Non-profit

Southwest Key Programs

Location:

AUSTIN, TX

Tax ID:

74-2481167

Tax-Exempt Status:

501(c)(3)

Budget (2016):

Revenue: $242,595,551
Expenses: $226,057,739
Assets: $101,686,304

Formation:

1987

Type:

Immigration Advocacy Group

Founder:

Dr. Juan Sanchez

Southwest Key Programs is an Austin, Texas-based grantee of the U.S. Department of Health and Human Services Unaccompanied Alien Children program. The organization also operates a network of charter schools in Texas called Promesa Public Schools.

The organization was founded in 1987 by Dr. Juan Sanchez. In more recent years, it has taken in annual revenue in excess of $300 million as the number of unaccompanied minors crossing the U.S.-Mexico border has increased. [1] Recently, the organization has come under fire for alleged mistreatment of illegal immigrant children in its custody,[2] allegedly poor conditions of the charter school it runs,[3] and alleged financial mismanagement by Sanchez and others. [4] Sanchez resigned in 2019 amid an investigation into the organization’s finances. [5]

The extraordinarily high salaries of Sanchez and other top executives at Southwest Key have also come under criticism. [6] The organization was under federal investigation as of March 2019. [7]

Housing Child Migrants

Southwest Key Systems works on housing of unaccompanied illegal immigrant children who enter the U.S. through the southern border. The bulk of the money allocated through the U.S. Department of Health and Human Services Unaccompanied Alien Children program goes to only two nonprofits, one of which is Southwest Key Programs. [8]

In 2017, the cost of housing an unaccompanied minor under the UAC program is $700 a day per child. According to HHS, 80 percent of the total program costs is the result of “bed capacity care.” Although custodial responsibility for the unaccompanied minor aliens lies with HHS, the actual care and day to day shelter is the responsibility of contracted nonprofits. [9]

In 2017, the UAC program accounted for 99% of Southwest Key’s $300 million budget. The organization also lobbies in support of continued funding on the issue. [10]

In the past, Southwest Key founder, president, and CEO Juan Sanchez has served on the board of the National Council of La Raza, now UnidosUS. [11] Southwest Key and UnidosUS broke ties in 2018 after UnidosUS criticized Southwest Key’s practices. [12]

Controversies

Substandard Charter Schools

In addition to running shelters for unaccompanied alien children, the organization runs a network of charter schools in Texas called the Promesa Public Schools. The flagship school is East Austin College Prep in Austin, Texas. Southwest Key Programs says that it started the schools in order to give disadvantaged children a chance to go to college. [13]

The New York Times alleged that the school experienced substandard conditions, including an infestation of raccoons and rats, leaks in the roof of the main building, and a chair leg falling through a classroom floor. There is no cafeteria, so students eat lunch in the gym. [14]

The schools contract with for-profit companies associated with Southwest Key Programs. For example, Southwest Key Maintenance charged the school $192,000 for janitorial work at the school; an independent janitorial contractor allegedly would have charged only$93,000. [15]

Another in house for-profit company that provided services to the school was Cafe del Sol, which the schools paid $3 million for meals. Students complained about the poor quality, limited offerings, and high prices charged by the company. After a student demonstration and complaints from parents and teachers, the school switched to a cheaper outside vendor. [16]

Southwest Key Programs also charges rent and other fees to the schools it controls. East Austin College Prep pays Southwest Key Programs $900,000 in annual rent. The entire charter network pays $1.4 million in rent annually to Southwest Key. Southwest Key also charges a $334,000 management fee and $103,000 accounting fee. [17]

Promesa Public Schools were $3 million in debt as of the March 2019 Times report, largely the result of plans to expand into Brownsville and Corpus Christi. As a result of the debt, the school has not replaced teachers who left teachers are reportedly teaching subjects they are not qualified to teach, and sports teams do not have equipment or any practice fields. [18]

