Five weeks before he abruptly resigned from the top job at the United Neighborhood Organization, Juan Rangel met me for an interview. He picked the day (Halloween) and the spot (UNO’s Soccer Academy High).
It was easy to see why Rangel wanted to meet at the new high school. Designed by Colombian-born architect Juan Gabriel Moreno and unveiled the month before, the building had been plopped like a futuristic glass-and-steel spaceship onto an otherwise unremarkable industrial stretch of 51st Street. Lush green fields surrounded it, marked off for student soccer games. Inside, only a few students sported Halloween costumes. Most were dressed head to toe in crisp five-piece uniforms, topped off with navy blazers and ties.
Dressed much like his students, in a dark suit and striped tie, the 48-year-old Rangel strode into the glass-walled lobby right on time, with his crisis manager in tow. Over the high-decibel screech of a buzz saw that signaled ongoing construction, he launched into a tour, detailing his favorite architectural elements with energy and charm.
But once we made our way to a second-floor conference room for questions, his guard went up. Asked if it had been hard to admit to a crowd of reporters last spring that he had “failed,” he slumped a little in his seat, and his face reddened. “Of course!” the head of the nation’s largest Hispanic charter school operator replied testily. “[But] sometimes you make mistakes, and you have to acknowledge them.”
Rangel has made so many that it’s hard to know where to begin. 2013 was his year from hell. A torrent of bad publicity about insider contracts, nepotistic hires, and political cronyism at UNO. Millions in grant money yanked from the organization and its network of 16 charter schools. A U.S. Securities and Exchange Commission investigation into one of the bond deals that helped drive UNO’s rapid expansion. And, of course, Rangel’s December departure from the juggernaut he had built—a deep humiliation for the quintessential Mexican American boy made good, a man whom this magazine last March ranked No. 32 on its list of the most powerful people in Chicago. Unfortunately for him, 2014 looks to be shaping up no better: At presstime, Miguel d’Escoto, his former deputy and close friend, had just filed a lawsuit claiming Rangel forced him to resign “against his will” to try and stop the spiral. The suit charges both UNO and Rangel personally with fraud.
How did Rangel and his organization grow so fast and fall so hard, and what does their fate mean for the future of charter schools? To find out, I conducted an investigation with the nonprofit, nonpartisan Better Government Association. We interviewed roughly 50 sources, among them several former top UNO insiders, and scoured budgets and other documents obtained through Freedom of Information Act requests.
What emerged is a cautionary tale about the intersection of ambition and opportunity. UNO and its CEO thrived mainly because of gaping loopholes in the charter school system. While UNO has received a staggering $280 million in public money over the past five years to spend on education, neither Chicago Public Schools nor the Illinois State Board of Education provided enough oversight. Without that, insiders say, UNO developed a free-wheeling culture that was ripe for abuse. It collected lots of money, and Rangel amassed lots of power. But he didn’t always use them for the benefit of the thousands of kids in his charter schools.
Ultimately, says a former UNO employee who requested anonymity, Rangel’s Achilles’ heel may have been that he “thought charter schools don’t have to play by the same rules as public schools.” The most troubling part: For several years, at least, they didn’t.
Thirty years ago, a former Jesuit priest named Greg Galluzzo noticed that many immigrants in Chicago’s fast-growing Mexican American community were struggling. With his wife, Mary Gonzales, he founded a nonprofit group in 1984 called the United Neighborhood Organization. Its goal: to help these new Chicagoans find housing and become U.S. citizens.
A young activist named Danny Solis, himself the son of Mexican immigrants, soon joined the fledgling group. Solis had grown up at 21st and Paulina and watched his father work three jobs to pay his Catholic school tuition. Influenced by the teachings of the legendary South Side community organizer Saul Alinsky, he believed that change occurred by flexing muscle from the inside, not by throwing stones from the outside.
When Galluzzo left UNO after two years (he went on to mentor a young Barack Obama), Solis became UNO’s executive director. His vision was far broader than his predecessor’s. Solis latched UNO on to the city’s burgeoning school reform efforts, organizing mass protests in Springfield, agitating for new schools running UNO-backed candidates for seats on local school councils. One of those candidates was Juan Rangel.
