On May 24th, at Jess Schwartz Academy (“JSA”), at 7:00 PM, Mr. Mitchell Ginsberg, the Chairman of JSA’s Board of Trustees, addressed a crowd of Pardes and JSA parents, educators, and interested parties. Mr. Ginsberg began his address by admonishing the crowd that he was aware that there were dissenting voices about the wisdom of the merger and that dissenting opinions were not to be expressed, but kept to oneself. Thus began my introduction into the Pardes JSA Community Day School.
I am a parent of a seventh grade student at Pardes, and I have decided to withdraw him from Pardes and send him to school at Ingleside. That decision was made long before I learned of this merger. It is my good fortune that I did not re-enroll my son and I am not held to a re-enrollment contract before knowing of the merger. I can not comment intelligently about Pardes’ viability as a stand-alone school because there is a complete and comprehensive lack of transparency about the financial condition of Pardes. I have asked for many years for Pardes to publish their financial statements as is required by most 501c3 organizations, but Pardes is operating with an exemption to this requirement because they were originally part of a Temple, but it is also possible also that Pardes has just decided to wait until they are forced to comply.
I do not know of Mr. Ginsberg’s background. I do know that he has presided as trustee over two failed private schools, the last being the failure that is embodied by JSA (42 students and cessation of operations is my definition of failure). As critical as I have been about the Pardes’ board for their involvement in the JTO, I have never felt that the Pardes Board has ever knowingly done something that would be harmful to the well being of Pardes. Now, for the first time, I believe they are not putting the interests of the students first. Instead, I believe the board has been influenced, according to the Jewish News, by community leaders who, after failing the Federation, have decided to spread their mismanagement melanoma to Pardes, the only viable Jewish Day School in Phoenix. The board appears to be searching for a mythical community unity, a utopia where dissent is not tolerated, a utopia not unlike Iran, and what was Pardes will be destroyed.
Mr. Ginsberg waxed on eloquently about the virtues of JSA. The physical facility at JSA looks very nice, the campus has room for expansion, and apparently JSA will have access to the facilities of the JCC. However, JSA has no students, they shuttered their high school, stranding students, and their only prospect for survival was to become a Non-Religious Hebrew Language Charter School. So, in the world of reality, the management of JSA earns an “F” and if they were your employees, running your business, you would terminate their employement. I sincerely doubt the viability of a Hebrew Language School in Phoenix, yet I was left with the spin that Jess Schwartz agreed to abandon this über-successful plan as a concession to the merger (i.e. that is what JSA was giving up to agree to merge with Pardes). Jill Kessler’s selling points about the wonderful facilities of the JCC seem to ignore the point that the JCC is virtually insolvent, if not insolvent, and no one knows if that facility will even be there in the coming year(s). At the end of the meeting, there were only two facts that were communicated about JSA: 1) Jess Schwartz Academy has a building with a 1.7 million dollar mortgage and their CFO seems to think the campus is worth many many multiples of 1.7 million dollars (but by his own admission in the meeting, he does not really know), and 2) what is left of JSA is 42 students.
Pardes has somewhere in the neighborhood of 300 students. The school is apparently viable, the educational product is excellent, and the campus is very nice, but probably not as nice as the physical plant of JSA. Pardes has a mortgage on the property and owes somewhere north of $5,000,000 dollars. This means that if all 42 Jess Schwartz students enroll at Pardes, Pardes will be acquiring those students for the assumption of 1.7 million dollars in debt and another campus of unknown value. This equates to more than $175,000 worth of long term debt per student (Pardes Long Term Debt Per Student is about $16,000). Since the per capita income in Phoenix has steadily declined without retreat over the last decade, the concept of appreciating real estate values is a bit murky, at best. Even though we were repetetively told, as answers to all but the most simple questions, that the merger was put together so quickly that they are still doing due diligence, Pardes’ board indicated they are in discussions about how to handle this debt load. I do think it is common for due diligence to be done before a merger.
It is interesting to note that Scott Wallace, the Treasurer of Pardes, pointed out that Pardes is designed to run without financial assistance and that the tuition is set at the cost of what it costs to actually educate the kids and run the school, so for the sake of argument, this equates to about $15,000 per student. According to the 990 tax return filed by JSA, JSA spent over $27,000 educating each student in 2008, and $31,000 in $2007. I believe that the gross differential in expense load per student is a very serious obstacle to overcome, and without a note holder being willing to write-off a very large portion of Pardes’ debt, there is very little possibility the combined school will be able to survive, especially in a geographic area with declining per-capita income. Money that is spent on the unrelenting payment of debt is money that cannot be used to develop the school financially. As noted above, Pardes does not publish their financial information, but Jess Schwartz does, and JSA is to be commended for their financial transparency, especially in view of how poorly they have performed as stewards of their own school. I have stopped giving money to Pardes, because I have no idea what their financial condition is. However, the interest payment alone on seven million dollars worth of mortgage debt for the first several years of a 30 year note at 5% is going to be somewhere close to $35,000 per month. The added cost of the JSA Mortgage makes up about $10,000 of that figure.
I suspect that the Kumbaya Gestalt hoped for by both board treasurers (i.e. no more fighting for JTO dollars, no more confusion for donors about to whom they should donate) will be hindered by the high handed way Mr. Ginsberg addressed my request for an open forum to discuss our concerns. An open forum would be very painful because it would shine light on both the perrennially terrible management that Jess Schwartz parents have endured and his tenure over that failed school.
It is a fact in philanthropy that donors don’t like smoke and mirrors, they like a clear view of what they are donating to. This is why the Phoenix Federation has been given Guidestar’s worst rating as a charity for the last five years: a lack of transparency, poor management, and an unmanagable debt load. I feel very bad that Ms. Schwartz has seen the money she donated to help the community squandered because it could have been used in a very constructive way.
I have lived in communist countries where no dissent was tolerated. It was not a very comfortable environment, and ultimately, the political and economic repression gave way to more freedoms, and the institutions designed to impose order were more or less, swept into the dustbin. If I were faced with enrolling a student at Pardes Jess Schwartz Academy Community Day School, I would withdraw my committment until such time as I was certain that my child would be attending a school that would embody the values that I wanted him to be taught and to make sure the education would remain the first priority. Being told to shut my mouth and that the merger plan has not undergone due diligence is far afield from my comfort zone.
Mark Greenburg, Current Pardes Parent 5/25/11