Private consultants will work with charter school networks to assist in opening more of the publicly funded, independently managed schools in economically distressed areas under a plan announced by U.S. Secretary of Education Betsy DeVos Thursday.
Investors who build in those areas—identified as Opportunity Zones under the Tax Cuts and Jobs Actsigned by President Donald Trump in 2017—qualify for the use of an investment vehicle called an Opportunity Fund, allowiing them to defer taxes on capital gains by investing them in projects in those zones instead. And investors could potentially avoid taxes for profits they make within opportunity zones altogether.
States select low-income census tracts to carry the federal designation. About 70 percent of existing Opportunity Zones don’t current have a charter school, DeVos said in a statement Thursday. (That is in part because some Opportunity Zones are located in states that do not have laws permitting charters.)
“Access to high-quality, innovative education options is fundamental to the long-term success of not only students but also entire communities,” DeVos said. “The focus on opening charter schools in designated Opportunity Zones will have a long-lasting impact, and I’m looking forward to seeing how charter school leaders, nonprofit organizations, and others utilize the Qualified Opportunity Fund to invest in students and improve outcomes.”
As we reported in July, DeVos already made locating within an Opportunity Zone part of the education department’s priorities for competitive grants, which could be directed toward charter schools. The department awarded nearly $4 million in new funding to applicants serving Opportunity Zones in 2019, after giving the projects within the zones priority in two of its Charter Schools Program grant competitions, the agency said.
How would the tax benefits help schools? Public schools, including charter schools, could partner with private enterprises for facilties funding made available through the zones. This arrangement could extend to schools’ participation in mixed-use developments and partnerships with things like health centers and libraries, according to a piece by John Bailey published in July in the journal Education Next.
Through a newly awarded contract from the education department, Leed Management Consulting, a firm located in Silver Spring, Md, will “conduct outreach to current and prospective high-quality charter operators, develop resources to assist with opening high-quality charter schools and serving students living in economically-distressed communities, and provide technical assistance to entities looking to create and expand high-quality charter schools in Opportunity Zones through the use of Qualified Opportunity Funds,” the education department said.
The plan is sure to have some detractors. Supporters of charter schools say they provide a meaningful alternative to struggling, district-run public schools for low-income families. But opponents have said charters can siphon students, and the public funds that follow them, away from district schools, leaving them to struggle to serve their students.
And the Opportunity Zones program in general has attracted controversy from critics who say it has failed to help the poor people who live within designated tracts. In some cases, investors have clustered luxury developments, like high-end hotels, into more affluent neighborhoods within otherwise distressed areas that carry the designation, the New York Times reported in August.