The Recovery School District is arguably the most corrupt, wasteful and unnecessary state department in all of Louisiana. Over the next several weeks I will explain exactly what they have lost, how much they waste, why they are unnecessary and explain the numerous unethical and possibly illegal behaviors they engage in. If I could cover everything in a single article I would, but their scheming really needs several posts to cover in any depth. This post will describe how they have managed to steal property and funding and to exploit loopholes created for them by the state legislature to rip off the federal government. I will not be revealing anything that is not already available in the public domain.

It perplexes me why no one on Bobby Jindal’s staff and no editorial board has weighed in on these shenanigans.  Bobby has said no to Medicaid dollars for the elderly and infirm to keep them from dying, but yes to using a shell corporation to extract federal tax credits to fund RSD?  Interesting presidential choice.

In 2013 the Recovery School District (RSD) asked BESE to grant it the power to create a “shell corporation” called a Public Benefit Corporation or PBC. Mercedes Schneider covered this development on her blog at the time with the question “Why does a “Turnaround” District Need to Purchase Buildings. At the time there was some speculation made, but I wasn’t really sure what was going on. I assumed this was a formality and this building would be turned over to the Orleans Parish school board. RSD was originally pitched as a temporary state agency under the umbrella of LDOE. RSD’s primary mission was described as “turning around” failing schools and handing them back to school districts. The current head of RSD, Patrick Dobard, described RSD success as working himself out of a job. But with this purchase coupled with the latest developments, that is clearly no longer the goal.

The latest development is ridiculous, but exactly the kind of situation one should come to expect when allowing bankers and RSD shysters to get together.  RSD asked the publicly elected (through massive corporately financed campaigns) Orleans school board to simply give them the schools. . .  and they did it.  RSD has gone from being an overseer of a federal grant and recovery dollars (from which they skim a healthy portion each year to cover their own outrageous expenses), to an owner of actual properties that they will lease to charter operators and use that funding to fund themselves on an ongoing basis. 

This was ostensibly done to simply increase the National Debt by leveraging dollars the federal government gave to us after Katrina (10 years ago) to secure historic preservation credits estimated to be in excess of 20 million dollars.  This is just for the initial properties transferred to RSD.  Confused?  I would be, and was.  Let me show you the steps.

RSD is created by legislature in 2003. 

Katrina comes in 2005 (schools are destroyed.)

Feds gives Louisiana Recovery dollars to rebuild schools in excess of a billion dollars and RSD is placed in charge of managing this fund.

RSD takes it’s sweet time rebuilding the schools because this means it pulls down management fees from this fund to pay for extravagant purchases and lifestyle (it is currently located downtown across from the Superdome.)

Looking for a more permanent funding stream, RSD creates a “shell” corporation that it alone controls and owns.

RSD tries to use funds from the Recovery fund to purchase a building (for itself and it’s new shell corporation.)  It intended to renovate building and charge rent which will got towards its budget while claiming those funds will go to rebuild other schools and save the  district money in the long run.

RSD asks Orleans school board to transfer 4 of their schools to its shell corporation.  (Orleans could have set up its own PBC and retained control of the buildings.  RSD could have mentioned this to Orleans but chose not to because it wanted the real-estate, rent and credits for itself.) RSD claims it will use these tax credits to fund other projects but it is not bound by this arrangement. This money is fungible, and RSD’s budget is so complex you could never know where that money’s going or what revenue it is replacing.

RSD will renovate its buildings with recovery dollars and sell tax credits to US Bank (reducing the bank’s tax burden by millions which would have gone to the treasury to fund the military, lower taxes for us, healthcare, reducing the debt but instead goes to RSD to cover their everyday exorbitant and eternal expenses.)

If this scheme succeeds RSD will continue to acquire buildings from Orleans and renovate them with federal tax dollars to get more historic preservation federal tax dollars, for themselves as well as possession of all the real-estate. 

For free! 

Sweet deal.

Keeping a staff as large as theirs isn’t cheap. To put that in perspective their current payroll to run no schools is 6.5 million dollars compared to the 29 million budget for the entire State department of Education.  They are larger than one fifth the size and their current payroll is more than twice the State has budgeted for them  Is this magic?  It is.  Dark magic. I will explain their financial footprint and just what all that tax money is paying for in the posts that follow.