Colorado: State Tells District to “Reconsider” Walton-Dominated Charter– But Let’s Not Mention Walton.
Walmart grandson, James Walton, is substantially connected to Colorado’s proposed Great Work Montessori School (GWMS).
In October 2016, the District Accountability Committee (DAC) expressed serious concerns about the GWMS application, including the lack of transparency surrounding its “partnering” with a “property services company, TGNA Holdings LLC, and Walton ties to that company.
On November 03, 2016, the JeffCo board voted 3-2 to reject the GWMS application, as the Colorado Independent reports on November 07, 2016:
Chief among the concerns by the [JeffCo] school board: the charter’s business model. The charter planned to rely partly on grants from the Walton Foundation and on tuition, up to $1,500 per month, from parents of pre-K students, to cover the budget.
Then there’s the involvement of the Walton Foundation. Head of School Amy Malick (sp.) told The Colorado Independent that the foundation had no involvement with the charter beyond a $250,000 grant, contingent on the charter winning approval from the Jeffco board.
In fact, the school was the brainchild of Walton Foundation board member James Walton, a resident of Golden.
The Independent obtained a letter from James Walton to the Jeffco board that attempted to clarify the foundation’s involvement. …
Walton’s letter dealt with the school’s proposed location, off West Center Avenue in east Lakewood. A property for the school was purchased last month by TGNA Holdings, which also holds title to the land and building of a Walton-backed private preschool in Edgewater. …
Contrary to Malick’s (sp.) description of TGNA as a non-profit, Walton said the company is a Delaware-based single-member limited liability company. TGNA will either buy or sell property on its own behalf, he wrote.
However, while its articles of incorporation show TGNA is a Delaware company, its principal mailing address, according to documents filed with the Colorado Secretary of State, is a post office box belonging to Walton Enterprise, Inc. of Bentonville, Arkansas.
According to the November 07, 2016, Colorado Independent, James Walton identified TGNA Holdings as a company, not as a nonprofit. However, TGNA Holdings is owned by the nonprofit, Great Work Educational Holdings, created by James Walton and involving others associated with Walton Enterprises. (Read about Great Work Ed Holdings here.) In order for TGNA Holdings to become a nonprofit LLC, it must meet a number of conditions.
As of this writing, TGNA Holdings is not registered with the IRS as a nonprofit according to this IRS exempt organizations search engine.
On November 07, 2016, GWMS counsel William Bethke filed an appeal to the Colorado State Board of Education, requesting that the state board remand the decision to the district board with directions to reconsider the application and grant the charter within the 30 day period provided by law.
The State Board accepted the appeal and scheduled a public hearing to take place at its regular monthly board meeting, on December 14, 2016. On that day, the state board voted 5-2 to send the GWMS application back to JeffCo for “reconsideration.” The state’s decision does not mean that JeffCo must agree to grant GWMS the charter.
Nothing has notably changed such that JeffCo should reconsider, except that if there isn’t already a charter school operating in a neighborhood, the majority of the state board apparently believes there should be. That’s all that really matters.
The Colorado Independent reports that the 5-2 vote was as follows:
Voting yes: Republicans Steve Durham, Joyce Rankin, Pam Manzanec and Debora Scheffel, and Democrat Angelika Schroeder. Voting against, Democrats Jane Goff and Val Flores.
One state board members voting against GWMS, Val Flores, asks Malik about the GWMS property. Malik and GWMA counsel Bethke are neither clear nor honest in their information regarding TGNA Holdings– including the fact that TGNA Holdings is definitely tied to the Waltons.
The text below is a continuous, unedited, 3 1/2-minute portion of Great Work’s testimony at the December 14, 2016, state board meeting. Approximate location of this text within the audio file: 30:12 – 33:40.
Audio file of the December 14, 2016, Colorado State Board of Education regular meeting:
Speakers are Val Flores, member of CO State Board of Education, Amy Malik, executive director of Great Work Montessori Learning Community (the tuition-based early childhood portion of the operation) and Head of School for the intended Great Work Montessori Charter School, and William Bethke, attorney for Great Work Montessori.
Note that Bethke tells Flores that she is not supposed to be asking about the property because it’s “not really relevant to this appeal.” In other words, JeffCo let slide the incestuous Walton connection to the proposed GWMS property, so the state is supposed to let the issue go, as well.
Note also Bethke’s insistence that nonprofits cannot increase charter school rent in order to increase profits. Even though no single person owns the nonprofit, it is certainly possible for any nonprofit to direct funds into the pockets of its paid officers or to questionably funnel such money toward preferred entities in the name of carrying out the purpose of the nonprofit.
However, Bethke’s point about the safety of nonprofits hits a wall given that the entity he is defending, TGNA Holdings, is not registered as a nonprofit.
Val Flores (VF): “May I ask you about the building?…Is it a building that’s there already?”
Amy Malik (AM): “No it doesn’t exist right now. There is land that has been purchased. And we’re through the… um… D.E.D. phase? … there’s a lot of acronyms, but basically, we’ve designed the building, we have the layout, we’ve been given the grading permit, we’re just waiting for one more permit for the ground to be broken.”
VF: “And, um, where did you get the monies for this, uh, to buy the land, because that seems to be very pricey land.”
AM: “Great Work Montessori School will not own the property or the building. We’re leasing the property.”
William Bethke (WB): “This is a leasehold arrangement, and actually a very favorable leasehold arrangement. The school will only pay for the space in the building that it occupies, so it will be able to titrate its rent. Typically, one of the dilemmas in building out a charter school, especially a Montessori school, but also other charter schools…”
VF: “That’s okay. I don’t want to take up your time. Who owns the property?”
