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Charter Schools Eye Coronavirus Relief Aimed at Small Businesses

By Evie Blad — April 07, 2020 5 min read
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Some charter schools may qualify for programs in the federal coronavirus relief package that aim to aid small businesses affected by the pandemic, advocacy groups have said.

But as the organizations that manage charter schools consider applying for the aid, they’ve faced some pushback from charter critics who believe those funds should be directed to businesses—like restaurants and retail stores—that have had to close their doors and lose revenue as the nation tries to slow the spread of the virus.

It’s unclear how many charter schools, if any, have applied for the recently launched programs, which are not options for traditional public school districts.

The discussion comes as education groups representing all sectors suggest Congress should do more to help schools meet students’ needs during unprecedented closures due to the pandemic and to help offset anticipated steep drops in state revenue.

Groups like the National Alliance for Public Charter Schools and state-level associations have urged charter schools, which are independently operated and publicly funded, to consider applying for the $349 billion Paycheck Protection Program, a short-term loan program designed to help businesses cover payroll expenses. If recipients use the money for a qualifying purpose and avoid layoffs, those loans will later be forgiven, essentially converting them into grants.

Charter schools may also be eligible for Economic Injury Disaster Loans created through the $2 trillion CARES Act, the organization said in guidance on its website.

“The last recession hit charter schools pretty significantly,” said Nina Rees, the chief executive officer of the group, which held a webinar walking its members through the provisions in the stimulus bill.

And, while charter schools have assured public revenue this year, they also rely on private giving to support their operations, Rees said. It’s unclear how the emerging economic crisis will affect that fundraising, and how philanthropists will shift their giving strategies to assist families and organizations that have been hit hard by job loss and uncertainty.

“We have been very clear in our communications to anyone interested in this to make clear why they need this funding and what that funding would cover,” Rees said. “Every application is going to be studied carefully and the onus is on our sector and on our schools applying about why they need this funding.”

In addition to small for-profit businesses, both programs in question are available to nonprofits that are classified as 501(c)3 organizations with the Internal Revenue Service and have fewer than 500 employees. Depending on state laws, many small charter school organizations would meet those criteria. Larger, for-profit charter networks would not.

The process for applying for the loans and interpreting the regulations could be difficult for some charter schools without a large administrative staff, said Rees, who does not have a count of how many schools have applied or expressed interest.

‘Ethical Dilemma’

The possibility has already stirred discussions in some cities. In the District of Columbia, for example, charter schools say they have racked up unexpected expenses for items like Chromebooks as they helped students quickly transition to online learning, the Washington Post reported last week.

“We are in an ethical dilemma,” D.C. Council member and Education Committee Chairman David Grosso told the Post. “The challenge is digging deep inside of yourself and seeing where you see yourself in the pecking order of needs in our community.”

A spokesperson for the Small Business Administration said in an email that charter schools that meet the programs’ criteria are eligible to apply, but she did not respond to other questions about the programs.

See full coverage of the coronavirus and schools

Concerns about what organizations qualify are not limited to the education sector. Organizations that advocate for the separation of church and state have sounded alarms that churches and religious organizations qualify for the aid, NPR reports.

The possibility that charter schools would benefit from the programs troubled the Network for Public Education, an organization that frequently criticizes charter schools and has called for Congress to end a designated federal fund that supports their creation.

“It just raised some ethical concerns for us because we know that both [district-run] public schools and charter schools have had no drop in the funding stream,” Executive Director Carol Burris said. “So they are either being paid from the state based on attendance and kids are still going to school virtually, or they are receiving school district-based tuition.”

Burris says the funds should be reserved for small businesses that have faced more immediate revenue declines because of loss of customers.

“They are being so hard hit,” she said. “It just raises concerns to see any sector that is still being fully funded trying to take advantage and get additional funds.”

While schools’ state funding may be set for the current academic year, both charter schools and school districts face an uncertain future as states anticipate drops in revenue and accompanying budget cuts.

New York, the epicenter of the coronavirus outbreak in the United States, expects to lose $15 billion in public funding, more than 8 percent of its revenue, leaders projected last week.

Anticipating those concerns, the CARES Act also includes some education funding: $13.5 billion earmarked for K-12 schools through the law’s Education Stabilization Fund, and $3 billion for governors to use at their discretion to assist K-12 and higher education as they deal with the fallout from the virus.

As states press the U.S. Department of Education for quick guidance on how to direct that funding, some charter schools are uncertain how they will benefit, Rees said. Small schools also face challenges recruiting students amid statewide stay-home orders, which may challenge their operations in the next academic year, she said.

Even as President Donald Trump signed the CARES Act, education groups called for additional aid for schools. A list of organizations, including the two national teachers’ unions, sent a letter to Congress Tuesday pressing for an additional $200 billion in aid to cover costs like special education services and distance learning.

Photo: Getty