[Durham INC] statistics about the financial consequences of the Charter Bill (Senate Bill -8)

[Melissa Rooney]

Thought you all would be interested in this presentation made at the School 
Board meeting yesterday afternoon. It lists many of the inequities in financial 
requirements of charters vs. school board schools. Just to add to your bullet 
list of pros and cons for the Charter Bill currently under consideration in the 
House.

Melissa
____________________


Folks,

I went to the School Board meeting yesterday and
heard a very impressive and persuasive presentation
made by Carolyn Olivarez, the  CFO of DPS.

I asked her to forward me her notes because I 
believe anyone interested in this critical debate
should be aware of what this bill actually does,

I believe that anyone who wants to have
a common sense approach to making sure
that ALL kids get the best education possible
will be deeply troubled by these facts.

This is not a pro/con Charter School debate.
It's a common sense debate about leveling
the playing field and making sure our
tax dollars are allocated fairly with a high
degree of accountability.

Some of the highlights:

DPS pays sale taxes - Charter Schools won't

Charter schools will get 8.95% of every dollar raised
by DPS - that includes grants. So for example,
after EKPOWE parents and teachers labored
for a whole year to get a After school education grant
worth hundreds of thousands of dollars - Charter
schools would get a 8.9% cut of that money for
having done absolutely nothing. 
[And there's no reciprocality, apparently.]

There is a difference between saying "Charter Schools
are part of the solution" (which they are) and totally deregulating them
and creating unnecessary conflict among parents!

Charter school proponents should be aware that
extreme politicians are dragging their schools through the mud!

BELOW ARE THE NOTES:



Special Called Board Meeting
March 2, 2011
Comments by Carolyn Olivarez, Chief Financial Officer, DPS
 
 
 
The language in Senate Bill 8 – Charter School Legislation – needs to be 
clarified, needs to be specific, and must require accountability from the 
Charter schools receiving funding.  There are many inequities buried in the 
wording of the legislation.
 
Background Information:
Currently Durham Public Schools has 8.8% of total Durham County students 
enrolled in 23 charter schools, 7 of which are based in Durham County.  As the 
number of charter school students increases, so does the percentage paid to them 
increase.
 
At the beginning of the year the state provides dollars to charter schools by 
taking state dollars from the allocations to local education agencies – DPS.  If 
these charter school students return later in the year to the public school 
system, the state dollars for these children are not returned to DPS.  

 
DPS is projecting to send $9.4M in county appropriation dollars and $950K in 
fines and forfeitures to charter schools in 2010-11.  In 2009/10 DPS sent $8.4M 
in county appropriation dollars to charter schools as well as fines and 
forfeitures.  We have been doing this for many years and have had a good 
relationship with the charter schools.  We require them to provide us a monthly 
billing for students and a monthly report generated from NCWise to prove the 
residency of the students they are claiming.  We then check this against our 
NCWise database.  Many times charters have billed us for students that are not 
Durham County students.  We only pay local county appropriation dollars for 
Durham County charter students.
 
Four charter schools requested approval for expansion from the Department of 
Public Instruction in November, 2010.  The effect of this expansion over the 
next three years is projected at $11M in additional funding leaving Durham 
Public Schools and going to these charter schools.
 
Inequities in Proposed Funding in the Senate Bill 8 legislation:
Durham Public Schools is not sales tax exempt.  We must file for a sales tax 
refund and only receive 2% back in sales tax in that refund.  Under the 
legislation, if DPS spends $100 in sales tax and receives the 2% refund of $2, 
17 cents (8.8%) of this refund will go to charter schools.  Charter schools are 
tax exempt so not only do they keep all of their sales tax, but under the 
legislation then they get a portion of the small refund DPS receives.
 
DPS students pay for lost and damaged textbooks.  Under this legislation, a 
portion of these payments (8.8%) for lost and damaged DPS textbooks will be paid 
to charter schools even though they did not incur any of the expense to buy the 
textbooks in the first place.  They do not share any portion of their fees with 
DPS.
 
DPS carefully invests our cash to maximize interest earnings.  Under this 
legislation, a portion of this interest (8.8%) will be paid to charter schools.  
Charter schools are not required to share the interest they earn with DPS.
 
DPS has a vending machine on the first floor of the Fuller Building which sells 
sodas and snacks.  Employees in the Fuller Building and visitors to this 
building purchase items from this machine.  Under the legislation, a portion of 
this money (8.8%) will be paid to the charter schools.  Charter schools are not 
required to share their vending machine proceeds with DPS.
 
