[Durham INC] Fw: DPS analyzes the recent changes made to SB 8

[Melissa Rooney]

FYI:

Anyone interested in having an informed
conversation regarding the state of SB 8 
should read this latest analysis from the NC School Board Association.
--Melissa



MEMBER CALL TO ACTION

Yesterday, March 8, the House Education Committee proposed a new committee 
substitute (PCS) for
SB 8: No Cap on Number of Charter Schools. Several changes were made that 
moderately improve
the bill including a requirement that there be at least 50 students at a charter 
school (current law is 65
but previous versions had this at 0) and a cap on the number of new charter 
schools of 50 per year.
The bill made some changes to the funding of charter schools but NCSBA and 
NCASA’s analysis of
those provisions is that they do not address the funding inequities and further 
the chances of
continued litigation if passed.

I.

The New Funding Scheme
a. Charter Schools will receive a per pupil share of the “Local Current Expense
Fund” of the traditional school system sending the student (new G.S. 115C-
238.29H(b) p. 14).
b. The ONLY exceptions allowed are the following:
i. Individual School Accounts – (new G.S. 115C-238.29H(b) p. 14);
ii. “Trust funds” where the donor or grantor imposes a requirement that the
school system separately account for the funds (new G.S. 115C-426 p.
19);and
iii. Federal “grants” or federal “appropriations” restricted as to use.

II. Intentionally vague? / recipe for more litigation
a. Individual school accounts are for “special funds” – the next wave of 
litigation will
be over what qualifies as “special funds”. The term, just like, “special 
programs”
in the Sugar Creek cases has no statutory definition. In addition, items such as
activity bus fees and payments to substitute teachers MUST be accounted for in
the central office accounts meaning that the School Board will be forced to 
share
these monies with charter schools when the individual school reimburses the
central office. THIS WOULD ALSO APPLY TO ANY TICKET SALES,
BOOSTER CLUB, PTA AND PTO FUNDS THAT MUST FLOW THROUGH
CENTRAL OFFICE ACCOUNTS.
b. Child Nutrition funds are not excluded. These funds are charged to non-free 
and
reduced lunch students and are accounted for in the child nutrition budget, not
the individual school accounts for special funds.
c. Trust Funds are just that, funds held in “trust”. The next wave of litigation 
will
revolve around whether donations and grants to school boards are “trust funds”.
It remains a fact that no donor or grantor designates the manner of accounting,
just the restricted use.

d. Is the term “federal appropriation restricted as to use” synonymous with 
“federal
funds restricted as to use”? The original charter funding statute used similar
language (“local current expense appropriation”) that had no clear meaning and
over a decade of litigation has resulted. This language does not clearly 
excluded
federal free and reduced lunch monies.
e. The new bill does not exclude fund balance for which the charter has already
received a portion. Two bites at the same apple.
f. The new bill does not exclude More-At-Four funds. If a charter schools wants 
to
be a More-At-Four site it can receive those funds just like private providers!

III. Not a fix

An invitation for creative accounting is not the answer. The proposed bill makes 
the fate of
grants, donations, trust funds, federal funds, fees, and special funds of 
individual schools
uncertain and all these issues will be ripe for years of litigation at a time 
when our public
schools, traditional and charter, need clarity! To be fair to all public school 
children, the
General Assembly must be direct in what is to be shared with charter schools. 
The Courts
are forced to interpret the law only when the General Assembly fails to be 
clear.

IV. School taxes cannot be sent outside the tax district

Voters in some districts passed a tax to operate the schools in that district at 
a higher level.
The tax does not, and cannot legally, follow the child outside the tax district 
to any other
public school (traditional or charter). New G.S. 115C-238.29(H)(b) (p.14) 
provides that an
equal share of school taxes will leave the tax district and follow the child. 
This is a blatant
attempt at an end-run around voter approved taxes and invites a taxpayer 
lawsuit.

V. Repayment of debt with public funds

a. Charter Schools can use their State public school fund allocation for capital
assets or for current expense (new G.S. 115C-238.29H(a1) p. 14). Charter
schools can also use any local operating money for capital because they are
exempted from G.S. 115C-433(d) which limits the use of operating money for
capital (or vice versa) by traditional public schools to true emergencies to 
avoid
misuse of designated revenues.
b. If public money is used by charter schools to purchase capital or other 
assets
and the charter school becomes bankrupt the assets purchased with public
money are used to pay creditors with the resulting surplus, if any, going to 
back
to the public coffers. Thus, a charter school will pay its debts by selling 
assets
purchased with public money first so that any surplus of assets paid for with
private money can go to entities designated by the private corporation in its 
by-
laws to receive a surplus. Taxpayers lose. (new G.S. 115C-238.29F(i) p. 12).
Upon dissolution, a charter school must be legally required to use all private
assets to pay outstanding debt before public assets can be liquidated and used
to pay creditors. In short, the assets purchased with public money get sold 
last.
-- 


      
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