Pennsylvania auditor general questions Propel Schools lease reimbursements

A potential conflict of interest between Propel Schools and its landlord puts four of the system's charter schools among those that collected more than $2.5 million in “questionable” lease reimbursements from the state, the state auditor general said Wednesday.

An audit shows Propel collected $376,921 for Propel Homestead, Propel Montour, Propel East and Propel McKeesport between December 2010 and April 2016, even though a bond document filed by the landlord lists Propel founder and executive director Jeremy Resnick as the landlord's contact person, Auditor General Eugene DePasquale said.

Pennsylvania Department of Education policy states that buildings owned by charter schools are not eligible for lease reimbursement.

“The problem is that PDE makes no effort to verify ownership of the buildings or look for conflicts of interest between the school and related parties,” DePasquale said in a statement. “They simply write a check for whatever amount the charter school submits. That is a disservice to Pennsylvania students and taxpayers.”

In a prepared response, Propel denied any conflict of interest and said the lease reimbursements were legally approved by the Department of Education. The landlord, School Facility Development, is a separate nonprofit that purchases and leases properties for use by charter schools.

Propel Schools operates 10 charter schools and educates 3,600 students in Allegheny County, according to its website. No one at Propel benefits financially from the relationship with School Facility Development, and the two entities do not share employees or board members, system officials said.

“The auditor general may think the law needs to change, but Propel followed the law,” said Alan Shuckrow, its legal counsel. “There are no conflicts of interest.”

DePasquale said the Propel system, along with eight other charter schools across the state, have collected more than $2.5 million in dubious lease reimbursements since 2013. He believes that amount is just a fraction of the money that has been “wasted” since the reimbursement program's inception in 2001.

“Schools in this state are struggling, and $2.5 million is a lot of money that could be better spent on classroom education,” DePasquale said.

Elizabeth Behrman is a Tribune-Review staff writer. Reach her at 412-320-7886 or Lbehrman@tribweb.com.