Answer Sheet: Did Some Charter Schools Double-Dip in Federal Coronavirus Relief Funding?
But after the act passed, some charter schools — which are publicly funded but privately managed — decided to also apply for loans from a different part of the new law, the Paycheck Protection Program (PPP), which was intended to help small businesses and eligible nonprofit organizations.
That sparked a debate in the education world, especially after some charter schools decided it would be double-dipping if they did apply for loans, and declined to do so. The conversation was animated by the issue of whether charters are really small businesses or public operations.
The charter school movement says charters are public schools because they are publicly funded. Most are nonprofits — although some are managed by for-profit companies. But critics have raised questions about their status. Charter schools largely have independent boards over which the public has no control.
Washington state had a years-long legal battle over the issue of whether charters were “common schools,” meaning schools controlled by the public. The state Supreme Court at one time or another supported both sides; in 2018, it reversed itself and decided charters could be publicly funded. Meanwhile, some charter schools have argued in various venues that they are actually private corporations.
Some charter school advocates said charter schools have every right to take PPP money as well as the money they will receive from the Education Stabilization Fund. Their operations have been disrupted, too, they say, and just like traditional public schools, their students face hardships. Many say they continue to be underfunded through the regular district funding formulas.
In North Carolina, however, a new report from NC Policy Watch, a project of the North Carolina Justice Center, a progressive research and advocacy organization, says local spending for charters in the state “exceeds” that of traditional public schools.
But some charter schools that chose not to apply for PPP money said that source of funding was not meant for charter schools but instead for small businesses and small nonprofits that had been crippled during the pandemic. Because public school funding had not stopped, charters shouldn’t be included in PPP, they said.
After the Cares Act was passed, superintendents of traditional school districts said the aid was nowhere near enough to cover the costs sustained in moving education online during the coronavirus pandemic, and the costs of preparing to reopen schools in the fall. They have asked Congress for some $250 billion in the next aid package, which would, again, include school districts and charter schools.
Washington Post reporter Perry Stein wrote an article recently about charter schools in the District, saying that most of them would not say if they had accepted aid. She noted that some elite private schools and big companies, such as Shake Shack and Ruth’s Chris Steak House, came under public scrutiny for accepting PPP money and then decided to return it. She wrote:
Charter schools now face similar blowback. That’s because their main revenue source — per-pupil government funding — is so far unaffected by the pandemic. Meanwhile, other companies and organizations across the district have lost nearly all of their revenue, said D.C. Council member David Grosso (I-At Large), who chairs the Education Committee and has questioned whether charter schools should apply.
This post, written by Carol Burris and Marla Kilfoyle, takes on this debate, looking at some of the charter schools that did accept money from the Cares Act, and some that didn’t. It goes into detail about one school, Pine Springs Preparatory Academy in Holly Springs, N.C. School board members did not respond to requests for comment but I will add it if I get one.
Burris is a former New York high school principal who serves as executive director of the Network for Public Education, a nonprofit advocacy group. She was named the 2010 Educator of the Year by the School Administrators Association of New York State, and in 2013, the National Association of Secondary School Principals named her the New York State High School Principal of the Year. Kilfoyle is a former teacher who is now the grass-roots liaison to the Network for Public Education.
By Carol Burris and Marla Kilfoyle
Pine Springs Preparatory Academy in Holly Springs, N.C., looks to be doing just fine. It ended 2017, its first year of operation, with a healthy fund balance of $1.3 million — which seems remarkable for a school with expenditures that year of only $2.75 million, school documents show.
On March 23, 2020, as North Carolina’s schools prepared to move to remote learning during the coronavirus pandemic, Pine Springs Prep was ready to go. Triangle Education Organization is the nonprofit that runs the school. Its board minutes show that every student would get a Chromebook, there was $2.17 million in the bank, and that local tax dollars would keep coming in.
Connectivity would not be a problem for a charter school located in one of the wealthiest towns in North Carolina. “It’s like a private school for wealthy kids,” founding board member Ryan Monteleone said in an interview.
In its charter application, the school claimed that “students who enroll in our school will match the demographics of the local school system,” which, according to the application, was 24.4 percent black and 15.4 percent Hispanic. The school also expected that “33.7 percent of the students would be eligible for free or reduced-price lunch, and 7.5 percent classified as LEP [limited English proficiency].” Free or reduced-price lunch is a proxy for poverty.
But the reality turned out to be quite different. Black students comprise less than 5 percent of the enrolled students, and Hispanic students comprise about 7 percent. Pine Springs Prep does not participate in the federal free and reduced-price lunch program since so few are eligible to receive it. According to Monteleone: “When I asked why we did not provide busing, I was told that it would bring in kids who would bring test scores down and whose parents would not donate to the school.”
And yet despite all of the wealth and privilege, in April, the charter school’s board called a special meeting to take $550,600 of Cares Act money via a Small Business Administration Paycheck Protection Plan (PPP) loan. Those loans were intended by Congress to shore up small, struggling businesses that would otherwise lay off their employees as revenue dried up. PPP loans are more like grants because if you follow the rules, you do not have to pay the money back, as the minutes of the meeting noted.