Born in Brownsville, Texas, one of seven children of undocumented Mexican immigrants, Rangel had moved with his family to Chicago’s Little Village neighborhood when he was four. His father worked construction and owned a neighborhood tavern. “He would never subscribe to being a victim of this country,” Rangel told me in October. “This is a place where my mom, with a third-grade education, is now an Avon lady! . . . I always say, Don’t underestimate our community.”
A shy child with a talent for drawing, Rangel attended the American Academy of Art in the Loop. While working as an illustrator, the young man began attending evening meetings for UNO volunteers. In 1989, with UNO’s backing, Rangel ran for a school council seat at his alma mater, Gary Elementary. He won—but was booted two years later after he voted to fire a principal who had been clashing with the council. “All of a sudden I realized that my little grammar school was a power center in my neighborhood,” recalls Rangel. “It was a rude awakening.”
Rangel went on to head UNO’s Little Village chapter. Solis was busy steering the group’s agenda into alignment with City Hall’s. That was true even on issues that seemed oddly counter to the group’s agitator roots. In 1993, for example, Little Village activists were fighting the city’s plan to build a new elementary school at 31st and Millard, across the street from a drum-recycling factory that incinerated thousands of gallons of toxic waste a year. As a parade of outside environmental consultants reported increasingly disturbing results, the issue grew embarrassing for Mayor Richard Daley. UNO sided with the mayor. “I think it’s an appropriate site for a school,” Rangel told the Reader at the time. “I lived near that site for years, and I’m fine.” (The city ultimately decided not to build there.)
In 1995, the politically ambitious Rangel ran for 22nd Ward alderman, losing to Ricardo Munoz. Solis fared better. A year later, his loyalty to City Hall was rewarded when Daley handpicked him to fill the vacant 25th Ward aldermanic seat.
Solis kept one foot in UNO’s door, however: His high-school buddy Phil Mullins, a London-born college activist who networked with Latinos through various Chicago soccer leagues, stayed on as the organization’s chief strategist. But the director job had to go to someone Hispanic, and Mullins was not. Rangel got the nod.
If the Solis era was about making UNO a political player, Rangel’s was about connecting the dots that would make it a force to be reckoned with.
Rangel could see that Chicago’s booming Latino population was having a staggering effect on the city’s public schools. (By the 2011–12 school year, Latinos would constitute 44 percent of the CPS student population.) And that public officials were eager to find educational alternatives to crowded public schools—many of which were in Hispanic neighborhoods—and to underachieving ones.
Not long before Rangel took over UNO, Chicago’s mayor took over its public schools. Daley’s plan included opening charters: public schools run by private managers that receive considerable leeway in curriculum, financing, and hiring. Remove the bloat of bureaucracy and give principals free rein to fire bad teachers, the thinking went, and performance will improve.
Daley charged his schools chief, Paul Vallas (now running for Illinois lieutenant governor on Pat Quinn’s ticket), with ushering “school choice” into the district. CPS began rounding up community groups—including UNO—and selling them on the idea. “Chicago was the first big-city school system to ask people to start charter schools,” says Greg Richmond, one of Vallas’s deputies, who eventually oversaw the program (and since 2005 has run the Chicago-based National Association of Charter School Authorizers).
In Rangel, CPS found an eager audience. “In society, there is a politically correct version of our community that wants to see us as poor, downtrodden brown people that can’t fend for themselves,” Rangel told me in October, his voice rising as if he were preaching on a Sunday. “That is a caricature. Instead of using poverty to rationalize failure, [we wanted to] set up a more ambitious expectation of our kids and our families.”
In 1997, UNO made its first charter school proposal to the city, for two campuses in heavily Hispanic Little Village. Anticipating concerns about a politically active organization opening schools, Rangel pledged that a separate management company (Advantage, a for-profit charter operator out of Boston) would handle day-to-day operations. He got the green light. “We didn’t set out to build a network,” Rangel says now. “We just wanted to prove something about what was possible.”
