Celebrated all-boys charter school in Chicago cited by CPS for ‘dismal’ financial management

CPS says Urban Prep operated using cash advances and predatory loans. School leaders say its financial issues have been resolved.

Urban Prep Academies graduates gather at Daley Plaza for a college signing day ceremony. The school is known for getting 100% of its graduates admitted to college, despite its financial struggles. Pat Nabong / Chicago Sun-Times
Urban Prep Academies graduates gather at Daley Plaza for a college signing day ceremony. The school is known for getting 100% of its graduates admitted to college, despite its financial struggles. Pat Nabong / Chicago Sun-Times

Celebrated all-boys charter school in Chicago cited by CPS for ‘dismal’ financial management

CPS says Urban Prep operated using cash advances and predatory loans. School leaders say its financial issues have been resolved.

WBEZ brings you fact-based news and information. Sign up for our newsletters to stay up to date on the stories that matter.

For years, a charter school network in Chicago was celebrated nationally for getting 100% of its Black male graduates admitted to college. Its founder was once even named “hero of the year” by People Magazine.

But behind the scenes Urban Prep Charter Academies has been mired in such deep financial trouble that Chicago Public Schools officials say they have “grave concerns” about its sustainability, WBEZ has learned.

The school, which once looked at expanding across the country, has struggled to make payroll, operating on credit cards, “predatory loans” and cash advances from the school district, according to a CPS memo obtained by WBEZ.

Meanwhile, students who are legally mandated to receive special education services have suffered. School district officials say they have no evidence that required services were provided for months, even years at a time, according to a report obtained through a public records request.

Urban Prep also is the subject of an investigation by the Chicago Public Schools’ inspector general. The probe is focused on how Urban Prep’s financial problems, which date back to 2015, started and why they persisted for so long.

Urban Prep was also part of another investigation looking into concerns around charter schools receiving federal Paycheck Protection Program funds. Urban Prep received a $3.1 million loan, meant to help organizations avoid layoffs during the pandemic, according to the memo. CPS officials accuse Urban Prep of overstating the number of staff on payroll on its PPP loan application.

Tim King, Urban Prep’s leader, was not made available for an interview. But other Urban Prep officials strongly defended the open enrollment charter school, which has three campuses in Englewood, Bronzeville and downtown serving about 500 mostly low-income young men.

They argue the CPS memo from January details problems that are years old and say Urban Prep’s finances are now in order. Looking back, they say factors outside their control drained their budget — but they were unwilling to scale back on the education they say their students deserve.

A turning point came when the school district cut budgets starting in 2015.

“We were committed to making sure that our students and staff did not feel the budget cuts,” said Troy Boyd, the chief operating officer at Urban Prep.“We didn’t cut programs, we didn’t cut services, we gave salary increases to our staff because we felt like they deserved it. But, as you can imagine, there was a hole and it didn’t go away. It got deeper and deeper.”

Urban Prep staff also unionized in 2015, which meant the organization had to “expend a tremendous amount of resources on lawyers,” Boyd said.

Urban Prep officials say, from the beginning, that as the only charter school in Chicago run entirely by Black men, they have faced discrimination working with CPS and accessing the same resources as other charter schools.

Charter school experts add that historically school districts have not funded charter schools on par with traditional schools. They say it is especially difficult to work with hard-to-serve students, as Urban Prep does, without adequate funding.

“When you’re piling everything else up on top of that and trying to pay it all out of your general budget, you get behind very quickly and you’re treading water and starting to slip beneath the waves very easily,” said Michael Musante, senior vice president at the Center for Education Reform, an advocacy group that promotes school choice.

Boyd and Chief Academic Officer Dennis Lacewell say they will keep fighting to keep Urban Prep open. Lacewell said Black male students do better at Urban Prep than at other schools.

“Young Black men [are] at the bottom of the positive statistics and at the top of the negative,” he said. “So it is essential that Urban Prep exists for our community.”

Urban Prep’s leaders say young Black men succeed at their schools in ways they don’t at traditional Chicago public schools. Tyler McKenzie, 18, right, is going to the University of Illinois at Urbana-Champaign, and Harold Stuckey, 18, left, is going to the University of Illinois Springfield. Pat Nabong / Chicago Sun-Times

But Urban Prep is not just struggling financially. It is not attracting students. At its peak after opening in 2006, it served 1,500 students — three times what it does now.

Lacewell and Boyd say the network is losing enrollment because some Black families have fled the city to escape the same problems Urban Prep is attempting to solve. Top among them: the lack of opportunity for Black boys.

The charges against Urban Prep

Tim King not only graced the cover of People Magazine as Hero of the Year, but also was named Chicagoan of the Year in 2010.

