Duncan’s tenure as CEO of the Chicago Public Schools.

Reporter Cassie Walker Burke with a team from the Better Government Association spent months investigating the crisis in the United Neighborhood Organization and its charters: “A torrent of bad publicity about insider contracts, nepotistic hires, and political cronyism at UNO.  Millions in grant money yanked from the organization and its network of 16 charter schools.  A U.S. Securities and Exchange Commission investigation into one of the bond deals that helped drive UNO’s rapid expansion.  And, of course, Rangel’s December departure from the juggernaut he had built…”

UNO began opening charter schools in 1997, benefiting from the array of funding streams available in Chicago to entrepreneurs who wanted to enter the charter sector.  According to Chicago Magazine, UNO charter schools have received $280 million in public money in the past five years. “CPS, like many authorizing districts around the country, gives charter operators a guaranteed base allotment per student—in Chicago, that amount currently ranges from $4,140 to $5,130.  On top of that, charters get additional public funds for facility rent and maintenance and even more if they teach large numbers of kids who are poor or are learning English (as UNO schools do).  And that’s not all: there is a blend of local, state, and federal monies dedicated for lunch programs, special education, teacher training, and a long menu of services.  Charters also attract serious dough from certain foundations.  The Dell Foundation has given UNO at least $1.5 million, and the Walton Family Foundation has forked over more than $3 million.”

In 2009, the Illinois legislature awarded UNO a $98 million grant to build more schools, but the grant’s requirements specified that UNO “must immediately notify the Illinois Department of Commerce and Economic Opportunity that administered the grant in writing of any actual or potential conflicts of interest.”

Beginning in February of 2013, the Chicago Sun Times exposed, “a long line of contractors, plumbers, electricians, security firms, and consultants tied to many of the VIPs on UNO’s organizational chart….  Rangel spelled out in tax documents and in later bond disclosures that the construction firm d’Escoto Inc.—owned by former UNO board member Federico d’Escoto, the brother of Miguel d’Escoto—was the owner’s representative on three projects funded by the grant… The vendor lists were peppered with other familiar names: a $101,000 plumbing contract awarded to the sister of Victor Reyes, UNO’s lobbyist, who helped secure the state grant; a $1.7 million electrical contract given to a firm co-owned by one of Ed Burke’s precinct captains; tens of thousands in security contracts to Citywide Security, a firm that had given money to Danny Solis, and to Aguilla Security, managed by the brother of Rep. Edward Acevedo, who voted for the $98 million for UNO.”  The list of conflicts of interest continues page after page.

Today UNO’s schools serve 7,500 students.  While UNO’s programming may be innovative and the facilities gorgeous, the students’ future is also connected to the shady business practices that threaten the ongoing operation of their schools.

According to Cassie Walker Burke: “UNO and its CEO thrived mainly because of gaping loopholes in the charter school system.  While UNO has received a staggering $280 million in public money over the past five years to spend on education, neither Chicago Public Schools nor the Illinois State Board of Education provided enough oversight.  Without that, insiders say, UNO developed a free-wheeling culture that was ripe for abuse.”