Hearings today on charter co-locations and the eviction of West Side HS focused on class size

You can find the court filings in the lawsuit to block the Success co-location, Mulgrew vs. Bd of Ed, by searching this website for Index case #152847/2023. including my affidavit here. The filings in the lawsuit to block the West Side HS re-location and Brownsville/Aspiration co-location, Fernandez vs. Bd of Ed, can be found on the same website under Index case #155629/2023, including my affidavit and the affidavit of Jacqueline Shannon, Chair of the Brooklyn College Early Education Department, on the importance of the LYFE program.

UPDATE at 5 PM:  The Judge ruled that the Temporary Restraining Order would continue so that Success Academy is barred from renovating the spaces in Waterside and Sheepshead Bay until he rules on the application for preliminary injunctions in both lawsuits, which he intends to do as soon as possible. 

This morning at 10:30 AM, at the NY Supreme Court building at 80 Centre St., Judge Lyle Frank heard  arguments in the lawsuit to block the co-location of two Success Academy charter schools in the Waterside Leadership Academy building in Queens and the Sheepshead Bay high school complex in Brooklyn.  He also heard arguments in the lawsuit to block the re-location and co-location of three transfer schools, designed for under-credited and over-aged students: the forced eviction of the Edward A Reynolds West Side High School in Manhattan to a building across town to make way for The Young Women's Leadership Academy, and the co-location of Aspirations Diploma Plus High School with Brownsville Academy in Brooklyn.  (For more on these lawsuits, see here and here.)

The small courtroom was chock full of attorneys, plaintiffs, observers, a couple of reporters, and four very young Success Academy children wearing their bright orange uniforms, sitting and sometimes squirming in the first and second rows.  They were clearly put there to try to affect the outcome of the case. Unfortunately, it was very difficult to hear much of what was said because there were two air conditioners humming loudly, and the attorneys were speaking with their backs to us, facing the judge.  We will hopefully get a transcript soon but until then, please take this account of what transpired with some large grains of salt.

Judge Lyle Frank was appointed to the Supreme Court in 2018.  He is relatively young, and not afraid to make waves by ruling against the the City and the DOE in some prominent instances, when he believes that they have not been following the letter of the law.  Last summer, he ruled that the budget cuts to schools should be restored because they had been illegally imposed by the city.  Though later on appeal, the Appellate Court let the cuts stand, they agreed the DOE had acted illegally. More recently, he issued a preliminary injunction against the City's plan to change the healthcare of NYC retirees to a Medicare Advantage plan.

This morning, he jauntily walked into the courtroom, slipped on his robe, seemed pleased that the room was full of observers, and made a joke by asking if there were "any retirees" among them.  Then he launched right into closely questioning the four attorneys for the city, and the two lawyers who represented the parents and teachers who oppose these moves, Dina Kolker of Stroock and Laura Barbieri of Advocates for Justice.

The DOE immediately argued that these cases should be dismissed, based on their view that the issue should have gone to the Commissioner first instead of to Court, and if not, they should be granted another 45 days to research and argue the other claims made in the lawsuit.  

The Judge seemed surprised, but seemed to ignore that request, and immediately dove into the more substantive questions: namely, whether the Educational Impact Statements should have mentioned the potential impact of these proposals on class size, and more specifically, whether DOE should have analyzed how the loss of rooms at the existing schools might prevent them from lowering class size, especially considering the new class size law passed last spring by the Legislature and signed into law by the Governor this fall.

The city's defense seemed to be primarily based on two narrow issues: that the state law that requires EIS's does not explicitly mention class size, and again, that any legal challenge should have been filed with the Commissioner first, as matters such as class size are so complex that they require education expertise.   

In response, Dina Kolker pointed out that the state law that mandates the creation of Education Impact Statements cites enrollment among many factors that should be examined, but also specifically says that the list is not exhaustive, and that the "statement shall include, but not be limited to" these factors.  Clearly, changes in class size have a serious educational impact on students and thus should be addressed in the EIS, especially given the new state law.  She also cited precedents in which the court had blocked changes in school utilization based upon legally deficient EISs, without the issue going to the Commissioner first, most notably, in the decision by Judge Lobis in 2010 to halt the closure of nineteen schools.  