But Chicago Public Schools officials are raising questions about King’s influence over the charter school and how accountable he is.

The scathing CPS memo highlights that King serves as both the executive director and chairman of the board. “It fosters conflicts of interest and is an inappropriate model for an organization that receives public funding,” according to the memo. Urban Prep officials say this is allowed under state law.

Tim King, left, is founder and CEO of Urban Prep Academies. Pat Nabong / Chicago Sun-Times

This arrangement was especially concerning to CPS given the organization’s “dismal” financial management, according to the memo.

As evidence, it says the charter network requested advance payments from CPS, which funds the charter school, in five of eight quarters between September 2017 and March 2020 “to remain solvent.” A final request at the start of the 2021 fiscal year was denied. “The district is unsure why Urban Prep is unable to utilize its funds efficiently enough to ensure that its staff is paid — no other operator has issues in doing so,” the memo reads.

The memo also cites $900,000 in loans the organization took out in 2019 by selling a portion of future revenue streams, agreeing to pay back $1.3 million — a 45% markup. And in 2020, a collection agency contacted the school district because Urban Prep owed them nearly $200,000, which CPS paid and then withheld a future payment.

The memo argues that taxpayer money meant for educating children covered the high interest rates. But Urban Prep said it raised $1.5 million from private sources during this time and that taxpayer money was not “wasted.”

Still, students were affected by the charter school network’s financial issues. In February 2020, Urban Prep did not pay two vendors and as a result the vendor stopped special education services, according to the memo. After two months, the school district stepped in and paid the bill.

This is not the only time the charter school has had problems providing legally required services to students in special education.

CPS says it received no documentation that any student saw a social worker or a psychologist during the 2020 or 2021 school year, according to a report by CPS officials. And in many months, nursing and speech language pathology services were greatly limited.

When pressed for more details, CPS officials said they had “no evidence” that services were provided.

This is unacceptable, said Chris Yun, with the disability rights group Access Living. “The lack of the service delivery records most likely means no service was even given to students, even though their [Individualized Education Program] requires such supporting services,” she said. “If that’s the case, these are massive violations.”

According to the law, students and their families must be notified if a required service is not provided and told they are entitled to make up services.

Yun said ultimately it is the school district’s responsibility to ensure this happens and it is not enough to simply say they don’t have documentation. “They have to ask what is going on here,” she said.

Urban Prep officials did not respond to questions about what is behind the lack of documentation.

But they did say the school district has never provided sufficient funding for special education and indicated that providing these services is a huge weight on their budget. More than a quarter of the students at the Englewood campus require special services. The citywide high school average is 15%.

Structural problems

Urban Prep’s financial difficulties came up at a Chicago Board of Education meeting this winter when members were considering renewing the contract that allows the school to run its Englewood campus.

It was not the first time the Board took issue with Urban Prep. In 2018, members revoked the charter of its campus in Garfield Park on the West Side. They said the campus was failing academically.

But Urban Prep officials appealed to the state, stressing that while they might not outperform CPS students in general, they outperform other schools with Black male students. The state took the campus over, allowing it to stay open and funding it.

This February, when board members approached the renewal of the flagship Englewood campus, they did so with consternation.

For months, parents and students had testified on Urban Prep’s behalf at board meetings. “I feel like they care about my son and not just his academics, but his social and emotional well being,” one mother told them. She said her son was not being noticed or nurtured at his previous school.

Urban Prep officials reminded the board that compared to the school district’s dismal record with Black male students, the charter did far better on many measures. When they founded the school in 2006, only 2.5% of Black male high school freshmen had a college degree a decade later.

They said the school’s emphasis on building confident, college-bound young men was of the utmost importance.

Urban Prep grad Terrell Morrison puts on his college cap at the school’s college signing ceremony. Pat Nabong / Chicago Sun-Times

Before voting on Urban Prep’s future last February, board member Elizabeth Todd-Breland called it a complex situation. She said the experiences of families cannot be ignored, nor can the need to hold the charter school accountable. “What we are hearing is a deep value for the school community, but we still have responsibility here,” she said.

Board members had the memo and report detailing Urban Prep’s difficulties at that meeting but did not talk about it publicly.

Other board members also pointed out that CPS officials visited Urban Prep and found some “structural improvements to its academic program.”

Ultimately, for the second year in a row, the board gave Englewood campus a one-year renewal, rebuking pleas by Urban Prep officials to give freshmen confidence they could graduate from the school. Charters usually get three- to seven-year renewals.

“We believe the Urban prep one-year renewal allows the District to continue to monitor the progress made in academics and operations while also setting a clear expectation for the school to improve its financial operations,” CPS officials said in a statement.

