Tuesday, January 27, 2009

LAUSD NIXES CHARTER SCHOOL LOAN PLAN: Proposal is pulled from agenda after criticism.

By George B. Sanchez, Staff Writer | LA Newspaper Group

Tuesday, January 27, 2009 - A plan calling for the Los Angeles Unified School District to make short-term loans to charter schools was scrapped after the idea drew sharp criticism from officials who said the district is not a bank.

The proposal, which was to be discussed at today's board meeting, was pulled from the agenda late last week after board members alerted Superintendent Ramon Cortines, who said he didn't know how the plan got on the agenda.

"I want to help charters but we're not a bank," Cortines said.

While the practice of school districts loaning money to charter schools is not unheard of, school officials said it would not be practical to do so in these tough economic times.

"It doesn't make any sense right now to give loans out when you can't balance your own budget and are in the hole," said board member Julie Korenstein.

Cortines and board members questioned why the district would be loaning money as it faces a $400 million midyear budget gap.

District Chief Financial Officer Megan Reilly said the request for the agenda item came from either her office or the district's charter division.

She said there was no pending request for a loan from a charter school.

Reilly characterized the one-year loans more as cash advances, capped at $250,000.

Market interest rates charged on the loans would cover LAUSD's administrative costs, according to a district report.

The loans would be granted from the district's general fund, it said.

Charter officials support the loans and said the LAUSD could even make money on them.

"There is a financial incentive for the district," said Gary Larson, a spokesman for the California Charter Schools Association. "They're making money off the loans."

But Reilly said the loans would not be a "profit-making venture," adding the interest would only cover the cost of staff work to process the loans.

The proposal would have given Reilly and the district's controller the ability to authorize short-term loans to charters that do not directly rely on the district for funding.

All but 11 of the district's 148 charter schools are financially independent from LAUSD, said Jose Cole-Gutierrez, executive director of LAUSD's charter schools division.

Cole-Gutierrez said he was unaware where the request for the loans came from.

The referenced agenda item:


Governing Board of the Los Angeles Unified School District


333 South Beaudry Avenue, Board Room

1 p.m., Tuesday, January 27, 2009

20. Board of Education Report No. 221 – 08/09 TO BE WITHDRAWN

Office of the Chief Financial Officer (Delegation of Authority to Enter into Short Term Loan Agreements with Fiscally Independent Charter Schools) Recommends approval of a delegation to allow the Executive Director of the Charter Schools Division to grant short term loans to fiscally independent charter schools based on need from increased enrollment or revenue deferrals.

Bd. of Ed. Regular Meeting                - 5 -                        Order of Business, 1 p.m., 1-27-2009

●●smf’s 2¢: Agenda items don't just appear on board agendae …or they're not supposed to! Per Roberts' Rules of Order and/or standard operating procedure they are placed there by staff, the superintendent, at the request of a board committee or by the chair of the board.

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