Federal CARES Act Public Education Relief Dollars Quietly Flow into the Coffers of Charter Schools and Private Schools

Many charter schools are taking advantage of their public/private status to double dip into more than one stream of federal CARES Act dollars. And Betsy DeVos has also been shifting the rules on distribution of CARES Act education dollars to support private schools at public schools’ expense. Promoters of school privatization are using every opportunity they can find to squeeze the public schools that serve 50 million of our children and undermine especially the public school districts serving our nation’s poorest big cities.

Charter Schools Skim CARES Act Dollars

The NY TimesErica Green reports: “Charter schools, including some with healthy cash balances and billionaire backers like Michael Bloomberg and Bill Gates, have quietly accepted millions of dollars in emergency coronavirus relief from a fund created to help struggling small businesses stay afloat.”

By state law, charter schools must themselves be nonprofits, although, as we know, many are operated by for-profit Charter Management Organizations. Whether they are nonprofit or managed for-profit, they are all private contractors operating schools under a charter from the state. As private contractors providing a public function under state law, they receive per-pupil state aid provided by tax dollars. But charter school promoters like to call themselves “public charter schools” and keep the definition murky. Right now, however, a lot of charter schools are trying to operate as private businesses just to get CARES Act Payroll Protection Program dollars.

Erica Green explains: “Since their inception, charter schools have straddled the line between public schools and private entities. The coronavirus has forced them to choose. And dozens of them—potentially more because the Treasury Department has not disclosed a list—have decided for the purpose of coronavirus relief that they are businesses, applying for aid even as they continue to enjoy funding from the school budgets, tax-free status, and in some cases, healthy balances and the support of billionaire backers.”

Green describes Summit Public Schools, for example, a chain of charter schools on the West Coast.  She explains that, because charter schools are nonprofits, they qualify for the CARES Act Paycheck Protection Program, a loan program:  “Charter recipients of the forgivable loans include wealthy networks like Summit, whose most recent tax filings show it had assets totaling $43 million and an endowment, and it paid its chief executive nearly $500,000. The charter network receives donations from the philanthropic organizations of Mr. Bloomberg and Bill and Melinda Gates, and the Bezos Family Foundation.  And its business-savvy California board of directors includes Meg Whitman, the chief executive of Quibi and former chief executive of eBay.”  At a Summit board meeting, there was discussion about whether taking Paycheck Protection Program dollars would be the right thing to do: “Summit’s chief executive, Diane Tavenner, brushed away several concerns… including ‘public shaming.’  She urged the board to take the funds, saying that ‘the benefits far outweigh the risks.’  The board ultimately accepted the loan… at its May 18 meeting.  By that time, Ms. Tavenner said the money had come in, and with the recent announcement from Gov. Gavin Newsom of California of 10 percent budget cuts next year, ‘further bolsters our case, as a nonprofit that’s operating schools, of our economic uncertainty.'”  All public schools in California will be affected by Gov. Newsom’s 10 percent budget cut, but only charter schools, like Summit Public Schools, who redefine their status in these CARES Act times as private businesses, can qualify for Paycheck Protection Program dollars.

In a new report, Are Oakland Charter Schools Double Dipping?, In the Public Interest and Parents United for Public Schools examine the acceptance of Paycheck Protection Program dollars by charter schools in California’s Oakland Unified School District.  Quoting the bill itself, In the Public Interest explains that the language Congress used to describe he Paycheck Protection Program makes the intent of the program clear: “With the COVID-19 emergency, many small businesses nationwide are experiencing economic hardship as a direct result of the Federal, State, and local public health measures that are being taken to minimize the public’s exposure to the virus. These measures, some of which are government-mandated, are being implemented nationwide and include the closures of restaurants, bars, and gyms. In addition, based on the advice of public health officials, other measures, such a keeping a safe distance from others or even stay-at-home orders, are being implemented, resulting in a dramatic decrease in economic activity as the public avoids malls, retail stores, and other businesses.”

