Many Chicago Charter Schools Run Deficits, Data Shows
By SARAH KARP | New York Times + Chicago News Cooperative
as the Obama administration promotes charter schools as a way to help raise the academic performance of the nation’s students, half of Chicago’s charter schools have been running deficits in recent years, an analysis of financial and budget documents shows, calling into question their financial viability.
José Moré/Chicago News Cooperative - Teachers heading to their classrooms at Perspectives Calumet High School, a charter school on the South Side of Chicago.
Chicago News Cooperative is nonprofit, nonpartisan news organization providing local coverage of Chicago and the surrounding area for The New York Times.
August 13, 2010 -- Even Charter teachers may do more than teach. Ryan Beaudoin, an 11th-grade teacher at Perspectives Calumet, painted his room.
On Monday, Chicago Public Schools released a bare-bones budget that included a cut of about 6 percent in per-pupil financing for charter schools — to $5,771 from $6,117 per pupil for elementary school students and to $7,213 from $7,647 per pupil for high school students. The cuts are a result of shrinking tax revenue and lagging support from the strapped state government. The city’s 71 charter schools, which enrolled 33,000 students last year and expect to enroll another 10,000 in the 2010-11 school year, stand to lose $15 million under the cuts.
It is difficult to compare the cuts with those that are being made at traditional schools because those schools do not receive money on a per-pupil basis, but district officials said they tried to make the amount of cuts comparable to those being made at traditional schools.
As a result, charters will become more dependent on private donors to provide the extras — more counselors, smaller classes, longer school days and up-to-date technology — that charter operators say set their schools apart from traditional public schools.
But even though Chicago’s charter schools brought in $21 million in private money from foundations, corporations and wealthy individuals in 2007 — the last year for which complete information is available — half have run an average of $700,000 in deficits in recent years, with some of the shortfalls reaching $4 million, according to an analysis of Chicago Public Schools data by Catalyst Chicago, an independent magazine on urban education.
The data showed that two-thirds of the schools could not cover core expenses, like salaries, facilities and overhead, without private money. A third needed private money to fill more than 20 percent of their budgets. A recent study by Ball State University found that Chicago’s charter schools depend far more on private financing than those in other big cities, including Boston, Miami and New York.
Robert Runcie, chief administrative officer for Chicago Public Schools, said the district needed to take a “serious look” at the fiscal health of charters and was developing a system for stricter oversight. Four Chicago charters have been shut down since the 1990s largely because of financial problems.
Charter schools, which receive public money but are run by private for-profit and nonprofit organizations, were established to foster innovative educational practices by freeing the school from state and local regulations, for example, the requirement that all teachers be state-certified.
Chicago Public Schools officials and national education experts say that charters, to be considered fiscally sound, should be able to cover all their general operating costs with public money. If charters raise private cash, it should be just for additional programs, said Greg Richmond, president of the National Association of Charter School Authorizers.
Advocates of charter schools say inequitable public financing is the root of the problem. Charters are forced to rely on private money because they receive less public money than traditional schools, said Larry Maloney of the Aspire Educational Consulting Company in Washington, D.C., one of the authors of the Ball State study.
“The question is, are we intentionally setting up charter schools to fail?” he said.
Opponents of charters blame the financial problems of the schools on the expense of extra bureaucracies. In addition to principals and assistant principals, the schools often have executive directors and financial officers on staff, all of which cost extra money.
“I think the charter school system was always built on a house of cards, and once the economy took a dive, it would crumble,” said Jackson Potter, staff coordinator for the Chicago Teachers Union and co-chairman of the Caucus of Rank and File Educators, which now leads the union.
Union leaders have vigorously fought charter schools, which they consider privatization of public schools and a way for school districts to abandon their responsibility to children. Charter schools also have mostly nonunion teachers, although teachers at two charters in Chicago have recently formed unions.
President Obama and Education Secretary Arne Duncan, a former Chicago schools chief, view charter schools as a way to spur innovation in public school systems that they say are too resistant to change. States that do not allow charters or restrict their replication jeopardize their chance to receive federal financing, Mr. Duncan said last year. “We want real autonomy for charters,” he said.
