Too Big to Fail

That the UCSN faces a possible strike at the same time CPS prepares for a walkout would have been unbelievable in 2012, the time of the last major CTU strike. Then, CEO Juan Rangel crowed about the fifty thousand students who would continue to report to charter schools while the public schools were shuttered.

Rangel’s pre-strike provocation inspired Chicago ACTS to organize UCSN teachers. The CTU joined the effort and contributed significant staff resources and leadership attention to the project.

This was a huge challenge. UCSN was the largest network of charter schools in Chicago at the time, with ambitions to expand to new markets. It was a driving force in the industry lobby, the Illinois Network of Charter Schools, and Rangel had served as transition chief for Chicago mayor Rahm Emanuel’s first one hundred days. Up to that point, Chicago ACTS had organized mostly small networks and independent schools.

Given the high degree of teacher turnover and the rapid expansion of the network, we knew we needed to pressure management to sign an organizing rights deal — an agreement not to fight our organizing efforts — if we were going to win a union for the teachers and staff.

Campaign researchers soon discovered that the same rapid expansion that made the network hard to organize was UNO’s financial Achilles heel. Virtually every year, the network had to float a new bond to Wall Street investors, each time using the newest school property — purchased with the last bond — as collateral for the new one. This meant that any increase in the charter’s network’s revenue went to service debt. Any pause in new growth or revenue would put immediate pressure on their bottom line.

In essence, a charter school is just a five-year contract to provide government services. So when charters apply for fifteen- or thirty-year bonds, they are charged extremely high interest rates. Across the board, charter school bonds are only rated one grade above “junk.” But Wall Street investors love them, because they are also classified as municipal bonds, which produce triple-tax-free income for investors. Banks carefully bundle these with safer bonds from actual public entities to produce higher yield, but supposedly safe, bond funds.

If all of this is starting to sound like The Big Short, that’s because the bankers who inflated and then popped the sub-prime mortgage bubble are repeating the same scam in the charter school industry. This should be a national scandal.

But the actual UNO scandal was a result of the organization’s culture of insider dealing and no-bid contracts. Ordinarily, that’s business as usual in Chicago. But in the aftermath of Rahm Emanuel’s controversial closure of fifty public schools, the question of how public education dollars were spent became highly politicized.

When Chicago Sun-Times investigative reporter Dan Mihalopoulos launched a series of UNO exposés in early 2013, the public was outraged by the cavalier and venal misuse of public funds. As Mihalopoulos began to connect the scandal to specific politicians, UNO started losing friends fast.

The day the Sun-Times ran a story on UNO’s fundraising for House speaker Mike Madigan — complete with an embarrassing picture of Madigan at an UNO charity golf event — two things happened: first, the governor set in motion the suspension of a special $98 million grant that was supposed to seed the network’s expansion, and leadership called AFT president Randi Weingarten to propose a neutrality agreement.

Thanks to that deal, the worker-led organizing committee signed up over 90 percent of the teachers and staff for a May Day union certification.

Broke on Purpose

Negotiating multiple contracts with different corporations in the same labor market has not been an easy evolution for teachers’ unions. Traditionally, staff representatives from state umbrella organizations negotiate contracts for local bargaining units. These staffers tend to seek the most expeditious deal possible, with little consideration of how it might affect other units in the area.

CTU leaders, on the other hand, recognized that if the largest and most politically influential charter school bargaining unit agreed to concessions on merit pay or pensions, then they would see those demands pop up at their bargaining table, just as CPS’s concessionary demands are showing up in the current UCSN negotiations. The point of organizing staff in charters is to make them and their unions stronger, not race to the bottom in terms of employment standards.

These conflicting approaches to bargaining strategy have produced no shortage of internal tensions.

The UNO workers did manage to win just-cause job protections, maternity leave, an extended summer break, a salary schedule that brought newer teachers closer to — and occasionally above — the CTU pay scale, and the same 7 percent pension contribution that district teachers enjoy in their first contract.

Coming out of that experience, Chicago ACTS asked the CTU to provide negotiators and organizers to coordinate the current contract campaign. It also now has a full-time union officer released from teaching duties to keep teacher voice central to strategy.

Chicago ACTS is now aiming to have all charter-school contracts share the same expiration date, according to Chicago ACTS president and former charter school teacher Chris Baehrend. “We’re trying to be much more deliberate about how we exercise our bargaining power,” he says. Forming an employer association for the purposes of bargaining common contract language and benefits could make sense to charter employers, if they actually desire stability.

Whether it makes sense to have the charter school units bargain (and possibly strike) at the same time as the district teachers or to try to leapfrog the CTU’s contract gains (or losses) by bargaining in the following year is still being debated within ChiACTS. It’s also one that the bosses have no small say over.

Since that first contract, UNO has evolved as well: after the scandal, CEO Juan Rangel became a convenient scapegoat for the organization’s regulatory problems. He was fined by the federal Securities and Exchange Commission for failing to reveal his insider deals, and his Twitter account indicates that he’s now hustling for astroturf education reform campaigns.

In 2014, the UNO Charter School Network also split from its parent organization — the Saul Alinsky–inspired United Neighborhood Organization. Their background explains why they had the savvy to sign a union neutrality deal when they did. UNO had floated the bonds that paid for the network’s expansion. They owned the real estate, charging UCSN nominal rent but hefty management fees. The whole financial structure was designed to be intermingled. The messy disentangling of UNO’s complicated finances has resulted in a charter school network that is as “broke on purpose” as Chicago Public Schools.

The union announced the lopsided results of their strike vote in favor of a walkoff on Thursday night. Local reports stated that this was the first strike in American charter school history, but these Chicago teachers actually would not be the first group of charter employees to go on strike. Teachers at a Philadelphia’s Khepera charter school engaged in a wildcat sick-out in 2011 after management basically refused to bargain a contract in good faith.

Although the Khepera teachers could have been fired under the Pennsylvania labor law they were considered to be under at the time, management instead capitulated and accepted the union’s last contract offer. When Khepera’s administration attempted to gut that contract in 2014, the teachers conducted a strike authorization vote under private sector labor law, and management once again immediately capitulated.

Also in 2014, teachers and staff at Detroit’s Cesar Chavez Academy voted to authorize “walk and work” informational picketing after a year and a half of frustrating negotiations with the Leona Group, LLC. There, management settled the contract the night before the first planned action.

As Karen Lewis said of her members, so is true of teachers at charters: “Our ability to withhold our labor is our power.”

The Chicago ACTS members are working under a contract extension that expires on October 9, but they will not be walking out with the CTU on Tuesday. Even if their elementary schools weren’t on a one-week autumn break, both parties are carefully watching what happens in the CTU negotiations. “I think that UNO is probably waiting to see what happens with the pension contributions in the CPS negotiations,” says Andy Crooks, a leader of the charter school network’s support staff. Instead, the bargaining team has set an October 19 strike deadline — which could be during the potential public teachers strike, if the CTU has not settled by then.

Regardless, if no contract settlement can be reached, Chicago ACTS will be holding a rally outside of UCSN’s corporate headquarters some time this week. If the CTU is on strike, there will be forty thousand union members able to join their colleagues’ picket line.

That is a visual that managers at non-union charter schools are likely dreading. Expect to see some of them pipe up in the press with moralizing about how charter schools were designed to be free from the kinds of collective bargaining disputes that are currently roiling UCSN, and for them to denounce the Chicago Teachers Union and Chicago ACTS.

The obvious truth is that they’re afraid. They’re afraid that the people who actually work in charter schools view unions as an important part of making these schools work. And they’re afraid that those workers have a powerful ally in the CTU when their bosses try to push them around.