The next year, UNO and Advantage cut the ribbon on an elementary school and a junior high, both called Octavio Paz, in buildings on West 23rd Street and Congress Parkway leased from the Archdiocese of Chicago. It didn’t take long for the light bulb to flip on inside UNO headquarters: The education business had major perks. Schools come with cafeterias and gymnasiums where community groups could assemble. They offer built-in armies of foot soldiers: parents who could vote, move petitions, or gather in large numbers to rally on the issues of the day. And they bring in money.
Do they ever. CPS, like many authorizing districts around the country, gives charter operators a guaranteed base allotment per student—in Chicago, that amount currently ranges from $4,140 to $5,130. On top of that, charters get additional public funds for facility rent and maintenance and even more if they teach large numbers of kids who are poor or are learning English (as UNO schools do). And that’s not all: there is a blend of local, state, and federal monies dedicated for lunch programs, special education, teacher training, and long menu of services.
Charters also attract serious dough from certain foundations. The Dell Foundation has given UNO at least $1.5 million, and the Walton Family Foundation has forked over more than $3 million.
Fast forward to 2005. Daley’s army of Hispanic foot soldiers, the Hispanic Democratic Organization—run by one of Daley’s top political aides, Victor Reyes—was falling apart after a city hiring scandal involving HDO patronage workers. His administration began looking to shore up its relationships with Latino influencers. That same year, Vallas’s successor, the Daley protégé Arne Duncan, called Rangel, who had been nosing around for other UNO locations. A Catholic school at 51st and California was closing. Wouldn’t its building make a fine UNO school?
“We jumped at it,” recalls Rangel. That very fall, UNO opened a new grammar school, Rufino Tamayo, where Duncan had suggested.
New UNO school openings came quickly after that: Bartolome de las Casas in Pilsen and Carlos Fuentes in Avondale in 2006; one or two additional schools in each subsequent year, mostly in Hispanic neighborhoods on the South and Southwest Sides. “It was a really aggressive schedule,” Rangel says, looking back. “But there was a need. And no one else was giving a voice to what Hispanic parents want.”
To drum up students, UNO ran ads on Spanish-language radio stations and undertook door-to-door campaigns. The sell: Traditional public schools were setting the bar laughably low for Latino students. UNO schools were safe, and tuition-free. Teachers would visit homes regularly and involve parents. And, hey, if a parent needed English classes or computer training or even a little part-time work to help pay the rent, UNO could probably arrange for that, too.
That pitch resonated with parents who, like Brighton Park resident Chiqui Gonzalez, “never really trusted public schools.” After witnessing a fight outside her neighborhood junior high, she enrolled her granddaughter at UNO Rufino Tamayo. Many UNO parents were pleased with the extra attention. “When I came to UNO [from CPS], a lot of things changed,” says Monica Hernandez, an UNO Fuentes parent. “I started getting text messages about my kids.”
Juan Rangel and Phil Mullins, his No. 2 at UNO, have always made an odd couple. Rangel has overcome his early shyness to become an affable, well-dressed schmoozer; until the scandal, he drove a sports car with vanity plates reading “Patron 2” (Spanish for “boss”). Mullins is a brooding professor type, prone to eloquent lectures about understanding clout and self-interest. But they shared some of the same views, including the importance of building a professional Latino middle class.
With that express purpose, in 2001, the pair launched the Metropolitan Leadership Institute, or MLI. Each year they chose 30 or so professionals, mostly Latinos, and taught them how to land roles on important boards and commissions and network with those who had.
From the beginning, Rangel operated on the notion that charters were exempt from the school district’s nepotism rules (they are allowed to write their own ethics policies) and from the so-called Shakman Decree, a consent decree put into place in 1983 to curb the patronage practices of Chicago pols (it applies to CPS but not to charter operators). As the UNO organization grew, it created plenty of jobs: teachers’ assistants, IT consultants, central office administrators, and community relations officers that Rangel and Mullins filled as they pleased.
“It was always this dog-and-pony show about how we needed to have relationships and how these relationships would bring good things to UNO,” recalls one former management official. “It was nothing about doing a job, or doing a good job. It was the ‘who you know’ type of thing.” Says another insider: “That was a constant theme. Juan and Phil decide who’s going to get special treatment and who’s not.”