Mr. Duncan has also pressed charter operators to take over failing schools under the so-called “turnaround” strategy, which involves replacing the entire staff of existing schools.
Charter schools are a centerpiece of Chicago’s Renaissance 2010 strategy, which was started in 2004 by Mayor Richard M. Daley and Mr. Duncan, who was then the chief executive of Chicago Public Schools. The program’s goal is to close failing schools and replace them with new ones, including charters.
The initiative has been controversial from the start, and charter finances are not the only concern. New schools have been spread unevenly across the city, and half of the 25 neighborhoods considered most in need of better schools have yet to get them.
In addition, teacher turnover at charters is high: Catalyst Chicago’s analysis of charter teacher lists found that half of teachers left from 2008 to 2010, a rate comparable to that in many of the most troubled district-run schools.
Charter school operators say teacher turnover can be good if it means that bad teachers are being fired. But education experts say that high turnover is often a result of poor working conditions, and charter teachers typically work longer hours for less pay than teachers in traditional schools. Experts also say high turnover causes an unstable learning environment.
Educators have said the real test of charters is whether they are driving improvement in public schools. The Catalyst Chicago analysis showed that most charter schools in the city outperform traditional schools in their neighborhoods, but only eight have reached the higher state average for student achievement.
A host of national studies have found that charter-school performance is mixed and, on the whole, no better than that of traditional public schools.
Charter operators say that there are other measures besides test scores. This year, a handful of the charter high schools called attention to the fact that almost all their students got into colleges.
Around the Calumet campus of Perspectives Charter School on Chicago’s South Side are posters and murals with the motto “College For Certain.” To reach that goal, Perspectives has college counselors dedicated to taking students on college tours and helping them navigate the journey from poor South Side neighborhood to leafy college campus.
In May, the school celebrated its first graduation, with 70 percent of the class having been accepted to at least one college, the school reported.
But the 6 percent cut in Chicago Public Schools spending on charter schools is going to make it increasingly difficult to fulfill the promise of college, said Rhonda Hopps, chief executive of Perspectives, which operates five schools. The proposed cuts would mean $710,000 less, based on current enrollment, to hire the additional college counselors Perspectives had planned to add. Ms. Hopps said she would try to find volunteers to fill the gap.
“I am worried about the direction of the cuts,” said Ms. Hopps, who joined Perspectives last spring as the school’s first chief executive. Her major task, she said, is to raise money.
Beth Purvis, the executive director of Chicago International Charter Schools, the city’s largest charter operator with 13 schools, said her board of directors believed that “public education should occur with public money.”
Leaning on outside sources might work in the short term, while charters are still the toast of the philanthropic community, Mrs. Purvis said, but the strategy may not work in the long run.
“We don’t want to just be in a community for 15 to 20 years,” she said. “We want to be in a community for 50 to 100 years.”
Sarah Karp is deputy editor of Catalyst Chicago, an independent publication on urban education. For more information on charter schools visit catalyst-chicago.org.
Searching for Equity: Children in some of the neediest neighborhoods are still waiting for quality schools and a cut of the millions of private dollars being spent on them
by Sarah Karp | Catalyst Chicago |http://bit.ly/9E1yIj
Parent Sharisa Lee
Lee's three sons
August, 2010 -- In the short time Sharisa Lee’s children have been enrolled at Wendell Smith Elementary School in Pullman, she’s seen the hallways become sparse and classrooms left with empty chairs and desks.
Some families moved to new apartments outside Smith’s attendance area. Some students were sent to live with relatives in other neighborhoods deemed safer than crime-plagued Pullman and adjacent Roseland, nicknamed the “Wild Hundreds” (a reference to the east-west streets numbered in the 100s). A few students now travel daily to magnets and other schools, their parents eager to see if they could do better than the steel-frame, blue-and-yellow school at East 103rd Street and South Cottage Grove Avenue.
Lee has thought about joining the exodus. But, reluctant to give up on her neighborhood schools, she didn’t.
