Dozens of NC charter schools raked in PPP loans in addition to state funding :: WRAL.com
Raleigh, North Carolina – Forty-five public charter schools in North Carolina secured a total of $ 28 million in repayable federal loans last year in the first weeks of the pandemic that traditional public schools could not access.
WRAL Investigates screened the US Small Business Administration’s database for hundreds of thousands of Paycheck Protection Program loans approved last spring. The program aimed to keep businesses afloat and people on payrolls during widespread lockdowns, but nonprofits, religious entities and schools were also eligible for loans.
In addition to the $ 28 million in P3 loans, North Carolina charter schools also received $ 37 million in federal pandemic relief funds that flowed through the state. Traditional schools have also received money from this fund to cover technology expenses and other costs related to the pandemic, although most schools in the state have closed for most of the past year.
“I would say it’s been a lifeline for them,” said Rhonda Dillingham, executive director of the North Carolina Association of Public Charter Schools, of P3 loans.
WRAL found this to be true for some charter schools after reviewing hundreds of minutes of charter board meetings that received the loans.
At Invest Collegiate Transform in Charlotte, for example, board minutes in May show the school was facing a deficit of nearly $ 1 million. A month later, a donation of $ 1.1 million and $ 507,000 in PPP loans helped restore the school’s finances.
WRAL emailed principals and board members over a month ago for comment, but never received a response.
In fact, only two of the many charter schools in the SBA PPP loan database that WRAL attempted to contact responded, and both said they requested, but did not receive, a loan.
Dillingham said fundraisers that normally help charter schools make up for what they don’t get from the state had to be called off during the pandemic.
“The charter schools law we currently have does not allow capital spending in per-pupil funding,” she said. “This means that for about every dollar a district school receives, a public charter school receives about 70 cents.”
But public schools use fundraisers for academic and athletic programs, and they were not eligible to apply for PPP loans.
Public schools received more money per student than charter schools from federal pandemic relief programs. P3 loans have helped close the gap for charter schools and in some cases even surpass it.
Tom Kelley, who specializes in nonprofits at UNC Law School, said he didn’t like charter schools taking two pots of money.
“In my opinion, I don’t think there is any doubt that the double deduction exists,” Kelley said, wondering how schools have shown that loans are necessary to save jobs when they are were already receiving taxpayer money for wages.
“I don’t see clearly how the schools, the charter schools, receiving this money from the CARES Act, would be threatened by the loss, by the loss, of jobs. I don’t see how it would turn out, ”he said. “So I guess at least a lot of this P3 funding is going to come in as a windfall.”
Kelley said he doesn’t think charters should receive PPP money, especially those run by companies.
“I find the double deduction to be somewhat problematic in that it creates a windfall that other mainstream public schools don’t appreciate,” he said. “I find this particularly problematic when we are talking about charter schools that are run by for-profit corporations.”
WRAL reviewed the records and found the argument, much like the lifeline argument, to be legitimate.
Davidson Charter Academy in Lexington, for example, had a P3 loan approved for $ 319,000. Its application with the state shows links with two other groups that have also obtained PPPs: CFA Classical Academies obtained $ 589,000 and Leaders Building Leaders more than $ 42,000.
“I don’t necessarily think it’s fair, and it’s to the disadvantage of traditional public schools, but there is nothing illegal about it, as far as I know,” Kelley said.
Dillingham said schools were not doubling.
“If a school applies and gets the PPP, it needs it because it has suffered a huge financial blow,” she said.