SCCOE: Rocketship California sent Wisconsin $1.1 million — CA tax payer education dollars are paying for Wisconsin Students??

Santa Clara County Office of Education accuses Rocketship of sending California money to Wisconsin, but “According to the CDE the transfer from the CMO to
the Wisconsin school is not prohibited.”


Rocketship Los Sueños and Mateo Sheedy are up for a 5 year charter renewal at the April 15th Santa Clara County Office of Education (SCCOE) board meeting.  The staff reports for Mateo Sheedy and Los Sueños charter renewals raise major questions about Rocketship’s finances.  The staff audit found that Rocketship’s national organization transfered $1.1 million from the Bay Area headquarters to their struggling Wisconsin school.  Rocketship is a large scale Charter Management Organization with schools in California, Tenseness, Wisconsin, and Washington DC.  Rocketship is a privately held national corporation, and hence, has the ability to send California tax payer funds to educate students in other states.

Gary Miron, an education professor at Western Michigan University told the Tennessee Ledger last year the following about sending education dollars across state lines, “It’s called ‘cross subsidization,’ and whether it is legal or not is very questionable.”   Rocketship senior vice president of growth and development responded to criticism of the cross subsidization plan last year in Tennessee by stating  “that plan has been scrapped and will be replaced in May with a similar business model that shows money will not be moved from state to state”.

Jim Ford from the Raza Development Fund (which helped fund Rocketship Mateo Sheedy), said the following in a 2011 charter school symposium attended by then Rocketship CEO John Danner,  “there are major public policy questions associated with cross subsidization of CMO schools, especially those that are moving money to subsidize schools from one state to another or one tax base to another: To me that is the ticking time bomb for CMOs.”

This is not the first time Rocketship has been questioned about sending California tax money to Wisconsin.  In a November 20, 2013 San Jose planning commission meeting, Rocketship was questioned on whether or not Rocketship’s California tax payer funded management fee had been used to fund Wisconsin schools.  Rocketship’s Chief Business Officer, Anrew Stern replied that “Rocketship raises money in a lot of ways, including philanthropy from outside sources, so I don’t know”.  The fact that the corporation’s chief business officer didn’t know if California tax payer monies were flowing to Wisconsin seems highly suspect, given that the $1.1 million grant reported by the SCCOE happened in the same year as Stern’s testimony.

The $1.1 million dollar grant to Rocketship Wisconsin is all the more worrisome given the controversial history of Rocketship’s Wisconsin VP of Policy, Katy Venskus.  As we reported last year, Venskus’ court records indicate she was convicted of felony embezzlement in 2002 at a prior non-profit organization, and has faced additional legal difficulties since then.  It is unclear if there is a mechanism for California tax payers to ensure that our public dollars are being used wisely in Wisconsin.

The SCCOE also found significant discrepancies in their audit of Rockesthip. For example, they found that Rocketship Mateo Sheedy signed a lease agreement with the secretive Launchpad corporation in 2013.  Launchpad, a private corporation with no board, no contact info, and no website, holds $51 million in tax payer funded properties in San Jose.  Those properties are leased backed to Rocketship to serve as schools.  Rocketship signed a lease agreement for Mateo Sheedy in 2013 with estimated future payments of $869,000.  However, the 13-14 audit indicates that Rocketship Mateo Sheedy actually paid $1.25 million to Launchpad, an unexplained excess of $381,000.  The SCCOE report sates that the “lease agreement was signed on 8/23/13 by Andrew Stern, Board Chair and sole and managing member of Launchpad development (and Chief Business Officer of Rocketship Educaiton)”.

The staff report also found additionally anomalies in their audit, relating to unexplained reductions in cash reserve balances.  Rocketship Los Sueños had an unexplained $537,000 cash reserve reduction, while Rocketship Mateo Sheedy had an unexplained $1.36 million dollars loss of cash reserves.

The staff report recommends that an MOU be signed with Rocketship stipulating that Bay Area money be restricted to Bay Area usage.  However, now that Rocketship is opening schools outside of Santa Clara County, the definition of “Bay Area” also gets complicated.  Can Rocketship use money destined for Santa Clara County to fund schools in Contra Costa or San Mateo counties?

Grant to Rocketship Education Wisconsin In 2013-14:
RSLS’s charter management organization (Rocketship Network Support – RSN) provided a $1.1 million grant to Rocketship Education Wisconsin for the operational support of Rocketship Southside Community Prep (audit report — Note 10, p. 22). The Milwaukee school ended 2013-14 with negative net assets of -$728K, and it is anticipated that the school will continue to need support in the current fiscal year. Staff contacted the CDE regarding this grant. According to the CDE the transfer from the CMO to the Wisconsin school is not prohibited.

 Rocketship’s Chief Business Officer, Andy Stern, replies to questions regarding California tax payer funds going to Wisconsin schools