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Public Schools Disadvantaged as Charters Get Loans from PPP

Charter schools in New Orleans have applied for federal loans through the Payroll Protection Program, receiving anywhere from $97,000 to $5.1 million. Public schools are ineligible for the same loans.

(TNS) — More than two-thirds of New Orleans' charter school organizations have applied for federal loans through the congressional act to help keep businesses afloat during the coronavirus pandemic, garnering criticism from some groups for tapping into a program that hasn't been available to traditional public schools.

Dozens of New Orleans schools have applied for Payroll Protection Program loans, aimed at shielding small businesses from closure due to COVID-19, according to interviews and a review of documents from over 40 boards operating schools in New Orleans.

At least a third of the charters had received loans, with officials from those organizations saying they got anywhere from about $97,000 to more than $5.1 million in funds, based on their payroll.

"The COVID-19 pandemic has severely impacted the city of New Orleans and created great economic uncertainty for our schools about how we can continue to operate, employ all of our employees, and not dramatically cut services for students, many of whom will return to school with learning gaps and needing additional social and emotional supports," said Kate Mehok, CEO of Crescent City Schools, which received $3 million.

The money, which comes from a $349 billion stimulus established by the $2 trillion federal CARES Act, can be forgiven if all employees are kept on the payroll for eight weeks and if the money is used for salary, rent, mortgage interest, or utilities, according to the U.S. Small Business Administration, which along with the Treasury Department is implementing the program.

Critics had already lambasted charter schools around the country for the applications, accusing the non-profits of abusing their status and double-dipping, and were miffed to learn about the dozens of applications to come out of New Orleans, which this year became the first major American city to have no traditional schools.

Like traditional schools, local charters have already received some CARES Act funding through the Louisiana Department of Education. But unlike the charters, district-run schools weren't eligible for the extra payroll loans.

The charter organizations each got hundreds of thousands of dollars from the $260 million doled out to districts and charters in late April as part of the Elementary and Secondary School Relief Fund, another part of the CARES Act, mostly for technology and distance learning.

Supporters of the loans to the charters, including NOLA Public Schools, say the funds may prove to be critical for charters in the coming years, amid forecasts of sales tax revenue declines, state funding woes and declines in fundraising that some charter schools rely on to bolster their budgets.

"We support schools in their effort to secure these resources to ensure they have the funding they need to help students continue to grow and succeed, especially given the significant state and local funding decreases anticipated this coming school year and beyond," Orleans Parish school district officials said. "Now more than ever, these students are relying on the stability of their schools and teachers."

Charter leaders noted that their per-pupil funding relies largely on taxes, and that sales tax revenue has dipped dramatically. Officials with the Algiers Charter School Association, which got about $3 million, called it "a lifeline."

Some said they were losing thousands from canceled annual fundraisers, couldn't sell bonds to make up the difference and could face additional expenses related to coronavirus. For example, they expect to have to buy more technology for distance learning, cleaning and medical supplies, and incur additional transportation costs if schedules are stacked for social distancing.

The school district is still determining how steeply revenues might fall. But last month a School Board committee was told a best-case scenerio might be a 13 percent-drop in per-pupil revenue for the 2020-2021 year.

Nash Crews, COO for New Schools for New Orleans, said funding had never been enough in a district where more than 80 percent of students are economically disadvantaged, and Caroline Roemer, head of the Louisiana Association of Public Charter Schools, said schools had to demonstrate need before getting funds.

The program, however, has been controversial since it rolled out in the spring. Critics complained that some large businesses, like the national chain Ruth's Chris Steakhouse, were able to collect large loans from the program, while smaller businesses couldn't get any at all because the funds ran dry. Ruth's Chris ultimately returned its loan.

Thanks to lobbying from national pro-charter organizations, schools in New Orleans were eligible to apply for the program, because they are run by separate, non-profit boards.

And, because government-run schools weren't eligible, New Orleans schools could fare better than those in neighboring parishes directly run by traditional districts.

That's problematic to Carol Burris, the executive director of the Network for Public Education, a national policy group backed by union members that has been critical of charter schools.

"You cannot have the privileges of being the private entity and of being a public entity at the same time," Burris said. "It's just not fair."

Burris' group started a petition asking Congress to stop giving the charter schools the loans.

"We have men and women across this country who work for small businesses, who right now have no income, who are getting free food because they have no income and cannot take care of their families," Burris added. "Charter schools still have a stream of income."

The group Parents United for Public Schools has also criticized charter organizations nationally for applying for the loans while running schools with robust fund balances and wealthy backers.

Several New Orleans charters had healthy budgets as of April, and at least one -- Warren Easton Charter High School -- has enjoyed hundreds of thousands of dollars in donations from a big-name supporter, actress Sandra Bullock.

Officials at Warren Easton, which applied for a loan, did not respond to requests for comment.

Although support for the loans has been strong publicly, meeting documents show that at least some board members felt apprehension at taking the loans.

A finance report for Bricolage Academy also showed a board committee was reviewing the terms of the loan in April with lawyers to decide whether to return it.

Mehok, in the meantime, said critics were pointing fingers at the wrong people.

"The question we should be asking is why weren't traditional districts allowed to apply for PPP money," she said. "Furthermore, ask how the federal government intends to provide much needed relief to all public schools in the country to counteract the large decrease in revenue."

©2020 The Times-Picayune | The New Orleans Advocate. Distributed by Tribune Content Agency, LLC.

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