In Roseland, another mother, Charise Agnew, keeps her children in the neighborhood school because of proximity. Agnew works as a security officer at Horseshoe Casino in Indiana, and leaves in the wee hours of the morning to make it to her job on time. She is deathly afraid of having her two boys travel to school alone on buses and trains.
“I just worry,” says Agnew.
Lee’s and Agnew’s stories illustrate some of the challenges raised by Renaissance 2010, which promised to create new school choices and options in communities with low-performing schools.
WHY THIS MATTERS
Renaissance 2010, launched under Secretary of Education Arne Duncan’s tenure in Chicago, foreshadowed the federal Race to the Top emphasis on charters. Yet a Catalyst Chicago analysis of charter financial documents, staff lists and test scores raises questions about the strategy’s impact on equity and school performance.
CPS does not require prospective operators to open schools in the neediest neighborhoods. Eleven of the 25 highest-need communities have gotten no new charter, performance or contract schools, cutting them out of the money flowing into these new schools.
Charters bring in significant private donations, raising five times the private cash that traditional schools received in 2007. But half of charters still had deficits in recent years, putting them in danger of potentially shutting down.
On average, charters lost half of their teachers over the past two years, a turnover rate that rivals many low-performing neighborhood schools.
Only 16 of 92 new schools have reached the state average on test scores. Of those 16, just eight are charters. The rest are new magnet schools or new satellites of existing magnet and selective schools.
Mayor Richard M. Daley and then-CEO Arne Duncan stressed that goal when they announced Renaissance in a packed hotel conference room in June 2004. The launch came on the heels of a 2003 report from the Civic Committee that argued for a market approach to education: Force neighborhood schools to improve through competition from more charters.
But six years later, the initiative has not sparked widespread improvement or equity. Eleven of the 25 neighborhoods identified as most in need of better-performing schools have gotten none. (The 25 neighborhoods were identified in a report from the Illinois Facilities Fund, which provides assistance to non-profits, including charters.)
Charter schools, the primary strategy under Renaissance, have pulled in millions of private dollars. In 2007—the most recent year for which complete financial data are available—charter schools brought in $21 million from foundations, corporations and wealthy individuals, according to a Catalyst analysis of financial documents. CPS data show the 500 traditional neighborhood schools brought in just $5.4 million.
In Roseland and Pullman, where no charters have opened, the 20 neighborhood schools have raised just $100,000 over the past three years, in small grants of less than $2,000 each.
Charter school advocates maintain that the movement has meant more equity for poor children, rather than less. Robin Lake, associate director for the Center on Reinventing Public Education at the University of Washington, says that charter schools want to be in low-income neighborhoods with concentrations of children of color.
Even if it is not across the board, it is these children who are benefiting from the performing charter schools that are bringing in extra money, she says.
“I am not too worried about the distribution of resources, though it is something we should keep an eye on,” Lake says. Lake adds that public school parents in wealthy areas have the ability to contribute money to supplement their children’s education.
But it is this unevenness that troubles Diane Ravitch, a research professor of education at New York University, who was once a proponent of charter schools and now is convinced that as a large-scale method of school improvement, they are a bad idea. Quality public education is not something that should be doled out to some and not others.
“It is an obligation,” she says.
Education Secretary Arne Duncan has heralded his initiatives in Chicago as the groundwork for his national agenda, Ravitch points out. Yet the evidence in Chicago is that thousands of children and entire communities did not benefit. In fact, as the choice movement has grown, neighborhood public schools have been decimated, she says.
Why have some communities benefited more than others from Renaissance? “There is no easy answer,” says Jaime Guzman, who recently left his post as director of the CPS Office of New Schools to work for former School Board President Gery Chico, who now heads the board of City Colleges.
The district has no formal process to ensure potential school operators go to the neediest neighborhoods. The new schools office issues requests for proposals, notes preferred neighborhoods—and then waits.
Lake says the fact that CPS issues requests for proposals, which note communities and types of schools, makes the district proactive.
