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. The most important of those is which students will be eligible for Say Yes scholarships going forward.
However, even after that much anticipated official announcement, many elected officials and community leaders – from members of the Guilford County Board of Education to Guilford County commissioners and donors to the effort – will still have a number of questions about the program that was started by billionaire George Weiss three decades ago in Philadelphia to help provide inner-city high school graduates with a college education.
Some of those questions are: 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?
Over the last two years, there’s been so much community excitement and sheer joy over the local implementation of the Say Yes to Education program that many area leaders never really looked in any depth into potential problems or at issues that Say Yes faced in other communities. Now, nearly two years into the initiative, they’re starting to do that.
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.”
Branson said the common wisdom among school officials and community advocates was to not ask questions about Say Yes because that might disturb Guilford County’s opportunity to land the program, which was billed to do everything from improve graduation rates to promote economic development.
“I had strong reservations from the very beginning, and I was hooked and twisted to go along,” Branson said. “But I knew if you are told you are going to get something for nothing, there’s always something that comes back to bite you.”
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.
Now that the honeymoon period is over, and over in a big dramatic way, things that were once obscure facts floating around quietly are now the object of greater curiosity among some local leaders.
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.
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.
Weiss is a philanthropist who has received civic recognition countless times for helping children afford college as well as for other charitable acts. His Say Yes program, which helped inner-city school kids in Philadelphia afford college – as well as many students in Hartford, Connecticut, and Buffalo and Syracuse, New York – was featured in a highly positive piece on 60 Minutes years ago.
However, one local elected official said that, back in 2014, when Guilford County was discussing bringing the Say Yes program here, there was a chink in Weiss’ armor. The source said that some area officials quietly took note of Senate hearings at that time that garnered Weiss and his investment fund less than favorable attention.
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 Guilford County, local officials have said for some time that they are just happy Say Yes chose Guilford County and they have pointed out that Weiss has given generously to many communities, including this one, and his program has had a very positive influence on communities where Say Yes is active.
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.”
Local leaders also point out that Say Yes Guilford’s funds are not comingled with those of the national Say Yes to Education. Guilford County’s funds are held in a separate account.
Moore said at that Jamestown Operating Committee meeting, “Funds to support this program are essentially locally raised and locally managed and invested by our two community foundations.”
He also said: “I’ve come to understand the importance to the community of raising the funds and having our endowment housed locally. This is the money that we ourselves together are raising and dedicating to this effort.”
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.
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 has a daughter at UNC-Wilmington and he said that his daughter’s tuition help from Say Yes had not arrived the last time he checked, but he said that may be due to a technical glitch he’s aware of with his daughter having the wrong Social Security number on file, rather than to the shortfall.
Branson said he’d spoken with another Guilford County commissioner whose child’s Say Yes college money for the 2017 spring semester has been paid.
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. He added that, if the program does use means testing to limit benefits, that makes it significantly less attractive to him, for one, because, Branson said, the middle-class families struggling to make it don’t have access to the same vast base of aid programs for college tuition and many other things that low-income families do. He said middle-class families in the county and the country are fighting mightily to make it.
“In my opinion, those are the ones who need to be helped,” Branson said. “Those people are struggling. If they’re going to cater to the low-income bracket – which already gets a great deal of federal and state aid – then the middle class won’t get help.”
He said it was that aspect that made the program attractive to many in the beginning, even though others like himself had reservations.
“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.”
This week, Turlington told the High Point Enterprise that Say Yes officials had wanted to correct the issues and make adjustments to the program before making the information public but that, after the publication of a Rhino Times article noting the shortfall, Say Yes Guilford spoke publically about the issue. 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.
Guilford County Schools Chief of Staff Nora Carr said that school officials are generally optimistic that a suitable and sustainable program can be worked out. She said the school system is already reaping benefits from Say Yes to Education’s involvement and expertise. The national group has funded studies and research meant to help the county’s school system function more efficiently.
Say Yes, for instance, gave a $590,000 grant to the Guilford County Education Alliance and $6,375 to “system support.” Say Yes has hired Schoolhouse Partners, a Virginia-based consulting firm, to look into Guilford County Schools’ procedures.
“We certainly benefited from that analysis,” Carr said.
She said it allowed local school officials to look at things through “a different lens,” and she added that it was beneficial to have “somebody from the outside” looking into the schools.
“They have been funding a Data Fellow from Harvard University in our accountability and research office,” Carr added in an email, “and they have underwritten the district’s cost for joining the National Clearinghouse, which tracks where our students enroll after high school.”
As for support from the Guilford County Board of Commissioners, 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.”
One of the things many commissioners were focused on was whether the program would help charter school graduates in Guilford County. Phillips said that officially there’s now “a pathway to charter school funding,” but he added that that’s another nebulous term that still leaves a whole lot of questions unanswered.
“The silver lining is that that we didn’t go too far down that path,” Phillips said, adding that there hasn’t been a lot of hoopla and fundraising efforts in the charter school community and hopes weren’t raised dramatically before the news of the giant shortfall.
In numbers provided by Say Yes last November, more than 2,000 students are getting Say Yes scholarships at all 16 University of North Carolina colleges, at five community colleges and at least 11 of private schools across the nation.
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.