At Pine Spring’s Prep, there was not a penny in revenue lost other than the inability to run a modest fundraiser. But the minutes reflected no hesitation as the board took more than a half-million dollars, even as businesses all over North Carolina collapsed.
Board Treasurer Greg Sinders, shepherded the PPP loan for the Board. Sinders also appears in the April minutes and roll call of the Bonnie Cone Classical Academy. At that meeting, the board approved a for-profit Arizona education management organization, Charter One, to apply for and manage their PPP loan. According to his Facebook page, Sinders is a business developer for Charter One.
These two charter schools are far from the only schools applying for PPP funding.
The Boston Globe reported that Achievement First Rhode Island received $2.5 million dollars through the program. In 2017, it received about $16 million in taxpayer funds — enough to send approximately $1.7 million to its management company in Connecticut and another $41,000 to advertise and promote the school.
Blackstone Valley Prep, also in Rhode Island, received $4 million in PPP funds and small Nowell Leadership Academy took over $400,000.
The Globe also mentioned those charter schools in Rhode Island that declined funding, acknowledging the ethical shortcomings of taking funds from businesses in dire straits as the school’s income stream remains intact.
But those schools that take the high ground are making that decision on their own. Leadership in the charter school world is pushing schools to apply for the funds.
Mike McGee, chief executive of Chiefs for Change, a nonprofit started by former Florida governor Jeb Bush, defended the use of PPP funds for Rhode Island charter schools, even though those schools compete with and pull funding from the public school districts that members of the group lead.
In her March 23 blog, Nina Rees, executive director of the National Association of Public Charter Schools, wrote about the lobbying efforts of the NAPCS to ensure that charter schools were included in the PPP program.
Greg Richmond, founder of the National Association of Charter Schools Authorizers, justified charters taking the SBA funds in the pro-charter news outlet the 74. In an April 14 piece, he wrote that critics would attack charter schools for taking PPP money for a number of reasons, and said:
“They will say charter schools did not immediately lose all funding this spring, like some businesses, while ignoring the deep cuts that are coming later this year. They will say school districts were not eligible for the program, putting them at a supposed financial disadvantage versus charters, while ignoring the fact that districts have access to local property tax levies and low-interest loans that many charter schools cannot access.”
Richmond now works for a nonprofit called Bluum Inc., which received a nearly $9 million grant from the federal Charter Schools Program to start more charters in Idaho.
Although the full list of PPP recipients has not been published, stories have been popping up around the country as reporters comb board minutes for other charter schools that have been taking PPP money.
Liza Bercovici, executive director of the dance-themed Gabriella Charter Schools in Los Angeles, said in a written statement to LAist.com that the schools turned to the PPP program as a solution to their “major cash flow issues and revenue shortfalls starting this year.” Gabriella received a $1.3 million PPP loan.
Ivy Academia, whose founders were convicted of embezzling over $200,000 in 2013, received nearly $1 million as well. Ross Valley Charter School, in affluent Marin County, Calif., views itself as a progressive alternative to the local public schools, according to the Los Angeles Daily News. It received more than $270,000 which, according to board minutes, would help their fund balance for three years.
Heritage Community Charter in Idaho, which says on its website that it is a “four star charter school,” received a grant — although it did not include the amount in the board minutes. In 2013, the State Charter Board met with the school’s board to review 17 pages of problems, including violations of the state’s laws. In 2018, the charter was one of 13 charter schools in the state under sanctions.
Encore Academy in New Orleans was placed on corrective actions by the state last August for special education violations. It now has to follow an intensive correction action plan. Yet the school received $913,000 from PPP.
New Orleans College Prep that had its own difficulties with finances, instability, and staff turnover before the pandemic, received $1.7 million in PPP funding for its two campuses.
When The Washington Post asked D.C. charter schools if they had applied for and received a grant, most would not respond.
There is justifiable unease about taking from a fund intended to keep the paychecks of parents coming when your own payroll is funded with no interruption in income. In addition, charter schools received funding through the Education Stabilization Fund of the Cares Act in the same manner as public schools, reinforcing the criticism that charters claim to be public schools but seek advantage as private entities when it is convenient.
Taxpayers in Marin County accused the local charter school of using the PPP loans to take a “double dip.” According to the Marin Independent Journal, Ross Valley resident Sara Tewksbury was one of 60 commenters posting on a community website about Ross Valley Charter taking PPP funds.
“RVC has repeatedly insisted that they are a public school and that they have stable finances, but they consistently act like a business,” Tewksbury said.
Recognizing the ethical dilemma posed when one claims to be a public school yet takes money intended for businesses or nonprofits with diminishing income streams, the Learning Community charter school in Falls Rhode Island turned down its $1.3 million PPP loan.
According to the Boston Globe, it was a difficult discussion made after a 90-minute debate.
Learning Community Board Chairman Marc Greenfield commented on the Board’s rationale for not taking the money by saying: “We have come to believe that the PPP loans are intended for a more distinct or traditional nonprofit, and while we are technically a nonprofit, our primary identity, mission, and value is as a public school.”
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