Watchdogs: Quazzo’s companies got $1.3 million from CPS-funded charters

As a member of the Chicago Board of Education, Deborah Quazzo has voted to support charter school networks that have given more than $1 million in business to companies in which Quazzo has an ownership stake, according to records obtained by the Chicago Sun-Times.

Five companies in which Quazzo has an interest have gotten a total of more than $1.3 million from contracts with the privately operated schools, which are funded almost entirely with tax dollars through the Chicago Public Schools system the Chicago venture capitalist helps oversee.

The deals involved six charter operators and a company that manages some campuses for a seventh Chicago charter network, the records show.

The money coming to Quazzo’s businesses from the charter schools is in addition to more than $3.8 million the Sun-Times reported in December her companies have gotten directly from CPS. Since then, the district also has paid another $200,000 to two of them.

As a result of the December Sun-Times report, Quazzo came under fire from the Chicago Teachers Union and candidates challenging Mayor Rahm Emanuel, who appointed her to the Board of Ed, in the Feb. 24 mayoral election. Emanuel responded by voicing his support for Quazzo, saying the city is “lucky to have her.”

Quazzo wouldn’t answer questions about the financial ties the companies she has invested in have with the CPS-funded charter operators. She cited a pending review by the school system inspector general prompted by the news reports.

“Given the ongoing inspector general investigation, I am unable to comment,” Quazzo said.

Earlier, responding to the Sun-Times report in December, Quazzo disputed that her companies’ business from CPS has tripled since her appointment to the Board of Ed in June 2013.

She said it actually has declined since her appointment if you include a sixth company — Teachscape — that she says also should have been a part of that calculation.

Teachscape has had contracts with CPS since 2006 and has gotten a total of $5.6 million in business from the city schools system but only $832,000 of that since Quazzo’s appointment, records show.

Unlike her interest in the other companies, though, Quazzo said she hasn’t invested in Teachscape but, rather, has warrants allowing her to take a stake of up to a 0.71 percent in the company in the future.

A spokesman for Quazzo would not say how long she has had those warrants, when they expire or how much they cost.

She and a CPS spokesman earlier had argued it would be unfair to include Teachscape, saying she is not an owner of the company.

Quazzo — the founder and managing partner of GSV Advisors, a Chicago venture-capital fund — has made personal investments in a range of education-based technology companies, records and interviews show.

To alleviate any concern over her public and private interests coming into conflict, she has said she would donate any profits her companies make on their CPS deals to unspecified schools or education-related charities. So far, those profits have totaled only about $2,600, according to Quazzo, and were donated in January to Manierre Elementary School, a CPS school on the North Side.

Asked whether she also would forgo any profits from selling her ownership stakes at some point in the future, Quazzo has said she would do so only on a limited basis — until one year after she leaves the Board of Ed.

“To be clear: Ms. Quazzo stands to gain nothing if these companies make a profit or if they sell for millions of dollars,” a Quazzo representative said.

She has pointed out that she hasn’t violated any CPS policy and that she abstained from voting in one instance in which a deal involving her companies came before the board.

But school board records show Quazzo has voted for measures that benefited the charter school operators that do business with her companies.

In January 2014, Quazzo was part of a unanimous vote to allow charter operator Intrinsic Schools to open a second campus in Chicago funded largely by CPS. At capacity, that will nearly double the number of students Intrinsic has — and also its taxpayer funding, which comes primarily on a per-pupil basis.

At the time of the January 2014 Board of Ed vote, Intrinsic Schools was doing business with two Quazzo companies, and it has continued to do so since then, according to records obtained from the charter operator.

Intrinsic’s proposal to CPS even mentioned an online tool offered by one of Quazzo’s companies — ThinkCERCA — as something its new school planned to make extensive use of to help students with reading and writing.

Eileen Murphy, ThinkCERCA’s founder and CEO, advised Intrinsic, according to a ThinkCERCA representative.

Josh Tolman, a technology consultant who worked for Intrinsic, left the school in August and, according to his online LinkedIn profile, went to work for ThinkCERCA as chief technology officer. He also serves on Intrinsic’s board of directors.

Neither Murphy nor Tolman was paid by the charter operator, according to ThinkCERCA.

Intrinsic has paid ThinkCERCA more than $22,000 for work during the initial two years of operation of its first Chicago school. According to the charter operator’s records, it pays the Quazzo company a license fee for each student. So the expansion that Quazzo and the rest of the Board of Ed approved for Intrinsic could mean higher payments to ThinkCERCA, in which Quazzo invested $100,000 in 2013, according to city records.