However, “Despite that need and the limited funds available, Oakland’s charter school industry is heavily accessing this ‘first come, first served’ small business funding source, while at the same time receiving full continuity of education funding from the state, plus access to federal CARES Act (public school relief) funding. In other words, charter schools are receiving full funding to pay their employees as public schools while also seeking PPP funds to pay those same employees as private businesses.  Overall, the charter schools located within OUSD’s boundaries have received a total of at least $18,909,300” in CARES Act Paycheck Protection Program loans.

DeVos Rewrites Guidance to Drive Title I Equitable Services Dollars Away from Public Schools and Into Private School Coffers

It is not only charter school operators who are finding a way to use CARES Act dollars to shore up school privatization at the expense of the local public schools. Education Secretary Betsy DeVos has released informal guidance, and now threatens to issue compulsory formal guidance to change the distribution formula for federal CARES Act public education relief dollars that Congress specified should be awarded according to the Title I Formula.  In addition to sending federal funds to public school districts serving poor children, Title I was designed additionally to award federal dollars to enable school districts to provide Title I services to impoverished students attending the private schools located within their district boundaries.  DeVos has now demanded that per pupil CARES Act relief for private schools be based on each private school’s full enrollment, not on the number of the private school students who qualify for additional services because their families are living below 185 percent of the federal poverty line.

Public Funds Public Schools, a project of the Education Law Center and the Southern Poverty Law Center, explains how Congress set up distribution of CARES Act dollars to public and private schools: “Title I of the Every Student Succeeds Act (ESSA), the national education law, requires public school districts to use part of their funding on ‘equitable services’ for low-income students attending private schools in their geographic area.  This fits with the purpose of Title I, which is to provide resources for low-income students who may need extra supports to succeed in school. The recent CARES Act states that school districts receiving federal relief funds must provide equitable services to students and teachers in non-public schools ‘in the same manner’ as provided under Title I of ESSA. But Secretary DeVos’ guidance tells districts to do things differently than federal law requires, instructing them to calculate the amount they must spend on equitable services based on all students in the district who attend private schools rather than the number of low-income students in private schools. This dramatically decreases the federal emergency funds available for many public schools….”  (emphasis in the original)

Independent Media Institute education writer, Jeff Bryant shows what DeVos’s reinterpretation of Congress’s plan for redistributing CARES Act education relief dollars will mean for vulnerable public school districts: “Should DeVos get her way, the impact will be devastating on struggling school districts… In Passaic (New Jersey), where the majority of public school students are poor, the district will need to reserve $1.4 million for private school students instead of $300,000….”

A seasoned education reporter with experience in Ohio, now writing for The 74, Patrick O’Donnell describes outrage across Ohio about CARES Act money, urgently needed in Ohio’s urban districts which serve masses of poor children, but now scheduled, according to DeVos’s new guidance, to support private schools. Public schools across Ohio are desperate because, due to the COVID-19 recession, Governor Mike DeWine has already slashed state funding for public schools in this fiscal year ending June 30 by $300 million. O’Donnell quotes a letter sent by Ohio’s “Big 8” urban school districts demanding that Governor DeWine ignore DeVos’s new guidance and abide by the distribution plan Congress established in the CARES Act itself: “The past few months have laid bare the inequities that exist across our state, which is why Ohio must distribute the CARES dollars as they were directed to by Congress… Following watered down guidance from the USDOE will weaken Ohio’s ability to address the unique needs of low-income children, children with disabilities, students experiencing homelessness, and foster care youth.” In Ohio, O’Donnell reports that losses as CARES Act dollars are rerouted to private schools will be sizeable unless DeWine joins eight other states refusing to follow DeVos’s new guidance: “DeVos’s approach would cost the Cleveland school district $2.3 million and the Cincinnati schools $4.9 million.”

