Sunday, September 01, 2013

Public Educators Upset That Indiana Legislature Forgave $91.2 Million In Loans To Charter Schools

Here's something I didn't know before reading a story in the Northwest Indiana Times today by Carmen McCollum. Tucked inside the budget bill passed this year was a provision that forgave $91.2 million in loans made to charter schools from the state's common school fund. Traditional public schools complain that they are required to repay loans they receive from the state. Sen. Luke Kenley sees it differently. He says the state is merely leveling the playing field by converting what were once viewed as loans to charter schools to grants. From the Times:
"Public schools have already been funded for that (the first six months of operation). At first, we were in a recession and we didn't have the money to deal with it. We have the money to deal with it now. All we're doing is making it a level playing field. We also changed the funding formula so that the money flows to schools with the school year rather than a calendar year. Moving forward, it won't create a problem," he said.
Kevin Teasley, president and CEO of the Indianapolis-based GEO Foundation, which operates 21st Century Charter School and Gary Middle College locally along with charter schools in the Indianapolis area, echoed Kenley's remarks and said the payment is incorrectly identified as a loan.
"It's the amount of money the state gave charter schools for the first six months of operation before the school received tuition-support funding," he said.
Teasley said charter schools were eligible to apply for a loan at the beginning of each school year if they were able to show enrollment growth. For example, if a charter school opened with 200 students, it had to grow by 15 percent or 30 students the following year to apply for another Common School Fund loan.
"It's really all about cash flow and how the state funds schools," he said.
"It used to be that you count students in September on ADM (average daily membership, which refers to student enrollment) and the state would pay you for those students in January. It would pay you from January to December. If you were a brand new charter and opened in August, you didn't receive a payment until January so the state 'loaned' you money to operate for the first six months. It wasn't fair to charters, because traditional schools were already up and running and were receiving their operating funds."  
Rather than a loan, the state now calls it a grant to charter schools — money they don't have to pay back . . . .


Anonymous said...

Note that Mr. Teasley was paying himself over $200,000 per year in salary, and retirement benefits in his job as the head of GEO foundation. Ms. Johnson, GEO's VP also pulls down over $140,000 per year. Over the last few years, GEO was "managing" four of 5 schools whose total enrolment was between 1000 and 1500 students. Pretty good money made on the backs of hiring young, inexperienced teachers for less than $25,000 per year.

This can be verified by looking at several years worth of form 990 reporting on

Gary R. Welsh said...

Conceptually, charter schools sound like a good idea. In Indiana, they have become nothing more than a way for a few political insiders to swindle money from the taxpayers. So we have less money being pumped into the ruling political class from teachers unions as a trade off for new business opportunities for a select few and a new source of political contributions for the ruling elite.

Paul K. Ogden said...

Charter schools unlike traditional public schools do not receive any property tax revenue for facilities. They only receive the state per pupil amount. As a result many charters have to borrow money when they first open to buy or rent a building.

Jon said...

Charter Schools do have an option other than renting a building; the state allows Charter Schools to rent school buildings that are not being utilized for $1 / year.