Byron Sigcho presentation 10/26/13

1. 1
•THE NEXT
BUBBLE…..
•TOO ‘BIG’ TO
FAIL…
•… SETTING UP A
NEW CRISIS
AGAIN…
• BUT THIS TIME
THE TARGETS ARE
OUR CHILDREN’S
EDUCATION!
UNO CHARTER NETWORK:
Corruption, profit, and politics. Who will stand for
our children?
by Byron Sigcho
University of Illinois at Chicago
(October 2nd, 2013)

2. QUICK BACKGROUND
2
 UNO charter network is one of the state’s largest charter school networks, with 13 schools serving
approximately 6,500 students (98% Latina/o students).
 Despite their demographics, UNO does not support ELL, bilingual, or ethnic studies instruction; but
rather “full immersion” instruction with focus on civic engagement.
 UNO was recipient of a $98 million school-construction grant in 2009 (Largest of its kind in the whole
country)
 In official financial documents and audits UNO projects its enrollment to reach 8,096 students by 2014-
2015. In fact, they must meet this projection in order to generate enough funds to honor their financial
obligations with wealthy investors who own their bonds.
 Juan Rangel (UNO’s CEO) was co-chairman of Rahm Emmanuel mayoral campaign. He was appointed
by Emmanuel as Board commissioner for the Public Building Commission of Chicago (PBCC), despite the
clear conflict of interest with his position as UNO-CEO.
 UNO’s management has been more involved in politics and political scandals than in improving our
public school system. UNO is a political group, not a group of educators.

3. Schools or businesses?
3
Approximately $13
million in contracts
to friends and
family friends.
This represents a
cost of
approximately
$2,500 per student.
Around $8.5
million went to
UNO’s #2 family
members.

4. UNO’S FINANCIAL BUBBLE
4
First Bail
out
2006
2006
•$8 million in
•$8 million in
debt/bonds
debt/bonds
($4,429 debt
($4,429 debt
per students)
per students)
2005-06
2005-06
•1,054
•1,054
students
students
2007
2007
•$18 million in
•$18 million in
debt/bonds
debt/bonds
($10,781 debt
($10,781 debt
per student)
per student)
2006-07
2006-07
1,779 studts
1,779 studts
2007-08
2007-08
•2,325 studts
•2,325 studts
2008
2008
•$65 million
•$65 million
private loan
private loan
($19,496 debt
($19,496 debt
per student)
per student)
•Deficit of $1.7
•Deficit of $1.7
million
million
2008-09
2008-09
•3,334
•3,334
studts
studts
2009-2010
2009-2010
•3,391 studts
•3,391 studts
2011
2011
2013
2013
•Refinance $45
•Refinance $45
••Total
Total
million of the
million of the
2008 private loan
debt:
2008 private loan
debt:
with:
with:
approx.
approx.
• • $37
$37
million in
million in
$91 million
$91 million
bonds.
bonds.
in bonds.
• • $20
in bonds.
$20
million on
million on
••Approx.
Approx.
aa new
new
2010-11
2011-12 $61 million
2012-13
2010-11
2011-12 $61 million
2012-13
Bank
Bank
•3,861 studts
•5,376 studts
•6,294
•3,861 studts
•5,376 studts
•6,294
Loan.
Loan.
studts
in private
studts
in private
• • $13.5
$13.5
million on
million on
loans.
loans.
New
New
markets
markets
tax
tax
credit/JP
credit/JP

5. 5
Bond service
interest table
-
Most of the payments
that UNO is making go
towards interest rather
than principal.
-
In addition, by in 2019
UNO is expected to
refinanced two private
loans for approximately
$61 million.
-
UNO’s assets (school
buildings) have been
used as collateral to keep
borrowing.

6. Deficits are transferred to students
6
Largest deficits = Lowest instruction/support services
Only $0.45 of every $1 spent by UNO goes towards
instruction and educational support services. The rest
goes towards debt payments and administration fees.

