Education Law Center attacks charter schools for having surpluses; ignores context, facts

The Education Law Center has found a new angle to attack charters from.

An Education Law Center analysis of the most recently available, audited school budgets shows many New Jersey charter schools carry a significant amount of surplus fund balance. Based on 2013-14 budget data, charter schools statewide have over $100 million in fund balance, with $87 million of that amount in "unrestricted" surplus funds.

Fund balance refers to the difference between a district or charter school's assets and liabilities, or the difference between revenues and expenditures. Both school districts and charter schools carry fund balances in their budgets to address emergencies or other unforeseen occurrences.

Fund balances are divided into restricted and unrestricted portions. Restricted funds are designated for specific purposes, such as maintenance, tuition or capital reserves. Unrestricted funds can be appropriated as needed.

The NJ Department of Education (NJDOE) limits the amount of unrestricted fund balance to 2% of a district's operating budget. Charter schools are not subject to this requirement, and the NJDOE does not impose any limit on the amount of fund balance a charter can maintain as surplus.

The $87.4 million in unrestricted charter surplus represents 18% of the combined operating budgets of all charter schools statewide. Fund balances vary by charter school, with some having none, but others accumulating up to 200% of their annual operating budget.

Under the charter school law, the districts in which charters are located or draw students pay per-pupil funding for each student enrolled in a charter directly from the district's budget. Many of the charters with substantial fund balances receive funding from districts such as Newark, Paterson and Camden that have had to make significant cuts in teachers, support staff and programs in recent years.

If charters, like districts, were subject to the 2% limit on unrestricted fund balances, an extra $77.7 million would be returned to district budgets.....

It is possible that some of this surplus is inappropriate, but the Education Law Center makes this out to be much more sinister than it it is.  As usual, when it comes to charters the Education Law Center ignores inconvenient truths that weaken its claim that charters are wicked, greedy, "corporate reform."

First, since charters do not get any money for facilities, they must save money ahead of time for any construction they know they will need to do.

Second, charters are only funded from September to June and yet they do have summer expenses, like maintenance and salaries of twelve-month employees. Therefore they must have surpluses in June to provide for July and August. The Education Law Center did its audit in June, precisely when charter savings are at their peak.

This article from NorthJersey.com gave the issue very well-balanced reporting.

But representatives of charter schools in Paterson and around the state dismissed the Law Center study, saying the organization has a track record of being “anti-charter.” The charter schools say the report is misleading.

“The organization has repeatedly criticized funding of charter schools while continually beating the drum for more money for bloated, inefficient and failing urban school bureaucracies,” said Thom Ammirato, spokesman for the John P. Holland charter school in Paterson. 

The New Jersey Charter Schools Association also issued a statement criticizing the Law Center’s report. 

“In their most recent misguided assault on charter school viability, the ELC calls for a two percent limit on charter school fund balances without adequate research and without placing into context why charter schools must generate fund balances in the first place,” said the association. 

Ammirato said that charter schools only get funding between September and June. As a result, the charters must set aside money to cover expenses that arise during the summer – such as payroll, utilities and rent, Ammirato said. 

By basing its report on charter schools’ balances at the end of June, Ammirato said the Law Center was providing a misleading picture of their finances. 

The state charter association said the charter schools also must build reserve accounts to cover the costs of school building purchases and renovations because they do not get funding for facilities. 

“This balance must be large enough to give them access to additional financing from private financial institutions, such as banks, non-profit loan funds, or developers,” said the state charter association. 

“Over the past decade, many charters have successfully completed facility projects using this method—and at a fraction of the per seat cost incurred by most school districts.”

What was the most annoying about the Education Law Center's Newsblast is the conclusion from David Sciarra:

"The excess charter fund balance is available to provide desperately needed teachers, staff and programs for students in district schools," Mr. Sciarra added. "Since charters are public schools, they cannot be allowed to carry unlimited, excess surplus they don't need while the education of students who choose to attend district schools suffers from deep budget cuts."

Oh yeah David, if you are so worried about schools having "money they don't need" then why do you not criticize Hoboken's egregious aid hoarding?  Why do you defend universal Pre-K for Hoboken when you know that most of the kids getting it are affluent?  Are you going to say anything about PILOTs and Jersey City's abuse of them or that even without its PILOT'ed buildings being factored in, Jersey City gets $111 million more than it should?  Or how about the millions that the state sends to ultra-high-resource districts with more than $50,000 per student in Local Fair Share, of which Abbott-district Hoboken is one?  What about the absurdity of Asbury Park's $24,000 per student in state aid?  

Again, it's possible that some charter school money is being saved inappropriately, but charter schools aren't the only schools "getting money they don't need."