The board placed a long list of conditions on the renewal, including if there were any findings of wrongdoing against the school, Urban Prep must implement recommendations by that investigative body.

The memo obtained by WBEZ does not accuse anyone in the organization of maleficence or profiting individually.

Survival mode

Urban Prep’s leaders stress that the organization did what was necessary to survive, even as the landscape around them became increasingly challenging.

They say the organization’s finances started to deteriorate in 2015 during the budget stalemate under then-Gov. Bruce Rauner. Without state money coming in, the school district twice cut budgets for all schools midway through the school years. Lacewell said Urban Prep officials maintained programs at first, expecting a quick resolution. But that didn’t happen.

At the same time, other forces were shrinking the organization’s bank account. Their plummeting student population hurt because CPS funds its schools on a per pupil basis. The organization also once brought in more than $100,000 in student fees. That also dried up with fewer students.

On top of that, private fundraising the school had been counting on did not materialize as charter schools and Urban Prep lost some of their earlier shine.

In 2019, Urban Prep’s revenue from CPS funding, private fundraising and student fees, was $5 million less than it was just five years earlier, according to tax documents.

“We are not blind to the fact that we are the only charter school that is operated and managed entirely by African American men in the city or the state. There are no endowments or rich benefactors who can come in,” Lacewell said.

Andrew Broy, president of the Illinois Network of Charter Schools, argues that the Board of Education treats charter schools differently than traditional schools.

“Whenever the board seems to talk about underperforming district schools, the framing of the discussion is about how they can push in more support, provide more resources, and make sure those schools have what they need,” Broy said. “When they bring up an underperforming charter public school, their discussions are more about, ‘how do we hold those schools accountable?’ There’s no commensurate support, no idea of providing more support and service to help those schools get better.”

Broy said he doesn’t think the current board recognizes that charter schools have helped drive the overall improvement of the school district. Under Mayor Lori Lightfoot, no new charter schools have opened.

The students and the mission

Deontae Moore enrolled in Urban Prep looking for a good high school that would set him up for a successful future. He had been rejected by his first choice, a selective enrollment school, and his mother did want him to go to the neighborhood high school where less than half of the Black male students earned a diploma.

Deontae Moore was in the first class to graduate from Urban Prep.

As a 14-year-old freshman, Moore remembers how hard it was to adjust to the new rules and rituals at Urban Prep. The students wear blue blazers, red ties and khaki pants. They recite the Urban Prep creed every morning.

“We believe,” the students declare, followed by a series of chants: “We are college bound. We will never succumb to mediocrity, uncertainty or fear. We are our brother’s keeper.”

These messages set in over time, Moore said, countering all the negative messages that can come at young Black men.

“It allows you to really start to change your mindset and how you live your life,” Moore said. “There is a lot on the line for ourselves as Black men. We can go on the path of distraught — dead at 25 or have a hard time finding a job or don’t finish school at all. So they always enforced the creed because they didn’t want us to live by certain stereotypes of Black men.”

The public also took notice of Urban Prep students, these professionally dressed teenagers, riding trains and buses to school with their heads held high.

Moore’s class, the first class to graduate from Urban Prep, was the first with all seniors admitted to a four-year university. Moore went to Northwestern University.

“It was a really big deal because it was finally like validation that all my mom’s hard work and re-enforcement to have me stay in school and out of trouble paid off,” Moore said. “Urban Prep was a big part of not only how I got into Northwestern, but just my life in general. It really changed the scope of my life in a big way.”

Family members cheer on Urban Prep Academies graduates at the spring college signing ceremony. Pat Nabong / Chicago Sun-Times

For 13 years, Urban Prep says every graduate has been accepted to a college. But it has also been criticized for not discussing the students who transfer out, including some who say they are pushed out, and the fact that far fewer graduates actually enroll or complete college than are admitted.

Still, King stands behind his vision for creating a school that drills pride and confidence into its students. This spring, at the school’s annual college signing day ceremony, he told the students gathered at Daley Plaza how powerful it is to show the world a picture of young Black men who are college bound.

Just a few days earlier, a 16-year-old Black teen was fatally shot a few blocks away when scores of teenagers gathered in Millennium Park. TV news stations flashed images of the teens, with some standing atop cars and others twerking in the street, though many of the kids were there just to hang out.

King told the graduates that day they were replacing these negative images.

And then one-by-one, the young men came to the microphone to announce their college choice. Some shared their achievement quietly, while others shouted for all to hear.

Sarah Karp covers education for WBEZ. Follow her on Twitter @WBEZeducation and @sskedreporter.