Later in the hearings, the city attorneys suggested that since the EISs did mention changes in enrollment, that was practically the same as class size, (which of course isn't true).  They also proposed that since the DOE is currently in compliance with the new class size law (which actually doesn't kick in until next fall),  what happens to class size if these co-locations occur is not relevant  at this point.  

They added that DOE will comply with the class size law in the future, and the Judge replied, "but how, if they [the schools] need more classrooms and the charter school takes up all the space?"  At that point, the city reiterated that this is a complex question that only the Commissioner was qualified to decide.

In general, Judge Frank seemed to respond to the city's arguments with skepticism.  Yet the decision on whether to continue a temporary restraining order in the case of the Success Academy and/or order a preliminary injunction in both cases depends on three different assessments by the Court:  one, the likelihood of the lawsuit's eventual success when it is considered in full; two, whether the harm by letting renovations go forward is irreversible; and three, the balance of equities between the opposing parties.  

As to the latter two issues, the city argued that the Success charter schools are due to start school in mid-August so the renovations must start soon, that any renovations could be undone, and that "children are more important than buildings."  Dina Kolker countered that renovations are expensive to reverse, that the construction could disturb many of the activities, including summer school, currently taking place at the Sheepshead Bay complex, and that the fate of children are involved in both sets of schools, not just the charters.  

Then there were arguments from both sides on the secondary issue as to whether Advocates for Justice should have legal standing to be a petitioner in this case.  DOE said no, Laura maintained that they should, since they are a non-profit that is expending resources and time on advocating for student rights.  

She then argued that the fact that several of the PEP members had their cameras turned off during the vote on these transfer school moves was a clear violation of Open Meetings Law, since it is impossible to ensure that the right person was voting; the videotape for a large section of the PEP meeting is also missing.  The city responded that these were mere "technical violations" that shouldn't nullify the votes.

Laura went on to say that the EISs were also deficient since they included no discussion of where students at the transfer schools with special needs would receive their mandated services, and that depriving of them of these dedicated rooms is a violation of the city's Human Rights Law.  In addition, the EIS contained no analysis or discussion of the loss of the LYFE center and how that would affect the students at West Side High school who are young parents. 

See the affidavit  of Jacqueline Shannon, Early Childhood Department Chair at Brooklyn College. on how critical the LYFE Center is in keeping these students engaged and attending school.  The LYFE Center is a day care program which was established to care for the infants and toddlers of West Side students while they are in school, with abundant research and experience showing their value. What's fascinating is that Judge Lobis in her 2010 decision  in which she ruled  that 19 school closures were illegal because the EIS's were inadequate explicitly cited the fact that there was no discussion of how the loss of LYFE centers in these schools would impact students, just as in this case:

The EISs completely failed to provide information about specific programs existing at the schools proposed to be closed or phased out, or where the students would be able to find such programs. For example, where the school had a Living For The Young Family Through Education (LYFE) Center, no mention was made of that program, or where a similar program existed in other city schools.

The attorneys for the city responded that the West Side EIS contained such a discussion, which is false.  The EIS does mention that the LYFE Center may remain in its original site, more than a mile away from the new West Side school,  but never defines what the LYFE Center is or even attempts to describe the impact to the West Side students from having access to it in the same school building where they are enrolled,  as you can see for yourself.

The city's attorneys also claimed that EISs do not have to specify which rooms will be used to deliver special education services; but as Laura responded, they should at least analyze whether there will be enough rooms for that purpose, once these proposed co-locations and re-locations take place.

To sum up, the arguments on both sides were interesting and we should hear soon on the issues of the TRO and preliminary injunction, and hopefully, even on the broader questions of whether these moves should occur at all.  

One thing I predict, however, is that after today, future EISs will at least mention the issue of class size and at least superficially pretend to discuss the ability of affected schools to comply with the new class size law, no matter the outcome of these particular cases.

