The federal CARES Act included the Paycheck Protection Program to help struggling small businesses and nonprofits survive the pandemic. Lobbyists for the charter industry slipped in a provision enabling charter schools to apply for PPP funding, even though they experienced no financial losses. Charter schools got a share of the $13.2 billion allotted to the nation’s early 100,000 public schools. The average public school received about $135,000 to meet the expenses of the pandemic. On the advice of their lobbyists, some 1200 charters also sought and won PPP funding. Thus charters drew funding from two sources; public schools were not eligible for PPP funding. Charters that applied for PPP funding won six times as much federal money as public schools.
The Arizona Republic reported that the Primavera online charter school in Arizona won a sizable “loan” (1% interest, forgivable), at the same time that its owner took a $10 million bonus.
Primavera online charter school, like many businesses this spring, sought help from the federal Paycheck Protection Program to weather the economic disruption of the COVID-19 pandemic.
The Chandler-based school received a PPP loan of nearly $2.2 million, the largest forgivable loan among the 132 Arizona charter schools that obtained them.
But Primavera’s loan appears to have been more of a bonus than a lifeline.
The school, which like all Arizona public schools didn’t lose state funding because of the pandemic, ended its fiscal year on June 30 with $8.8 million in the bank — almost double the annual payroll costs for its 85 teachers, records show.
The school also shipped $10 million to its lone shareholder: StrongMind, an affiliated company owned by Primavera’s founder and former CEO Damian Creamer.
The school’s annual audit indicates Creamer controls both Primavera and StrongMind, noting he has “the ability to influence the school’s operations for the benefit of StrongMind.” Primavera paid StrongMind nearly $23 million this past fiscal year for software and curriculum services, records show.
Creamer declined to comment.
An Arizona Republic review of more than 100 charter school financial records, audits and federal Small Business Administration documents found the overwhelming majority of the Arizona charter schools that obtained PPP loans didn’t need the money.
John Todd, a longtime auditor of Arizona charter schools, said there are numerous problems with fully funded charter schools getting PPP loans intended to help struggling businesses.
“The PPP loans are taxpayer dollars intended to help the needy, not the greedy,” Todd said.
A few charters, including Legacy Traditional Schools, repaid several million dollars worth of PPP loans after The Republic reported in August that Legacy and other operators had millions of dollars in the bank when they received loans.
Most charters that got loans didn’t need them
The Republic found that most of the charter schools getting PPP funds padded their cash balances (savings accounts), and a few for-profit charter operations, like Primavera, gave money away to shareholders that matched or exceeded their PPP loan amounts.
Meanwhile, tens of thousands of small businesses have permanently closed because of COVID-19.
Further, The Republic found that PPP loans didn’t significantly enhance teacher pay at schools that received them. The 132 Arizona charter school loan recipients, on average, paid their teachers several thousands dollars less than the statewide average.The 132 charter schools receiving PPP loans increased teacher pay by an average of 5% — an amount similar to all 555 charter operations and 263 school districts.
Arizona public schools saw no major job losses or layoffs this year because the state Legislature fully funded schools and gave them additional money to raise teacher pay.
A 2018 Republic investigation found the state’s charter school industry, which gets more than $1 billion annually from the state general fund, has produced several multi-millionaires through self-dealing and lax oversight.
Creamer is among the prominent figures who’ve made millions of dollars operating Arizona charter schools. His online alternative school boasts more than 20,000 full- and part-time students. Primavera paid Creamer $10.1 million in 2017 and 2018.
A spokesman for StrongMind declined to say how much the company paid Creamer.
Ian Kidd, superintendent of Pima Prevention Partnership, said financially strong charter schools that took PPP loans open themselves to criticism and scrutiny.
“I don’t subscribe to making money off of students. It’s not appropriate,” Kidd said.
Kidd said he obtained PPP loans for his three charter schools, but the money was used to cover social and behavioral services for low-income, at-risk kids. His three charters had a combined negative $7,031 in cash balances, even after getting PPP loans.
The SBA, under pressure from news outlets, recently released specific figures for all PPP loan recipients. Previously, it released only the names of the borrowers and loan ranges above $150,000.
The earlier SBA records had indicated about 100 Arizona charter schools had received up to $100 million in PPP loans. The new data shows about 30 more charter schools got loans.
