PPP loans

Unchartered Territory: County Charter Schools Take $15.8M in Federal Small Biz Loans

In addition to receiving federal education funding, some local charter schools are taking out small business loans, NBC 7 Investigates found.

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Publicly funded charter schools in San Diego County have received more than $15.8 million through the Paycheck Protection Program (PPP,) a federal government fund aimed at helping small businesses from shutting down during the coronavirus pandemic. 

Some of the recipients include large charter school companies with campuses throughout California such as Learn4Life, and Magnolia Public Schools are among those that received millions in PPP loans. 

Charter schools have historically straddled a fine line when it comes to whether they are considered public schools or private businesses. However, that distinction, at least in terms of public funding during the coronavirus pandemic, appears to be more clearly defined.

According to the data obtained by NBC 7 Investigates, local charter schools including Gompers Preparatory, The School for Entrepreneurship and Technology (SET), E3 Civic High, and Magnolia Science Academy have received $3.1 million in CARES Act funding from the federal government which is meant for public schools. Of those, Gompers Prep secured the most CARES Act funding, receiving $408,364 in CARES Act funding while the school also raked in $2.25 million in PPP loans.

In addition to federal education funding under the CARES Act, more than a dozen charter schools in San Diego County have applied for PPP loans with nine schools so far already having received the funds.

Those loans range from $50,135 received by Kidinnu Academy in El Cajon, which has an enrollment of 115 students from TK through 5th Grade, to $5.6 million in loans that went to Magnolia Public Schools, which operates two charter schools in San Diego County and several other campuses statewide.

Graph of Schools That Received PPP LOans
PPP Loans To San Diego Charter Schools

It is the fact that charter schools can receive both public funds from the government as well as opting for loans meant to keep small businesses afloat in times of the pandemic that has some policy experts concerned.

Clare Crawford is a Senior Policy Advisor for public advocacy research organization, In the Public Interest. 

Crawford and her organization recently discovered that charter schools in Oakland received $20 million in PPP loans and now Crawford is looking at charter schools in San Diego County as well as throughout California. 

“We've basically been looking at board documents, posted agendas, and meeting minutes for charter schools  for charter schools to find out which charter schools applied for and received these small business loans,” said Crawford. 

“All schools need more funding right now because they're dealing with a lot of uncertainty,” said Crawford. “But, there's been funding for public schools to keep people employed. Charter schools, however, are tapping into public funds while at the same time are applying for loans that were intended for small businesses and nonprofits that don't have that same continuation of funding.”

Added Crawford, “There are businesses and families in the community that need those funds to keep people employed, many of whom are parents of kids going to these schools and they're struggling. Charter schools are already getting public dollars from the state while also dipping into this money.”

But the $15.8 million in loans will likely increase as hundreds of local small businesses were denied money under the Paycheck Protection Program, or never received any kind of response from the Small Business Administration, resulting in some businesses having had to cut staff positions or close permanently.

According to board documents reviewed by NBC 7, several other charter school companies including Inspire have also applied for millions in PPP loans. Those schools have not yet confirmed whether their applications were approved and if  they received the money. 

Graph of Charter Schools and PPP Amounts Requested

Crawford said her organization found that throughout the state, Inspire has applied for more than $30 million in PPP loans since March of this year. 

“Inspire believes their overarching entity doesn’t qualify for PPP loans but we've documented school-by-school that they have applied for over $30 million in PPP loans in California,” Crawford said.

In October 2019, state officials launched an investigation into Inspire schools in San Diego, Kern, and Placer counties amid reports that the district had misused public funding.

https://www.nbcsandiego.com/news/local/state-investigating-inspire-charter-for-alleged-financial-violations/1966225/))

NBC 7 Investigates reached out to Inspire for comment but did not hear back.

Those most knowledgeable about charter schools say the schools have an uphill battle when it comes to public funding. The economic downturn that COVID-19 unleashed only made matters worse.

“When it comes to helping kids, nonprofit charter schools should not be shamed when asking for a federal loan to remain financially solvent during a national emergency and should not have to apologize for doing what is needed to help the students they serve and the staff they employ,” said Luis Vizcaino from the California Charter Schools Association.

Vizcaino says charter schools have played a crucial role in making sure the communities they serve are taken care of, whether that means food for low-income families or laptops and other school supplies for students with disabilities. 

“The COVID-19 pandemic has impacted all sectors including nonprofit charter schools that are publicly funded. Unlike district schools, charter public schools have limited resources. Unlike traditional district public schools, charter schools are unable to tax local residents to increase funding for school services or facilities. They also do not have access to low-cost loan and financing options that are available to traditional public schools,” said Vizcaino.

A spokesperson for Learn4Life Charter Schools said its San Diego Workforce Innovation High School, a non-profit charter that works with at-risk students, has yet to receive any public funding and needed the PPP loan to help pay its 216 staffers.

“We do not take any federal funding to operate our schools,” said the spokesperson. “We did not claim any relief from the CARES Act. We sometimes need to access gap funding to maintain cash flow and continue serving students, especially as we go into the next school year with cuts to education and deferrals.We have not laid off any employees during the pandemic and we have started transitioning our students back to on-site learning.

Meanwhile, Crawford and In the Public Interest will continue to search charter school board meeting documents to track just how much charters throughout California are receiving in PPP loans.

“We’ve seen GoFundMe pages for families whose businesses are shutting down because of the stay at home order,” said Crawford. “This is not a critique of charter schools. This is money that people, small businesses, need. This money was intended for, for those folks. So, it's hard to not understand the impact that taking this money has on those folks in the community.”

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