Comments on IBO brief on class size reduction costs

Articles about the IBO estimate and our response were published in the Daily News and Gothamist.

July 12, 2023

Regarding IBO brief on class size reduction costs:

It is surprising that the IBO came out with a higher estimate of the staffing cost for the new class size reduction law than the city’s estimate– $1.6- $1.8 billion vs. the DOE’s estimate of approximately $1.3 billion, and it is unclear why.  Perhaps this is because the IBO is re using enrollment data two years old.  The DOE states they also assumed “a moderate degree of school budget realigning through reducing existing non-teacher positions, per diem and per session, and non-staffing spending.” Neither the IBO nor the DOE seem to have into account the fact that many NYC schools have a relatively high teacher/student ratios yet relatively large class sizes, meaning that some schools may be able to re-assign existing pedagogical staff to classroom instruction, without additional costs.

Nonetheless, there will be a significant need for hiring more teachers in the years to come. The IBO estimates 17,700 new teachers will be required, which will be a challenge, particularly given the fact that the number of K12 teaching positions has fallen by about 4,000 over the last five years, with the number set to fall even further next year.  As the report points out, the current DOE plan is to further reduce the total pedagogical headcount by approximately 3,500 positions from 2023 to 2026; clearly that will have to change. While the IBO states there are approximately 11,000 pedagogical vacancies, they do not explain if these are forced vacancies that schools have been unable to fill because of budget constraints, or a result of a shortage of available candidates.

What the IBO brief does reveal is that the Chancellor’s repeated claim that high-poverty schools will not benefit from the class size mandate because they already have small enough classes is a red herring.  The data reveals that only 9 percent of the one third of schools with the highest poverty rates achieved the class size cap in 2021-2022; and most likely even fewer did last year, as class sizes increased in most schools across the city.  Nearly half (47%) of the schools with the highest poverty rates had between 37-100% of classes over the cap.  Moreover, even in the other two-thirds of NYC public schools, poverty levels can be as high as 72%.

It is particularly disappointing that the IBO did not attempt to estimate the cost of new facilities, and how many new seats will have to be built to provide enough space for smaller classes, especially when they did provide an estimate in the case of the City Council bill, Intro. 2374, that had far more rigorous requirements for class size.  The latest version of the capital plan approved by the City Council in June cut 22,000 new seats from the plan adopted in June 2021, without any explanation of why fewer seats will be needed, especially given that more than 300,000 students are enrolled in overcrowded schools.

Nor did the IBO brief take into account the potential cost savings from smaller classes, including lowering remediation costs and referrals to special education.

In any case, the conclusions of this brief reinforce the need for the city to start moving now on a realistic, effective class size reduction plan as quickly as possible, and to quickly reverse their planned shrinkage of teaching staff in order to meet the five-year timeline required in the law.

For immediate release: Hearings and press conference tomorrow Friday July 14 on two lawsuits, challenging DOE co-location and re-location proposals

More background on these lawsuits here and here.

For immediate release: July 13, 2023

Contact: Sarah Frank 617-828-2032 (sarfrank@gmail.com), Laura Barbieri 914-819-3387 (lbarbieri@advocatesny.com)

What: Press conference at NY State Supreme Court, 80 Centre St, NY, NY 

 When: Friday, July 14, 2023, at 9:30am (arguments to be heard at 10:30 am)

New York, NY – Tomorrow at 10:30 AM, at the NY Supreme Court building at 80 Centre St., Judge Lyle Frank will hear arguments in the lawsuit to block the co-location of two Success Academy charter schools in the Waterside Academy middle school building in Queens and the Sheepshead Bay high school complex in Brooklyn.  At the same time, preliminary hearings will be held on a concurrent lawsuit to block the re-location and co-location of three transfer schools designed for under-credited and over-aged students: the forced move of the Edward A Reynolds West Side High School to a building across town to East Harlem, and the co-locations of Brownsville High School and Aspirations Diploma Plus High School in Brooklyn.

