Illinois Governor Freezes UNO Charter School Construction Funding

CHICAGO — Illinois Governor Pat Quinn has vowed to withhold all further construction funding from the United Neighborhood Organization (UNO), after a second financial scandal has engulfed the charter school operator. The organization, which has constructed 16 charter schools across Chicago, is currently being investigated for securities fraud by the Federal Security Exchange Commission (SEC).
According to the SEC letter received by UNO on Sept. 20, the investigation will “determine if violations of the federal securities law have occurred.” In response, Quinn has frozen a remaining $15 million from a nearly $100 million grant approved by Illinois lawmakers in 2009. Citing UNO’s need to “straighten out their affairs,” the governor has declared that none of the remaining funds will be released for UNO school construction. Quinn’s spokeswoman Sandra M. Jones added, “As a result of our own internal review conducted earlier this year, we have not approved any new projects, and have suspended future capital projects.”
Since the 1990’s, UNO has received generous financial support through both state grants and state-supported bond sales. The group had intended to construct two new schools with the remaining funds, as well as an additional $35 million lawmakers earmarked in 2012, before it received the SEC notification. The SEC is also requesting records related to 2011’s state-backed bond sales.
UNO previously came under scrutiny when two relatives of an UNO executive were awarded $8.5 million, state-funded construction contracts. Following this first financial scandal, Juan Rangel, resigned as UNO’s chairman of the board, but remains CEO. Rangel also acted as campaign co-chair for Mayor Rahm Emanuel in 2011.
The governor’s previous suspension of UNO funding briefly froze construction on the UNO Soccer Academy High School, a $25 million venture on the city’s southwest side, believed to be the country’s largest charter school subsidy. The freeze was eventually lifted, and the facility opened to students in September 2013. In defense of the financial reinstatement, Jones responded, “The funding was released because the work had already been completed, children needed to go to school and the contractors needed to be paid.” Despite Quinn’s confidence that the organization had corrected any wrongdoing, the Illinois Department of Commerce and Economic Opportunity has also received a letter from the SEC requesting UNO-related documents.
UNO began as a Hispanic community group in the 1980, and began constructing charter schools in the 1990’s. UNO schools now serve roughly 7,600 students across Chicago.