Charter failure prompts scrutinyZeiger sees tens of millions of dollars lost
The bankruptcy of a one-year-old charter school in West Sacramento has underscored difficulties with state and federal funding of startup schools and raised questions about the State Board of Education’s long-term capacity to oversee dozens of charter schools that it has approved.
There are probably practical fixes to the funding issue that could reduce the odds that millions of dollars would be squandered on bad-bet charter schools. The issue of the State Board’s oversight of charters raises a deeper question: Who should approve and monitor charters – local districts, the State Board on appeal, or perhaps independent agencies and universities, as in other states, with the expertise and a disinterest in the charters they would regulate?
Louis Freedberg, the new executive director of EdSource, writes about both developments in a two-part blog posting that ran Wednesday and today. He details the cautionary tale of the California College, Career and Technical Center, which came up at the State Board’s September meeting.
Before declaring bankruptcy this month, the charter had spent nearly a million dollars funded through a federal startup grant, a state loan, and standard state tuition payments. CCCTEC had encountered setbacks from its opening, when delays with its facility led to a sizable defection in student enrollment, contributing to escalating financial problems that led to a default in payments and loss of government money.
Richard Zeiger, Chief Deputy Superintendent of Public Instruction, told the State Board that CCCTEC’s failure was symptomatic of other charter school defaults, which happen “with great regularity,” and over two decades totaled “easily into the tens of millions of dollars, and it wouldn’t surprise me if it went higher.” Zeiger didn’t elaborate further at the meeting and didn’t provide Freedberg with specific numbers, saying the Department of Education is doing the research. It’s presumably a small portion of the 1,400 charters that have been granted over two decades, including more than 900 currently operating.
The federal Department of Education is already paring back grants to California and setting aside more money for proven charter management organizations. On Wednesday, it announced multimillion-dollar startup grants to Palo Alto-based Rocketship Education ($1.9 million), San Francisco-based KIPP ($9.5 million), and Los Angeles-based Alliance College Ready Public Schools ($3.1 million).
However, Eric Premack, executive director of the Charter Schools Development Center in Sacramento, which provides technical advice and training for charter operators, acknowledged that the state could cut funding losses by tightening procedures for awarding grants and tracking attendance.
Charter operators run on thin margins and need advance money to get rolling, especially first-time charters that start with one or two grades and are projected to break even when they reach full enrollment. That’s why the federal government started the Public Charter School Grant Program, with grants of up to $600,000, and the state started a revolving loan fund, repayable over five years. Throw in deferrals of state tuition payments and unexpected encounters with fire marshals, and new charters can find themselves in precarious spots.
But a more competitive process for grants, with check-off dates for when charters must have enrollments and facilities lined up, could catch problems. There also needs to be stricter scrutiny of attendance figures, on which advance state payments are based, made on the 20th day after the opening of a school. In CCCTEC’s case, fewer students attended than enrollment figures indicated, leading to $219,000 in overpayments last year alone, according to Freedberg.
Time for more authorizers?
Most charters are granted by local districts, but the State Board has granted three dozen – less than 4 percent of the total number of charters statewide – mostly on appeal after rejection by district trustees and county school boards. CCCTEC is one of those.
As State Board President Michael Kirst told Freedberg, “There are charter schools that are turned down by both local districts and counties that deserve to operate and so there needs to be some state appeal mechanism.” Some local trustees are unabashedly antagonistic to charters.
Whether the State Board should be saddled with oversight responsibilities – or contract out that function and leave the Board strictly with policy decisions – is a question that the State Board should confront as the number of appeals and approvals increases.
Charters pay fees, between 1 and 3 percent, to their authorizers, but, with rare exceptions, few districts do the monitoring well. It’s not clear that the State Board should have caught CCCTEC’s spending anomalies and possible misrepresentations earlier. But a review of the events leading up to bankruptcy should be part of the Board’s postmortem.