The charter school bond scam

Philadelphia Inquirer editorial - Philadelphia’s regular public school buildings are so run down that the cost to repair them is estimated at $4 billion. Those buildings aren’t likely to get face-lifts with the School District limping from funding crisis to funding crisis. In contrast, the city’s charter schools have received $500 million in taxpayer-backed bonds for new or improved buildings….

With no one saying no, some charters are in a frenzy to acquire or renovate buildings and finance the transactions with bond issues they can’t afford. The Philadelphia Industrial Development Corp. issues bonds for charters, but fees for lawyers, consultants, and others who profit from the deals aren’t fully disclosed.

Bonds for charters cost more because the risks are higher, Rutgers University professor Bruce Baker told Philly.com’s Alex Wigglesworth and Ryan Briggs. Those risks are passed on to taxpayers, who get stuck with even more costs when charters default, which has become common nationally.

Consider the Walter D. Palmer Leadership Learning Partners Charter School. It was the first Philadelphia charter to receive bond funding, and the first to default. The Northern Liberties school spent $11 million in bond funds in 2005, but closed abruptly in December. Taxpayers have paid $6 million in debt service, but the building will likely be sold to pay creditors.