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The ABC$ Of UNO

How did UNO get so clouty and corrupt? They had Democrats Rahm Emanuel, Michael Madigan and Ed Burke at their side.

Chicago magazine and the Better Government Association have the details in their new investigation.

Among the major findings, as summarized by the BGA:

  • UNO has received more than $280 million in public money over the past five years but neither Chicago Public Schools nor the Illinois State Board of Education closely monitored how those funds were spent.
  • A good chunk of the public money UNO collects never touches the classroom. In 2012, for example, it received $49 million from local, state and federal sources. Of that amount, more than $5 million went to management fees, nearly $3.5 million to debt interest payments, nearly $1 million to consultants and $68,200 to promotional materials.
  • According to state law, charter school networks are supposed to conduct and videotape blind admissions lotteries. But two sources with direct knowledge of the process say UNO never held a "real" lottery and instead cherry-picked students based on where they live in order to build up coalitions in certain Latino neighborhoods.
  • UNO has co-developed at least five senior housing developments in and around Chicago, signaling its growing business prowess, and push to diversify its interests. As is the case with its schools, taxpayers helped foot the bill. UNO and its business partner have received loans, grants and housing tax credits worth $78 million from the governments of the State of Illinois, Cook County and City of Chicago.

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Don't forget: UNO impresario Juan Rangel was Rahm's campaign co-chairman. Rahm later appointed Rangel to the Public Building Commission. Then Rahm assigned that agency to handle construction projects related to school closings instead of CPS, which would normally handle the job.

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Meanwhile, Madigan and Burke. From Chicago:

In the summer of 2007, UNO embarked on its biggest project yet: the gut rehab of an abandoned industrial bakery near 47th and Pulaski - a campus that UNO would later name Veterans Memorial. Sure, says Rangel, the graffitied eyesore could have been improved on the cheap, with some new windows and a fresh coat of paint. But nothing quite spells success in Chicago like a multimillion-dollar feat of modern architecture.

UNO hired the Near North firm UrbanWorks, which designed a curtain wall of acoustically enhanced panes of glass to block out the noise from Midway Airport. "Why settle?" Rangel remembers thinking. "Why not do something that puts a mark on a community?" ("Juan is really just a frustrated architect," says one insider.) For Rangel, a major construction project was a twofer: It also brought the power to dole out tens of millions in contracts.

Halfway through construction, however, UNO began gasping for cash. Rangel reached out to some powerful political allies with a concentration of UNO schools in their districts. One was Illinois House speaker Michael Madigan, who had been working to tack facilities funding for charters onto the state budget. But the speaker was squabbling with Governor Rod Blagojevich, who in the summer of 2007 slashed a slew of Madigan-supported "add-ons" from the budget, including a $3.5 million grant that would have helped UNO.

Madigan later made it up to him.

*

Back to Chicago:

It got worse. The credit markets were tightening. CPS, meanwhile, was no help. The school system was refusing to increase its per-pupil allotments, funding that UNO was counting on to help secure construction financing. The lead contractor, F.H. Paschen, threatened to pull its crews.

Desperate, Rangel tried political lifeline No. 2: Southwest Side alderman Ed Burke (whose daughter-in-law was later hired at UNO). In June 2008, Burke convened a team of bankers, LaSalle Street lawyers, and politicos, including his brother, Daniel, a state rep, and Daley's chief of staff, Lori Healey. The group helped UNO secure a $65 million low-interest loan from a consortium of banks led by Cole Taylor Bank and MB Financial Bank and quietly guaranteed by City Hall.

This being Chicago, few were surprised when Rangel subsequently threw his support behind Dan Burke in his hotly contested reelection race for the Illinois House in 2010. The fact that Burke's opponent was a Mexican American in a predominantly Hispanic district didn't stop Rangel. To critics, it was further proof that UNO's Latino-empowerment principles could be readily abandoned when self-interest was on the line.

The story was told earlier by the Tribune's Melissa Harris:

Within days, Burke summoned executives from three banks to City Hall. He put them in a conference room with Rangel, his two attorneys and three elected officials, all UNO allies, and told the bankers not to leave until Rangel got what he needed. The resulting $65 million loan, which closed in June 2008, saved UNO from ruin.

This being a tale of Chicago politics, the story doesn't end there. Less than two years later, Burke's brother, Illinois state Rep. Dan Burke, found himself in a tough re-election campaign against Mexican-American Rudy Lozano Jr. At Edward Burke's request, Rangel backed the Irish clan, lending his name to a mailer, introducing Dan Burke to voters and getting people to the polls.

