Public Schools Or Non-Profits? These NC Charter Schools Received PPP Funding

The Network for Public Education released a state-by-state list of charter schools that received Paycheck Protection Program loans.

This is the list of NC schools.

Almost 50 of the 184 charter schools in North Carolina received loans.

From the July 19th edition of the Asheville Citizen Times:

Charter schools occupy a blurry space between public schools and small businesses. They are free to attend and funded like traditional districts, with public money given for every student. Yet, charters are managed independently, autonomous from the traditional school district in which they reside.

In North Carolina, charter schools typically receive less local funding than their district counterparts, though unlike traditional public schools, charters aren’t obligated to provide students with transportation or free meals.

Last year, there were close to 200 charter schools in the state.

In addition to PPP loans, many charters received federal CARES Act funds. For example, Sugar Creek Charter School in Charlotte reportedly received a PPP loan between $2 million to $5 million while also getting $438,000 in federal CARES Act money.

In contrast, school districts only collected CARES Act relief.

“Our public schools are being thrown to the wolves,” said Renee Sekel, founder of the parent-run public education advocacy group Save our Schools NC. Sekel accused charters of “double-dipping” by acquiring both businesses loans and public school funds.

You can make your own decision as to whether an entity that claims to be a public school can take out “business loans” while taking public money. But the North Carolina Association for Public Charter Schools anticipated that charters taking PPP money would raise eyebrows.

It even set out to give talking points in order to answer obvious questions.

Here is the text of that:

Dear School Leaders,

The Small Business Administration is expected to release data today, showing which organizations received loans through the Paycheck Protection Program. The names of recipients who received loans of $150,000 or more will be revealed, as well as addresses, NAICS codes, zip codes, business type, demographic data, nonprofit information and the number of jobs supported.

Rather than providing the precise dollar amounts of the loans, they will be categorized in the following ranges:

  • $150,000 to $350,000
  • $350,000 to $1 million
  • $1 million to $2 million
  • $2 million to $5 million
  • $5 million to $10 million

This could generate renewed interest and fresh reporting on charter schools receiving PPP loans. In advance of the data release, the National Alliance has prepared guidance to help with possible media queries.

If you are contacted by a reporter who is writing about this story, we strongly urge you to respond. If you are uncomfortable providing an interview, it is also fine to offer a written statement. Being unresponsive will suggest there is something to hide. Since the information will be public and the funds were lawfully accessed to address emergency needs, there is nothing to gain from being unresponsive. Please do not use this as an opportunity to reinforce that charter schools are traditionally underfunded when compared with traditional public schools, as PPP loans were not intended to address ongoing funding inequities. Attached to this email, please find a communications toolkit and a template for a media statement that can be customized, in case this is helpful in providing a quick response.

The National Alliance has provided these talking points that may also be helpful:

Equity – We believe this is the most important message…

While many district schools reduced instructional time and in some cases called for a halt to all distance learning, charter schools chose to lean in and do whatever is necessary to keep educating their students, and in many cases they offered to support students outside their community.

  • Charters are frequently mischaracterized as taking from the public school system – of which they are a part, and those same people who mischaracterize charter schools immediately remember we are public schools when we step up to secure the resources our students need, deserve and are entitled to under the law.
  • Charter school students are disproportionately black and brown – members of the communities most affected by the current health, social justice and economic crises.
  • During the pandemic, charter schools stepped up and did what was right – whatever it took to keep educating their students – extra hours, extra staff, extra resources. And that costs money. It costs money to do it right. And it’s money that was available to them under the law.

Why Did Schools Apply for the Money?For some charter schools, this was a lifeline. Charter schools disproportionately serve underserved students who had greater needs. Sixty percent of charter schools are single site, independently run schools with small budgets. There was a real risk of layoffs because charter schools had to pay overtime to teachers, hire supplemental staff, and they were unable to do fundraising for the funds needs to cover mortgage/rent payments and utilities. Typically, charter schools receive 80% of what district schools receive in public funding and they have to raise funds to cover the rest.

Why do Charters Have Different Costs than Districts?
Single-site charters don’t have a central office staff. Paraprofessionals had to be paid out of their local budget. The PPP allowed them to do things like pay administrative staff, cafeteria workers and janitors, while still covering expenses for extra instructional needs and support for families. Charters had to take money from the operating budget to pay for extra expenses like providing internet access and digital devices.

Without the PPP funding some charter schools would have been more vulnerable to default on a mortgage or rent, or forced to lay people off. Collective bargaining agreements in district schools prohibited the number of hours teachers could work, while charter schools were able to supplement staffing and pay for extra hours needed to train staff and support students. Conversely, we saw examples across the nation where collective bargaining agreements were used to justify cutting work hours and time for instruction.

LA Unified District is just one example of how a collective bargaining agreement was used to pull back on instructional time.

Guidance to Schools from the National Alliance
The Alliance has always stated clearly that if schools don’t need it, then they shouldn’t apply for it. Schools were advised to consult with their attorneys and accountants and determine whether it was the right thing to do. The National Alliance provided important information to charter schools who were struggling financially, but the determination of a crisis was made at the operator level.

Was it “double dipping?”
For certain charter schools the PPP funding was an absolute lifeline. There are about 1700 charters that sit under LEAs and have no guarantee of receiving any portion of the $13.5 billion in CARES Act emergency funding the K-12 schools. They had immediate expenses that many districts do not have – paying rent, hiring substitute teachers, and paying overtime hours for their teachers working to provide student support. Many district schools had CBAs that limited the amount of hours that teachers could work. In some instances, they used those CBAs to halt instruction all together. Charters had the flexibility to lean in and do whatever was required in that moment to make sure students had what was required for distance learning. Often, that meant extra hours and teachers had to be compensated for it.

Charter Schools are Public Schools
Charter schools are public schools that qualify for this emergency assistance. The PPP was not only set up for small businesses – it was also set up for nonprofits. We believe appropriators had an understanding of the complexity of charter schools, and that’s why they were not prohibited from receiving relief funding. District schools have other options available like taking out bonds.

Copy of the PPP Resource Document.

And here is the template for media statements:

INSERT NAME applied for and received a Paycheck Protection Program loan to meet the urgent needs of our students during a time of crisis.

The PPP allowed our school to pay administrative staff, cafeteria workers and janitors, while still covering expenses for extra instructional needs and support for families. Our school had to take money from the operating budget to provide internet access and digital devices to students. Without the PPP funding we would have been more vulnerable to default on our [MORTGAGE OR RENT] or forced to lay off staff.

As a charter school, our nimble, innovative structure gave us the flexibility to pivot quickly to keep our focus on what is most important: continuing to provide a high-quality education, though done remotely, to students during the COVID-19 pandemic. (Discuss how your school continued to serve students). It takes money to sustain this level of educational programming.

As non-profit organizations, charter schools were legally provided the ability to apply for PPP funds. These funds provided financial support to pay employee wages during the coronavirus pandemic, ensuring employees kept their positions. For many charter schools, whose students already receive less funding than their local district peers, this program provided essential financial assistance.