Philadelphia Daily News

MAY

18, 2004 Tuesday 4STAR EDITION

SECTION:

LOCAL; Pg. 08

LENGTH:

966 words

HEADLINE:

Will SRC renew

Perzel

charter?;District mum on site run by speaker's wife

BYLINE:

JOSEPH R. DAUGHEN daughej@phillynews.com

BODY:

City school officials have drawn a curtain of secrecy around the still-pending decisionwhether to renew a charter school founded by Sheryl S.

Perzel,

wife of state HouseSpeaker John

Perzel.

Renewal of the New Foundations School's charter for five years is considered likely - in fact,it could happen as early as tomorrow, when the School Reform Commission is to meet. Itwould virtually guarantee the school more than $10 million in public money over five years.But a final vote on the renewal has been delayed since March 17, when the SRC voted torenew the charter - as long as certain unidentified "audit issues" were resolved.Since that vote, the school district and the school itself have refused to disclose what those"audit issues" are. The district has not yet acted on a Freedom of Information request filedby the Daily News that seeks access to audits of the school's operations.Other public documents, however, show that New Foundations spends a significant portionof the money it gets from the state to rent space for the school from a nonprofitcorporation, which is also controlled by

Perzel

family members.The nonprofit, 8001 Torresdale Corp., is in turn using the rent payments to buy thebuildings it is leasing to the school.For example, in the year ending June 30, 2002 - the most recent information available -New Foundations received $2.5 million from the state to educate its 393 students, accordingto the school's tax return. The school paid 8001 Torresdale Corp. $384,854 for rent thatyear.If the arrangement between New Foundations and 8001 Torresdale continues for 20 years -which is what's envisioned in a lease the two have signed - 8001 Torresdale will end upowning a

property

with a current estimated value of $4.5 million without spending a pennyof its own.

That kind of arrangement isn't unusual for charter schools, which are governed by strictstate law that limits their ability to buy

property

themselves.But deals between closely linked businesses often draw increased scrutiny from auditors.And one charter-school expert said the district has expressed concern about other, similardeals.It's not clear if that's what has attracted the district's attention. School districtspokeswoman Cecilia Cummings said school officials haven't made final decisions onrenewing the charters of New Foundations and three other schools, and so audits of theiroperations are considered "drafts" not open to the public.School officials were mum, too. "I have nothing to say," Sheryl

Perzel

said, when contactedabout the charter renewal. John

Perzel,

architect of the city school takeover that installedthe SRC, didn't respond to requests for comment.Tax returns filed by New Foundations and 8001 Torresdale Corp. indicate that neither Sheryl

Perzel

nor her husband has been paid any money by the school or the nonprofit.But other public records examined by the Daily News provide an outline of how NewFoundations and its partner company, 8001 Torresdale, were organized and financed.Those records show the

Perzel

family links to both New Foundations Charter School, Inc.,and the school's landlord, 8001 Torresdale:* Sheryl

Perzel,

according to the Department of State in Harrisburg, is listed as president,secretary and treasurer of the school, which is housed in two buildings, 8001 and 8025Torresdale Avenue, in Northeast Philadelphia.* Sheryl

Perzel's

nephew, Gordon R. Johnston III, is president of 8001 Torresdale, and herbrother, Samuel C. Stokes Jr., is a board member.Johnston also is identified in documents filed with the State Elections Bureau as treasurer of John

Perzel's

reelection campaign organization.In its filing with the Department of State, 8001 Torresdale claimed to be a "charter school,"thereby qualifying it to be a nonprofit corporation. On its tax return, 8001 Torresdale saysits primary purpose is "to own and lease facilities to not-for-profit school."Also, real estate records show that 8001 Torresdale Corp. acquired 8025 Torresdale Avenueon Dec. 27, 2002, for $100,000. The sellers were Sheryl

Perzel,

her two sisters and herbrother.It's not unheard of for charter schools to pay rent to nonprofits affiliated with the school,said Dr. Tom Mills, vice president of the Charter School Institute, an advocacy group.