"I went all out," Rangel, 46, said of his efforts on Burke's winning campaign. In a separate interview, he scoffed that there was a quid pro quo. "I'm not that simplistic about 'I'm going to go with the Mexican.' If you want to think about it in simple terms, I run charter schools, and Dan Burke is super supportive of charter schools. Rudy Lozano is against charter schools. So where should I be?"

When Lozano made another run at political office earlier this year, Rangel seized the opening. He knew Edward Burke was still steaming about Lozano's challenge to his brother. So Rangel asked Burke to support Silvana Tabares, a 33-year-old journalist and graduate of UNO's Metropolitan Leadership Institute, a training program for young Latino professionals.

With Burke and Rangel's support, Tabares won the February Democratic primary for an Illinois House seat by about 300 votes.

Lozano, too, came from a political family - a good one.

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Back to Chicago:

According to records, UNO's charter network also spent freely on things you rarely see on your neighborhood public school's budget, such as restaurant meals (about $48,000 in 2012) and educational trips to New York City, Orlando, and Beijing (about $59,000 in 2012). Asked about the Orlando expense, Rangel crowed about the glossy Disney corporate training center where he sent a portion of his staff - including janitors - to study customer service. The bill: $38,000 for the trip, and thousands more for Disney trainers to come to Chicago. "You go there, and the bus driver, the security guy, the ticket attendant - they are on. They call it 'onstage'! It's the Disney magic! Why don't schools function this way?"

Um, maybe because they are schools and not theme parks?

At any rate, that explains this (watch to the end for the fireworks):

*

Quinn also implicated.

*

And Daley.

"UNO Chief Executive Officer Juan Rangel doesn't see any conflict in tying a back-to-school rally to the Olympics," WBEZ reported in 2009. "He serves on a council that helps promote the Olympic bid and reaches out to the community."

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Back to Chicago:

And the other trips? Many underprivileged Latino students, Rangel says, have never been to the Loop, much less overseas. "The idea of a group of Mexican kids from the neighborhood going to China - I don't think any of those kids ever dreamed that."

Student trips notwithstanding, a good chunk of the public money flowing into UNO never saw a classroom. Take the $49 million that the charter network collected from local, state, and federal sources in 2012. Once you subtract the management fees ($5 million), the lengthy roster of consultants (nearly $1 million), the promotional materials ($68,200), and a host of other expenses that have little to do directly with kids and classrooms, you're left with $38.6 million. Then factor in about $3.5 million in interest payments on its roughly $70 million worth of debt. Suddenly a big charter school operation doesn't sound so streamlined after all.

And how.

"The United Neighborhood Organization celebrated the opening of its new $22 million charter school on the Northwest Side last September with a laser light show and fireworks display," Catalyst noted in July.

"The cost? More than $143,000, according to records obtained by the Chicago Sun-Times. Now, 10 contractors say UNO stiffed them out of more than $1.3 million they're owed for work they did for the school."

Neither Pat Quinn nor Michael Madigan or Ed Burke donned their hard hats and grabbed their shovels for a ceremony to explain that.

*

Back to Chicago:

Behind the scarlet curtain, UNO's schools could be sloppy. Rangel rarely entered them. From 2008 until 2011, day-to-day operations fell to a strict Catholic nun, Sister Barbara McCarry, a veteran from the CPS office that vetted charters. To make up a budget gap from leaner times, UNO began stuffing more kids in classrooms (up to 30 in kindergarten and first grade, compared with the CPS average of 24) and levying "activity fees" on unsuspecting families.

Someone has to pay for the fireworks.

*

Bonus anecdote! From The City Council Just Secretly Redrew Your Ward:

So @DriXander heard an Alderman today say someone from UNO got more time in the map room than they had to see their own ward. #remap

Basically UNO has been running a political machine operating as a shadow school district.

*

Leading legislative fauxgressive Don Harmon - once voted the state's best legislator by Rich Miller and his Capitol Fax readers - also comes out pretty stinky.

"In 2009, state Sen. Don Harmon (D-Oak Park) was among the members of the General Assembly to vote to give the United Neighborhood Organization an unprecedented $98 million state grant to build charter schools in Chicago," the BGA reports.

But UNO wasn't the only group that ended up benefiting from the grant, which was part of a massive capital spending bill that provided money to infrastructure projects across the state.

Harmon's law firm did, too - collecting at least $35,000 for legal work it subsequently performed for UNO, according to copies of invoices and payment records obtained from the State of Illinois.

