Eagle Academy council hearing video is available

[Anonymous]

https://video.oct.dc.gov/VOD/DCC/2024_12/12_05_24_COW.html

It's long and intense, many candid witnesses and touching on very significant issues.

[Anonymous]

Summary?

[Anonymous]

It's 5 hours long so that's a big ask.

Themes so far, 90 minutes in.

Inadequate board training. Board not given the real financial info. Board failed to meet their responsibility to dig deeper, demand info, and not be put off by the school leadership's excuses and assurances.

Joe Smith was CEO and CFO at the same time and that's not okay. There were conflicts and also he was trying to open other schools in other states with relatives in charge. Also, he was paid a lot, disproportionate to the size of Eagle and what leaders make at peer schools. Definitely a lot of fingers pointed at him, especially by the daughter of the original (now deceased) founder.

Ms. Brantley from the Friendship network testified and has a lot of relevant things to say about how charter schools work and how the situation was with Eagle at the time-- basically Friendship thought they could stabilize it by making budget cuts. Discussion of interpreting charter financial data and things that are red flags but are not necessarily obvious. Very informative.

[Anonymous]

This is so interesting I'm going to do more recap:

Jacque Patterson: Says the PCSB didn't view Eagle as viable, partly because there are too many schools in the area competing for limited students, and so that's why they closed it. The old model of a stronger entity taking over the school no longer works because there still aren't enough students. Need to look at how many schools and where. The council seems receptive to that line of thinking.

Next panel:
Valerie Jablow, typically hard to understand because it's a barrage of information delivered very fast. But raises a lot of [I think] long-standing issues that are important to have on the record. Ms Jablow calls out all kinds of financial issues not captured by the DCPSB's FAR, such as late tax filing. Again Joe Smith's salary. Scathing critique as usual. Later on, she points out inconsistencies in the PCSB's statements about what they knew at what time in this fiasco. Complicated stuff but the council is interested.

Cathy Reilly: General case for greater oversight by Council. PCSB passed Eagle in 2023, closed a year later, that is not something that we should see, they are opening too many schools and passing too many schools along that are in bad shape. [She says the building will be DCPS swing space, which is news to me.] The council has delegated a huge amount of approps and capital planning to the PCSB and it's not going well. DCPS should get RFR on closed charter buildings. Should be a process for charters to become DCPS (a la Excel).

Suzanne Wells: Eagle's financial information should be public, including all loans and whether they were legal, the closeout, the $4m, all debts, and the accounting firm should be publicly questioned. Over-authorizing the area is a big contributing factor, the PCSB is at fault for having approved so many seats. No new starts (e.g. BASIS elementary), too many seats already authorized. Need to coordinate DCPS and PCSB opening, sizes, and locations. We can't afford this wasteful half-full schools no-coordination system.

Ms. Batchelor: I came to you in 2016 re Eagle's building project near my house and there was lots of wrong-doing related to the construction, DDOT and DCRA do nothing, self-dealing, insider loans, Joe Smith and others, we wrote it all up and were ignored. Built the whole school without a permit. Oversaturation harming all schools in area. Stuff about Lee East End as well. [I'm stunned by the breadth of wrongdoing this citizen is alleging!] She sent information to Las Vegas and Las Vegas shut Joe Smith down.

Mendo says that Joe Smith was invited and declined to come, he did submit a statement. Did not invite the accountant. Zachary Parker engages with Ms. Jablow about the timeline, PCSB actions, what they knew when, transparency, inconsistencies. He also asks about the debts. Henderson thanks Jablow for raising the alarm over the years, asks questions about the timeline. Discussion of how transparency about problems can lead to a "run on the bank," taking down a school that could have survived a rough patch. Jablow says it's supposed to be parents' choice, so let it happen. Allen validates Jablow-- parents' choice so they get the info, and if that takes down a school, so be it, DCPS budget process is pretty transparent, and PCSB needs to make it a lot easier to dig up financial problem docs. Frumin agrees generally.

[Anonymous]

Suzanne Wells is wrong as usual.

