Public Educators Upset That Indiana Legislature Forgave $91.2 Million In Loans To Charter Schools

Here's something I didn't know before reading a story in the Northwest Indiana Times today by Carmen McCollum. Tucked inside the budget bill passed this year was a provision that forgave $91.2 million in loans made to charter schools from the state's common school fund. Traditional public schools complain that they are required to repay loans they receive from the state. Sen. Luke Kenley sees it differently. He says the state is merely leveling the playing field by converting what were once viewed as loans to charter schools to grants. From the Times:

"Public schools have already been funded for that (the first six months of operation). At first, we were in a recession and we didn't have the money to deal with it. We have the money to deal with it now. All we're doing is making it a level playing field. We also changed the funding formula so that the money flows to schools with the school year rather than a calendar year. Moving forward, it won't create a problem," he said.

Kevin Teasley, president and CEO of the Indianapolis-based GEO Foundation, which operates 21st Century Charter School and Gary Middle College locally along with charter schools in the Indianapolis area, echoed Kenley's remarks and said the payment is incorrectly identified as a loan.

"It's the amount of money the state gave charter schools for the first six months of operation before the school received tuition-support funding," he said.

Teasley said charter schools were eligible to apply for a loan at the beginning of each school year if they were able to show enrollment growth. For example, if a charter school opened with 200 students, it had to grow by 15 percent or 30 students the following year to apply for another Common School Fund loan.

"It's really all about cash flow and how the state funds schools," he said.

"It used to be that you count students in September on ADM (average daily membership, which refers to student enrollment) and the state would pay you for those students in January. It would pay you from January to December. If you were a brand new charter and opened in August, you didn't receive a payment until January so the state 'loaned' you money to operate for the first six months. It wasn't fair to charters, because traditional schools were already up and running and were receiving their operating funds."  

Rather than a loan, the state now calls it a grant to charter schools — money they don't have to pay back . . . .

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