What's more, the Better Government Association found the firm, Burke Burns & Pinelli, had done legal work for UNO prior to Harmon's June 2009 vote.

This means Harmon not only voted on a measure ultimately benefiting his firm, he also voted on a measure benefiting a past (and continuing) client of his law firm.

That sounds about right.

"Is there even a shred of evidence that a legislator is under the thumb of a legislative leader because of campaign spending?" Harmon said in 2009, trying super-hard to maintain a straight face.

"I don't see it. I see members elected from competitive districts vote in the best interests of their district, which is often counter to the way the legislative leader votes."

*

And then this:

"Back on February 13, state rep Kevin Joyce introduced a bill to expand the kinds of materials open to the public under the Illinois Freedom of Information Act," Ben Joravsky reports. "On April 3 that bill passed the house and was sent to the senate, where it sat in committee for weeks. Legislators tell me that during that time city lobbyists got in touch with their allies in the senate, and on May 18 Senator Don Harmon gutted the bill, removing the language about the FOIA and adding an amendment that extended the life of the four Chicago TIF districts: Madden/Wells, Roosevelt/Racine, Stony Island/Burnside, and Englewood Mall. None of these fall into Harmon's legislative district.

"Harmon - who didn't return calls for this story - is from Oak Park, whose TIF policies seem to be almost as nutty as Chicago's, hard as that is to believe. (Hardly a week goes by without some Oak Parker calling and asking me to write about one TIF debacle or another.)"

*

Back to the BGA:

"A previous BGA investigation found that in 2012 Harmon supported gaming expansion legislation that included language Burke Burns helped craft on behalf of a client, the City of Des Plaines, where Rivers Casino is located.

"Gov. Pat Quinn ultimately vetoed the bill, which would've reduced the suburb's casino-related tax payments to the state by $120 million over 30 years.

"That same investigation also revealed that since Harmon joined Burke Burns as a partner in January 2005 the small Chicago law firm has secured at least $6.3 million in legal work from state agencies that receive funding and are overseen by the General Assembly. At the time, the firm said it had long-standing relationships with many state agencies and that Harmon had nothing to do with the contracts."

*

"An UNO spokesman declined to comment. The law firm's president, Mary Patricia Burns, didn't return messages.

"What's known is that both Burke Burns and UNO have strong ties to Illinois House Speaker Michael Madigan (D-Chicago).

"City of Chicago filings show Burke Burns was a lobbying client of Madigan's law firm in 2001 and 2002. And Burke Burns and its partners have contributed more than $287,000 since 1994 to political committees controlled by Madigan, according to Illinois State Board of Elections records.

"Harmon is linked to Madigan, too - Harmon served as the speaker's deputy legal counsel before becoming a state senator in 2003. Harmon has since risen to become one of the Senate's top Democrats, holding a leadership position called president pro tempore and chairing the General Assembly's influential Executive Committee."

*

"Madigan spokesman Steve Brown says the speaker was unaware UNO had any involvement with the senior housing developments, and therefore it wasn't the reason the law firm won the business."

Just got lucky!

*

Fallout:

"When Chicago public television's nightly news show tried to get folks to come in and talk about charter schools for a segment last night, there weren't any folks from the charter community who were willing to show up," Alexander Russo reports on his This Week In Education blog.

"That's strange. Usually it's not hard to round up people who want to be on TV. Perhaps it was just the cold weather.

"Or perhaps it was the fact that charters are particularly controversial in Chicago right now, despite being just 12 percent of kids in Chicago (#9 for choice in the nation according to the recent Brookings report) and having what some consider a very tight application process.

"The most obvious reason for the controversy surrounding charters in Chicago is the spectacular flameout of one of its biggest advocates - and beneficiaries - Juan Rangel. The latest issue of Chicago magazine chronicles his story, which makes for excruciating or exciting reading depending on your point of view on charters."

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See also:

"The United Neighborhood Organization, the city's largest Latino community group, is poised to become the biggest charter school manager in Illinois after scoring a $98 million state grant to build eight more schools," the Tribune reported in 2009.

"How UNO landed all that cash - believed to be the largest-ever taxpayer windfall in the U.S. for a community-run charter group to build schools -- at a time of massive government budget deficits is a classic Chicago story of awakening immigrant clout and lobbying muscle."

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Previously in the Beachwood:
* The [UNO] Papers.
* Pizzeria UNO vs. UNO Schools.
* UNO No-No (last item).
* UNO & Wall Street.

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Comments welcome.



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Posted on January 10, 2014


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