Indirect cost revenue is allowed under most federal grants and is paid to a 
school system to reimburse them for the cost of the space and the utilities used 
in support of the program.  Under this legislation a portion of this indirect 
cost (8.8%) will be paid to charter schools.  Charter schools may apply for 
federal grants also and will be eligible to receive indirect cost revenue of 
their own.  However, they are not required to share their indirect cost revenue 
with DPS.
 
Child Nutrition is a cost reimbursement program.  We are only paid for the meals 
served to the students in the lunch line.  The federal reimbursement is to pay 
for the cost of producing this meal.  Under this legislation, a portion of this 
money (8.8%) will be paid to charter schools.  Charter schools can choose to 
serve lunch and are eligible to request federal reimbursement for these 
lunches.  They are not required to share their revenue with DPS.
 
ROTC is a cost reimbursement program.  We employ ROTC instructors, pay their 
salaries, and the federal government reimburses us for these salaries.  Under 
this legislation, a portion of this money (8.8%) will be paid to charter 
schools.  Charter schools can choose to have ROTC programs.  They are not 
required to share their revenue with DPS.
 
If a school system is frugal and controls its spending to save money, this money 
is placed in fund balance.  If this money is then appropriated for use (for 
example, to save teaching positions in tough budget times), then it becomes 
revenue to the school system.  Under this legislation, a portion of this savings 
money (8.8%) will be paid to charter schools.  Charter schools are not required 
to share their savings with DPS.
 
DPS currently receives over 111 separate grants from various grantors many of 
which are private businesses.  Each of these grants must be spent for a specific 
purpose.  DPS also provides fiscal agency services for several organizations 
where we handle the accounting for them.  Under this legislation, a portion of 
these monies (8.8%) will be paid to charter schools.  If this money is paid out 
to charters, DPS will be required to replace this money from other sources since 
each expense under each grant is grant specific.  Charter schools are not 
required to share any of their grant dollars with DPS.
 
Currently, capital funding for DPS is anticipated at $94.5M.  This capital 
funding was accomplished by DPS providing a 10 year capital plan to the county, 
the county evaluating these capital needs, and then preparing construction bond 
referendums to present to the voters to help finance the capital needs of DPS.  
There is a possibility that the charters may expect a prorata share of capital 
funding (8.8%) which could total as much as $8.3M.  The bond referendums are 
very specific as to what is being financed and for what purpose.  If the charter 
schools wish to pursue capital funding, then they need to be held to the same 
rules as DPS, provide a 10 year capital plan to the county and work with the 
county on how to finance these needs just as DPS was required to do.
 
Timing of Payments to Charters:
The legislation includes language that requires DPS to pay charters within 15 
days of receipt of their money from the county or a 1% penalty is applied.  The 
language is not specific about what is required from the charters in order for 
DPS to pay them within the 15 day time limit.  As explained in the background 
information above, DPS requires charters to provide a list of students from 
their NCWise database each month so we can verify that the students attending 
the charter school are Durham county students.  If this report is not received 
on time, DPS cannot meet the 15 day rule and then would be required to pay a 1% 
penalty.  It also must be noted that DPS receives county appropriation dollars 
on a monthly basis (1/12th).  Some charters in the past have requested to be 
paid their annual amounts up front.  DPS cannot do this for cash flow reasons.
 
Growth of Charter Schools:
This legislation provides for unlimited growth in charter schools and does not 
restrict the charter school growth within individual counties.  As mentioned in 
the background information above, 4 charter schools located in Durham county 
requested expansion permission from the Department of Public Instruction in the 
Fall, 2010.  DPS provided information at that time to DPI about the adverse 
impact this would have on DPS and provided a projection that this growth would 
cause a loss of funding of $11M over the next three years.  Dr. Becoats, 
superintendent of DPS, concluded the impact statement with the following 
statement:
 
“The loss of this amount of local funding compounded with the state funding 
impact of this growth severely impacts Durham Public School’s ability to provide 
a sound basic education to its students.  We are currently aggressively 
reengineering the delivery of instruction in Durham Public Schools and the steps 
we are taking are resource intensive.  Losing this amount of funding in the 
current economic climate severely impedes our ability to move this district 
forward.”   


      
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