Austin “Non-profit” Southwest Key Raking in the Cash

The City of Austin, University of Texas, and Travis County should cancel all contracts with Southwest Key Programs, Inc. (SKPI) until they suspend their child detention facilities.  El Presidente/CEO Juan Sanchez may have started the organization with the best of intentions, however SKPI has lost its way.

I spent some time reviewing the 2015-16 Form 990 SKPI filed with the IRS and was dismayed at what I found.  Essentially there are two arms of the organization, the nonprofit Southwest Key Programs which is responsible for federal contracts and East Austin College Prep (EACP), the other arm is a holding company named Southwest Key Enterprise which according to the filing, “does not create goods or offer services to the public itself; its sole purpose is directing the management of the for-profit subsidiaries.”

The for-profit subsidiaries and exorbitant salaries of senior leadership are just one of several ways public dollars are siphoned off into private industries with little public oversight in regard to contracts and budgeting.

One example is, “Southwest Key Café del Sol, LLC (the “Café”) is a small Mexican-American café located at Southwest Key Headquarters that produces delicious and affordable food for the East Austin community.”  Sounds innocuous enough, until you see that they are also responsible for providing catering and food service for their charter school and multiple family and child detention centers across five states.

Southwest Key charged the federal government nearly 4.8 million through the school lunch program reimbursement and the café brought in an additional $687,832 in 2015-2016.  Others may argue that the nonprofit does meaningful work in the areas of juvenile justice and marriage and parenting classes, but closer examination reveals spending priorities.

Southwest Key spent less than $60,000 on healthy marriage and responsible father programs, but $221 million on its unaccompanied minors detention centers and associated costs.  When you add the $227 million spent on education programs here locally and in their centers, you begin to understand why Southwest Key Enterprises contains eight firms responsible for tasks all directly related to the delivery of the non-profit services, it is a lucrative business.

The subsidiaries include not only the food service company but also: maintenance, green energy and construction, real estate holdings, floral services, workforce development, transportation, and data and evaluation.  Their for-profit status means there is no ceiling on employee salaries or what the companies can charge the parent non-profit for services rendered.

It is highly unlikely that the spoils from these contracts proportionately benefit the many direct-care workers or the children and families they are meant to serve.  Highly unlikely because, according to their 990, the for-profit entities earned nearly $19.6 million in revenue.  Overall the company increased net assets by more than $16 million in a single year. The top six executives combined earnings were over $1.5 million, averaging about $260,000, that’s right more than a quarter of a million dollars.  Not bad for a mom and pop nonprofit.

These salaries do not include bonuses which pushed CEO Juan Sanchez’s individual earnings alone to nearly $1.5 million last year.  Equally concerning is that the board of this huge enterprise only consists of six members.  Orlando Martinez, former commissioner of Georgia Department of Juvenile Justice whose LLP uses intimate knowledge of policy to leverage programs for juvenile offenders.  Southwest Key operates in Georgia.

Anselmo Villareal, CEO of La Casa de Esperanza charter school near Milwaukee whose Café Esperanza is strikingly similar to Key’s Café del Sol.  Southwest Key is also active in Milwaukee and Juan Sanchez is on the privately appointed school board for Esperanza.

These are but two examples which aptly demonstrate the way federal policy is leveraged to line the coffers of non-profit and for-profit providers alike.  Another hidden aspect is the way South West Key’s real estate contributes to gentrification through expanding the property tax base. Additionally, when EACP enrolls students, who otherwise could go to AISD, the district loses money and the district’s burden under recapture is increased.

Rosa Santis is another board member with a well-known history of real estate development in east Austin.  A global technology firm’s management consultant, local insurance agent, and a retiree from Veterans’ Services round out the board.  I think all they are missing is a banker.  Follow the money and you find a deeper story of profit built on pain.  Until Southwest Key stops making millions of dollars off others’ misery, the city and county should end their contracts, UT Austin should stop providing social work interns for free labor, and parents should withdraw their children from East Austin College Prep.

School Choice: It’s Common Sense? Installment 3.5 Wormhole

Before returning to the accountability history of Johnston and Eastside Memorial, I would like to take a moment to share some remarks from a recent school board meeting where I critiqued the proposal to move the Liberal Arts and Science Academy (LASA) to the former site of Anderson High School (the school for African Americans under segregation) in East Austin.  (LASA’s influence at Eastside Memorial is discussed in last weeks post)

(LASA) is a selective public magnet high-school. The demographics of the school ethnicities are 23% Hispanic, 3% Black/African-American, 51% White, 20% Asian, 2% American Indian, and 1% Hawaiian/Native Pacific Islander for a total enrollment of 796 students (Lamb, 2014). LASA is collocated within LBJ High School (LBJ), LBJ is an Early College High School with different ethnicity/race demographics: 30% Hispanic, 39% Black/African-American, 15% White, 1% Asian, 14% American Indian, 1% Hawaiian/Native Pacific and a total enrollment of 648 (Lamb, 2014). Counted as one school, on paper LBJ and LASA are a model for racial diversity and their closely related socioeconomic status indicators, but in reality the two schools are worlds apart.

LBJ may have college in its name but on average sixty-six percent of the students agree with the statement, “I will go to college after high school,” thirty-four percent say “maybe” (AISD, 2014). At LASA ninety-three percent of students say “yes” and six percent say “maybe” (AISD, 2014). Even the response rates to the survey of both schools is telling. LBJ was sixty percent, LASA was eighty-eight percent, and the district average was seventy-three percent on the Student Climate Survey. Not only are students from the neighborhood being served by LBJ less likely to participate in sharing their voice, but students are also less sure that college is in their future. On the other hand LASA students not only show greater participation but also have generally more optimistic perceptions of their school climate.

It is with the above passage in mind that I drafted the subsequent citizen’s communication last week at the Austin ISD board meeting:

“Janelle Scott points out that historically the imposition of middle-class values and pronouncement of the liberal creed of “pulling yourself up by the bootstraps,” is heralded by white men claiming to know what the best course of action should be.

The choice the Austin school district made to house its most prestigious academic track at LBJ did not occur in a vacuum but was influenced by a historical context white consultants from Washington DC are likely ignorant to. A desire to both recapture students leaving due to white flight as well as to increase enrollment in an economically and racially stratified part of Austin drove the district’s initial placement of the magnet schools at Johnston and LBJ, subsequent consolidation, and is driving the proposal to relocate the campus.  I argue that one of the major reasons the school choice movements has come to flourish is because rather than confront the glaring inequalities of a society stratified by race and class by standing up to the underfunded mandates of TEA and teaching critical pedagogy and Praxis, public schools allow the same disparate outcomes as separate but equal under the guise of equal opportunity in a post racial society. Researchers describe schools like LBJ as characteristically displaying “higher-than-average suspension rates and lower-than-average graduation rates” (Fabricant & Fine, 2010 p.121).  Therefore the STAAR test serves to discipline LBJ while simultaneously ennobling LASA to participate in social reproduction and white supremacy. In 2014 26% of LASA students were nonasian minorities, that number is nearly three times as much, 69% of students at LBJ are nonasian minorities.

Magnet schools, like LASA, take on air of democratic equality, but from the brief example above there is little equity in a system where some parents can choose and participate in the best public education has to offer, a choice often accompanied by the social capital to be informed about the program, and the ability to afford the supplemental supports- academic, social, and communal- to make their child a viable candidate.  On the other hand, parents at LBJ have a reduced ability to choose based on broader historical, racial, and economic contexts.  Contexts which are tertiary concerns at best when consultants are hired to evaluate facilities and efficiency in an ahistorical fashion.

Therefore I ask that Black Anderson (now the Alternative Learning Center) not be repurposed to house LASA, Representing the erasure of culture, perpetuating the burden of desegregation disproportionately placed on our African American community, and representing the final gentrifying nail in the east Austin cultural coffin”.

*Photo Credit for this installment goes to Rodolfo Gonzales retrieved from: http://preps.blog.statesman.com/2015/06/11/prepped-and-ready-reviewing-the-2014-15-school-year/