Thursday, March 30, 2017

"Say Yes Guilford currently has $9.2 million on hand"

"The Say Yes Guilford Scholarship Board is meeting on Thursday, March 30 and, on Thursday afternoon, Say Yes is expected to answer some pressing questions regarding the program...

...Why was there such a rush to offer scholarships on a widespread basis before the money was there to fully fund it?  How could an estimate of needed funding be off by over 600 percent?  Why didn't Guilford County Say Yes officials look more closely at program costs before implementing scholarships whole cloth in the 2016-2017 school year?  What exactly are the "wrap around" services that Guilford County, the school system and others are expected to provide?

...Guilford County Commissioner Alan Branson said that, from the very beginning of the process, the county commissioners were ostracized for asking questions and so were others who went against the grain.  He said school and Say Yes Guilford officials simply have not communicated well with the county commissioners.

"That's the thing," Branson said.  "They have not been open with us from the beginning - we asked questions but didn't get answers.  Several gave me the evil eye when I was trying to figure it out in the very beginning."

...Say Yes national has committed to investing $15 million in the Guilford County Schools over the next five years to support the program and Say Yes is supposed to have a large presence in school system operations.

...One area of interest was that the last available IRS 990 form, filed in August 2015, showed that, of $50.5 million in assets held by the national Say Yes to Education, $32.2 million was in the Cayman Islands in the "Weiss Multi-strategy" fund, and just over $5 million in a Weiss reinsurance business in Bermuda.

Say Yes Guilford currently has $9.2 million on hand

When the Rhino Times asked Say Yes Guilford Communications Director Donnie Turlington why that was, he referred those questions to the national Say Yes.

Say Yes to Education spokesman Jack Steinberg wrote in an email, "Weiss Multi-national Strategy Advisers is a separate business entity from Say Yes to Education" and referred all questions regarding the fund to a public relations firm that did not offer any comment on the record.

...In 2014, Weiss' investment strategies - and similar strategies used by about a dozen other hedge funds - faced a good deal of scrutiny and negative publicity due to a US Senate subcommittee investigation over his investment funds' use of a complex financial instrument known as "basket options" that some said were used by Weiss' fund and other funds to dodge taxes.  The funds' moves were not alleged by the committee to have been illegal but there were allegations of questionable financial moves based on "a series of fictions" to exploit tax loopholes to an uncomfortable extent.  The investigation at that time looked into Weiss' fund and about a dozen other funds that used basket options.

In July 2014, USA Today ran a story, "Banks and hedge fund grilled on tax schemes" after a Senate subcommittee hearing, and a Washington Post story ran with the headline, "Senate report: Barclays and Deutsche Bank helped hedge funds skirt $6 billion in taxes."  The Post-Standard in Syracuse, where Say Yes has a program, ran an article, "U.S. Senate committee report slaps hedge fund run by Say Yes to Education founder."

The Washington Post story stated: "The findings of the investigation will be the subject of a Senate panel hearing Tuesday, where senior executives from Barclays and Deutsche Bank are scheduled to testify ... The subcommittee staff focused on options involving the largest users, Renaissance Technologies (RenTec) and George Weiss Associates.  Deutsche Bank and Barclays used the options structure to open accounts for their clients in their own names, creating the illusion that they owned the assets.  But in fact, the hedge funds exercised complete control over the assets, executed all the trades and raked in all of the trading profits, according to the report."

The method was allegedly used by the funds to turn short-term gains into long-term gains for a tax advantage and were used to increase investment leverage beyond limits that would otherwise be allowed.

A spokesperson for Weiss Associates said at that time in a statement, "Basket options are lawful financial instruments" that are often used to increase leverage, and the statement added that Weiss' hedge fund had terminated its involvement with the options transactions in 2010.

...In a November 2016 presentation at a Say Yes Guilford Operating Committee meeting, Skip Moore, the former director of the Weaver Foundation, one of the founders of the Guilford Education Alliance and a leader of the local Say Yes movement, voiced his gratitude during a presentation before a packed auditorium of Say Yes advocates at Guilford Technical Community College in Jamestown.

"Thank you, George Weiss, for your $15 million and thank you for all you've been giving over the years," Moore told the audience.  "I really don't care where it's invested - thank you for giving it away.  We appreciate it very much."

...While the national funds and the local funds are in different places - financially as well as geographically - the national Say Yes to Education organization did recently contribute money to make up a shortfall in scholarships for the 2015-2016 year according to one source familiar with the recent proceedings.

Say Yes Guilford had estimated the first year would cost about $900,000 but the bill came in at $6.1 million and Say Yes Guilford was about $1.5 million short.

Say Yes Guilford currently has $9.2 million on hand  

The source said that, though Say Yes money wasn't originally supposed to be used to fund scholarships, when Say Yes Guilford went into crisis mode over the giant shortfall, the national Say Yes branch kicked in money to make up the difference needed for first-year payments.

The source said there was an "Oh no, moment" when Guilford program administrators realized that Say Yes Guilford wouldn't have enough money on hand to pay to colleges for the students' first year and Say Yes national used some of its money to fund the first year scholarships.

...Branson also said he and other commissioners remain basically in the dark about what's going on with the program.  He said he's heard only "bits and pieces" of what's going on in regard to Say Yes.  ..."Everybody from the Education Alliance was selling it," he said.  "They were all pumped up and I thought: Maybe they know something I don't."

...Since the Scholarship Board meets on March 30, and Say Yes has said more details will be coming by "the end of the month," that strongly suggests an official Say Yes announcement will be made on Friday, March 31.

...the county was supposed to see some requests for wrap around services to support the program, but a meeting with school officials in August 2015 was the last time those two words have even come up in a county commissioners meeting in any meaningful way.  School board officials have also stated publically that they want more information as to what is expected in regard to  wrap around services the schools are expected to provide.

Chairman of the Board of Commissioners Jeff Phillips said he hadn't seen any request yet for the county to provide wrap around services or to make up the recently discovered financial shortfall.

"There's been no indication of any ask," Phillips said.  "There have been repeated references to wrap around services, but we still don't know what that means.  Nothing has been decided."

...In numbers provided by Say Yes last November, more than 2,000 students are getting Say Yes scholarships...

The program has more than $41 million in "pledges and commitments" from roughly 100 donors across the state.

The fundraising goal for the endowment was initially $70 million, but earlier this month Say Yes Guilford announced that the group would actually need about $550 million for a sustainable endowment.

Say Yes Guilford currently has $9.2 million on hand for that endowment."