Some operators don’t consider certain neighborhoods because the population is declining and the area is isolated from public transportation, Guzman points out. Charters have citywide lotteries for enrollment and get a per pupil stipend for each student, so they have a financial incentive to fill their seats.
Roseland and Pullman are tough draws on both counts. Despite a decade-long fight to extend the Red Line, the el train still ends outside the northern edge of the communities, at 95th Street. The number of school-aged children in the area fell by 22 percent over the past decade, according to the U.S. Census and CPS estimates.
“I saw the transition,” says Claretha Morrell, a school clerk at Lavizzo Elementary. She notes that the community is not only aging, but hard-hit economically.
Need is not always the decisive factor in where new schools open.
Greg Richmond, the former head of new schools for CPS and now president of the National Association of Charter School Authorizers, acknowledges that politics plays a role. “It happens everywhere,” he says. “Some places are better at managing it than others.”
Many observers believe charters should be approved by independent authorizers, disconnected from local districts and school boards. In Chicago, where CPS controls charter approvals and Daley controls CPS, politics are ever-present. Communities that need new schools are often left to flex their own muscles.
Roseland has so many challenges—violence, transportation problems, joblessness, lack of grocery stores and other retailers—that it can be hard for activists to focus on a single issue and build grassroots support to confront the problem, says Darryl Gibson, a Roseland activist who is working at Dunne Elementary School and Fenger High School.
“The activists have been fractured,” he says.
People rallied around the schools this past fall after the beating death of Fenger student Derrion Albert. But even so, there’s little agreement about how to improve schools and whether charters are the way to go, Gibson says.
Yet in a struggling community, a new school, of any variety, can represent hope and spark new energy.
“I embrace anything new,” says Deloris Lucas, who lives around the corner from a Chicago International Charter School that opened last year in nearby Riverdale. She says that when Carver Middle School shut down five years ago, it cast a shadow over the community, another sign of its depressed state.
“I have a love for that building,” Lucas says. “Charter or not, doesn’t matter. It is a new school, a new curriculum. It is a shot in the arm.”
This spring, Charise Agnew was forced to confront the lack of school options in Roseland as she made an agonizing decision about where to send her older son, Dorian Metzler, to high school.
Dorian was one of the top 8th-graders at Lavizzo, one of the lowest-performing schools in the city. In 2010, only about 44 percent of students met or exceeded state standards on the ISAT.
Agnew had her heart set on Dorian attending Gwendolyn Brooks College Prep, a selective enrollment school just to the west of Lavizzo. She had him apply, and then she waited. But Agnew didn’t know that Dorian needed to take an entrance exam. Few students at Lavizzo score above the 70th percentile on the ISAT, the cutoff to take the selective enrollment test. So there was no buzz in the hallway. A teacher might have asked about it, but the original 8th-grade teacher was fired and the class had a substitute for two months.
The end result is that no one tapped Dorian or Agnew on the shoulder to tell them about the entrance test. “I just had no idea,” Agnew says.
Brooks is the only higher-scoring high school in the area. Agnew’s first reaction was to take Dorian’s transcript up to Brooks and try to talk to the principal. But selective enrollment school principals can be inundated with pleas from parents to offer their child a slot. Schools set up shields, and Agnew didn’t make it past the foyer.
Agnew started to bite her nails and worry. She called the Office of Academic Enhancement and asked for advice. They gave her some phone numbers of charter schools.
Agnew was not happy with that idea. She has nothing against charters; in fact, when she lived in Indiana for a brief time, her sons attended a charter school near the Dunes. The kids got out into nature a lot, which Agnew liked. But no charter high schools are particularly close by, and Agnew didn’t know anything about the academics or climate at the schools.
Late in the game, Dorian was presented with another option. To increase the number of black and Latino students in the elite downtown and North Side selective schools, the district set aside 25 additional seats at each of them for high-performing students from the worst elementary schools. Dorian got into Walter Payton College Prep, the second highest-scoring school in the city, on the Near North Side.