Last summer, Judge Lyle Frank ruled that the budget cuts to schools had been illegally imposed by the city, and more recently issued a preliminary injunction against the City's plan to change the healthcare of NYC retirees to a Medicaid Advantage plan. 

Before the hearing, a press conference will be held at 9:30 AM in front of the courthouse, with students, parents, teachers at the affected schools, as well as attorneys representing the plaintiffs.  The lawsuits argue that these proposed changes in school utilization should be blocked, primarily because the Educational Impact Statements prepared by DOE were profoundly deficient and omitted much critical information about how these changes would affect students.  For example, there was no discussion of the educational impact of the loss of a science lab on the Waterside Leadership middle school students, or the loss of the Lyfe Center in the case of West Side High School students, which takes care of their young children while they are enrolled in school.  

In addition, none of the Educational Impact Statements mentioned the new class size law and no assessment was made whether there will remain sufficient space in the schools to lower class size to mandated levels if the proposed changes of school utilization are adopted.  Instead, the EIS’s wrongly assumed that class sizes at the existing schools would continue into the indefinite future, even though their current class sizes are above the level mandated by the new law.

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How investors make money from NYC Charter Schools despite purported ban on for-profit charters by Gavin Healy

The following post is by Gavin Healy, a public school parent and a newly-elected member of CEC2.  Though ostensibly, all new for-profit charter schools are banned from opening in NYC, there are still ways to make a buck off the proliferation of charters, especially as NY State law requires the city to reimburse charter schools for the cost of its leases at a very generous rate, one that it appears many charter schools including those whose management organizations own their own buildings have used to their advantage in many cases to inflate their own rent.  See the Class Size Matters 2019 and 2021 reports on this issue, and the letter from Senators John Liu, Robert Jackson and CM Rita Joseph asking the City Comptroller to audit these payments.  

Now that some charter schools are closing due to falling enrollment, such Harlem Hebrew Language Academy, they can sell off their buildings or rent them back to DOE,  and garner even higher profits, despite the fact that the city has already spent nearly nine million dollars on lease payments in the case of HHLA over the years.

Here Gavin reports on how Barone Management, which is in the process of building and managing a portfolio of 10 charter school buildings throughout the city, mostly in the Bronx, promises a steady rate of 22.5% internal rate of return (IRR) to its investors. What Barone explained below is that the per student amount set by the state and received from the city in rent doesn't align with the actual cost of the land, construction or maintenance; thus building charter schools in less expensive areas of the city like the Bronx guarantees a higher profit to investors. 

Thanks to Tanesha Grant, who first noticed this ad on Facebook.

Recently, I came across an ad seeking “investors” for the Bronx Charter School for Children, and immediately the question popped into my head: How can a NYC charter school have “investors” when for-profit charter schools are now prohibited under New York State law? 

Nationally, approximately 12% of charter schools are run by for-profit management companies. In New York State, charter schools had once been permitted to contract with for-profit operators, but the state legislature closed that loophole in 2010, and now only six for-profit charter schools remain in New York (four of them in NYC), grandfathered under the previous version of the law. Bronx Charter School for Children is not one of them.

So how can a “non-profit” NYC charter school be sold to investors? The answer to that question lies in what drives much of NYC politics: real estate.

The developer of this real estate project is a firm called Barone Management. Barone boasts of an “educational portfolio” of a dozen charter schools in NYC with close to 6,000 students, plus several more schools in development. For the Bronx Charter School for Children, Barone is renovating an existing building into a 28,000 square foot school. 

To partially finance the ground lease and renovation of the building, Barone is seeking investors through a “crowdfunding” platform called RealtyMogul, which hosted a webinar to answer questions about the project. RealtyMogul and Barone structured this project as a private placement of shares in a limited liability company established to lease the building to the (non-profit) charter school operator. As a private placement, shares can be sold to “accredited investors” (generally, people with a net worth of $1 million or more) without registration with the Securities and Exchange Commission. The Bronx Charter School for Children is Barone’s second “crowdfunded” charter school project in NYC, following one it completed for the Renaissance Charter School in Elmhurst, Queens in 2020.

