Deficits found in charter schools

Audit: 25% of Broward facilities operating in red

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.

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

Broward Superintendent Robert Runcie has cochaired a task force to study ways to improve charter schools. The state Legislature considered proposals that would make it more difficult for charter schools to open and easier for districts to close them, but it died when the House of Representatives abruptly ended the session early.

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

Two schools listed in the report already have closed: RISE Academy School of Science and Technology in Lauderhill, and one of two Broward Community Charter School locations in Coral Springs.

Broward Community Charter School West is still operating, but has had a deficit for at least three years in a row, according to the report. Others with multiple years of deficits include Franklin Academy B in Pembroke Pines and International School of Broward in Hollywood.

Some schools cited in past audits, including Kathleen C. Wright Leadership Academy in Oakland Park, have been closed due to failing state grades. Pegg, the director of Palm Beach County charter schools, 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.

Atlantic Montessori Charter School in Pembroke Pines, which opened in 2012, reported a $19,226 deficit due to a loan the founders made to the school, said Juana Garcia, executive director, principal and one of the founders.

“We’re paying it back little by little,” Garcia said. “There’s money in the bank. We ended last year with $22,000.”

Imagine Charter School of North Lauderdale reported a $52,920 deficit, but that was covered by its parent company, which operates 70 schools, Principal Erin Kelly said. She said 98 percent of students at the school are on free and reduced lunch, but the school has received a federal grant and has come up with a plan to show its parent company it will be economically sustainable.