1) PCSB already approved BASIS elementary
2) Blocking new starts by responsible charters such as BASIS because of Eagle's failures is just dumb.

[Anonymous]

Anonymous wrote:Suzanne Wells is wrong as usual.

1) PCSB already approved BASIS elementary
2) Blocking new starts by responsible charters such as BASIS because of Eagle's failures is just dumb.

Is BASIS going to follow through though?

[Anonymous]

Dang this is long, but it's super interesting and substantive.

Next panel, starting at 2:35-- Michelle Walker-Davis, Shantelle Wright, Will Henderson (PCSB staff). Lengthy explanation of financial oversight, with slides, you can read it online here: https://lims.dccouncil.gov/Hearings/hearings/572
Basically they told Eagle to make budget cuts and Eagle didn't make them fast enough. PCSB was very engaged, but Eagle's board pulled the plug so suddenness is their fault and the PCSB couldn't do what it would otherwise have done (a more orderly revocation or maybe a different merger partner?)

PCSB plans these improvements:
● We will adjust our criteria for when schools get placed on an FCAP.
● Increase visibility of the FAR which is an important financial monitoring
and assessment tool.
● Communicate with school board members in addition to the school
staff when a school is added to the Monitoring List to ensure full
transparency of the financial health of the school to all relevant parties.
● And, we will publish our Financial Oversight Overview, a resource that
encompasses what we do and how we do it. Publishing it will provide
complete transparency at every step of the process.
When appropriate, DC PCSB will publish the FCAP on the School’s
Profile Page on our website
● Publish and regularly update the Financial Monitoring list; and,
● Request the school share the FCAP at its next School Board Meeting.

Mendo digs in on PCSB not following its stated procedures for when to implement a FCAP, with so many red flags. Trayon White asks a bunch of questions. Walker-Davis explains that the Friendship acquisition wasn't approved in part because there were so many schools in the area that could take the kids, and also because enrollment was so low, viability was in doubt even under Friendship takeover.

Parker asks if the PCSB is at fault. Walker-Davis says the Eagle board was the one who closed it. PCSB has reflected and feels they didn't communicate enough with the Eagle Board (as distinct from school staff). Parker asks about Joe Smith's behavior and complaints, Joe Smith's loans, real estate sale, lots of stuff. Walker-Davis says they would have engaged in a revocation evaluation and it's like 15-30 days, but they could have decided to prop it up for the remainder of the year.

Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

Frumin asking about Joe Smith salary, was PCSB monitoring? Walker-Davis says ultimately it's up to the schools though they may force a discussion of it. Mendo discussion of whether the FCAP was realistic-- can they actually increase enrollment and cut staff? PCSB is saying it was realistic. Parker asks if PCSB is aware of any legal action against Joe Smith. They are not but they did refer concerns to DCOAG. Henderson flagging a lot of things the PCSB doesn't track and didn't have (like missing rent payments). Mendo asks how the PCSB approved it in 2023, Walker-Davis says it's a look-back and didn't capture current-year issues or decline trends. Review flagged concerns but it just wasn't bad enough to deny or FCAP. The AG has been told of the concerns, AG will determine whether civil or criminal.

Finis.

[Anonymous]

Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

[Anonymous]

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

[Anonymous]

I'm not sure this is up to date (it's from 2018) but here's OSSE's charter school closure policy document.
https://osse.dc.gov/sites/default/files/dc/sites/osse/publication/attachments/Charter%20School%20Closure%20Policy%2010.29.18.pdf

Page 9 seems to contemplate clawback of city funds, and OSSE may invoice the school for OSSE's costs as well. There's also a section on "small but attractive items" such as computers and it's "transferred" to other charters or DCPS-- not sold, I guess?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

It's a former property used by DCPS so it is owned by the city but DGS controls the disposition of the building. Because there is bank debt on the building the city/DGS will have to pay off the $14million debt to avoid foreclosure from the bank and put the building back under DCPS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

It's a former property used by DCPS so it is owned by the city but DGS controls the disposition of the building. Because there is bank debt on the building the city/DGS will have to pay off the $14million debt to avoid foreclosure from the bank and put the building back under DCPS.

