Craig Harris of USA Today wrote a blistering expose of the money grab by charter schools for federal COVID funds. Harris was previously a reporter for the Arizona Republic who often covered charter school scandals in that state where deregulation has enabled grifters to get rich by opening charter schools. This story is a national scandal. Unfortunately, it is behind a paywall, so I urge you to run out and buy the Sunday March 20 USA Today.

The story begins:

America’s charter schools received at least a $1 billion windfall during the pandemic, an unneeded cash infusion for most from a federal program intended to bail out struggling small businesses, USA TODAY has found. 

More than 1,000 of the publicly funded but privately operated schools that educate a fraction of U.S. children jumped at the chance to collect forgivable loans up to $10 million after Congress created the Paycheck Protection Program in March 2020.

The hastily launched program was designed to save small businesses during the pandemic by helping them cover employee salaries and other costs.

While more than 90% of all eligible businesses across the country took the roughly $800 billion inloan allocations, charter schools were among the first to get the money — ahead of mom-and-pop shops and minority-owned companies — during the early days of the crisis when the economy was cratering and many business owners scrambled to get a financial lifeline.

And charter schools were uniquely positioned to get the loans — even though they continually received funding from taxes, just like traditional public schools. But unlike those schools, which educate the vast majority of American children, charters qualified for what would eventually become pots of free money because they are considered a business. 

A USA TODAY investigation, based on public records,found 93%of the charter schools may not have needed the money because they were in states that continued to fund them at the same level as before the pandemic, or at even higher levels in some cases. These schools also had access to federal COVID grants. 

Records show some of the private companies that operate the charter schools used the money to pad savings accounts or, in one case, hand millions of dollars to an investor.

USA TODAY’s investigation is based on publicly available documents from 1,139 charter schools, as well as federal and state agencies, including 37 departments of education that oversee local funding for charter schools.

“It makes me furious because there was absolutely no reason for those (charter) schools to get that money and take it from small businesses,” said Carol Corbett Burris, a critic of charter schools and executive director of the Network for Public Education Foundation, an advocacy group in New York City. “They successfully double-dipped….”

Charter school advocates said operators were entitled to the loans, which ranged from $150,746 to $9.8 million,because they are technically private businesses

“Funding is always difficult to secure but was even more challenging during the pandemic,”  said Nina Rees, president and CEO of the National Alliance for Public Charter Schools.

Rees added that charter schools typically receive less public funding than traditional school districts and Congress intended for them to get the money because of “the special nature of these unique public schools.”

Critics have a different view. 

A congresswoman who has monitored the program said that while the schools may have done nothing legally wrong, their decisions to take the money were “terrible.” And one superintendent who leads an inner-city San Diego charter operation said that despite the legality, the behavior was unethical because financially strong charter businesses took money from those truly in need. 

“At the time PPP became available, we had not suffered financially,” said David Sciarretta, superintendent of the Albert Einstein Academies, which has 1,450 students from kindergarten to eighth grade at two San Diego campuses. “I saw PPP as a way to help small businesses, especially those in the service sector…There is a fiscal way to look at it, and there’s a moral and ethical way to look at it.”

While Sciarretta declined to call out specifics schools, USA TODAY found, for example, that at least 14 affiliates of the California-based charter chainKnowledge Is Power Program (KIPP) took a collective $28.4 million in loans and had them forgiven at locations around the U.S.

Its national headquarters in San Francisco, meanwhile, saw its bottom line swell 56% to $75 million during the first year of the pandemic….

The concerns about charter schools have spurred critics to pressure the federal Small Business Administration, which is in charge of forgiving the loans if companies used them to save jobs and cover COVID-related expenses, to claw back the money.

The SBA declined repeated requests for interviews in response to questions about financially solid charter schools having their loans forgiven. 

The agency in a late December email told USA TODAY it was committed to helping businesses reopen and that it had removed hindrances for small businesses to have their loans forgiven.

SBA two months later, following additional questions from USA TODAY, blamed the Trump administration for issues of “fraud, waste and abuse” in the program. Yet, nearly all of the loan forgiveness has happened at SBA during the Biden administration.

California Congresswoman Judy Chu is a member of the House Small Business Committee, and she has sought answers about where the money went and which businesses received loan forgiveness. Shamed by media attention in the early days of the pandemic, the Los Angeles Lakers and the national chain Shake Shack returned their multi-million dollar PPP loans.

Congresswoman Chu said:

It was never the intent of Congress to forgive loans to companies, such as charter schools, that experienced no economic loss.

“It’s terrible,” Chu said about the charter schools. “But nonetheless, it is in the realm of what is permissible.”

Permissible, but not ethical. Charter schools got their ”loans” early on because of their relationships with their banks, but minority-owned businesses waited for months.

The PPP program was a boon to the charter industry, which never lost its state funding, but it was ineffective. Harris quotes a study by the National Bureau of Educational Research which found that the program “the program kept up to three million workers employed an additional year at a cost of up to $258,000 per job retained.

This is a very powerful, well researched article that raises important questions. if charter schools are “businesses,” how can they call themselves ”public schools?” Public schools were not eligible for PPP funds because they are not businesses. Charter schools qualified for public school funding and for PPP funding. They are both fish and fowl. They did not lose money, like the mom-and -pop stores that had to close their doors. But they eagerly took the money that was supposed to save the jobs of people who lost them and save the businesses on the edge of bankruptcy.

Permissible? Perhaps. Ethical? No.