WATSONVILLE—Two Watsonville area charter schools received funds through the federal Payroll Protection Program (PPP), the $660 billion initiative created to use taxpayer dollars to help keep small business and nonprofit organizations afloat.
Watsonville Prep School, which received more than $1.7 million, and Ceiba College Preparatory Academy, which received $806,205, joined hundreds of charter schools across the U.S. that received millions of dollars in aid from the PPP, according to data from the Small Business Administration.
The federal government says the low-interest PPP loans can be forgiven if borrowers use them to cover payroll costs.
The fact that charter schools used their status as nonprofit organizations to apply for the funds while public schools are ineligible has rankled some education officials who say the charter schools are double-dipping by also accepting public education dollars.
Public schools, meanwhile, cannot receive the funds because they are funded by taxpayer dollars, says Nina Ramon of the Washington, D.C.-based U.S. Small Business Administration.
This controversy is not unique to charter schools. Many large companies such as Shake Shack returned their loans after public backlash from people who say they money was meant to help small businesses weather shutdowns related to Covid-19.
Nationwide, charter schools received as much as $2 billion in PPP loans, says Carol Burris, Executive Director of the Network for Public Education.
That number is likely a low estimate, as loans in lower amounts are not made public, she said.
The trouble, Burris says, is that the PPP funds were intended to support small businesses and organizations that could not make payroll after a loss in revenue due to Covid-19.
Charter schools, she says, never lost their revenue.
“We know of no other organizations that are fully funded by taxpayer dollars, that are also receiving PPP funding,” she said. “Charter Schools did not have the interruption in income that prevented them from meeting payroll.”
Kirsten Carr of Navigator Schools, which runs Watsonville Prep, says that the loan helped protect 182 jobs, which in turn provided services to the organization’s 1,250 students after Covid-19 forced schools to close.
Carr added that, as a nonprofit organization, Navigator was eligible to apply for the program.
As school districts throughout the U.S., Carr says Navigator saw financial impacts while providing iPads for all of its students, hotspots for families without internet, daily live instruction and meals.
“These services and support impacted our overall operational budget and the PPP was able to help ward off employee and service reductions,” she said.
Carr added that public charter schools don’t have access to some of the same funding as school districts, such as bonds.
“…schools like Watsonville Prep School could be devastated by the current funding gap in the California budget, access to the Payroll Protection Program is critical to the students we serve,” she said.
Ceiba Head of School Josh Ripp said the school applied for the loan to help protect more than 100 jobs after Covid-19 hit.
“Given the financial landscape we found ourselves in, it was prudent to participate in this program,” he said.
Charter schools, Ripp pointed out, have some “extraordinary expenses” that other school districts do not, such as paying rent.
Nina Rees, CEO of National Alliance for Public Charter Schools, says that charter schools are eligible for the same funding as public schools since they are part of that system.
“Charter schools are tuition-free, open-enrollment public schools,” she said.
“They are usually set up as nonprofit organizations, some of the very entities identified under the CARES Act as eligible for PPP loans.”
Rees says that charter schools must bear the burden of paying their own mortgages, rent and utilities.
“As nonprofits, they have to raise money to cover these expenses, which is difficult to do during a pandemic,” she said.
According to Rees, 60% of charter schools are single-site, independently run organizations with small budgets.
“Unable to do the fundraising needed to cover operational costs, they were faced with potential layoffs,” she said, adding that the problem was worsened by paying staff to deliver distance learning during the pandemic.
Rees added that about 1,700 charter schools that are not part of a public school district are not guaranteed funding under the Coronavirus Aid, Relief and Economic Security (CARES) Act funds.
That is not the case with Ceiba and Watsonville Prep, both of which receive Average Daily Attendance funds from Pajaro Valley Unified School District.
Burris said that charter schools are eligible for certain funds from their own national organizations.
“To our way of thinking, this is really unethical,” she said. “The PPP is designed to support paycheck protection. Not bonds, not adding a wing to a charter school. One purpose—to prevent the nonprofits from laying people off because they are no longer getting the income.”