So far, Promesa Public Schools have $65 million in government money to operate its schools. The Texas Education Agency is now reviewing the money and Promesa Public Schools. [19]

Alleged Misuse of Federal Dollars

In December 2018, the New York Times published an article alleging that Southwest Key was misusing federal funds and its executives were engaging in profiteering. Among the allegations was that Dr. Juan Sanchez was personally profiting from federal tax dollars. [20]

Southwest Key rented the shelters in which it was housing unaccompanied alien children. Allegedly, Sanchez was one of the landlords. Southwest Key also loaned its cash on hand to private real estate developers. [21]

Alleged Mistreatment of Immigrants

Southwest Key has been accused of mistreating some of the immigrants under its care. An employee was accused of sexually assaulting eight unaccompanied minor boys between August 2016 and July 2017. In addition, the facility, Casa Kokopelli in Arizona, where the alleged sexual assaults happened was cited in 2017 for failing to perform background checks on employees. As a result of the arrest, the federal government temporarily stopped sending children to that facility and removed all children from that facility. [22]

In July 2018, another employee at another shelter in Phoenix was accused of molesting a teenage girl. [23]

Meanwhile later in 2018, the Hacienda del Sol shelter in Youngstown, Arizona was closed after multiple staff members were accused of physically abusing three children. [24] In March 2019, Arizona prosecutors declined to press charges in the case. [25] The shelter had allegations of abuse dating as far back as 2015. [26]

Financials

In 2017, Southwest Key received $626 million in federal grants. [27]

According to federal law, executives of nonprofits that receive federal grants for migrant sheltering have their pay capped at $187,000. Juan Sanchez, then-Southwest Key president and CEO, made $1.5 million in 2017. His wife, Jennifer Sanchez, serves as vice president and made $500,000. His chief financial officer, Melody Chung, was paid $1 million. In total, eight employees made more than the $187,000 cap. [28]

Southwest Key allegedly circumvented the pay cap through its for-profit services and the charter school network. Since those did not rely on federal funding, they could pay their salaries through those funds. [29]

Sanchez and Chung have since resigned once their salaries and other financial mismanagement has come to light. Southwest Key has since come under federal investigation. [30]

