7 county charter schools in red

State audit reports financial results

More than three dozen of South Florida’s charter schools finished last year with a deficit, a state audit shows, raising questions about their abilities to operate long-term.

In Palm Beach County, seven charter schools, or 15 percent of those operating, were in the red in 2013-14, according to a state Auditor General’s report released this month. By comparison, Broward County had 23 charter schools (25 percent) operating with a deficit, while nine (7 percent) did so in Miami-Dade County.

The grades of the schools range from A to F.

Charter school advocates say most of the schools are doing fine. The negative balances are due to major investments that will be repaid over time. Some have businesses or agencies that have agreed to cover any shortfalls.

But school district officials say negative balances can indicate a charter school is struggling to survive.

“If a school is consistently performing in the red year after year, you have to ask how are they able to operate? How are they paying their teachers?” said Jim Pegg, director of charter schools in Palm Beach County.

School districts have been complaining about charter schools shutting down abrupt-

ly, leaving parents scrambling to find a new school, often in the middle of the academic year. Many that have failed elsewhere return to open a new charter school. Districts are often on the hook for the money, since they absorb the kids but don’t get any additional state funding.

Florida’s Board of Education unanimously agreed Wednesday to require charter-school applicants to disclose their successes and failures during the last five years. Under the revisions, the applicants, governing board members and/or the management company would have to list all the schools they’ve been involved with, and reveal how the schools performed academically and financially.

The changes come after a Sun Sentinel investigation last year exposed weaknesses in state law that allowed virtually anyone who could fill out an application to open a charter school. In some cases, they collected public dollars and then quickly shut down.

Nearly 40 charter schools in South Florida have closed since 2012. The closures continued into this school year — six in Palm Beach County shut down or were ordered to close since July.

One Palm Beach County school listed in the report already has closed: Noah’s Ark International Charter School in Riviera Beach.

Toussaint L’Ouverture High School in Delray Beach is still operating, but has had a deficit for several years in a row, according to the report. A school on the brink of closing, Leadership Academy West in West Palm Beach, didn’t submit its required audit to the state.

Some schools cited in past audits, including Joseph Littles Nguzo Saba Charter School in West Palm Beach, have been closed due to failing state grades. Pegg said there’s a strong correlation between financial and academic performance.

“When you have financial issues, you’re often not able to continually maintain high-quality teachers, and that impacts the teaching and learning in the classroom,” he said.

While the state toughened the laws for new charter schools to open, a rule for existing schools has been relaxed in recent years. Before 2011, a negative fund balance would automatically trigger the school district to work with the schools on a financial recovery plan. But now the financial problems must be more severe, such as failing to make payroll.

Charter school officials say that’s because many of these schools are not in financial danger. Some, including several Franklin Academy and Charter School of Excellence sites, are part of larger corporations that can subsidize deficits at individual schools, said Richard Moreno, executive director of the Fort Lauderdale-based of Charter Schools Service Corporation.

Others are new schools that borrowed money for books, technology and materials and have a plan to pay off the debts over time. Moreno said most schools also have assets that are valued more than their debts, but the state requires them to report how much they have in unrestricted assets.

“Most of these schools have positive equity. It’s a normal accounting scenario and there’s no issue. It’s just a few of these that have financial problems,” Moreno said.

Belle Glade Excel Charter School had a $140,184 deficit, but its operator, the Lutheran Services Florida, has agreed to cover the gap, said Chris Card, chief operating officer for the Lutheran agency. He expects that to continue.

“What we’re doing now is showing our contribution to the school as a revenue source, so the school will break even,” Card said.