On Monday, the Washington Post‘s Laura Meckler summed up Betsy DeVos’s failure to support the nation’s public schools which DeVos’s own Department of Education is supposed to protect:  “Education Secretary Betsy DeVos has long believed that the federal government should have little to do with education. This spring, with schools facing their most significant crisis in decades, DeVos has stuck to that conviction… The coronavirus, she has said, offers a ‘silver lining,’ showing Americans that traditional schooling is not the only way. ‘This really is a moment for transformation,’ she told conservative talk show host Glenn Beck in April… When Congress passed its pandemic relief package, it included $13.5 billion for K-12 schools, most of it to be distributed using a formula that favors high-poverty schools. But DeVos chose to distribute the money using a calculation that diverts millions of additional dollars to private schools—and away from high-poverty public schools. She said the law allowed her the flexibility to do so. Leading Democrats and school leaders lambasted the move. Even Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Education Committee and a DeVos ally, disagreed… She also used $180 million of the federal relief money to create a ‘microgrant’ program that will allow parents to pay for educational expenses, including private school tuition… ‘The problem is here she is again standing up for private schools and public school folks feel like she’s never protected or cared about them.’ said Michael J. Petrilli, president of the Thomas B. Fordham Institute, a conservative education think tank.  ‘As far as I can tell, she’s pretty much played to type.'”

When Mike Petrilli and the Fordham Institute, lovers of school privatization, criticize DeVos for failing to stand up for public schools, you know there’s an enormous problem. The redistribution of federal dollars to private schools and to charter schools is not inconsequential in these times when the National Education Association recently documented the likely loss of 1.9 million jobs from America’s public schools within the next three years, staff cuts resulting from the recession-driven collapse of state education budgets. The untenable reduction of educators across the nation’s public schools will occur unless, on top of the CARES Act, Congress enacts additional relief in the form of the HEROES Act—passed already in the U.S. House of Representatives but awaiting action in the U.S. Senate.  Betsy DeVos, the U.S. Secretary of Education, has no business undermining efforts by Congress to keep class size manageable and to preserve the jobs of essential school staff—teachers, counselors, school psychologists, social workers, nurses, and librarians.


3 thoughts on “Federal CARES Act Public Education Relief Dollars Quietly Flow into the Coffers of Charter Schools and Private Schools

  1. This is what you call an ‘ugly’ situation.
    The long history of the ‘public funding’ of private education (both private schools and charter schools) is at a crisis-point.
    And it all becomes complicated, even if the point is simple:
    What funds public schools are public dollars (in Ohio, and many states, both state and local taxes, supplemented by federal dollars).
    Now there are massive decrease in tax revenue due to COVID, so that states (Ohio) are making massive cuts to public school districts. That’s a disaster! We can’t afford it and there’s no money in the coffers (too much past tax giveaways to corporations, etc.)
    But the Federal Cares Act is supposed to prop up public education funding due to the crisis.
    (In Ohio, there is already a massive over-drawing of public funds by private/charter schools due to a bizarre formula that puts local districts on the hook for more than the amount the state provides for students, so that local school districts are providing more than the state’s funding. That is a foundational ‘idiocy’ (I don’t know how else to describe it) that has not been addressed!)

    Surely, private/charter schools have their own crisis, but it is not based primarily on tax revenue loss due to the pandemic. (As it is, private/charter schools will get some portion of the funds, just not a larger percentage. That’s the argument.
    And Dept of Ed chief, Ms DeVos has entered at the worst time to alter/distort the situation.)

    Holding all these details together makes is challenging to weed through the debris/catastrophe that the federal, state, and local governments have created by the long undermining of public education and its funding and functioning, most specifically with poor students). (Not to belabor, specifically, Ohio’s unconstitutionality of funding public education).
    In a crisis, past sanity and health is a good foundation to dealing with the moment of krisis.
    Sadly., the USA, and its states and local communities have built a house of cards that has been waving in the winds for too long.
    It’s hard to fathom how it shall stand, so divided it is within itself, and in this crisis.
    All of it coming to bear down on students, often students of color. It resonates with the whole current uprising against policing.
    Such it is in each major institution in our country – healthcare, housing, education, safety…

  2. Pingback: Biden Offers Hope for Turning Around Awful DeVos Education Policy | janresseger

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