JIM CHRISTIANA FOR SENATE issued the following announcement on July 22.
A local education services company is the focus of a statewide push to reform Pennsylvania’s charter school law — considered by some to be one of the nation’s worst.
Pennsylvania Auditor General Eugene DePasquale on Wednesday called on the state’s General Assembly to overhaul the 22-year-old law after revealing that Lincoln Learning Solutions, a Rochester-based charter school management company, held nearly $82 million in financial reserves as of June 30, 2018, and gave sizable raises to key executives in recent years.
Lincoln Learning Solutions is connected to Midland’s Lincoln Park Performing Arts Charter School and the Pennsylvania Cyber Charter School, both of which DePasquale said appear to be “almost entirely funded by public sources.”
The registered nonprofit receives millions of school tax dollars every year for students, but its finances can’t be reviewed by the state because of its legal status, officials said.
In 2019, DePasquale requested financial statements from Lincoln Learning to determine how it spent taxpayer money in years prior. Under current charter school law, neither the Department of the Auditor General nor the state Department of Education can perform a full review of the company’s books. The nonprofit’s tax forms showed it had received a “substantial amount of revenue” from PA Cyber in 2017, he said.
After receiving a variety of documents, DePasquale initiated a review of Lincoln Learning’s public tax filings from July 1, 2014, to June 30, 2018. He found that key executives at the company received sizable pay increases in recent years.
Board President and CEO Robert Clements received a 50 percent increase in pay from 2015 to 2018, from $186,100 to $279,652. Then-chief financial officer James Livingstone’s salary jumped 148 percent, from $88,033 in 2015 to $218,505 three years later.
The company also reported spending more than $622,000 on lobbying during the four-year review period. According to the Internal Revenue Service filing, it used that money to “influence the Legislatures to give funding and grants to digital schools.”
Lincoln Learning representatives said on Wednesday that executive salaries are in line with education, experience and responsibilities, and pay increases are based on an independent salary analysis of similar nonprofits. For example, Livingstone received a raise because he was promoted from within the finance department to chief financial officer.
“We do agree with (DePasquale) wholeheartedly, though, that accountability and transparency are tantamount to any proposed charter school reform legislation,” Lincoln Learning said in the statement.
Since providing DePasquale with the documents he requested last year, company leaders said Wednesday’s news release was the first and only time they have heard from the administration.
“The ‘financial reserve’ (DePasquale) refers to consists of our organization’s assets, funds to pay our employees’ salaries and benefits, our monthly bills and operating expenses,” Lincoln Learning representatives said. “Most of our funds are utilized for infrastructure, technology, curriculum development and delivery for students in Pennsylvania and elsewhere.”
DePasquale said no other nonprofit charter company in the state reported spending any money on lobbying, nor did any have a balance even close to Lincoln Learning’s $81.8 million reserve.
“It was clear that Lincoln Learning Solutions was operating without boundaries or accountability to the officials from either charter schools or to the taxpayers who were footing the bill,” DePasquale said. “As a result, we really have no idea what was provided by the management company in return for the public education money it received.”
Lincoln Learning representatives said they have worked hard to restructure the organization. Many contracts have been terminated or have since expired, including the “lobbying” contract with PA Cyber. The public charter school said the contract expired in June, calling it a public relations and communications agreement.
The company also terminated a services contract with Lincoln Park, and said it has no “knowledge of or interest in” federal Paycheck Protection Program loans the school received.
“Our association with our school customers is based on the services and curriculum we provide to them,” the company said in a statement. “There is nothing convoluted about it; those services are clearly outlined in negotiated written contracts that have been provided to the auditor general.”
The news comes just months after more than one-third of Lincoln Learning employees were laid off in late May. The company recently signed a new contract with PA Cyber that resulted in a multi-million dollar loss of revenue, representatives said.
Lincoln Learning was founded in 2005 and provides curriculum to about 250 schools, districts and educational consortiums in 22 states through contract agreements. Public school contracts are subject to open records laws and can be requested by interested parties, the company notes.
Christina Zarek, communications director for Lincoln Learning, said in 2019 that the company is sensitive to the need for accountability and would cooperate with the state’s probe.
“We are a much different company than the one founded by Nicholas Trombetta, who has not been associated with Lincoln Learning Solutions for nearly eight years,” she said at the time.
Trombetta pleaded guilty in August 2016 to a count of tax conspiracy and was sentenced to 20 months in a federal correctional facility.
Gov. Tom Wolf’s administration has long-criticized charters for using tax-free status and revenue passed on from local and state governments to turn a profit. Because of how closely associated the company is with its schools, “determining exactly how much money it receives from the schools it manages is nearly impossible,” DePasquale said.
Wolf in the past has outlined necessary charter reforms, including mandating financial audits be provided to state regulators. Other recommendations are capping enrollment in low-performing charter schools until improvements are made and creating an equitable charter school funding formula.
Charter proponents say independently operated institutions give parents and students diverse learning options at a time when school funding sees regular cuts and child safety is of heightened concern. Pennsylvania law does not allow for-profit charter schools, they add. While charters themselves may not directly profit, management companies sometimes do.
“Now more than ever, it is absolutely imperative that the charter school law be updated to allow for greater transparency about where our tax dollars are going,” DePasquale said. “As recipients of public funds, charter school management organizations should operate under the same level of accountability that we expect of our school districts.”
Original source here.
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