Several watchdog groups, including Accountable.Us, have panned the loan program for enriching companies that didn’t need the money while shutting out many minority- and women-owned businesses.
Kyle Herrig, president of Accountable.Us, which compiled a database of all PPP recipients, said there has been widespread fraud and abuse of the program, including celebrities and wealthy companies getting loans.
“The Trump administration’s faulty design and mismanagement of the Paycheck Protection Program let thousands of mom-and-pop businesses slip through the cracks without adequate aid while charter schools cashed in,” Herrig said…
Arizona Schools Superintendent Kathy Hoffman, who also is a member of the Charter Board, said she was astonished by The Republic’s findings.
“It saddens me those dollars are not going to students,” she said. “It’s very excessive. These dollars should be going where they are needed most, and that’s the students and instructional needs.”
Hoffman, a Democrat, said Republican Gov. Doug Ducey and the GOP-controlled Legislature should consider reducing state funding for full-time virtual charter schools like Primavera, which receives nearly the same per-student funding as brick-and-mortar schools that have more costs.
Ducey, at a news conference Wednesday, declined to answer questions regarding Hoffman’s proposal. He also declined to answer whether charter schools that received the PPP loans should return the money or have their state funding reduced by an amount equal to the loans.
Ducey said the PPP loans were a federal issue, but added: “I want to make sure all public schools have available funding.”
Creamer has been a major political donor to Ducey, records show.
Creamer spent at least $137,650 during the past two elections to mostly help conservative Republicans retain control of the Legislature. Among his political giving was $50,000 in December 2019 to the Republican Legislative Victory Fund, state campaign finance records show.
There has been no significant effort by Republicans in the Legislature to change the funding formula for online charter schools. A few of those lawmakers have financial interests in charter schools…
Paying shareholders, boosting reserves
In addition to Primavera, at least three other charter school operators that received PPP loans paid distributions to shareholders. Most of the rest put large sums in savings.
The Republic found:
• The average Arizona charter school PPP loan was $393,055. Nationally, at least 5.2 million loans for small businesses were approved totaling $525 billion, with the average loan being $100,729, according to the SBA.
• The year-end cash balance for the 132 Arizona charter schools that received $51.8 million in PPP loans in April and May, increased by $62.6 million. Individually, cash balances increased for 87% of the loan recipients.
• Twenty-one charter schools that received PPP loans increased their cash reserves by at least $1 million, with Primavera seeing a $3.3 million increase.
Educational Options Foundation of Peoria, which got a $278,292 loan, saw its cash balance increase by $2 million to $13.7 million. The school has enough money to operate for four years without additional money. The state Charter Board only requires schools to have one month of cash liquidity. A call to the school was not returned.
• For-profit charters Humanities and Sciences Academy in Tempe and Accelerated Learning Center in Phoenix made shareholder distributions of $388,770 and $230,000 this past fiscal year, respectively. Both amounts exceed the charters’ PPP loans.
The Montessori Schoolhouse of Tucson gave a shareholder distribution of $92,372, equal to about 72% of its PPP loan.
Calls to the three schools were not returned.
Jim Hall, a former public school administrator who runs Arizonans for Charter School Accountability, compiled financial records from charter schools that received PPP loans and said he concluded that they didn’t need the money.
Hall said those loans should have gone to small businesses that have struggled to make payroll or mortgage payments. He said several of the charter operators engaged in “unmitigated greed.”
Diane Ravitch's blog 
SICKENING! 🤮
Bunch of ROBBERS run charter schools.
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Diane, You beat me to it. I found the headline this morning: “Charter’s PPP loan called into question. School gave shareholder company a $10M bonus.” That report from Craig Harris of the Arizona Republic (Dec 19, 2020) referred to Primavera, an online charter school based in Chandler. “The school received “a PPP loan of nearly $2.2 million, the largest forgivable loan among the 132 Arizona charter schools that obtained them. https://cdn.newseum.org/dfp/pdf19/AZ_AR.pdf
This scam is about to be repeated if more PPP money is allocated for so-called public charter schools now reinvented as small businesses.
I have been looking at the first round of Paycheck Protection Program (PPP) in Ohio, thanks to Carol Corbett Burris, Executive Director of the Network for Public Education who sent me an Excel database. I have been adding to that and doing some analyses that may be of interest.