At least two of Rangel’s nephews and a niece began working at UNO, including Juan (“John”) Rangel, an IT specialist; Carlos Jaramillo, who worked as deputy chief of staff; and Araceli Estrada, an apprentice teacher. Other relatives handled immigration services for the central office.
The jobs extended to powerful people in Rangel’s circle. Danny Solis’s wife, Mary Jane, landed a job teaching third grade in 2007 (she left in July 2012). So did Solis’s sister, Grace Perales, UNO’s longtime office manager. Carolina Cardenas, the ex-wife of 12th Ward alderman George Cardenas, works as a supply chain coordinator in the central office. (Cardenas has two UNO schools in his ward.)
As UNO grew, Rangel and Mullins engineered an increasingly complicated organizational structure that allowed the parent nonprofit—let’s just call it the UNO mothership—to reap financial benefits from the schools and spin off for-profit companies on the side.
Here’s how the relationship between the parent company and the charter schools worked. Technically, UNO’s charter school network, UCSN, was separate from UNO. But the two entities shared the same CEO (Rangel, who made $250,000 a year) and COO (Mullins, who made $190,000) and even the same board members—a situation fraught with potential conflicts of interest.
Remember Advantage, the outside firm to which Rangel had turned over the day-to-day management of the schools? UNO dismissed the firm around 2000 after Octavio Paz posted poor academic results. “We felt we were terminated capriciously,” says Steven Wilson, the founder of the now-defunct Advantage. “They wanted to self-manage.”
UNO did just that—and began paying itself a “management fee” of $1 of every $10 it received from local, state, and federal sources. (Some years UCSN kicked up more. In 2012, those fees totaled $5 million.) Under Rangel and Mullins, UNO had control over how that cash was spent.
A third of the nation’s charter schools pay fees to management companies—a head-scratching arrangement when you consider that charters were created as a way to eliminate bureaucracy, not create it. Few rules govern these arrangements, according to Gary Miron, a professor of education at Western Michigan University who has studied charter financing (though not UNO’s specifically). Once the charter manager collects the fee, the funds go under “the veil,” says Miron. “Basically, all of this money ends up getting paid to the management company, but we don’t know how much goes into their pockets or how much they spend on administrators, or administrators’ nephews or uncles.”
No wonder the Chicago Teachers Union charges that, despite promises to the contrary, charter school operators are not held as accountable as their traditional public school counterparts. “It’s the Wild West,” says Jesse Sharkey, vice president of the union.
With all those kids and all those crayons, schools are messy places that require constant cleanup. By establishing a for-profit janitorial arm, Rangel realized, UNO could set its own fees to clean its own schools—the profits would stay in-house—and he could offer jobs to whomever he wanted. Voilà: In 2008 arrived UNO Janitorial and Maintenance Service, known as UNO JAMS. Two of Rangel’s family members were hired to help oversee it.
As UNO’s schools have grown, so have UNO JAMS’s fortunes. In 2009, the company’s revenues were just $633,000; they now exceed $2.6 million. Still, those numbers are relatively small compared with the potential gold mine that is Rangel and Mullins’s other for-profit idea: senior housing. In 2007, UNO partnered with the Chicago-based group Senior Lifestyle Corporation to build or repurpose five senior housing developments in and near the city. Construction on two of the developments is still underway, but when they are completed, the total number of units will top 380.
UNO and Senior Lifestyle have received $22 million in taxpayer-backed loans and grants—more than $9 million of that from Mayor Emanuel’s administration—as well as no-strings-attached low-income-housing tax credits from the city and the Illinois Housing Development Authority worth $56 million, financial records show. Not much of this money has trickled down to UNO’s bottom line—yet. According to financial records, UNO earned $254,000 in development fees in 2011 and 2012.
“There is still a question of whether senior housing is attractive to Hispanics,” Rangel says. “We’re a traditional community—grandmothers and grandpas live with us—but if there is an opportunity for folks in our community, why not? UNO knows the Latino community better than anyone!”
