The nonprofit, nonpartisan “In the Public Interest” joined forces with Parents United for Public Schools in Oakland to investigate whether charter schools in that city were double-dipping, taking public school money and also taking federal funds intended for small businesses. Their conclusion: Oakland charters have collected close to $19 million that was intended for small businesses.

Their joint report begins:

The COVID-19 pandemic has caused immense job loss, social isolation, and economic hardship. Despite falling short of what’s truly needed, both the federal government and state governments have provided relief through a number of programs, such as the federal Paycheck Protection Program (PPP), which is directed at small businesses in an effort to maintain employment.
Other programs have provided relief to public entities, including public schools. However, some charter schools—which are publicly funded but privately managed—have applied for and received PPP loans despite having no loss in public funding.1 This data brief examines PPP funding within the boundaries of just one public school district in California, the Oakland Unified School District (OUSD), and finds that Oakland’s charter schools have received a total of at least $18,909,300 in loans from the PPP.

The crisis has made clear that public schools are a critical resource for communities, providing information, technology, and food for children and families, even when school buildings are closed. The need for social distancing and sheltering in place has resulted in crisis education strategies that have left families desperate to return to regular schooling. In order to ensure some continuity of education, California Governor Gavin Newsom issued an order maintaining full funding for all public schools, including charter schools, through the end of the school year.2 The order makes clear that the intended use of the continued funding includes paying school employees. This has enabled California public schools to continue to employ all staff with no reduction in state funding, while using additional funds to implement distance learning. In addition, Federal CARES Act funding has been granted to the state of California and will be distributed to all Local Education Agencies (LEAs) that apply and qualify.3 Also, the California State Legislature allocated $100,000,000 to all LEAs (including charter schools) for emergency measures needed to deal with the immediate crisis.4

Separate from state and federal aid for public education, the federal CARES Act established the Paycheck Protection Program (PPP) in order to allow small businesses (as opposed to public agencies and schools) to maintain employment. As described
by the U.S. Small Business Administration: “The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.”5 A subsequent bill extended the covered period to 24 weeks from the date of the loan’s origination, or December 31, 2020, whichever comes earlier.6

The intent of the program is 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 as 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.”7

Thus far, the PPP has been criticized for a lack of guidance and being difficult to
access for many small businesses.8 For example, Octavio Diaz, owner of the Oakland restaurant Agave Uptown, was forced in April to lay off over 60 percent of staff because the business didn’t have the financial resources to keep a full payroll.9 He’d previously reported applying for a PPP loan but was waiting for a response.10 Beninni, a men’s formalwear store in Hayward, California, was forced to close and lay off employees shortly after the area’s lockdown began.11 After waiting weeks to get an update on its PPP application, the small business finally received a loan through the program only after a reporter reached out to the lending bank for information. A May U.S. Census Bureau survey of 90,000 small businesses found that almost 40 percent had not received PPP assistance.12

While small businesses wither and die, 70% of the charter schools in Oakland have taken money from the PPP intended to help those businesses.

Please open the brief and see how charter schools are double-dipping: first, taking the money intended for public schools, then, taking the federal PPP funding intended for small businesses, even though charter schools have not lost any revenue unlike the tens of thousands of small businesses forced to close because of the pandemic.

What the charter schools have done is not illegal, but it is certainly raises ethical questions. They are taking money from the businesses that are failing and that employ the parents of their students.

As “In the Public Interest” said in a press release,

CONTACT: Jamie Horwitz 202-549-4921, jhdcpr@starpower.net & Jeremy Mohler 301-752-8413, jmohler@inthepublicinterest.org

New Report Reveals that Many of the Nation’s Charter Schools are “Double Dipping,” Taking Millions of Paycheck Protection Dollars Intended for Small Businesses and the Unemployed

Joint study by In the Public Interest and Parents United for Public Schools shows that in Oakland, Calif. alone 30 charter schools received nearly $19 million in federal PPP dollars meant for those in need, despite unchanged state public education funding.

OAKLAND – A new report released yesterday shows that millions of dollars in federal relief funds intended for those in need have been siphoned off by charter schools that have suffered no loss in state education funding while thousands of small businesses remain shuttered and their employees go without work due to the pandemic.

The report focuses on 43 charter schools located in Oakland where 70 percent of the publicly-funded but privately-managed charter schools within the boundaries of the Oakland Unified School District applied for and received federal Paycheck Protection Program (PPP) awards established by the federal CARES Act. Traditional public schools in Oakland and elsewhere are not eligible for PPP funding. The report, entitled Are Oakland Charter Schools Double Dipping?, was conducted by the Oakland-based Parents United for Public Schools and the nonprofit research and policy center In the Public Interest.

The findings are significant because California’s open meetings laws require board meetings and the minutes of charter schools to be made public.. In most of the country, charter school finances are less transparent, and the U.S. Department of the Treasury has refused to release the names of recipients of PPP awards. The United States has 7,000 charter schools.

“This report shows the need for more oversight and transparency in the charter school sector,” said Clare Crawford, senior policy advisor with In the Public Interest. “It’s not right for charters to act like a business on Monday and a public school on Tuesday. Having it both ways leads to double dipping and unethical raids on the public till. We deserve to have the full picture on how precious public dollars are being spent, especially now, during this time of need,” she said. “Every local public official and reporter should be asking if their charters took PPP money and how much.”

The New York Times cites the Oakland study in a story yesterday, “Charter Schools, Some With Billionaire Benefactors, Tap Coronavirus Relief,” that finds further examples of double dipping by charter schools all across the nation and documents how the charter school industry has sought federal dollars intended for private business’ struggling due to the pandemic.

Some key elements of the Parents United for Public Schools/ In the Public Interest report include:

Oakland charter schools have received a total of at least $18,909,300 in forgivable loans from the PPP.
Thirty charter schools have received PPP loans despite having no loss in public education funding.
Charter schools that received both PPP loans and CARES Act education relief funding received an average of $2,000 more per student than either Oakland Unifed School District public schools or charter schools that did not.
“It’s really concerning that so many charter schools are choosing to take these funds from local small businesses that employ Oakland families. If charter schools receive funds as a ‘public school,’ they should not then be eligible for small business loans intended to help keep families from being laid off,” said Kim Davis, a parent and co-founder of Parents United for Public Schools.

Charter schools are considered public schools under California law, as they are in many other states, yet they are also incorporated as nonprofit organizations. This has allowed them to access both public school funding and aid intended to support maintaining employment at small businesses and nonprofits.

Parents United for Public Schools is an independent, parent-led organization focused on building a strong parent voice on behalf of Oakland’s public schools. In the Public Interest is a nonprofit research and policy center that studies public goods and advocates for building popular support for public institutions that work for all of us.