In its webinar for potential investors, Barone offered a primer on the economics of what’s driving charter school demand in NYC. As Barone’s chief executive put it, “the NOI [net operating income] only grows as more students are enrolled.” Unlike payments under a more traditional commercial lease, which might be calculated on a simple dollars per square foot basis, total lease payments for this charter school depend on overall student enrollment. NYC is the only school district in the nation obligated to provide charter schools with rental subsidies, and this fact is a key element in Barone’s marketing pitch to investors. 

In the words of Barone Management CEO Scott Barone: 

“How does per pupil funding translate to real estate? Per New York City State and City charter regulations, 30% of an individual charter school’s per pupil funding is permitted to be spent on its real estate and facility needs. For the ‘23-24 school year, this equated to $5,502 per child per year. So, the short answer is that the more students you have enrolled in a particular school, the more robust its overall budget is, including its real estate budget, which is referred to as rental assistance in New York City.”

“Rental assistance” refers to payments NYC is required to make to charter schools established after 2014, or charter schools operating before that time that have since expanded, if such schools are located in buildings not owned by the NYC Department of Education. When the NYS legislature amended the charter law in 2014, it imposed the requirement to pay rental assistance only in respect of charter schools located in NYC and in no other school district in the state. As Barone notes, the amount NYC is required to pay to charter schools for rental assistance is $5,502 per student for the upcoming school year, a per student amount that has more than doubled since 2014. 

The Bronx Charter School for Children, established before the 2014 amendment, had not been able to take advantage of rental assistance until it expanded from a K-5 to a K-8 school starting from the 2020-2021 school year. The new location for the school will house these expanded middle school grades.

The amount of “rental assistance” due under the law is the “actual rental cost” of the charter school’s lease or 30% of per pupil funding, whichever is lower. In its pitch to investors, Barone is clearly setting the expectation that the amount of rent they will charge the charter school is the highest amount possible - 30% of per pupil funding - regardless of the actual rental cost. As the private placement memorandum provides, the base rent due under the charter school lease will initially be an amount equal to “(A) the greater of: (i) 30% of the Tenant School’s per pupil funding from New York State for the first Lease Year” and “(ii) $5,284.69; multiplied by (B) the Student Count.” 

The lease terms provide that the rent will increase by a minimum of 2.25% per year, plus a corresponding increase in that amount as student enrollment increases. Since “Student Count” is defined under the lease as the greater of the school’s actual enrollment and minimum enrollment numbers of 189 students in the first year, 200 students in the second, 213 students in the third, and 225 students in the fourth, the profits of Barone and its investors will rise as enrollment rises. The charter school also has a clear financial incentive to maintain its enrollment numbers, since if enrollment drops below those minimums, its rental payment obligations will not decrease. 

“Rental assistance” also explains why investors push for new charter school development in some neighborhoods rather than others. Responding to questions about crime and security around the school, Barone emphasized the presence of NYPD school safety officers, but ultimately turned the answer back to real estate economics, saying: “from a real estate perspective, for real estate dollars associated with a charter school, we get $5,500 per kid per year in rent. … I get that same $5,500 in the South Bronx that I would on Park Avenue. Obviously, the cost of my real estate is far cheaper in the South Bronx.”

Barone’s investment sales pitch is indicative of how charter schools can blur the line between the non-profit and for-profit education sectors. Barone’s chief financial officer projected total returns on a $100,000 investment in the school to be over $219,000 over the course of four years, and hinted at the potential for selling the project in its entirety to other investors at a later point. As an example, he cited how in 2019 “a large package of charter schools was sold … for over $450 million,” referring to the sale by a real estate investment trust of a portfolio of close to 50 facilities leased to a charter school operator. In that case, as with the Bronx Charter School for Children, it was buildings being sold rather than schools, but that distinction gets lost in the sales pitch to investors. In the real estate economics of the charter sector, schools are assets and greater student enrollment equates to a higher return on investment. NYC rental assistance guarantees these returns, and it also drives investor demand for charters in the South Bronx rather than on Park Avenue.