Technically PPP loans are to protect jobs, but they are also functioning as if they can become grants without the need for repayment. Details on how that works can be found here https://home.treasury.gov/system/files/136/PPP-Forgiveness-Factsheet-508.pdf
Of the 79 Ohio charter schools that received PPP loans, eleven omitted the number of employees who received funds or reported zero jobs protected. According to a local business analysis, these errors were present in many applications that were nevertheless approved.
Among the many surprises in Ohio’s charter school loans, one was awarded to the Hillsdale/Barney Northwest Ohio Classical Academy receiving $174,000 PPP for 20 employees. That is an average government handout of $8725 per job. Hillsdale College is so anti-government and so free market oriented that the college does not accept any federal money. College students receive privately funded scholarships if needed. I was even more astonished to learn that The Barney Charter School Initiative of Hillsdale College operates over two dozen schools for nearly 12,000 students in 11 states.
Students in grades 6 -9 progress though Latin I, Latin II, and Latin III. In the high school they may study advanced Latin or another language. The Initiative provides an existing or start-up charter school with a curriculum, teacher trainings, and other branded supports. These are funded by the Barney Family Foundation with assets of about $29.5 million. The anti-government Hillsdale Trustees have no problem in seeking federal PPP for the Ohio Barney Charter school. The hypocrisy is not really surprising.
Of the 79 charter schools that received PPP money, eight charter schools received from $1 to $3.5 million to “protect” 787 employees. On average each employee in these schools should have received $17,227. However, that average can be misleading because administrators, teachers, and staff do not have the same pay… and hidden from view may be payouts as absurd as the one reported in Arizona.
In addition to the Hillsdale/Barny franchise, 24 other charter school franchises cashed in.
KIPP Columbus, Ohio operates five adjacent schools, some with collegiate-like facilities. This charter management organization (CMO) received $2,229,000 for 191 employees. KIPP receive one of the highest average PPP checks per job at $13,136. KIPP Columbus serves 1,194 students in grades Kindergarten-10. The latest test scores placed this operation in the bottom 50 percent of the state. KIPP knows how to find dollars and it is not embarrassed by its riches. According to a recent IRS statement, the KIPP Foundation had about $67.3 million in assets and the Foundation paid the dubious Relay Graduate School almost $600,000 for professional development.
Performance Academies LLC, located in Columbus, operates twelve K-8 schools in Ohio. These schools have a standard curriculum organized around an extended school day and the systematic use of McGraw Hill Reading and Saxon Math materials, both Common Core compliant. This franchise received $3,591,124 for 375 employees. It is not clear whether this sum was for the six Columbus schools or the entire Ohio franchise. In any case, the average PPP was $9,396 to protect a job.
I looked into four other charter school franchises, schools with the same brand name.
The Intergenerational School franchise has three schools in the Cleveland area. The average PPP for each job “saved” was $12,695. These schools have partnerships with community and state organizations for various programs and perks. Six of these arrangements are with Catholic institutions. The Intergenerational Schools are part of The Cleveland Public Schools “portfolio district.” Since 2015, The CPS portfolio district has been working to prove that it is compliant with the Bill and Melinda B. Gates Foundation’s District-Charter Collaboration Compact. These Gates-funded Compact agreements specify in detail how districts and charters should work together. City districts sign the Gates Compact in exchange for money from the B&MGF, distributed at several stages of documented compliance. CPS has found that this Compact has complicated the district’s legal compliance with the Ohio’s byzantine school rating scheme. https://www.igschools.org/wp-content/uploads/2020/12/CMSD-Portfolio-Report-Annual_Sponsorship_Report-2019-20.pdf
The Breakthrough Schools franchise operates twelve college prep schools in Ohio, but only three K-8 schools applied for and received PPP loans. These Cleveland area schools are part of the Cleveland Plan for the Cleveland Metropolitan (portfolio) School District. The Cleveland Plan is intended grow ”the number of excellent schools in Cleveland, regardless of provider, and giving these schools autonomy over staff and budgets in exchange for high accountability for performance.” Schools that participate in this plan outsource many programs to volunteers, to non-profits (e.g., arts education), and to for-profit contactors. This franchise is also supported by money from “Friends of Breakthrough Schools.” According to the latest IRS form 990 for this non-profit, the mission is “to perform fundraising and advocacy activities that exclusively support the operations and growth of the Breakthrough Charter Schools management organization and all its member schools.” The IRS form submitted in 2020 showed assets of $49.2 million, with the President raking in $180, 849 in compensation.
