Arts charter asks for state money
Bethlehem school now wants reimbursement for some of $1M rent it pays its foundation.
The Lehigh Valley Charter High School for the Arts will take advantage of a loophole that allows charter schools to collect lease reimbursements from the state while paying rent to foundations that support them.
Under state law, charter schools can apply for partial reimbursement of leasing costs as long as the school does not own the building it’s in.
The Bethlehem charter school does not own its facility. The school leases the building on
Third Street in south Bethlehem from the Charter Arts Foundation, a nonprofit set up to support the charter school.
Since 2015, when the school moved into its new building, it has not applied for lease reimbursements. But in August, the school's board of trustees unanimously approved applying for state reimbursement, according to meeting minutes.
School CEO Diane LaBelle confirmed the school applied for lease reimbursements, but said it has not yet received the money. She declined to say why the school is now seeking reimbursements.
When reached by phone, board President Mario Acerra declined to comment. He referred questions to Ann Gilette, the charter school's media relations person, who did not return messages for this story.
The state Education Department paid $8 million in lease reimbursements to charter schools statewide last school year, based on a per-pupil formula. While many charter schools have no connection to their landlords, others have close ties. In some cases, landlords operate as the foundation that supports the charter school. In other cases, membership on the boards of the schools and the foundations overlap.
It's not unusual for charter schools to create foundations. Unlike traditional public school districts, charters do not have the authority to raise local taxes to create revenue. Foundations typically hold fundraisers and raise money for the charter schools.
That's what the Charter Arts Foundation does. Created in 2012, it has organized a $6 million capital project campaign for the school, according to the foundation's website.
The Executive Education Academy Charter School in Allentown also created a foundation that bought its building at 555 Union Blvd. The Allentown charter school applies for lease reimbursements while paying rent to its foundation. That foundation also raises money for the charter school, such as through its an annual golf tournament.
Traditional school districts, such as Allentown and Bethlehem, have foundations that are separate from the districts and also raise money for school programs, although neither Allentown's nor Bethlehem's serves as a landlord.
Unlike the Executive Education charter school, the arts charter school board and its foundation, which has 14 members, do not have overlapping members, according to the charter school and foundation's websites.
The arts charter school lists its foundation as a related organization on its IRS 990 form. The foundation, described as having a “mission to support the health, welfare and educational interests” of the charter arts high school, collects $1 million in rent for the 91,000-square-foot facility, according to its IRS 990 form.
It's unclear how much the arts charter school will get in reimbursements from the state. Executive Education school receives about $100,000 in lease reimbursements.
State Auditor General Eugene DePasquale has flagged situations where a charter school's founding agency owned the building housing the school, and where a school and its foundations members overlapped.
State Rep. James Roebuck introduced a bill in April that would end conflicts of interest in lease reimbursements for charter schools, but the bill died with the end of the 2017-18 legislative session.
Ana Meyers, executive director for the Pennsylvania Coalition of Public Charter Schools, said the lease reimbursement can be critical to the financial stability of charter schools, especially when new.
“This is not an ideal situation, but it is one that is forced upon charter schools in Pennsylvania since they are denied facility funding,” she said.
Bethlehem Area Superintendent Joseph Roy, a vocal critic of charter schools, finds it unfair they can receive lease reimbursements.
“As the auditor general found, this charter worked around existing laws to avoid the public bidding rules public schools must follow,” Roy said. “Now, this taxpayer-funded, privately run school is using another loophole to get their hands on more tax dollars for paying themselves rent.”
Charter schools and traditional public schools often compete for students, and thus the tuition dollars that follow the students. This year, Bethlehem Area is expected to pay $30 million in charter tuition.
The Lehigh Valley Charter High School for the Arts enrolls more than 600 students. Academically, it's one of the best in the area: 94 percent of students passed the English Keystone exam last year, while 73 percent passed algebra and 85 percent passed biology. The school has a 99 percent graduation rate and received Blue Ribbon School recognition given to the state's highest performing schools.
DePasquale this year released an audit on the arts charter school his office conducted after receiving a letter from the Bethlehem Area School District in 2016 alleging the charter school did not follow Pennsylvania Charter School Law when it constructed a building at 321 E. Third St.
DePasquale found the school did nothing improper.