In the summer of 2007, UNO embarked on its biggest project yet: the gut rehab of an abandoned industrial bakery near 47th and Pulaski—a campus that UNO would later name Veterans Memorial. Sure, says Rangel, the graffitied eyesore could have been improved on the cheap, with some new windows and a fresh coat of paint. But nothing quite spells success in Chicago like a multimillion-dollar feat of modern architecture.
UNO hired the Near North firm UrbanWorks, which designed a curtain wall of acoustically enhanced panes of glass to block out the noise from Midway Airport. “Why settle?” Rangel remembers thinking. “Why not do something that puts a mark on a community?” (“Juan is really just a frustrated architect,” says one insider.) For Rangel, a major construction project was a twofer: It also brought the power to dole out tens of millions in contracts.
Halfway through construction, however, UNO began gasping for cash. Rangel reached out to some powerful political allies with a concentration of UNO schools in their districts. One was Illinois House speaker Michael Madigan, who had been working to tack facilities funding for charters onto the state budget. But the speaker was squabbling with Governor Rod Blagojevich, who in the summer of 2007 slashed a slew of Madigan-supported “add-ons” from the budget, including a $3.5 million grant that would have helped UNO.
It got worse. The credit markets were tightening. CPS, meanwhile, was no help. The school system was refusing to increase its per-pupil allotments, funding that UNO was counting on to help secure construction financing. The lead contractor, F.H. Paschen, threatened to pull its crews.
Desperate, Rangel tried political lifeline No. 2: Southwest Side alderman Ed Burke (whose daughter-in-law was later hired at UNO). In June 2008, Burke convened a team of bankers, LaSalle Street lawyers, and politicos, including his brother, Daniel, a state rep, and Daley’s chief of staff, Lori Healey. The group helped UNO secure a $65 million low-interest loan from a consortium of banks led by Cole Taylor Bank and MB Financial Bank and quietly guaranteed by City Hall.
This being Chicago, few were surprised when Rangel subsequently threw his support behind Dan Burke in his hotly contested reelection race for the Illinois House in 2010. The fact that Burke’s opponent was a Mexican American in a predominantly Hispanic district didn’t stop Rangel. To critics, it was further proof that UNO’s Latino-empowerment principles could be readily abandoned when self- interest was on the line.
In June 2009, the state legislature awarded UNO a $98 million grant for school construction. Even charter advocates were shocked by such a staggering sum handed out to a single operator. “Very few, if any, charters [nationwide], except UNO, get that kind of state money to build schools,” says Andrew Broy, the president of the Illinois Network of Charter Schools, a lobbying and resource group.
Anticharter parents’ groups and unions immediately cried foul. “What on earth was the state thinking?” says Julie Woestehoff, the executive director of Parents United for a Responsible Education, a Chicago advocacy organization. “We have this huge budget crisis. To be giving UNO $98 million—it’s preposterous. It throws into enormous relief the political nature of this organization, the clout they have.”
By this point, no one could argue that. UNO’s coup was the result of a classic one-two punch. The cousin of Miguel d’Escoto, Rangel’s chief organizer at the time, had bused hundreds of parents in matching T-shirts to Springfield to rally for weeks in front of the Capitol and the TV cameras. Behind the scenes, Rangel had worked Republican lawmakers— many of them charter fans—from Senate Republican leader Christine Radogno on down. To reinforce the message, he had hired a cadre of powerhouse lobbyists, including Victor Reyes and Michael Noonan, a former Madigan aide.
“They were playing the ‘Kumbaya’ chord that this was for the betterment of Latino families,” recalls Senator William Delgado, a Chicago Democrat who chairs the Senate Education Committee and voted for the grant—a decision he says he now regrets. “But it was the wolf dressed in sheep’s clothing. These guys [at UNO] weren’t responsible enough to get that much money.”
With that $98 million, UNO began scrambling to build new schools, Rangel’s two-campus Soccer Academy complex among them. No one inside the organization, it seems, bothered to read the grant agreement’s fine print. It specified that UNO “must immediately notify the [Illinois Department of Commerce and Economic Opportunity, which administered the grant] in writing of any actual or potential conflicts of interest.”