The PPP loans were sent to Ohio’s 18 Gulen charter schools. A dozen operate as Horizon Science Academies. Four others operate under the brand names of Nobel (2) and Zenith (2). Taken together these schools pulled in $7,800,037 dollars with $10,029 the average for each job protected. One Gulen school, with 28 jobs, received a mind-boggling $12,885 per job. Inexplicably, another Gulen school with 29 jobs was awarded $ 6,379 per job. This is to say that the whole PPP compensation process has no clear rationale for the “worth” of a person who is technically supposed to be on the payroll. For recent information on this national network of Turkish schools see https://dianeravitch.net/category/gulen-charter-schools/
Ohio is also home for the charter-loving Thomas B. Fordham Institute. It is the sponsor/authorizer for eleven schools. Six of these received PPP money. These schools took in $5, 251,155 to protect 422 jobs. The respective average “loan” per job, per school were: $14,459; $14,177; $13,162; $13,136; $11,015, and $9,857. I am still investigating how a new Heir Force Community School in Lima, Ohio with only 5 employees managed to get $210,125, with that a mind-boggling $42,025 per job.
Just as a reminder, in Ohio the charter industry has managed to mislabel its schools “community schools.” This is another rhetorical move calculated to be misleading, just like speaking of “public charter schools” when that is convenient and then magically becoming “small businesses” when that shakes the money tree.
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We can always count you to get Paul Harvey-esque “rest of the story” from you. Thanks so much for this.
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Will Biden shut off the flood of public money into the bank accounts of traitorous, Trumpish, greedy, Charter School crooks?
By the way, Trump’s name will go down in history as an insult to any crook and traitor out there.
If a crook and traitor is found guilty of Trumpish behavior, they will have to be sliced lengthwise into euqal three-part.
One slice goes to Dante’s fourth circle of hell for their greed.
The second slice ends up in the ninth circle for treachery.
The third slice will be sent to the eighth circle for fraud.
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Charter schools are always eager to get in line to hoover up whatever unaccountable public money as they can. Politicians continue to give them preferential treatment despite the fact there is no evidence that they can do anything better than public schools unless they cherry pick students.
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“hoover up” — 🙂
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It may not be illegal, but it should be. Democrats need to wake up to the fact that a non-profit should not be handing out bonus checks. These non-profit chains are really for profit businesses that hide behind a wall of private opacity or else they would not be able to produce a $10 million dollar bonus check..
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We are going to have to work hard in the next session of the legislature to secure any limitations on the charters at all. The Senate and the House still hold a majority and there are a few legislators who actually own charters. The public seems to be on the side of public schools, but the Goldwater Institute, the Chamber of Commerce and the Heritage Foundation find many ways to not only lobby, but conduct public relations campaigns to intimidate and spread lies. They also file major lawsuits which have to be fought with few resources.
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Arizona also gets flooded with Koch and DeVos money to promote privatization.
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Sorry. Forgot to add. I’m from Arizona where charters are proliferating and siphoning funds out of public schools.
blackmoneyhole
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Once again “from the trenches”… I was vying for a teacher of the year award to win $20K for our school. I wanted to get a van so I could take the kids on field trips. I lost to a Charter School who was well organized, had art, band, an organic garden, and even a PayPal link on their website. I had to bring my footballs, jump ropes, cleaning supplies, vacuum. We just had dirt outside our one-room school house. I always fought for money and spent thousands to make sure the kids had supplies. It was always nice to hear how well the Charter Schools were doing; how their test scores were so high; and all the wonderful things. Meanwhile, I had kids sleeping in cars just trying to get to school. Equity at its finest.
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“The school also shipped $10 million to its lone shareholder: StrongMind, an affiliated company owned by Primavera’s founder and former CEO Damian Creamer.”
It appears that Creamer was aptly named.
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I’m not even sure if $13.2 billion is enough for them to restart the charcoal pit business. And who set CEO Creamer on the cream of the crop? I wish someone will dump him in a giant cup of hot, dark-roast coffee.
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