WB: “A… a non-profit corporation.”
VF: “…and who is that non-profit corporation?”
AM: “TGNA Holdings.”
WB: “So it’s a non-profit corporation. You can look it up on the secretary of state’s website… it’s… uh… you know it’s really not relevant to this appeal… because the question here is whether Great Work Montessori has an appropriate budget. And… in fact, it has a very favorable sub-market rate lease which will allow it to occupy space for only the students that it enrolls. So one of the concerns you have with any charter school, if you’re trying to build from the bottom up, is you may need a building for K through 6 or K through 5, or Pre through 5 or whatever, and you prefer not to enroll all those grades at once but start at the lower grades and gradually let those students work up through the system. That can be a real dilemma, because frequently the space you need is not space you can afford based on your initial enrollment. This lease will allow the school to pay for the space that it uses and increase its payment as time goes on. So it’s a highly favorable lease.”
VF: “And so, the people… I just want to know, kind of… names… because, um, sometimes what happens… is, I mean charter schools are known to do this… where the money really goes to the people who own the property.
WB: “One of the advantages of it being a non-profit corporation is no one is legally permitted to take a profit out of it. Um, and, that is a… with commercial landlords and with developers in particular, that can be a real dilemma, because some of them are predatory… um … this is not…
VF: “That’s right. … and that’s what I’m kind of alluding to.”
WB: “Yeah but this is not the case. This is not the case here. Again, this is a sub-market … if you look at what I’m paying for office space… uh, uh… within a few blocks of this location… and compare it to what the school is paying, they’re paying well below market.”
WB: “WELL below market.”
VF: “Yes, because it’s known that there are investors who invest in land…I mean it’s very well known.”
WB: “You can’t invest in a …”
VF: “…especially FOR… uh… charter schools… and then make a profit. Then the … the fees go up, up, up, up, up…”
WB: “Which is not true… which is not true in this case. You can’t invest i…”
WB: “You can’t invest in a non-profit corporation.”
VF: “Well… you can’t say it’s not true because…”
WB: “No I CAN say it’s not true. Legally it can’t be true because you can’t legally invest in a non-profit. If you try to do that, you’re subject to sanctions from the attorney general and the Internal Revenue Service. This is NOT a developer who’s taking advantage of a charter school. I’ve seen those arrangements. This isn’t one of them.”
Flores asks for names; Bethke offers no names. Indeed, GWMS offers no solid documentation regarding TGNA Holdings.
Just take Bethke’s word for it.
In reality, Bethke has an agenda that apparently includes concealing the overwhelming dependence of GWMS upon James Walton.
TGNA Holdings is not a nonprofit. It is on file with the Colorado Secretary of State as a foreign limited liability corporation (FLLC) (an LLC formed in one state and operating in another), and there is no mention of an EIN (employer identification number) associated with TGNA Holdings included in the IRS listing for nonprofit organizations.
Malik and Bethke also go out of their way to avoid any details about who owns or runs TGNA Holdings, or about the organization’s history, including any offering of TGNA Holdings website.
And Bethke either outright lies about TGNA Holdings’ being a nonprofit or he doesn’t know it isn’t but fakes like he does know.
Anything to get GWMS its charter.
Bethke tells Flores that she can look up TGNA Holdings on the Colorado Secretary of State’s website. Indeed, what one finds is this document noting that TGNA Holdings has a “principal office address” in the Walton headquarters of Bentonville, Arkansas.
Interestingly, the Colorado Secretary of State does have James Walton’s Great Work Educational Holdings on file as a nonprofit corporation. It, too, has a “principal office address” in Bentonville, Arkansas.
Given that GWMS has no solid financial plan, and given both Malik’s and Bethke’s cryptic responses about the proposed GWMS property/ leasing arrangement, it seems that GWMS is overwhelmingly fiscally dependent upon James Walton and Walton Enterprises.
In its original charter application, GWMS offered only the sketchiest information on TGNA Holdings. Below are two screen shots of the single letter supposedly submitted by TGNA Holdings to show that it would provide property for GWMA.
Note that the letter includes no website whereby one might investigate TGNA Holdings’ history (which includes its connection to Great Work Educational Holdings and to Bentonville, AR) or that TGNA Holdings offers no statement about its being a nonprofit. Too, the signator, Zach Burnett, does not even include a title with his signature, which means he need not have any connection to TGNA Holdings at all– he could just be a convenience or a contrivance, one who incurs no consequence if TGNA Holdings decides to shaft GWMS in the future.
There is no inclusion of detailed contract terms; no attachment even to detailed proposed terms as written in the form of a contract, and not even a phone number to contact TGNA Holdings/ Zach Burnett. (At the bottom of the TGNA Holdings letter, “Zach” didn’t even bother to delete the template placeholder for the nonexistent telephone number.)
The GWMS charter application is back in JeffCo’s hands. Nothing has changed; the majority at the state board appears to believe that since there is no charter in the immediate area, then JeffCo should approve GWMS despite the school’s being the Great [James] Walton Montessori School. So long as James Walton continues to rain Walton bucks onto GWMS, it should do just fine. If GWMS does what Walton wants.
If not, not problem. Walton can just bail. Dissolve TGNA Holdings. Sell the GWMS lease to another company, or even just threaten to do so in order to get his way about how GWMS is operated.
Given the GWMS dependence upon James Walton, that would be his choice, not the GWMS community’s choice.
JeffCo board, if you approve this school, you are approving Walton choice. The GWMS budget, property included, is heavily Walton-dependent.