Nashville charter schools take home millions in federal pandemic aid

Valor Flagship Academy Nashville (Photo: Valor Academy website)
Valor Flagship Academy Nashville (Photo: Valor Academy website)

Eight Nashville charter school organizations secured between $9.05 million and $22 million in federal paycheck protection program loans according to data released this week by the Small Business Administration.

The PPP loans were created as a safety net for businesses that experienced interruptions due to the COVID-19 pandemic. The loans are forgivable if the recipient businesses meet requirements such as retaining staff and meeting payroll.

The SBA allowed for nonprofit organizations to qualify for the loans.

Charter schools, which are required to be operated by nonprofit groups, say they needed the loans because of funding cuts from Metro in addition to their ongoing capital expenses, like rent and mortgage payments. Additionally, Nashville charter schools say that when the pandemic hit in March, they aggressively began purchasing laptops and executing a formal distance learning program.

Critics say charter schools’ actual funding cut by Metro Nashville Public Schools was small compared to the amount of PPP loans the schools received. They say the spirit of PPP loans was to help businesses shutdown because of the pandemic and that charter schools should return some of their funding to cash-strapped MNPS.

Charter schools are mostly funded through per-pupil funds through Metro Nashville Public Schools.

When the economic downturn arrived this spring, MNPS was advised by Mayor John Cooper’s administration that tax collections would drop and the district should plan for budget cuts. The most recent guidance is that a decline in revenue collections will lead to a $62 million reduction for MNPS including $8.7 million less for charter schools, which will receive approximately $163 million from the district and state this year. That includes an estimated $8.5 million increase from last year due to enrollment growth.

Critics say charter schools taking the PPP money violates the spirit of the funding program. Charter advocates say the loss of tax revenue during Nashville’s COVID-19 lockdown would hurt students without the extra funding.

Metro Nashville Public Schools, by comparison, received $26 million in funding from the CARES Act and the district was required to send a combined $1.8 million to charter schools.

The SBA data released on Monday provided a range for the loans businesses received but not the exact amounts. Nonprofits that received loans for less than $150,000 were not released to the public.

The eight charter schools that received PPP funding are:

*KIPP Nashville: $2 million to $5 million

*Martha O’Bryan Center: $2 million to $5 million

*Republic Schools Nashville: $2 million to $5 million

*Stem Prep: $1 million to $2 million

*Valor Collegiate Academies: $1 million to $2 million

*Nashville Classical: $350,000 to $1 million

*Purpose Preparatory Academy, Inc.: $350,000 to $1 million

*Strive Collegiate Academy, Inc.: $350,000 to $1 million

The Martha O’Bryan Center operates two charter schools in addition to other services it provides to those it serves in East Nashville including the James A. Cayce government housing development.

As word got out on Tuesday that charter schools received the PPP loans, critics sounded off, blasting the extra funding as unnecessary and unfair.

Faced with a tight budget, Metro passed a property tax increase that will provide modest raises to support staff and a contingency raise to teachers if MNPS can stay above its targeted 3 percent reserve fund. But, public school advocates say MNPS is still woefully underfunded.

Metro Councilman Dave Rosenberg, a frequent critic of charter school growth in Davidson County, said the charter schools already are better funded than traditional public schools.

Metro Councilmember Dave Rosenberg. (Photo from Dave for Bellevue website)
Metro Councilmember Dave Rosenberg (Photo from Dave for Bellevue website)

“I’m disappointed by not surprised to see charter schools again sucking up public funds intended for others,” Rosenberg said. “These schools already have more classroom dollars than public schools despite turning away high needs students. Now they’re robbing funds intended for small businesses trying to make payroll despite seeing no revenue losses themselves.”

But, the Nashville Charter Collaborative said Rosenberg is wrong since charter schools are expected to receive a reduction of at least $8.7 million from MNPS due to lower than expected tax collections. When the charter schools applied for the PPP loans it was unclear how steep their reduction would be.

But, the charter schools instituted a formal distance learning plan, including buying laptops, and still had to meet their other expenses, especially their rent and mortgage payments.

“For many members of the Nashville Charter Collaborative, these needs were real and urgent, since we do not receive capital funding like traditional public schools to cover facility costs and must pay these expenses from our operating budgets,” the Nashville Charter Collaborative said in a statement released to Tennessee Lookout on Wednesday. “As small nonprofits, we lack the financial reserves large organizations and public agencies can access when facing such a crisis.

“Charter schools did not stop teaching students when schools closed due to the pandemic in March — quite the opposite, in fact. Nashville charter schools went above and beyond to make a rapid and successful transition to distance learning and to support the overall wellbeing of their families. After spring break, most charter public schools distributed Chromebooks to students without technology at home and our staff and teachers began engaging in live virtual instruction, social-emotional support for students, and case management for families hardest hit economically by this pandemic. For the remainder of the school year, our teachers worked full-time to keep their students on track and provide them with wraparound supports.”

Although the MNPS funding formula can be opaque when compared on a school by school basis, charter schools essentially will receive $11,016 per student in public tax dollars this year. Some MNPS schools receive more per pupil when total resources are calculated.

That means, KIPP Nashville, which is the local branch of a national charter network and operates six schools in Nashville, is estimated to receive $23.4 million in per-pupil student funding from MNPS this year.

The Martha O’Bryan Center will receive an estimated $15.4 million this year for its schools. Republic will receive $6.9 million, Valor will receive $18 million, Nashville Classical will receive about $5.4 million, Purpose Prep will receive $4.1 million and Strive will receive about $4.3 million.

According to its 2019 financial audit, KIPP Nashville’s combined fund balance was $12.7 million. KIPP Nashville brought in $5 million more in revenue, including private fundraising, than its $23 million in total expenses in 2019, according to the audit.

We applied for the PPP loan because we were eligible and to guarantee job security for our teachers and employees,” KIPP Nashville CEO Randy Dowell said. “By focusing the PPP loan on salaries we were able to avoid teacher layoffs, serve over 30,000 meals to students and families in our school communities, and also to prepare for distance learning.

Randy Dowell, executive director, KIPP Academy Nashville. (Photo: KIPP Academy)
Randy Dowell, executive director, KIPP Academy Nashville. (Photo: KIPP Academy)

“During such uncertain times the ability to ensure job security for our teachers has been invaluable. Being fully staffed during this pandemic is more important than ever, as our families are relying on us to provide high-quality distance learning and support services. Schools are being asked to do more with less funding than ever before.”

Brad Rayson, president of the Service Employees International Union Local 205, which represents MNPS support staff, said charter schools should return some of their funding to MNPS.

“Charter schools are already taking vital resources away from our traditional public schools and this just adds insult to injury,” Rayson said. “If they received additional public funding on top of their regular allocation, they really have double dipped and should return some of that funding to MNPS. Our schools are underfunded, and we all know how hard the budget process has been. Every dollar counts.”