On the early spring day that Dorian received the acceptance letter, Agnew brought it to Lavizzo. Dorian says he doesn’t know what to think about going to Payton, but he had asked his mother to let his teacher make a copy of the letter to post on a hallway bulletin board that shows which schools the graduating 8th-graders will attend. By April, only three letters were on the board—one from Chicago Vocational High School, one from Carver Military Academy and the third from the DuSable campus of Betty Shabazz Charter High School.
All the other 36 8th-graders are planning to go to Corliss, the neighborhood high school. Corliss’ truancy rate is 35 percent, fewer than half the students who start as freshmen graduate and only 10 percent of juniors passed the Prairie State achievement exam.
After Dorian and his mother receive the acceptance letter, Agnew walks into Lavizzo’s office with it in hand. Principal Tracey Stelly meets her with an immediate smile. “Congratulations, Mom,” she says.
But Agnew sighs. Payton is two buses and a train ride away. Dorian would have to travel more than an hour to get there. In the winter, he would most likely leave and come back in the dark.
Agnew still wants him to be able to walk quickly up to Brooks, on a leafy campus that seems like a different, better world to Agnew.
She presses Stelly to send a letter to the Brooks principal, making the case that Dorian should get a seat. “Did you mail it?”
Sharisa Lee’s decision to keep her children at Smith Elementary, across the park from her apartment, is a matter of philosophical choice.
Lee is just 25, but has the aura of someone older and highly adept at navigating her way through the world. She has a broad face and an alto voice, and she revels in the fact that she does her homework. She presents her opinions about education and the neighborhood with confidence.
Lee’s demeanor gives the impression that she could easily find another, better school for her three boys, and get them to the bus and to school on time. But she sees herself as a budding activist and thinks that to abandon the school would be paramount to giving up on the community.
“I don’t believe in running away from problems,” Lee says.
Still, the idea of a high-quality neighborhood school sometimes seems like a fantasy to Lee. She knows enough to realize that Smith Elementary, where just about half of students met or exceeded state averages on the ISAT in 2010, is a disappointment. The clearest evidence is the library. On each shelf, a few books lean against each other, gathering dust. Worn, used chairs and tables are scattered about. There are no computers and no librarian—and so, no students.
“To tell you the truth, I think our children are way back” in terms of their educational opportunity, Lee says.
Sitting in the library one day, as her preschool-aged son pages through a dusty book, Lee says test scores and the lack of materials are not Smith’s biggest problem. Most frustrating for her is the lack of parent involvement, essential for a high-performing school. Lee attended just two parent committee meetings before she was voted in as chairwoman. The committee, required under the No Child Left Behind Act, is the only functioning parent group at the school. The local school council has had problems attracting members.
Among other tasks, the committee works with the principal on the school improvement plan and decides how to spend the $6,000 set aside for parent involvement activities. To drum up interest, Lee has gone door-to-door and won promises from people that they will attend. When they don’t, she calls them on their cell phones to urge them to show up—with mixed success.
“Oh, girl,” Lee says, wearily. “I have tried everything.”
Lee says to some degree, the infusion of new schools through Renaissance has created a scenario that many in the community feared. Lee says Smith is now largely a school for children whose parents don’t have the wherewithal to get them somewhere, anywhere else.
“A lot of students are children of really young mothers and they don’t know how,” Lee says. “This is a high-risk area. We had the children of the crack addicts, and now it’s the children of the children of the crack addicts.”
Smith Elementary Principal Johnny Banks and Lavizzo Principal Tracey Stelly are well aware of their precarious position. Being at struggling schools in an area with a declining student population puts them at high risk of closure or turnaround. Either option would mean the loss of their job.
Banks, a thin, soft-spoken man with graying hair, is not sold on the idea that a dramatic change through turnaround will make a difference.
What he wants most is counseling for students, who, he says, “come to us with a lot of needs that are difficult to meet. They need someone to talk to. They are screaming inside.” The district had a small-scale plan to bring in more social and emotional curricula for schools, but the lack of resources has hindered that effort.
In his five years at Smith, Banks says he has sought outside resources, applying for at least one grant a year. Some he has received, others not.