References

  1. Stilson, Robert. 2019. “Government-Funded Nonprofits Being Paid Millions To House Unaccompanied Minors”. Capital Research Center. https://capitalresearch.org/article/government-funded-nonprofits-being-paid-millions-to-house-unaccompanied-minors/. ^
  2. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’S Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  3. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  4. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’S Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  5. Kulish, Nicholas, Kim Barker, and Rebecca R. Ruiz. “Top Officials Resign From Southwest Key, Shelter Provider for Migrant Children.” The New York Times. March 11, 2019. Accessed April 01, 2019. https://www.nytimes.com/2019/03/11/us/southwest-key-migrant-shelters-resignations.html?module=inline. ^
  6. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’S Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  7. Kulish, Nicholas, Kim Barker, and Rebecca Ruiz. 2019. “Top Officials Resign From Southwest Key, Shelter Provider For Migrant Children”. New York Times. https://www.nytimes.com/2019/03/11/us/southwest-key-migrant-shelters-resignations.html. ^
  8. Stilson, Robert. 2019. “Government-Funded Nonprofits Being Paid Millions To House Unaccompanied Minors”. Capital Research Center. https://capitalresearch.org/article/government-funded-nonprofits-being-paid-millions-to-house-unaccompanied-minors/. ^
  9. Stilson, Robert. 2019. “Government-Funded Nonprofits Being Paid Millions To House Unaccompanied Minors”. Capital Research Center. https://capitalresearch.org/article/government-funded-nonprofits-being-paid-millions-to-house-unaccompanied-minors/. ^
  10. Stilson, Robert. 2019. “Government-Funded Nonprofits Being Paid Millions To House Unaccompanied Minors”. Capital Research Center. https://capitalresearch.org/article/government-funded-nonprofits-being-paid-millions-to-house-unaccompanied-minors/. ^
  11. “Dr. Juan Sanchez.” Southwest Key Programs. Accessed April 01, 2019. https://www.swkey.org/about/leadership/dr_juan_sanchez/. ^
  12. “UnidosUS Statement.” Southwest Key Programs. October 25, 2018. Accessed April 01, 2019. https://www.swkey.org/news/Unidos_letter/. ^
  13. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  14. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  15. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  16. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  17. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  18. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  19. Barker, Kim. 2019. “Southwest Key, Known For Migrant Shelters, Cashes In On Charter Schools”. New York Times. https://www.nytimes.com/2019/03/15/us/southwest-key-schools.html. ^
  20. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  21. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  22. Edwards, Breanna. 2018. “Youth Care Worker Accused Of Sexually Molesting 8 Children At Government Immigrant Shelter In Mesa, Ariz.”. The Root. https://www.theroot.com/youth-care-worker-accused-of-sexually-molesting-8-child-1828092652. ^
  23. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  24. Philip, Agnel. 2018. “Arizona Southwest Key Migrant Child Shelter Suspends Operations After Incident”. Arizona Republic. https://www.azcentral.com/story/news/politics/immigration/2018/10/05/feds-close-phoenix-area-southwest-key-hacienda-del-sol-migrant-child-shelter-youngtown/1534293002/. ^
  25. Gstalter, Morgan. 2019. “Prosecutors Decline To Press Charges After Migrant Children Seen Pushed, Dragged At Shelter”. The Hill. https://thehill.com/homenews/state-watch/436575-arizona-prosecutors-decline-to-press-criminal-charges-after-migrant. ^
  26. Philip, Agnel. 2018. “Arizona Southwest Key Migrant Child Shelter Suspends Operations After Incident”. Arizona Republic. https://www.azcentral.com/story/news/politics/immigration/2018/10/05/feds-close-phoenix-area-southwest-key-hacienda-del-sol-migrant-child-shelter-youngtown/1534293002/. ^
  27. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  28. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  29. Barker, Kim, Nicholas Kulish, and Rebecca Ruiz. 2018. “He’s Built An Empire, With Detained Migrant Children As The Bricks”. New York Times. https://www.nytimes.com/2018/12/02/us/southwest-key-migrant-children.html. ^
  30. Kulish, Nicholas, Kim Barker, and Rebecca Ruiz. 2019. “Top Officials Resign From Southwest Key, Shelter Provider For Migrant Children”. New York Times. https://www.nytimes.com/2019/03/11/us/southwest-key-migrant-shelters-resignations.html. ^

Directors, Employees & Supporters

  1. Juan Sanchez
    Founder and Former CEO
  See an error? Let us know!

Nonprofit Information

  • Accounting Period: August - July
  • Tax Exemption Received: June 1, 1988

  • Available Filings

    Period Form Type Total revenue Total functional expenses Total assets (EOY) Total liabilities (EOY) Unrelated business income? Total contributions Program service revenue Investment income Comp. of current officers, directors, etc. Form 990
    2016 Aug Form 990 $242,595,551 $226,057,739 $101,686,304 $41,279,426 N $240,900,527 $0 $102,012 $2,887,711
    2015 Aug Form 990 $158,942,833 $150,401,785 $67,581,150 $23,712,084 Y $156,434,153 $0 $36,499 $2,083,214 PDF
    2014 Aug Form 990 $168,051,119 $154,750,216 $65,770,910 $30,442,892 Y $165,204,842 $0 $520,218 $1,445,943 PDF
    2013 Aug Form 990 $96,329,889 $93,374,771 $42,697,063 $20,669,948 Y $95,363,431 $0 $45,855 $1,404,669 PDF

    Additional Filings (PDFs)

    Southwest Key Programs

    6002 JAIN LN
    AUSTIN, TX 78721-3104