7. Revenues and Projections
7

8. Expenses and Debt Service
8

9. Management and Profit
9

10. Ed Burke, Alderman
ties with Windy City electric $1.67 million contract with UNO .
Received $4,800 in contributions
from UNO contractors – D-Escoto
brothers
Martin Cabrera, Jr.
CEO Cabrera Capital Markets,
UNO Chairman, Member
Public Building Commission,
received large public contracts
as bond underwriter,
including $35 million on state
bonds for UNO. Has direct
business deal with Ed Burke
Susana Mendoza
Chicago Clerk
$9,700 in
contributions from
D’Escoto brothersUNO contractors
Rahm Emanuel­Mayor
Rangel was campaign manager
D’Escoto companies –UNO
contractors- contributed $2,500
to his campaign.
Michael Madigan
House Speaker – Rangel
campaigned for him during his
election. Received $14,500 in
contributions from UNO
contractors-D’Escoto brothers
Juan Rangel
UNO CEO
At the center of Nepotism
and corruption scandal
Joe Moreno
Alderman 1st Ward
MLI – UNO
graduate.
Received $3,600
from D’Escoto
companies for his
campaign.
Tony Munoz­State rep.
Education committee
Promoted bill to fund
charters at same rate as
public schools.
Received $10,500 in
political contributions from
D’Escoto companies –
UNO contractors.
Alderman 25th Ward
Co-Founder of UNO
“Killed” bill to stop charter
expansion, never has voted
against the mayor.
Received $30,050 in
campaign contribution
from D’Escoto brothers
Ed Acevedo­House Rep.
Brother received security
contract from UNO.
Received $5,250 in
contributions from
D’Escoto brothers
Luis Gutierrez
Congressman
– family ties to
Solis. “Friends of
Gutierrez”
contributed
$20,000 for his
campaigns
Gery Chico
Zoning Lawyer for
UNO.
Board member of the
Illinois State Board of
Education – approves
charter applications
Silvana Tabares
House rep.
MLI-UNO trainee
$51,000 in contributions
from D’Escoto
companies, and other
UNO contractors

11. Mismanagement
11
 Despite receiving almost $60 million in CPS contributions for this school year alone,
a recent report states that UNO has not been contributing to the pension funds of at
least 90 teachers and school staff in years and keeps financing deficits with debt.
 UNO’s new Chairman, Martin Cabrera Jr., only lasted three months on the job after
being appointed by Gov. Quinn to “clean house”, and assuring the Tribune editorial
team that him and Rangel will make sure things “change” in relation to the nepotism
and corruptions charges.
 It is key to understand that any increase in money to charters means a decrease in
funding available for traditional pubic schools. Furthermore, in the case of UNO, only
45 cents of every dollar taken away from neighborhood schools will actually be used
for instruction and support services. In the mean time, public funds are being
transferred to wealthy investors.
 Alderman Sposato (36th ward) has questioned their recruiting practices and
enrollment figures. UNO has not answered to his questions yet.

12. More on UNO’s mismanagement
12
 In New Orleans, UNO administrated Esperanza Charter school for four years 2007-2011)
before handing the operations to the Choice Foundation as they did not meet academic
standards. UNO’s charter was the only charter in the district that was not renewed in 2011.
 Another recent report in the Huff post, links UNO as a subcontractor under UNO Janitorial
and Maintenance Service LLC, in the new controversial $99 million contract to clean
O’Hare airport. Hundreds of employees lost their job as a result.
 Even though tax-exempt/non for profit organizations are not allowed to get involved in
elections, there is significant evidence that UNO officials actively engage in election process
as organizers and/or funders.
 In addition, UNO has real state partnerships in Senior housing projects (ex. Senior Lifestyle
corporation – multinational corporation) to supplement their revenues.
 Nuveen Securities LLC and Federated Investors have purchased UNO bonds for their “High
Yield” municipal bonds portfolio - high risk – high yield bonds. Their bonds have been rated
BBB- (“junk bonds”)