The general public might think that wealthy people and foundations line up to help schoolchildren in the most destitute neighborhoods, but Banks says that hasn’t been his experience. “If you know where they are, let me know,” he says.
For her part, Stelly is unique among traditional neighborhood school principals: She isn’t afraid of competition from charters or turnarounds. She would have loved to walk into Lavizzo with a clean slate and a pot of extra cash, which turnarounds receive.
She can quickly tick off a wish list for Lavizzo—at the top are reading and math specialists to help teachers with instruction—and she is not inclined to sit around and wait for help. “In a minute, I will get on the phone and beg,” Stelly says.
This is her first year at Lavizzo, and she got Xerox to donate $4,000. She also secured a $163,000 grant to turn Lavizzo into a community school.
But Stelly is also quick to note that it is not easy to go out and raise money. Principals have a seemingly unending list of tasks, and most of her time so far has been spent trying to get rid of poorly performing teachers and staff. Two have gone on medical leave, in an apparent move to sidestep the dismissal process.
Stelly was then left in an even worse position: She can’t hire a permanent teacher and has had to hire long-time substitutes for the classes.
“That is the most frustrating part,” she says.
Stelly has also had another major task: Since the school had been sanctioned by the state for failing to include special education students in regular classes, Stelly decided she had to go through and work with caseworkers on each student’s individual education plan.
CPS officials acknowledge that new schools can only do so much: They can give areas a boost, Guzman says, but it is wrong to look to them to spur general, systemwide improvement. After all, nearly 300,000 students in Chicago still attend low-performing elementary schools and high schools. About 6,000 of them live in Roseland and Pullman.
Chief Administrative Officer Robert Runcie agrees. Going forward, he says, the discussion should move away from charter schools versus neighborhood schools and focus more on school quality, no matter the structure. He points out that the evidence on charter schools is mixed.
Runcie says later this year, the district will hold community meetings to get residents to talk about how to improve regular schools. The meetings will include discussion about closing under-enrolled or under-performing schools, opening new schools and improving existing ones.
“We are trying to take a more holistic approach,” Runcie says.
Ultimately, for parents, the type of the school is not as important as whether they feel their children have a chance at a good education, he says.
That is the bottom line for Charise Agnew and Sharisa Lee.
Agnew wishes that she could keep her son close by. She worries that Dorian—who at 14 is still shorter than her 5 feet, heavy-set and shy—will be an easy target for bullies while waiting at bus stops.
But in the end, Agnew signed Dorian up for Payton. “We will see how this whole thing works out,” she says. “We will try it.”
Lee also is holding her breath as she waits for the coming school year. She is trying to be patient for improvements at Smith. And she remembers the situation she was in eight years ago, when her oldest son was born. At the time, she was a homeless teen mother. While living in a shelter, she was offered a subsidized apartment in Pullman.
Getting that apartment saved her and is one reason she is so committed to the community.
When Lee thinks about pulling her oldest son out of Smith, she thinks of her neighbors’ children. “I worry about the children left here. What will happen to them
A Catalyst analysis finds that many charters operate with deficits and depend heavily on private money to stay afloat
by Sarah Karp |Catalyst Chicago | http://bit.ly/bhJPB9
August, 2010 | Despite the cloudy sky, light streams into the imposing, two-story plate-glass windows of the school gym. Seated in several rows of chairs are immigrants, some in jeans and others in their best outfits, clutching papers and balled-up tissues.
Behind them on bleachers are students, middle school and high school-aged, neatly dressed in blue uniforms with white shirts. Their teachers hover nearby.
The occasion is a swearing-in ceremony for new citizens at the Archer Heights charter school run by the United Neighborhood Organization. It’s emblematic of what UNO once was—a grassroots group focused on organizing in the Latino community, leadership training and preparing immigrants to become citizens—and what is has become under Renaissance 2010—one of the city’s largest charter school operators.
But UNO’s story also illustrates the financial landmine that awaits many charters: finding sufficient money to stay afloat.
Underscoring the problem is a recently released Ball State University study, which found that Chicago’s charter schools depend on private funding far more than charters in other cities. (The study included 38 cities, New York and Miami among them.) Next in line was Boston.
