Rochester Charter Schools Received Millions in PPP Loans, Even As One Was Expecting A Budget Surplus
by DARIEN LAMEN with RITTI SINGH
(WXIR-Rochester) Charter schools across the nation have been called to account after receiving millions of dollars in forgivable loans intended to help small businesses cover payroll during the COVID-19 shutdown.
Critics accuse the publicly-funded, privately-operated schools of double-dipping.
And with the recent release of information about loan recipients, we now have a clearer picture of which charter schools in the Rochester area benefitted from the small business loans.
In April, at least 9 charter schools in Rochester were approved for loans totaling $4.9 to $11 million as part of the federal government’s Paycheck Protection Program (PPP).
Shawgi Tell, a professor of education at Nazareth College and author of Charter School Report Card, says that’s in addition to per pupil state funding, not to mention non-profit tax exempt status and, in some cases, large donations from venture philanthropists.
“It is yet one more expression of the fact that privately-operated charter schools are inherently private entities and therefore they should not be tapping into [public] money that should be going elsewhere,” Tell says.
Most charter schools receive the vast majority of their revenue from state funding that is redirected away from public school districts to area charters on the basis of student enrollment.
At Eugenio Maria de Hostos Charter School in Rochester, for example, more than 80% of the school's overall revenue for 2019-20 ($12.5 out of $15.4 million) came from public per pupil funding, most of which ($10.6 million) was redirected from the RCSD.
EMH also received a PPP loan of $1.9 million in April, the largest direct loan of any charter school in the Rochester area.
But charter school advocates have rushed to defend operators who applied for PPP loans even while continuing to receive state per pupil funding.
Anna Hall, CEO of the Northeast Charter Schools Association, told the Democrat & Chronicle this week that charter school operators were just playing by the rules as Congress wrote them.
"The federal government created this program and the guidelines and eligibility for it," Hall said. "Take it up with the federal government, [not] with charter schools. If districts had access to this funding, they'd have taken it as well."
Public entities including public schools were not eligible for the emergency PPP loans.
Hall added that the PPP loans help provide charter schools with a buffer in a time of uncertainty, noting that charters are facing a 5% reduction in state per pupil funding for the 2020-21 fiscal year.
But Shawgi Tell says the fundamental issue remains the same. “It’s true these are difficult circumstances, but they’re difficult for everyone. If you’re going to act, walk, and talk like a private business, that’s fine. Just say you are a private business. Don’t claim you are a public entity,” Tell says.
The RCSD has struggled to balance its budget over the last year, with advocates attributing the shortfall in part to nearly $90 million in state foundation aid they say the district is owed. That was before the COVID-19 pandemic prompted Albany to freeze foundation aid funding for the coming fiscal year.
Last year, the Rochester City School District had to pay about $90 million in charter school expenses.
PPP small business loans by the numbers
According to data released last week by the federal government, at least 150 charter schools across New York State were approved for PPP loans of over $150,000 this spring. All told, the charters received somewhere between $117 million and $273 million, with the average loan amount for somewhere between $784,000 and $1.8 million.
The available data only shows the range of loan amounts for which a given business was approved. Across New York State, here are the numbers for each loan tier:
20 charter schools received loans of $2 to $5 million each
55 charter schools received loans of $1 to $2 million each
57 charter schools received loans of $350,000 to $1 million each
18 charter schools received loans of $150,000 to $350,000 each
For recipients of loans of $150,000 or less, the company name is not listed.
In Rochester, at least 9 charter schools received PPP loans. Three of those schools--Eugenio Maria de Hostos, Rochester Academy, and UPrep--received loans for $1 to 2 million each, the largest amount received by charter schools in the Rochester area.
Genesee Community Charter School may have been the only charter school in Rochester that did not apply for the PPP loan.
A representative for GCCS told the D&C, "We decided not to apply since we were still receiving Per Pupil Tuition and we were saving in other operational areas due to our COVID closure… Therefore, our budget was looking stable and we were able to operate without the extra funding."
A comfortable financial outlook did not stop other charter schools from applying for the forgivable loans, however.
Most notably, Rochester Academy Charter School reported anticipating a budget surplus when they were approved for a loan of just over $1 million through ESL. They were also looking to move ahead with multiple capital projects.
“We are anticipating a surplus this year,” the Board finance chair reported in April. “We may be able to start the gym construction and purchase an elementary school building.”
RACS has since finalized negotiations for the purchase of St. Helen’s Church, although it was considering postponing gym construction due to a 5% reduction in state per pupil funding for the 2020-2021 fiscal year, according to Board meeting documents.
Rochester Academy has been in the spotlight in the past over its financial dealings and what the D&C's Justin Murphy calls its "connections...broadly to the nebulous network of Fethullah Gulen," the controversial Turkish cleric who lives in exile in rural Pennsylvania.
RACS leadership could not be reached for comment on the PPP loan.
The financial outlook for other local charter schools who received PPP loans was more ambiguous. But among the top tier of recipients, available documents show enrollment numbers were expected to remain steady.
According to the terms of the Paycheck Protection Program, PPP loans must be spent primarily on payroll-related expenses to be eligible for forgiveness. Lenders are ultimately responsible for determining whether a recipient met the criteria.
Charter schools will have until October 31st to apply for forgiveness.
Darien Lamen is news producer/director for WXIR Community Radio. He can be reached at firstname.lastname@example.org. Ritti Singh is a volunteer news writer. She contributed to this report.