As the Sun-Times would reveal in February 2013, a long line of contractors, plumbers, electricians, security firms, and consultants tied to many of the VIPs on UNO’s organizational chart got a piece of the action. Rangel spelled out in tax documents and in later bond disclosures that the construction firm d’Escoto Inc.—owned by former UNO board member Federico d’Escoto, the brother of Miguel d’Escoto—was the owner’s representative on three projects funded by the grant. Another d’Escoto brother, Rodrigo, was paid $10 million for glass subcontracts for UNO’s two Soccer Academies and a third school in the Northwest Side neighborhood of Galewood.
The vendor lists were peppered with other familiar names: a $101,000 plumbing contract awarded to the sister of Victor Reyes, UNO’s lobbyist, who helped secure the state grant; a $1.7 million electrical contract given to a firm co-owned by one of Ed Burke’s precinct captains; tens of thousands in security contracts to Citywide Security, a firm that had given money to Danny Solis, and to Aguila Security, managed by the brother of Rep. Edward Acevedo, who voted for the $98 million for UNO.
Meanwhile, the school network was handing out its own contracts to more familiar names. Monterrey Security, a firm that was previously co-owned by Danny Solis’s brother Santiago, won a $75,000 security contract. Phil Mullins’s wife, Mary Quinn, came away with an HR contract; so did firms that had contributed to Burke and Madigan. Says an UNO insider who spoke on the condition of anonymity: “There was a point where I began to wonder, Is it about the schools? Or are the schools the means to another end?”
UNO never notified the state of these potential conflicts. “They wanted to get the schools built ASAP, and maybe shortcuts were done,” says George Cardenas, the 12th Ward alderman. “When you grow exponentially, you tend to take an eye off the controls.”
“Things caught up with us,” admits Rangel. “There are checks and balances we didn’t have.”
Each time UNO unveiled a new campus, Rangel outdid himself in the dazzle department. To fete the opening of the Veterans Memorial campus in 2008, UNO blocked off part of 47th Street so the crowd could watch a fit-for-Broadway reveal: a plush scarlet curtain sliding off the three-story glass curtain wall as the soundtrack to 2001: A Space Odyssey played. The price tag for the school: $42 million, according to bond documents. In the fall of 2011, at the massive celebration for the first Soccer Academy (price tag: $27 million), UNO spent $75,000 for fireworks, DJs, and a laser light display.
According to records, UNO’s charter network also spent freely on things you rarely see on your neighborhood public school’s budget, such as restaurant meals (about $48,000 in 2012) and educational trips to New York City, Orlando, and Beijing (about $59,000 in 2012). Asked about the Orlando expense, Rangel crowed about the glossy Disney corporate training center where he sent a portion of his staff—including janitors—to study customer service. The bill: $38,000 for the trip, and thousands more for Disney trainers to come to Chicago. “You go there, and the bus driver, the security guy, the ticket attendant—they are on. They call it ‘onstage’! It’s the Disney magic! Why don’t schools function this way?”
And the other trips? Many underprivileged Latino students, Rangel says, have never been to the Loop, much less overseas. “The idea of a group of Mexican kids from the neighborhood going to China—I don’t think any of those kids ever dreamed that.”
Student trips notwithstanding, a good chunk of the public money flowing into UNO never saw a classroom. Take the $49 million that the charter network collected from local, state, and federal sources in 2012. Once you subtract the management fees ($5 million), the lengthy roster of consultants (nearly $1 million), the promotional materials ($68,200), and a host of other expenses that have little to do directly with kids and classrooms, you’re left with $38.6 million. Then factor in about $3.5 million in interest payments on its roughly $70 million worth of debt. Suddenly a big charter school operation doesn’t sound so streamlined after all.