When Chicago first began opening charter schools, there was concern about their potential dependence on private money, says Greg Richmond, who led the district’s new schools effort and is now president of the National Association of Charter School Authorizers. Charters can look to foundations and corporations to get them off the ground, Richmond says. But over the long term, they should be self-sustaining.
Katheryn Hayes, spokeswoman for the Renaissance Schools Fund, the private fundraising arm of the Renaissance 2010 initiative, agrees. But she notes that, so far, the business community’s interest in supporting charters as they start up hasn’t waned.
“Honestly, we have seen support grow for our movement,” she says. “It has now become a national movement.” Fueled by the business community’s desire for better outcomes, however, the Fund is switching tactics: Instead of providing start-up grants to every charter, the group plans to focus on helping the highest-performing networks expand, as well as helping promising emerging operators.
At UNO, the biggest chunk of a nearly $40 million budget is a $28 million contract with CPS to run eight charter schools serving almost 4,000 students. (UNO’s leaders have plans for that number to double in the coming years, and recently secured a state grant to help them build eight additional schools.)
But that hefty contract is not enough to cover costs. According to a Catalyst Chicago analysis of projected budgets filed with the district and financial disclosure forms filed with the IRS and the Illinois Attorney General’s Office, UNO would have had to raise $8 million in private money to end the 2008-2009 school year in the black. Yet the group has never raised nearly that much in the past, and has had substantial deficits for the last few years.
UNO isn’t the only operator walking this financial tightrope. Catalyst’s analysis found that half of charters have run deficits in recent years. Two-thirds of charters could not cover core expenses without private money. A third of charters look to foundations, corporations and rich individuals to fill more than 20 percent of their budgets.
Yet CPS officials and national experts say that to be considered financially sound, charter schools should be able to cover general operating costs solely with public money. If they raise private cash, it should be just for extras.
Both charter advocates and opponents agree that the situation is troublesome and raises questions about the long-term viability of these schools.
Advocates say inequitable funding is the root of the problem. Charter schools are forced to rely on private funding because they receive less public money than traditional schools, says Larry Maloney of Aspire Consulting Company in Washington D.C., one of the authors of the Ball State study.
“The question is, are we intentionally setting up charter schools to fail?” Maloney asks. Chicago’s charters face potential cuts in public money this year because of the district’s budget shortfall.
Others say deficits are to be expected when schools have an extra layer of bureaucracy. In addition to principals and assistant principals, charter schools often have executive directors and financial officers on staff—all of which cost extra money.
“I think the charter school system was always built on a house of cards, and once the economy took a dive, it would crumble,” says Jackson Potter, a staunch opponent and co-chair of CORE (Caucus of Rank and File Educators), a faction of the Chicago Teachers Union whose leader, Karen Lewis, is the new union president.
Charters “have to be held accountable,” Potter says. “Parents need to know if their child’s school is about to implode.”
Robert Runcie, chief administrative officer for CPS, says the district needs to take a “serious look” at the fiscal health of charters. Economies of scale are part of the problem, and Runcie tries to negotiate deals so that charters can purchase services under CPS contracts, although not all charters take advantage of the opportunity.
CPS is intent on getting a better handle on charter finances because budget problems can endanger the quality of education or force a shutdown, says Jennifer Dai, director of evaluation for the Office of New Schools.
“We just want to make sure they are sustainable,” Dai says.
In the past, the office considered just three factors to measure the fiscal health of charters: compliance with federal mandates, having a balanced budget, and use of sound financial practices. Starting next year, Dai says, the office plans to look at 12 to 15 measures, including cash flow and whether fiscal projections are realistic.
Some charter school operators, however, are not happy about the new criteria, says Andrew Broy, the new president of the Illinois Network of Charter Schools.
“The district wants a one-size-fits-all approach and we think that we need to be more nuanced in how charters are approached,” Broy says. “We want to be judged on outcomes, not process.”
Also in question is whether the district will move to close charters that do not meet these tougher criteria. (CPS has closed just a handful of charters for a mix of academic and fiscal problems.)