Intrinsic representatives would not comment.

Asked whether Quazzo should have recused herself from the January 2014 vote allowing Intrinsic to expand, CPS spokesman Bill McCaffrey said: “She always recuses herself from votes related to matters in which she has a known conflict of interest.”

Five other charter operators in Chicago — Noble Network of Charter Schools, Urban Prep Academies, KIPP Chicago Public Charter Schools, LEARN Charter School Network and Perspectives Charter Schools — also have hired Quazzo’s companies, records show. So has a Florida company that operates campuses for Chicago International Charter Schools.

Of the companies Quazzo has invested in, Academic Approach has gotten the most business from Chicago charter operators, records show — more than $1.27 million since 2011. To help prepare high school students for the ACT, it provides one-on-one tutoring at its offices in Lincoln Park and also sends teachers to schools.

Urban Prep — which has paid Academic Approach a total of about $387,000 over the past four years — has “been pretty pleased with the service we’ve received,” said Evan Lewis, the charter operator’s chief operating officer.

Lewis said Urban Prep hired Academic Approach based on cost and the proximity of its offices and that the charter company’s operators previously were unaware of Quazzo’s interest.

Matthew Pietrafetta, Academic Approach’s founder and CEO, said Quazzo made a one-time capital investment in the company in 2008 after sending her three children to him for tutoring. He said her investment gave her a 0.5 percent ownership stake.

“Deborah Quazzo has given me zero introductions to schools,” Pietrafetta said. “The people who’ve introduced me to schools have been other school leaders. Any growth in either public schools or charter schools has been driven by performance. We are not always as successful as we want to be, but we work hard, and when we are successful, folks want to work with us.”

In February 2014, Quazzo was part of a 5-0 vote to allow Urban Prep to move one of its schools to a CPS-owned building.

Quazzo also voted the same day — also as part of a 5-0 vote — to grant a five-year charter-agreement renewal to the Noble Network, Chicago’s largest charter operator.

A month before that, she had voted to allow Noble to open two new schools in the fall of 2014 and to expand enrollment at its Gary Comer College Prep Campus on the South Side.

Like Urban Prep, Noble is a longtime customer of Academic Approach. Noble schools have paid Academic Approach more than $700,000 since 2012, according to records from the charter network.

Noble spokeswoman Angela Montagna said Academic Approach has done an excellent job. She said Noble officials had been unaware of Quazzo’s investment in the company.

“We have not had any discussions with Ms. Quazzo about Academic Approach,” she said.

Perspectives Charter Schools has paid $41,200 to Academic Approach since last June and $9,630 to ThinkCERCA since lat July.

The charter operator hired the companies after two staff members attended an educational technology conference in Arizona that Quazzo’s investment firm co-hosts every April.

The KIPP Chicago Public Charter Schools hired three companies Quazzo has invested in — Dreambox Learning, Think Through Math and ThinkCERCA.

The schools paid $7,150 to Dreambox Learning in 2010 and 2011 to provide online math help for students.

During that period, Quazzo served on the board of directors of a separate not-for-profit organization the KIPP schools hired to do fund-raising and budgeting.

Between September 2012 and May 2013, Quazzo also was a member of KIPP’s board.

The KIPP schools paid another $7,175 to Think Through Math and $2,550 to ThinkCERCA in 2013, records show.

Nicole Boardman, chief operating officer for KIPP Chicago Public Charter Schools, said its principals made the decisions to use the Quazzo companies and that board members didn’t vote on the deals.

She said KIPP staff knew of Quazzo’s investments in the companies.

“In light of her expertise in education technology, Ms. Quazzo and officials regularly discussed developments in the field of emerging education technology products and services,” including the educational software businesses she invested in, Boardman said.

Quazzo left KIPP’s board shortly before Emanuel tapped her to replace Penny Pritzker, who accepted an appointment to President Barack Obama’s cabinet as commerce secretary, on the Chicago Board of Education.

When the Board of Ed voted a year ago to extend KIPP Chicago’s charters, Quazzo abstained.

The companies that Quazzo has a stake in also have been hired by Charter Schools USA, a Fort Lauderdale, Florida, company that operates campuses for Chicago International Charter Schools.

A Charter Schools USA spokeswoman said the company has paid a total of nearly $150,000 since last fall to Academic Approach, ThinkCERCA and two other Quazzo companies.

She said Charter Schools USA is “very satisfied with the performance of these contractors.”

A representative of the LEARN charters said the company has paid more than $27,000 to Dreambox Learning in the past two years.

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