D.C. Misses $103 Million Payment to 60 Charter Schools
Thursday, July 16, 2009
The District missed a $103 million payment due to its 60 charter schools yesterday, meaning a payless Friday for some teachers and other cash flow troubles for many of the publicly funded, independently operated schools.
Mayor Adrian M. Fenty (D) has asked Chief Financial Officer Natwar M. Gandhi to dip into contingency cash reserves to come up with $57 million, about half of the amount due, which should be available to the schools early next week.
Charter schools, which are due to receive almost $400 million to serve about 25,000 District school children on 90 campuses, are paid quarterly based on projected enrollment. The District traditionally advances the July payment to the schools against the budget for the fiscal year that begins Oct. 1. But the city has been unable to submit a balanced budget for fiscal 2010 to Congress because of persistently deteriorating revenue forecasts. Revised projections released last month by Gandhi showed that the city faces a $340 million deficit spread over two years: $190 million for fiscal 2009 and $150 million for 2010.
Gandhi said the law prohibits any advancing of funds from the 2010 budget until submission to Congress. Fenty is scheduled to deliver a revised budget to the D.C. Council tomorrow. The budget problems come at a difficult time for charter schools, many of which operate on tight budgets in the best of economic circumstances. Unlike traditional public schools, many charters, especially new ones, do not own their buildings and use part of their District allocations to pay for space in the pricey commercial real estate market.
District officials said that when the $57 million becomes available next week, financially strong schools will receive 50 percent of their quarterly payment. Smaller, less sound schools will receive 75 percent. The remainder will be paid once the budget reaches Congress. But school operators said even a three-quarters payment will pose problems.
"We calculate our cash flow down to the day pretty much. We're counting on that to make payroll," said John Goldman, chief financial officer at William E. Doar Jr. Public Charter School for the Performing Arts in Northeast Washington, which has 735 students and 130 staff members. It was expecting $2.5 million from the District yesterday. As it stands, he said, teachers will not be paid tomorrow.
Goldman added that charter schools also rely on the predictability and stability of the quarterly payments to maintain their ability to borrow money. "To mess with this messes with creditworthiness of charter schools as a group," he said.
Wuhaun Dansby, executive director of Nia Community Public Charter School, a pre-kindergarten through sixth-grade school in Northeast, said he was anticipating his full $400,000 payment to help make technology upgrades in classrooms for the coming academic year.
Some school officials wondered why they weren't told until the close of business Tuesday -- in an e-mail from the charter school board -- that the payment was in trouble. They received support yesterday from Council Chairman Vincent C. Gray (D), who said he favored using contingency funds to provide the entire $103 million, given that the city would be reimbursed when the budget is sent to Congress.
"I stand prepared to support an approach that minimizes the negative fiscal impact for public charter schools," he said in a letter to Fenty that his office release yesterday evening.
The July 15 charter school payment is becoming problematic for the District. Last summer it was late with money due to seven former Catholic schools that were converting to secular charter schools. The District said that the Center City Public Charter Schools were opened on an unusually expedited timetable, giving the city less time to plan. The District eventually used $7.5 million from a special education reserve fund to meet the obligation.
The tardy payments are the latest in a series of financial issues charter schools have had with the Fenty administration. Earlier this year, Fenty's proposed 2010 budget included a $26 million, or 26 percent, cut in the facilities allowance for charters. Much of the reduction was restored by the council.