How did the bank debt get on the building? Was Eagle allowed to encumber a building it did not actually own?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

It's a former property used by DCPS so it is owned by the city but DGS controls the disposition of the building. Because there is bank debt on the building the city/DGS will have to pay off the $14million debt to avoid foreclosure from the bank and put the building back under DCPS.

How did the bank debt get on the building? Was Eagle allowed to encumber a building it did not actually own?

Many of the supposedly "surplus" school buildings aren't habitable - especially the ones that have been closed for a while. Eagle borrowed to renovate, re-build and re-open the building.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

It's a former property used by DCPS so it is owned by the city but DGS controls the disposition of the building. Because there is bank debt on the building the city/DGS will have to pay off the $14million debt to avoid foreclosure from the bank and put the building back under DCPS.

How did the bank debt get on the building? Was Eagle allowed to encumber a building it did not actually own?

Many of the supposedly "surplus" school buildings aren't habitable - especially the ones that have been closed for a while. Eagle borrowed to renovate, re-build and re-open the building.

Ok... But how did Eagle use the building to secure the loan? A tenant would not be able to do that. Did DGS or DCPS co-sign or use a MOA or something?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Excellent summary. Thank you.

Anonymous wrote:Allen re Nevada and Ohio, unhappy that the PCSB doesn't track that at reviews, they found out when other people did. What happened to the $4m in regular funding. Will Henderson says Eagle has $1m frozen in their bank account. $1m was spent on payroll, $1.3m to pay outstanding line of credit for rent etc., $1m for prior year and summer expenses. Trying to get it back. Loan from Joe Smith to the school bore interest(!), he has not been paid back.

I wonder how they will get back money that they paid for payroll, prior year and summer expenses and paid off the line of credit? They won't get that back but maybe the 1m frozen in the bank account?? How much is the PCSB paying for the Eagle close out?

Anonymous wrote:Henderson: What gave you confidence they could turn it around? Wright: Thought they could make budget cuts and enroll more kids in August/Sept, and PCSB could have provided funding and orderly closure. Henderson pushing her bill to require training. Asks how many LEAs are currently meeting only minimum targets. 7 are on monitoring list, 3 FCAPs, 70% of the schools met all minimum targets for FY2024.

The most recent financial report (FY2023) that was released a few weeks ago from the PCSB says that 60% of schools met the financial floors. That's 40% that missed. The FY2024 figure of 70% is still 30% who missed. Is there a plan for those that miss the floors?

I think they might get back the $1m frozen in the bank account. I'm not sure how much they're paying for the close-out (and remember, DCPS owns the building so there won't be costs of selling it), but in general for closing down schools I believe there is a fund for this, which all charter schools have to pay into? Not sure how much it is going to cost.

For those that miss the floors, I believe the standard approach is for the PCSB to increase its financial monitoring and if needed, impose a FCAP. And I wouldn't be surprised if we see one or two shut down in this review cycle or after a year's probation. Some are up for review this year that are already in very clear financial and academic trouble (Hope and Capital Village for example). There are apparently 68 charter schools total, so 30% of that is 20 schools.

It's a former property used by DCPS so it is owned by the city but DGS controls the disposition of the building. Because there is bank debt on the building the city/DGS will have to pay off the $14million debt to avoid foreclosure from the bank and put the building back under DCPS.

How did the bank debt get on the building? Was Eagle allowed to encumber a building it did not actually own?

Many of the supposedly "surplus" school buildings aren't habitable - especially the ones that have been closed for a while. Eagle borrowed to renovate, re-build and re-open the building.

Ok... But how did Eagle use the building to secure the loan? A tenant would not be able to do that. Did DGS or DCPS co-sign or use a MOA or something?

Most likely the leasehold interest and future charter payments were used to secure the loan. Yes, the city (probably through DGS) would be a party to that.