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Under New Budget, Charter Schools Cash In

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Charter school advocates say this year's federal budget offers them something almost as important as a generous increase: a vote of confidence.

"There's still a little hesitation about whether charter schools are here to stay," said Mamie T. Thorns, the senior associate director of charter schools for Central Michigan University in Mount Pleasant. "With the federal government increasing the amount of funding, it speaks very highly of the movement."

"People are delighted that there's federal money," added Joe Nathan, the director of the Center for School Change at the University of Minnesota in Minneapolis. "But the number-one thing is not the money. It's the message."

It helps, Mr. Nathan said, that leaders such as President Clinton and Secretary of Education Richard W. Riley are backing the efforts to establish independent public schools built around a set of academic goals rather than traditional rules and regulations.

The charter schools program was one of the big winners as Mr. Clinton's aides negotiated the fiscal 1997 budget with congressional appropriators last month. ("After Two Lean Years, Education Budget Up 14%," Oct. 16, 1996.)

The program's spending will rise from $18 million in fiscal 1996 to $51 million this year. When it started two years ago, Congress gave it only $6 million.

Despite the nearly threefold increase for this year, the money is only a small portion of what the new schools need, experts say.

Focus on Start-Up

Charter schools, which agree to meet state performance standards in exchange for greater flexibility in making their own rules, have to pay for construction, textbooks, and teacher training before they open. They rarely get state money until they open their doors to students.

The federal program is focusing on start-up costs because it's "the place where they most need the funds," said Undersecretary of Education Marshall S. Smith.

The 19 states already receiving federal charter schools money may see their grants rise because of this year's budget increase, and some of the other six states allowing charter schools may win money under a competitive grant program. States that enact charter school laws in legislative sessions this winter may also be able to win funding before fiscal 1997 ends next Sept. 30, Mr. Smith said.

However the money is distributed, charter school entrepreneurs will find an appropriate way to spend it, state officials say.

Charter school founders--often groups of teachers or parents, or small, nonprofit organizations--often suffer from cash flow problems when they start. Most states don't give them money until they've enrolled students, and, like traditional public schools, they are forced to wait a month or two into the school year before they get their first state aid checks.

Most school districts have adjusted their bookkeeping to deal with the built-in cash flow problem, but that job is harder for a brand-new school. Michigan's new charter schools, for example, did not receive their first state payments until two months into the school year, Ms. Thorns said.

Those delays require organizers to use credit cards and lines of credit from banks to pay their start-up costs, said Brooks Flemister, Texas' senior director for charter schools.

Texas won two $250,000 grants in the first two years of the federal program. It spent the money on a combination of grants and low-interest loans to 12 new schools. While the money often was not much, "it helped tide them over" to pay salaries and purchase equipment until regular state checks started flowing, Mr. Flemister said.

In Arizona, state officials used portions of their $750,000 grant from fiscal 1995 to pay for fire alarms, wheelchair ramps, and other provisions so the buildings could open, said Kathi Haas, the director of the state's charter school project. Ms. Haas said the state education board will decide this week how to distribute the $1.2 million in fiscal 1996 money it has for schools.

Expanding Schools

While funding for the federal charter school program has increased 10-fold over its first two years, experts say Washington won't meet all the demand.

The number of charter schools open this fall is between 450 and 500, Mr. Nathan estimates. That's twice as high as last year. A hectic pace is almost certain to continue, as more states create laws allowing charters.

The department has not decided when and how much of this year's $51 million will start flowing to states. The agency is allowed to keep up to 10 percent of the money to pay for conferences and research on the effectiveness of the expanding movement, but officials said they doubted that they would keep as much as $5 million in Washington.

Department officials hope to release the federal money earlier than in fiscal 1996. The department did not award the $17 million in state and local grants until September, mostly because the amount it had to grant wasn't settled by Congress until late April, a result of extended talks that held up the federal budget.

The department may announce a competition for the 1997 grants by the end of the year. It also may hold some money in reserve, Mr. Smith said. That would give states that may pass charter laws early next year a chance to compete for funding.

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