Behind the scarlet curtain, UNO’s schools could be sloppy. Rangel rarely entered them. From 2008 until 2011, day-to-day operations fell to a strict Catholic nun, Sister Barbara McCarry, a veteran from the CPS office that vetted charters. To make up a budget gap from leaner times, UNO began stuffing more kids in classrooms (up to 30 in kindergarten and first grade, compared with the CPS average of 24) and levying “activity fees” on unsuspecting families. Expectations were high, tempers were strained, and a revolving door of principals (called directors at UNO schools) left a young and largely inexperienced crop of teachers casting about for guidance. Teachers say they felt pressure to please parents and to not draw any negative attention to the schools.
In December 2009, for instance, David Corral, a wellness teacher at UNO’s Major Hector P. Garcia High School, was fired “in retaliation” for reporting a locker room bullying incident to the Chicago Police Department, according to a lawsuit he filed in federal court. In the complaint, he alleges that after the bullies were carted away, UNO representatives persuaded the parents of the victim to drop charges. (The suit was settled in September 2013.)
Another teacher, a veteran of an UNO elementary school, contends that for two years she was asked by a master teacher to inflate grades lower than Cs so that parents wouldn’t grumble. She recalls: “We were told it is not a school; it is a business, and the children are your customers.” (“Who asked them to change the grades?!” Rangel thundered, when I asked him about this. He said no such accusation had crossed his desk, and UNO has a whistleblower hotline that teachers can call.)
UNO’s teacher turnover rate careened toward 40 percent for the 2011–12 school year, though the network wasn’t the only charter operator in Chicago burning through staff. According to the independent Chicago education journal Catalyst, average teacher turnover at all local charters exceeded 50 percent the previous year.
Insiders also contend that Rangel’s eyes were off some key controls, including admissions. By the start of the 2011 school year, the network’s student waitlist was in the thousands. According to CPS, the organization was supposed to conduct a blind admissions lottery and videotape it. But two sources with direct knowledge of the process allege that UNO never held a “real” lottery and instead cherry-picked new students based on where they lived in order to build up coalitions in certain Latino neighborhoods.
Rangel vehemently denies this. “I disagree!” he told me in October. He insisted that UNO used a spreadsheet with a randomizer function to select students. As for his role in the process, he said he “didn’t remember” being in the room when his compliance officer held the lotteries.
When the BGA and I sought access to UNO’s lottery-related records, including video documentation and witness statements, its law firm responded: “Despite a thorough search, no such records were located.” What about a document that spells out UNO’s process? “No such document exists.”
Admissions became a flash point, too, in UNO’s tense relationships with some aldermen. In 2011, 36th Ward alderman Nicholas Sposato initially opposed a proposed UNO charter on the grounds that the traditional public schools in his ward were not overcrowded.
Ultimately, Sposato struck a deal and backed the school, UNO Roberto Clemente, which opened in the fall of 2012. The school was supposed to give preference to students who lived near it, but after several 36th Ward parents complained that their children did not get in, the alderman asked UNO to produce a list of addresses of those who did. When UNO did not fully comply, he filed a complaint with CPS inspector general James Sullivan. “I have a big concern about who they’re letting into the school,” says Sposato. “To this day, I don’t have the information. I don’t understand why there’s no charter watchdog. I think they get away with murder.”
With all the drama, perhaps it’s not surprising that, on average, UNO schools have performed only slightly better—and in some specific cases, worse—than their traditional public school counterparts. In October, one of UNO’s elementary schools, Rufino Tamayo, even landed on the CPS watch list for poor performance.
Since 2011, the job of shoring up academics has fallen to Matthew Moeller, a young technocrat from the District of Columbia public school system. In 2012, UNO lengthened the school day by half an hour, shortened summer break to six weeks, and engineered a data-based tool to, it claims, more fairly assess teacher performance. As a result, several UNO campuses began to more consistently show gains. Those that didn’t saw firings.
Once the Sun-Times began revealing the list of UNO insider contracts last February, Rangel tried to quell the damage. He asked his old friend Miguel d’Escoto to stay after hours and sign a resignation letter for the greater good of the organization. D’Escoto reluctantly did. (The complaint filed on January 8 in Cook County Court reads: “Defendant Rangel acted solely in his own personal interest in soliciting and obtaining Plaintiff d’Escoto’s resignation . . . Defendant Rangel’s interests were totally antagonistic to and unrelated to the interests of Defendant UNO.” )
The bad news kept coming. In April, Governor Pat Quinn suspended the remaining $15 million of that huge $98 million grant. More pressures mounted. By late May, Rangel offered the public mea culpa that I had asked him about. “I have failed,” he said at a news conference.
