Charter schools’ unexpected windfall

Kudos to the mayor, teachers and principals who worked so hard to bring New York City public school students back to school. Unfortunately, their tenacious efforts were poorly supported by the federal Coronavirus Aid, Relief and Economic Security (CARES) Act. New Yorkers knew there would be many extra expenses to open school safely — and the meager support Congress provided in the CARES Act didn’t help much. New York City’s public schools received $720.5 million — only about $720 a student. And even that small amount was taken away when Gov. Cuomo cut $717 million to NYC schools.

Not all NYC schools were shortchanged, however. Our investigation of the CARES Act’s funding streams revealed that the nearly 60% of charter schools in the city double-dipped, getting far more per student than public schools. Not only did charters get a share of the main CARES Act provision for schools, called the Elementary and Secondary School Stabilization Emergency Relief (ESSER) Fund. Because they are non-profit corporations, Congress also allowed them to receive forgivable loans under the Payroll Protection Plan (PPP).

Many New York City charters used their status as nonprofit corporations to apply for forgivable, low-interest PPP loans that were intended to save small businesses from closing. Why charters were eligible to get PPP funding is unclear; unlike conventional small businesses, their revenue never disappeared. They continued to get their pre-CARES Act taxpayer-funded revenue streams — plus formula-driven shares of the ESSER funding on top.

Overall, 159 New York City charter schools got between $99.9 million and $231.5 million through the PPP program directly, indirectly through their Charter Management Organization (CMO), or both. We can only report the dollar amount as a range, because PPP does not publicly report the exact amount, and only a few charter schools reported their exact PPP proceeds in posted minutes.

Yet despite that windfall in extra funding, 59% of New York City charter schools that directly received PPP funds have not yet given kids the opportunity to come back to school. And 60% of the schools controlled by PPP-endowed CMOs have not opened for in-person instruction either. It’s ironic that, in the sector that touts the virtues of school choice, so many charter schools are failing to provide that choice to the families they serve.

Here are some examples. Six New Visions Charter High Schools each received a forgivable PPP loan. Four of them received between one and two million dollars each, while two received between $350,000 and $1 million. Board minutes for New Visions charters acknowledge accepting PPP for four schools, including a reference to a discussion regarding the risk to “public relations” of keeping the money. Those minutes, however, reveal neither the exact amount each school received, the PPP dollars received by two additional New Visions schools, nor the $2 to $5 million that the New Visions charter management organization itself received.

Based on student enrollment figures combined with mid-range dollar amounts, those six schools received, on average, $3,139 per pupil in ESSER plus PPP monies, versus the $720 per pupil given to New York City public schools by the CARES Act — a pro-charter bias of more than four to one. And that does not include the funding given to the New Visions CMO.

Other big CMOs cashed in as well. KIPP New York, LLC and Uncommon charter schools each received between $2 and $5 million. Their schools are still closed for in-person instruction. Aside from schools run by CMOs, we estimate that the New

York City charters that directly got PPP plus ESSER funds received, on average, over $3,500 per pupil in emergency federal funding. As these schools save money by teaching remotely, it is reasonable to ask where that double-dip extra money is going.

The ability of charters to use their nonprofit corporation status to get funds not available to the city’s public schools highlights the problems that arise with a sector that straddles both the public and private sectors. The public can only approximate how much they received, and if that amount was one dollar below the reporting threshold, they are not listed at all. Many of the recipient charters we checked have not posted 2020 board minutes, or if they do, those minutes don’t disclose how much in PPP funds they received. Either way, we believe they are violating the intent if not the letter of the state’s Sunshine Law.

We salute the minority of charters that received extra funding and put it work to open their doors. We wish New York City public schools had equal access to more CARES Act funding. Let’s hope that if Congress finally enacts a second relief package, it will treat public schools fairly and not allow charters to double-dip again.

Burris is executive director of the Network for Public Education. LeRoy is executive director of Good Jobs First.