Tag Archives: Merger

Into thin air: The Staggering Loss of Millions of Dollars by JSA’s Leadership and some equally frightening information about RAVSAK and PEJE.

12 Sunday Jun 2011

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Before I begin, I would like to call your attention to Rabbi Stephen Kahn’s Blog because I believe it represents what is best about any community: thoughtful discourse about sensitive events brought to the fore. Rabbi Kahn addresses the issue of forced Pluralism and his thoughts about the Pardes – JSA Merger.

I know that in almost all instances, I have pushed Pardes to open their books, file their IRS 990’s, and bring a healthy dose of sunlight on to their financial position so that we can step up and help. One board director told me that he thought that I was wrong to push for openness in the midst of merger plans and I told the board member that since the merger is not yet final, that their shareholders (which are the parents of the students) must be consulted, because a school without students is called Jess Schwartz Academy. When you read below about the staggering amounts of money that have been donated to JSA and to King David, you will see exactly why a top down decision, driven by wealthy donors is not a gurantee of success. Indeed, it seems to be a recipe for failure.

The William and Ina Levine Foundation and the Jess and Sheila Schwartz Foundations are required to make their tax returns available to the general public. These foundations comply with the law and their gifts to other philanthropies and non-profit organizations are well documented and they are to be commended for their philanthropic works. Both Guidestar and Charity Navigator provide access to their tax returns, and those links are located here for the Ina Levine Foundation and here for the Jess Schwartz Foundation.

In the Levine Foundation’s 990 for 2008, they made gifts totaling $970,586. Of these gifts, the Federation of Phoenix received $300,000, the JCC received $110,000. There were no donations made to Reform Jewish Charities or to Jewish Schools in the Valley. In their 2007 990 filing, the Levine Foundation generously supported the King David School with a gift of $325,000. They also gave $302,000 to the Jewish Federation of Greater Phoenix, and $72,947 to the JCC. They gave a total of $1,707,988 and Phoenix is very lucky to have such supportive donors in the Levine Foundation. There were many smaller donations to Orthodox and Conservative Schools, but nothing to any Reform Schools. This is not to be taken as anything bad, the Levine Foundation supports the giving vision of their Trustees and it is terrific that they give away such large sums of money. In 2006, the Levine Foundation gave $1,000 to the Jewish Federation, $84,840 to the JCC, and $250,000 to the King David School. That year, their charitable donations totaled $1,157,391.00

The Jess and Sheila Schwartz Family Foundation gave away a total of $1,780,695 in 2007, according to their 990’s. The Jess Schwartz Community High School received $1,001,356, and PEJE (Partners for Excellence in Jewish Education – this is the organization frequently cited by Jill Kessler) received $325,000. In 2008, the Jess and Sheila Schwartz Foundation gave away $1,688,550. The Jess Schwartz Community High School received $999,446, the Federation received $50,0000, and King David School received $205,000.00. Pardes received $4,600 (first Reform based Jewish gift I have seen from either foundation). The JCC received $22,500. In 2009, the last year I have access to records, the Jess and Sheila Schwartz Foundation donated $898,793, a drop in giving by the foundation of approximately 50%, but still incredibly generous, and the Jess Schwartz School received $198,798 (down from $1.2 million the year before), the Federation received $50,000, and PEJE received another $300,000.00 Interestingly, the Phoenix Hebrew Academy, which was founded by Jess Schwartz, received $100,000. There were no gifts made to Reform Jewish Schools.

It is very difficult to know what the financial wherewithal of these foundations are because the JS Foundation operates as a pass through, where the body of money is put into the trust every year and then spent. So if the people funding the Foundation have substantial assets, then the funding can go on for a very long time. The Levine Foundation has substantial holdings in equities, which is very detailed, but again, the last information I have available is from two years ago.

What is absolutely incredible, and not able to be disputed from the records that we do have, is that King David School and the Jess Schwartz Academy were the recipients of more than $2.8 million dollars from these two Foundations within the last four years and there is nothing to show of this incredibly generous support to the community other than an empty building and 40 students. I am guessing that my figures are actually just a small fraction of what these two foundations have donated (the law only requires three years of the most recent statements to be posted). I actually get a knot in my stomach when I think about how poorly their donations were stewarded by the leadership of JSA, and if anything, the leadership of JSA owes a very large apology for taking this money and setting it ablaze. They owe an apology to the Foundations first and foremost, and second, to the Jewish Community in whose interests they were supposed to act and protect. Unfortunately, sometimes “sorry” is just not enough.

This brings me half way around the circle to asking, why does Pardes want to embrace this? We know money is not the key to success, and we know relying on a concentration of small donors is not a key to success. It was mentioned at the Town Hall Censorship Festival when the merger was explained, sort of, that the merger would eliminate confusion among donors and would allow Pardes to get national grants from Ravsak and PEJE. According to Ravsak’s 2008 990 filing (Ravsak is technically known as the “Jewish Community Day School Network), also available on Guidestar, their largest inbound grant came from PEJE, and it was about $110,000. Ravsak’s 990 from 2008 boasts that they serve the leadership and management needs of 30,000 Jewish Day Students from 120 Jewish Day Schools in North America and they stand at the cutting edge of Jewish Day School Education and Leadership. In this year, they received $1,076,481 in donations and grants and their executive director earned $140,000.00, or 14% of all money given to Ravsak (that’s a disgraceful ratio by the way). Finally, I have found A Jewish organization that makes the Federation’s management look like Warren Buffet. So, basically, that leaves approximately $860,000 to deal with 30,000 students and 120 schools, or, $7,166 for each school, or $28.00 dollars per student. So it looks like merging the schools to please Ravsak might get Pardes $28.00 per student = $8,960.