He stepped down from UNO’s board and its charter school board but clung tightly to his $250,000-a-year CEO job. He set new rules barring nepotism and conflicts of interest. And in an about-face that reverberated throughout the school choice movement, he agreed to let teachers in UNO’s schools unionize (a deal is due imminently, says a source at the bargaining table).
Just when it seemed the worst was over, in early September Martin Cabrera Jr.—the man who had replaced Rangel as UNO’s chairman and was supposed to help clean up the mess—resigned mysteriously. Then came word that the SEC was investigating that key 2011 bond deal that helped drive UNO’s expansion.
Charter advocates watched helplessly as their industry got splattered by the mess. Unions and neighborhood groups circulated a damning anticharter PowerPoint presentation—with UNO as Exhibit A—in heated community meetings in Pilsen and Rogers Park.
In October, UNO quietly retracted its proposals for four additional campuses for the 2015–16 school year, bringing its rapid growth to a screeching halt. Given that UNO’s business model depends on continuous enrollment growth, postponing expansion plans could have serious implications for the organization’s long- term financial health.
Rangel had agreed to an hour-long interview on Halloween, and when the time was up, he politely said goodbye and darted out of the room. He headed down a window-filled hallway. I went the other way. But the school is shaped like a giant glass doughnut, and we unexpectedly met again. Rangel seized the opportunity to have the last word.
Through a second-story interior window overlooking the cafeteria, he pointed out the scene below. Despite the horde of kids angling for trays, the lunch line was army straight, the students’ uniforms Wall Street–worthy, the floor Clorox white. He wanted me to see what he saw: the precision, the discipline, the ambitious standards for a student body that’s almost entirely Hispanic and mostly low income and that, just a decade ago, was falling through the educational cracks. “These students have only been with us a month,” he said softly. “They’re doing so well! When you see our kids in their uniforms, very discipline oriented, that is the image we are trying to create for our community.”
Five weeks later, on December 6, the image Rangel had to worry about most was his own. After holding UNO’s top job for 17 years, he resigned under a cloud. The feisty charter network that never seemed to take no for an answer has been practically indistinguishable from its CEO. With Rangel gone, what will happen to UNO? The families of some 7,500 kids want to know. So do UNO’s bondholders.
UNO can’t count on more largess from the State of Illinois, at least until the inevitable political amnesia sets in. (In an email, a Quinn spokesperson wrote “NO” in all caps in response to the question of whether the governor would consider future UNO grants.) But the network’s authorizer, CPS, remarkably still seems to have its head firmly planted in the sand. Last February—after the Sun-Times stories broke—the board of education voted unanimously to extend UNO’s charter for another five years.
The office responsible for monitoring charters clearly took that as a vote of confidence. “We continue to monitor the situation closely,” says Jack Elsey, CPS’s chief officer of innovation and incubation, who stresses that UNO is being scrutinized more carefully than it had been in the past.
Is there a contingency plan for what to do if a large charter operator fails? “It’s obviously something we wouldn’t take lightly,” Elsey says. Charters have failed in Chicago before, as recently as the last school year. (Aspira’s Mirta Ramirez campus and Betty Shabazz’s DuSable campus were shut down; their students scattered to nearby schools.) And if you think CPS can’t handle closing 16 UNO schools, remember that it closed 49 public schools last May, in the face of vehement public opposition.
But at presstime, UNO was still keeping on. “We are setting in more internal controls with the end goal of keeping that excellent education we provide going,” UNO’s interim CEO, Jesse Estrada, an affable former archdiocese administrator, told me. (He was still in the process of plowing through the financials.) A national CEO search is underway.
As for Rangel, the man who had once been in the habit of giving reporters his cell number has stopped picking up the phone. He’s now left to confront the toughest job in the world for someone who once wielded such influence: starting over.