Investors Make Millions
High student-to-teacher ratios and lack of transparency enable healthy profits for tennis great Agassi and investors.
Andre Agassi, tennis great turned charter backer, has secured a third Rocketship school in Nashville Tennessee, adding to schools he financed in San Jose (Spark Academy) and Milwaukee. Agassi’s for-profit equity fund, Canyon-Agassi, is set to make millions on these projects, with taxpayers footing the bill. Rocketship’s controversial Nashville school was approved without even notifying local districts, sidestepping local communities in favor of state approval.
StopRocketShip.com has obtained documents that show the hefty profits Agassi and his investors gain on each school they fund. Agassi’s investors require their charters to provide a 10% return on capitol. Documents show that Agassi’s firm pressured Rocketship to be an exclusive partner, but Rocketship backed out, opting instead for an MOU with a fixed number of schools promised to Agassi.
Normally these multimillion deals and critical MOUs would be subject to public disclosure and inspection. However, Rocketship, a private corporation, has pursued a secretive path, hiding important board material from the public view, including this MOU.
Rocketship charges each school a 20% facility fee, and 15% management fee, about twice what local districts require. Those hefty fees enable Agessi’s profits. But high fees present a big problem to most schools, which spend 85% of their budget for teacher salaries. Rocketship has sidestepped this problem by running 41:1 student to teacher ratios, and padding their numbers using nearly minimum wage aids. Rocketship’s exorbitant management fees and facilities fees outstrip their employee spending. This creates fertile ground for for-profit corporations to reap millions off of the state’s per student funding.
Hedge Fund managers have been flocking to charter school investments, as reported years ago in the New York Times. Agassi’s for-profit fund looks to generate wealth for hedge fund investors, “targeting market-rate financial returns for socially responsible investors”. The great recession, housing bust, and stock market volatility have led the wealthy on a search for stable profit generators. Charters have proven an excellent target, largely because of a 2000 IRS tax ruling that made charter investments tax deductible.
Rocketship stated the following regarding Canyon Agassi in the Oct 16, 2013 board meeting: