Success Academy Tax Documents: Moskowitz Can Afford the Rent

Since 2006, Eva Moskowitz has been running a small charter empire that has at least $50 million in government per-pupil funding, at least $30.9 million in total, end-of-year assets, and the support of hedge fund millionaires. Why is it, then, that her Success Academies have never paid a dime in rent for the public school space occupied by her charter schools?

Recently-elected New York Mayor Bill de Blasio wants to put an end to the rent-free usage of public school space by charter schools.

Moskowitz’s response?

She closed her 22 schools on October 8, 2013, so that her students could “volunteer” to protest.

Public schools do not close in order to have public school students engage in protests– and this protest coincided with the political agenda of Republican mayoral candidate Joe Lhota, who just happened to attend.

Moskowitz is playing both sides of the public-private hybrid that is the Success Academy charter school. Her schools are “public” when it benefits her schools to be so, and they are “privately managed charters” when that is title is convenient (as in her closing school in order to have her students “protest” in favor of a mayoral candidate).

Not only does Moskowitz believe that she has a right to squat rent-free in the very buildings of schools she intends to replace; Moskowitz also believes that she is above having to undergo a state audit– an audit that would likely reveal additional details in support of the obscenity that is the Success Academy Rent-free Ride.

In July 2013, Success Academy Charter Schools CEO Eva Moskowitz sued New York State Comptroller Thomas DiNapoli and his office for DiNapoli’s attempts to audit Moskowitz’s charter network. Moskowitz believes that submitting annual reports to the New York State Board of Regents is enough.

Back to that “over $50 million”: In 2011, nine of Moskowitz’s schools received a total of over $50.5 million in per-pupil, public funding.

Wonder what else a state audit of the Success Academy empire would reveal.

It is beyond time for Moskowitz’s rent-free ride to be over. To that end, I would like to highlight certain information from Success Academy (SA) tax documents. The most recent filings were completed in May 2013, in the form of several 2011 990s. I also include discussion of other 990s of note.

I am not the New York State comptroller; however, this much is true:

“Free-ride” Moskowitz can certainly afford to pay rent.

And now, for an illuminating journey into the world of SA’s tax forms.

Harlem Success Academies 1 – 5

Harlem Success Academy (HSA) was Moskowitz’s first charter. Tax information for HSA is available from 2006 to 2012 (filed for 2005 to 2011). Interestingly, the IRS reported contact for Harlem Success Academy is the hedge fund, Luxor Capital Group.

On its most recent 990 (for 2011, filed 05-23-13), HSA reports total assets of over $6.7 million. Included is “gov’t per pupil revenue” of $10,995,165 for “approximately 733” K-6 students– which equals $15,000 per student. HSA also received $328,534 in “government grants.”

Conspicuously absent from among its expenditures is any disbursement for land or buildings. Also, HSA included no report of the value of any “donated services or use of facilities.” HSA did report the book value for “lease improvements, equipment, and other” as a mere $501,449. (HSA seriously depreciated its equipment, from the cost of $771,175, to the depreciated, “book value” of $135,794). Also, in a convenient arrangement for Moskowitz, HSA paid Moskowitz’s Success Academy Charter Schools, Inc., $901,931 for “management.”

Moskowitz also has Harlem Success Academies 2 through 5. Eighteen 990s for these four schools can be found here.  These include five for HSA 2 (2008-2012); five for HSA 3 (2008-2012); five for HSA 4 (2008-2012), and three for HSA 5 (2010-2012).

The primary IRS contact for HSA 2, 4 and 5 is the Success Charter Network. However, the primary IRS contact for HSA 3 is Eva Moskowitz.

As indicated in the most recent filings for HSA 2 through 5 (2012, filed for 2011), the combined total assets for these four schools is $16.8 million. The four schools serve approximately 1864 students.

According to 2011 IRS 990s, these four HSA schools paid Moskowitz’s charter management company over $2.2 million. Add to that the 2011 IRS 990 reported fee from the first HSA, and Moskowitz’s Success Academy Charter Schools, Inc., and the total rises to over $3.1 million.

None of the five schools own land or buildings. None of the five schools pay rent.

For a summary of select 2011 990 details on HSA 1 through 5, including links to the individual tax documents, click here.

Bronx Success Academies 1 – 3

Moskowitz also has three schools in the Bronx. The third just opened in 2013, so it has no tax information yet available. The remaining two, Bronx 1 and 2, each have three 990s for 2010 -2012 (for 2009 through 2011).  The two schools have combined total assets just shy of $4.8 million and serve approximately 491 students.

In 2012, Bronx 1 and 2 paid a combined total of $517,075 in management fees to Moskowitz’s charter management company. And just like the five HSA schools, these two Bronx schools paid nothing for the property on which they operate.

For a summary of select 2011 990 details on Bronx 1 and 2, including links to the individual tax documents, click here.

The Brooklyn Success Academies

The SA website lists eight of its charters as being located in Brooklyn. Two do not yet exist (Bensonhurst and Bergen Beach). Three opened in 2013 (Crown Heights, Fort Greene, and Prospect Heights); so, 990s on these schools have not yet been filed. Of the remaining four SA Brooklyn schools, three opened in 2012 (Bed-Stuy 2, Cobble Hill, and Williamsburg) which means that these schools were not in operation when the 2011 990s were filed. Thus, there is no information on the 2011 990s regarding per pupil funding (and no management charges) since the schools were inoperative.

Only one Brooklyn SA school was in full operation in 2011: Bed-Stuy 1, with total assets of $754,656 and government per pupil revenue of $2,441,480 for 169 students ($14,447 per student). Bed-Stuy 1 paid Moskowitz’s Success Academy Charter Schools, Inc. $122,078 in management fees.

Even though three of the four Brooklyn SA schools with 2011 990s were not in full operation, they did exist, and none of the four is on property owned or rented by Moskowitz. Furthermore, all of the schools have the same address listed on the 990s: 310 Lenox Avenue– same as that “management company” to which the schools pay fees– Success Academy Charter Schools, Inc.

For a summary of select 2011 990 details on Brooklyn 1 through 4, including links to the individual tax documents, click here.

The Remaining Manhattan Schools

Aside from the five HSA schools previously examined, Moskowitz lists eight additional schools on the SA website. One does not yet exist (City Hall); five opened in 2013 and therefore have no filed tax forms (Hell’s Kitchen, Union Square, Harlem Central, Harlem East, and Harlem North Central).  That leaves Upper West, with tax information available for 2010 and 2011, and Harlem West.

I could locate no 990s for Harlem West. The school opened in 2012 as a full middle school (grades 5 through 8), unusual for a Moskowitz charter (she tends to build her schools one year at a time).

As for Upper West: It opened in 2011 and has total assets of $543,395 based on its 2011 990. Upper West has approximately 162 students and reports government per pupil funding at $2,314,821, or $14,289 funding per student. In 2011 the school also received an additional $511,910 in government grants. Success Academies Charter Schools, Inc., collected $113,234 in management fees from Upper West in 2011.

Of course, Moskowitz owns neither land nor building for Upper West. She pays no rent. The book value of her contribution to Upper West (lease improvements, equipment, and “other”) was $335,324.

In an unusual turn, Moskowitz acknowledges on the 2011 Upper West 990 that “donated services and use of facilities” should be accounted for. In the case of Upper West in 2011, the determined sum was $804,194.

What is suspect is that the sum of $804,194 as “donated services and use of facilities” is recorded in both the “revenue” and “expense” sections on page 23 of the 2011 990.  Is Upper West using donated facilities and then “re-donating” them?

Hmmm….

Additional Information Worthy of Note

The 2011 Success Academy Charter Schools, Inc., 990 notes that Success Charter Network, Inc., is the former name for Success Academy Charter Schools, Inc.– the charter management organization of which Moskowitz is CEO.

Based upon the twelve 2011 SA 990s I examined in writing this post, all operative SA schools pay charter management fees to Moskowitz’s Success Academy Charter Schools, Inc. (As CEO, Moskowitz drew “compensation” just shy of half a million in 2011: $487,708.)

The chair of Moskowitz’s charter management nonprofit, Success Academy Charter Schools, Inc., is Joel Greenblatt, a hedge fund manager. Co-chair John Petry is also a hedge fund manager; both he an Greenblatt are partners at Gotham Capital. Vice-chair Gideon Stein founded a company that sells a “Common-Core-aligned, tablet-based literacy solution for K-12.” Trustee Richard Pzena is a hedge fund manager. Trustee David Greenspan is a hedge fund manager. Trustee Jim Peyser is a managing partner for New Schools Venture Fund. Trustee Yen Liow is “a former hedge fund sector head.”

And it isn’t just this board. Hedge fund managers are present on the boards of Moskowitz’s schools. Here are a few examples: Petry chairs the board of HSA. Greenblatt co-chairs the board of HSA 3, and Stein sits on the board of HSA 5. Furthermore, hedge fund manager Daniel Loeb is listed as board chairman of Brooklyn SA schools 2, 3, and 4. Finally, recall that Luxor Capital is the contact for Moskowitz’s first charter, HSA.

There’s more: Over half ($258,750) of Eva Moskowitz’s 2011 487,703 compensation was paid by the MRM Foundation, which happens to be run by Success Academies Charter Schools, Inc., chair and hedge fund manager Joel Greenblatt. An explanation on the Success 2011 990 states,

Officer Eva Moskowitz was compensated $258,750 by MRM Foundation, Inc. for services rendered within her capacity as an officer of Success Academy Charter Schools.

On that same Success 2011 990, Moskowitz is identified as the CEO and as working 60 hours per week.

Oddly enough, the MRM 2011 990 actually reports that Moskowitz worked 40 hours per week as “admin” and was compensated $367,500.

So… Moskowitz worked 100 hours per week in 2011? Was the $258,750 counted as part of Moskowitz’s Success salary also part of the MRM reported $367,500, or in addition to this amount?

Sounds like Eva could use a good outside audit, after all.

It should come as no surprise that the “substantial contributors” to MRM include Greenblatt, Loeb, and Greenspan.

One of many current corporate reform trademarks: Nonprofit incest.

A Few Concluding Thoughts

Moskowitz and her hedge-fund (and other business) associates are in the business of education.

Moskowitz is known to spend millions on marketing.

The focus is on turning handsome profits.

According to the 2011 990 information examined in this post, the nine Success Academy schools in operation in 2011 have combined total assets of $29.6 million. (When the three unopened Brooklyn charters are added, total assets rise to $30.9 million.)

These nine operational schools paid Moskowitz’s charter management company almost $3.9 million in fees in 2011.

Under New York Mayor Michael Bloomberg, none of these nine schools paid rent.

There’s a new mayor in town.

Time for Eva’s free ride to end.