13. THE NEXT BUBBLE – SOME WARNINGS
13
 UNO’s capitalization ratio (ability to pay their obligations), and their debt-to-worth ratio (financial leverage)
show high risks and serious deficits with respect to other charter schools, according to the Civic Federation
(2011 report), which is actually a pro-charter organization.
UNO replied: “As new campuses come into operation, the school management anticipated that those campuses
would generate sufficient funds to address the situation (financial)”
 On January 17th of this year, Parents United for Responsible Education (PURE) and Chicago Local School
Councils filed a formal complaint to the Illinois Executive Inspector General, charging UNO for overleveraged
its charter schools. Investigation is still pending and scandals have been booing since then.
 In February, a Sun-Times investigation found nepotism in several contracts and payroll positions that UNO
has signed with family and friends.
 In June, Gov. Pat Quinn initially hold a portion of the $98 million grant for the new UNO Soccer Academy
until all the allegations were cleared. However, after the Tribune editorial team absolved Martin Cabrera and
Juan Rangel from mismanagement and endorse them as the “best people” for the job, Gov. Quinn restore
funding in a matter of days.
 On June 7th, Teachers for Social Justice and the Hispanic Literacy Council issued an editorial letter to the
Tribune editorial team, questioning their reasons for accepting and endorsing UNO’s management. The letter
was never published.
 Only three months later, on September 13 th of this year. Martin Cabrera Jr. stepped down as UNO’s. There has
not been any communications from UNO or CPS official since then.

14. The UNO “revolutionary” model
14
The educational model implemented by UNO has nothing to
do with a curricular reform or a creative/alternative teaching
methodology for students, but it is a “ponzi” financial scheme
supported by corporate and political interests.
UNO was the entry point for Teach for America in Chicago.
Only 25% of their teachers are certified, 25% come from TFA,
and approximately 50% are not educators.
Only 15% of teachers have more than 5 years of teaching
experience. Actually, many former teachers report working
very long hours with a very low pay with respect to their work
load.
UNO’s CEO makes more money than the Mayor and more
than ten times the salary of the average teacher.

15. More on UNO’s “Revolutionary” model
15
UNO’s board do not have parents or teachers as members,
but rather members with religious and corporate affiliations.
At least two of their schools were placed on probation during
the first year of evaluation under the same rules that apply to
traditional public schools. Five others are not reporting
scores or there is “not sufficient” data.
This year, none of the UNO schools showed significant
improvements in any academic standard.
Parents have been waiting for literacy and computer classes
for years; this is a key component to help children with their
educational needs.

16. Assimilationist model
16
 Even though more than half of students at UNO would benefit from ELL
instruction (according to their own estimates), and that the vast majority
of parents’ main language is Spanish; Spanish is almost a forbidden
language in their classrooms.
 “UNO forcefully rejects any suggestion that the Hispanic community’ s
challenges represent any systemic inequity in American Life” Juan
Rangel, UNO-CEO
 Furthermore, UNO argues that there is no comparison between the
African American civil rights movement and the struggles of Latinos in
the U.S.
 This model has gained UNO millions from Rupert Murdoch, the Walton
Family Foundation, Gates Foundation, Golden Apple Foundation,
among others; but there is no research/evidence supporting this model.
 UNO is currently trying to start their own teacher-training and
certification program.

17. CONCLUSION
17
 As in the recent financial crisis, predatory lenders benefited from government
bailouts as they were conceived as institutions that were “too big to fail”; none of
them were accountable for their irresponsible practices.
 UNO has embraced these type of practices, as it continues to borrow and expand
its operations even when there is substantial evidence of mismanagement and
overleverage in their finances (not to mention questionable results in their
educational outcomes). All of this with public resources, and bonds that will
mature in the next 20 and 30 years.
 Even if UNO “cleans house” and stops the rampant corruption and nepotism in
their system, their educational model is still deficient and fails to address
children’s educational needs to develop their full potential.
 Furthermore, in general, charter schools function with contracts with expiration
dates that are replacing public schools which function through the constitutional
right of every child to have access to quality education.
 In the mean time, who will ‘bail out’ our public schools? Who will stand for our
children?
 WE MUST ACT NOW!

18. Thanks
18
For more information contact:
Byron sigcho
University of illinois at chicago
Policy studies in urban education department
Teachers for social justice
bsigch2@uic.com
http://www.teachersforjustice.org