Wednesday, August 10, 2016

BASIS Schools: On Beyond Charters

Posted By on Wed, Aug 10, 2016 at 4:15 PM

If you haven't been paying attention lately, you may not know that BASIS, which began with a single charter school in Tucson, now has charter schools in three states as well as two U.S. private schools—three more are scheduled to open—and a private school in Shenzhen, China. My, how BASIS has grown.

This post is more a BASIS update than an analysis. A lot of this information was new to me when I started looking into BASIS's current status, so I'm guessing it's new to many readers as well.

According to the BASIS.ed website, "We Manage 21 Public Charter Schools, 5 Domestic Private Schools, and 1 International School." Looking through the schools listed on the website, I count sixteen charter schools in Arizona, two in Texas and one in Washington, D.C., which only comes to nineteen, but either way, that's a lot of charters. Of the five private schools, two are open and running—in Brooklyn, NY, and Silicon Valley, CA—two are scheduled to open this fall—in Fremont, CA, and McLean, VA—and one in Manhattan is scheduled to open in 2017. The Shenzhen, China, school has been open, I believe, for two years.

From the look of things, BASIS has been more active lately opening new private schools than new charters. The tuition for the U.S. private schools is around $25,000, and in China it ranges from $21,000 to $30,000, depending on grade level. Comparing that to the $7,000, more-or-less, Arizona charters receive per student may explain why BASIS is moving aggressively into the private school sector.

At this point, I admit, I'm entering territory where I'm completely out of my depth: the various incorporations in various places which are part of the BASIS family. So here are the facts I know with a few questions and concerns thrown in.

The three main BASIS entities are BASIS.ed, BASIS Global and BASIS Independent Schools. Riding on top of the three is BASIS Educational Ventures. According to its website,
BASIS Educational Ventures is a holding company for three subsidiaries: BASIS.ed, BASIS Independent Schools, and BASIS Global. It supports growth, facilitates efficient management and manages the BASIS brand.

In the past I've expressed my concern that, while the Arizona BASIS charters are nonprofits, they're run by the for-profit BASIS.ed. Because of their nonprofit status, the schools themselves are somewhat transparent, though like all Arizona charters they should be more so, but as soon as the money flows uphill to BASIS.ed—and most of the state funding for the schools ends up at BASIS.ed—it disappears behind a for-profit wall. What happens up there with the taxpayers' money is none of the taxpayers' business. Now, as of December 22, 2015, we have BASIS Educational Ventures, another for-profit entity sitting on top of BASIS.ed, which may create yet another barrier to transparency.

BASIS Educational Ventures, LLC and BASIS Educational Ventures Services Corp. are both incorporated in Delaware, not in Arizona. The same is true of BASIS Educational Group, Inc., even though BASIS Educational Group, LLC is incorporated in Arizona.

Why not keep all the incorporation in Arizona, which is where BASIS has its headquarters? Let me repeat once again, I'm out of my depth here. This may just be the way business is done. But it's worth noting that Delaware is Incorporation Central in the U.S. The state has more corporate entities than it has people. Remember the Panama papers story about 11 million leaked documents pointing to tax havens which can allow folks to hide their identities, launder money and evade taxes? Delaware is in a similar league, which, some people conjecture, is why so few U.S. entities showed up in the exposed Panama papers.

In no way am I suggesting that BASIS Educational Ventures is in the money laundering or tax evasion business. What's troubling to me are the extra layers of privacy Delaware affords its corporations. According to a recent article on the Bloomberg website:
Delaware still stands out for its emphasis on privacy, which garnered for it the label of world’s most secretive jurisdiction twice over the past decade — once by the Tax Justice Network and another by National Geographic magazine.
As an example of the extra privacy, the BASIS Educational Ventures incorporation papers from Delaware don't mention the names of any people or corporations connected with it. By contrast, the BASIS Educational Group incorporation information in Arizona provides public manager and member information: Michael K. Block, Olga V. Block and BASIS Educational Ventures, LLC.

Is any of this BASIS incorporation information significant? I don't know. But I haven't seen it written elsewhere, so I think it's worth putting out there.

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