We also need to look at PEJE, the Partnership for Jewish Education. Their 2009 990 shows that they took in $2,290,700 and spent $442,000 compensating their Rabbi – leader, Joshua Elkin (who will be stepping down to do something else as of May 11, 2011. Just to keep this in perspective, Warren Buffet’s salary is $100,000), and $191,146 Compensating Amy Katz and $191,146 compensating Cheryl Finkel. That is $824,000 paid to three people of a tax exempt organization that collects 2.29 million dollars. So they are spending 35% of the money they collected on themselves. A new low, even worse than Ravsak. Maybe we should be happy with the devils we know. I don’t even think Bernard Madoff stole that high of a percentage of the money he collected. PEJE also gave out 11 grants, the largest was $150,000 to Ravsak, and then 10 other schools received $236,000, but the New Orleans School received $66,000 so the 9 other Jewish Day Schools received on average $18,888.

Clearly, the idea of merging the schools to get PEJE and Ravsak funds has either not been researched enough, since it will yield very little in the way of funding, or the Board of Pardes has been deceived. I actually do not know what is more troubling, merging with JSA or being affiliated with PEJE or Ravsak. If I was affiliated with PEJE or RAVSAK, I certainly would not tell anyone. So this argument about access to grant money goes into the intellectual dishonesty bin with, ‘they were going to start their Hebrew Language Charter School.”

Now, what remains? In my mind, the only possibility is that these two foundations, the William and Ina S. Levine Foundation and the Jess and Sheila Schwartz Foundation have promised Pardes something monetarily to become a Forced Pluralistic School and move to the Jess Schwartz campus. However, I actually think this is really unlikely because it would be beyond my ability to comprehend how such successful business people like the Levine’s and the Schwartz’s could be duped again by the management of JSA. Donors want to see results, and even the most passionate donors eventually realize they have been lead astray and that the assets that they worked so hard to accumulate, were just set ablaze, under the justification that this was somehow “good for the community.”

I think now that the matter of the campus is settled and everything is not rushed, it would be prudent to call off the merger, focus on building Pardes, being open with Pardes’ financials so we know what we are all facing, and not doing things in haste. Really, if we need to be deciding what is best for Pardes from the likes of the management of Ravsak, PEJE, JSA and the Federation, G-d help us all.

Fooled by Randomness: The Magic Kingdom

28 Saturday May 2011

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One of the continual themes that I have heard from select board members of both Pardes and JSA, and from what was attributed to past Phoenix Federation Chairs in the Jewish News is that this proposed merger is good for the community. I believe this is a very slippery slope because it assumes that the leadership of Pardes is now focused not only on the success of Pardes, but on making decisions about Pardes based upon their ability to divine what is good for the community.

When looking at the failure that is the Jewish Federation here in Phoenix, I have been told by several of their board members that the reason that the Federation failed was because they continually bailed out the JCC, donors backed out of commitments, key donors got indicted, and some passed away in tragic and unexpected circumstances, etc. Of course there are unexpected occurrences in every business, but planning for such events, not relying on a select group of donors to whom one becomes beholden, are the hallmarks of good stewardship in running any non-profit charitable organization. The collapse of the Federation is due to many factors, but bad management is at the top of the list.

When did running a health and social club, which is essentially what the JCC is, become part of the Federation’s mission? When did devoting the resources needed to fund the agencies that are dependent on the Federation, and fulfilling the Federation’s commitment to Israel take a second position to funding the JCC. While these decisions might be what is good for the community, I doubt it. I wonder if anyone who is in a self-appointed position to determine what is in the best interests of the community thought about selling the JCC campus to a health club company, which would allow the Federation to concentrate on their core mission of fundraising and delivering those funds to those organizations who need them the most? I suppose that the same people who built the JCC were also major Federation donors, so rather than making a determination that the community could not sustain a facility like that, they influenced the Federation to take on the JCC as part of their mission and reneged on promises made to the needy. Rather than admitting a mistake, they compounded it. I am not sure this is leadership that knows what is good for the community, nor am I certain that their input in affecting a merger between Pardes and JSA is wise.

It seems that our self-appointed community leadership has determined that the success of the JCC/JSA Campus is a Magic Kingdom, Phoenix’s Jewish Disneyland, and a priority above all else. For these leaders, it appears that there is some type of health club shortage and that the Jews will not be able to work out anywhere else, or that there is not another venue for the events that the Federation hosts. I guess that because all of the large synagogues have space that is vastly under utilized and could be used to host social events, and because there seems to be an abundance of health clubs, I am just unable to see the logic behind this so called “good”. Of this I am certain: When decisions are made for our community, cloaked in secrecy, and without input from our community, then there is no better excuse to fall back on in the event of failure than, “we did it for the community.”

A prelude to a nightmare: The Merger of Jess Schwartz and Pardes School in Phoenix

26 Thursday May 2011

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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