State Sen. Iris Martinez, a Northwest Side Democrat, says lawmakers and the public depend on CPS to make good decisions about closing struggling charters, including those with financial problems.
“You would hope that CPS officials would be working in an aggressive fashion and not let charters continue in a deficit, adding salt to a wound,” Martinez says. Operators need to adjust their budgets if they can’t raise enough money, she adds. And while she supports charters, and UNO, Martinez says CPS needs to keep an eye on the group if it is not living within its means.
Some authorizers have moved aggressively against charters with fiscal problems and mismanagement, Broy says. But those cases usually involve independent authorizers. In Chicago, the district is the authorizer and therefore every decision is enmeshed in politics, he adds.
INCS is leading an effort to have an independent authorizer established in Illinois, so that charter schools turned down by the district can appeal the denial. Broy says a bill should be in front of the legislature this year.
In the end, Broy says, funding parity with traditional schools is the solution. To achieve that end, he adds, the charter school community must do a better job of convincing school officials and the public that they can do what traditional public schools cannot, such as provide a longer school day and year.
UNO’s Chief Executive Officer Juan Rangel, who earns almost $250,000 annually, says charter schools should be measured solely on their educational outcomes.
“Ultimately the question is about results,” Rangel says. “Are we getting a big enough bang for the public’s buck? We should be held accountable for whether we are turning over a great product, and that is educating students.”
The proof is in the test scores, Rangel says. In four of the five community areas where UNO elementary schools are located, they are outperforming the nearby traditional schools, according to a Catalyst analysis of 2009 ISAT scores. However, only one of UNO’s eight campuses is performing better than state averages. UNO’s high school did not have a class of juniors in 2009, the most recent year for which Prairie State exam scores are available.
UNO’s charters also relieve some of the district’s overcrowding burden. If these charters go belly-up, CPS would have to scramble to find space for their students. UNO just received $5 million of a $98 million state grant to help with the new school construction.
Rangel says that if it weren’t for the cost of facilities—which can be steep for charters that must pay rent or a mortgage—UNO would be able to live within its means. He says there are few buildings in the Latino community that are built to function as schools, and rehabbing a building is expensive.
“There is nothing available in the Hispanic community,” he says.
Charters’ need to raise big money is evident from a quick glance at a well-known website where non-profits advertise job openings. On any given day, ads abound from charter schools seeking development officers, grant writers and fundraisers. UNO, along with Noble Street and Perspectives, each had fundraising jobs advertised on the site in June.
“We are always looking to try to replace the next big wad of money,” says Rhonda Hopps, an MBA from Stanford University who was hired in April by Perspectives to be its first CEO and quickly found that her major task was to raise money to make ends meet. The projected budget that Perspectives submitted to CPS shows the school needs to fill 10 percent of its budget with outside funds, a goal Hopps says is doable. With higher graduation and college-going rates, Hopps says she is selling something tangible to potential funders.
But other operators question the wisdom of relying heavily on private funds. Leaders of Chicago International Charter Schools, the city’s largest operator, estimate receiving about 3 percent of funding from non-government sources—mostly student fees and charges for after-school programs.
Beth Purvis, the executive director for Chicago International, says her board of directors believes that “public education should occur with public money.”
“Our No. 1 goal is to provide a better education with the same amount of money,” she says. “You can’t say we are getting better outcomes with the same kids and the same money, if in fact, you are not.”
Leaning on outside sources might work in the short term, while charters are still the toast of the philanthropic community. But Purvis is not so sure that strategy will work long- term.
“We don’t want to just be in a community for 15 to 20 years,” she says. “We want to be in a community for 50 to 100 years. It is a philosophical difference.”
In the end, perhaps charter school leaders are bolstering what CPS officials have been saying for years: The city’s schools are grossly under-funded, and it is nearly impossible to provide a decent education on the money provided.
“The sad fact is that the per-pupil amount that we have is not enough to take care of all the needs of our students,” says Runcie. “Even if we had the same amount as Naperville, our children have more needs.”
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