“Those losing their jobs in late June and July are part of a wave of new layoffs from companies whose PPP money is expiring, economists say.”
- The Washington Post

Approximately one thousand Americans are dying from COVID-19 every day. Absent a coordinated effort by the Trump administration, the economy has been hard hit, with workers taking the brunt of the punishment. In the last week alone, 1.416 million Americans filed new state unemployment claims.

While House Democrats passed their version of an economic recovery plan over two months ago, Senate Republicans have refused to consider the HEROES Act. Even as the last of the unemployment insurance boosters from the first stimulus package goes out to the states, Senate Majority Leader Mitch McConnell seems to ignore the immediacy of the problem when he suggests that a new package will be ready “in the next few weeks”.

As American workers wait for Senate Republicans to take action, many small businesses are running out of the funds that they received from the Payroll Protection Program (PPP). This program was meant to allow companies to weather the crisis without laying off their employees. However, without a replacement “only about one in six businesses that received loans said they were confident they could pay their employees”. The resulting wave of unemployment may be devastating for our already damaged economy.

These dire conditions further call into question the decision of Los Angeles County charter schools to take over $78 million in PPP money even though they faced no immediate loss of revenue. In the case of Palisades Charter High School, the governing board ignored concerns that their participation may have reduced the funds available for small businesses who had a genuine need for help in order to “get the money while the getting’s good.” The California Charter Schools Association (CCSA) maintains that taking these funds was “necessary” as a hedge against potential cuts in state education funding in the next fiscal year. In the meantime, Palisades will park the money in a savings account where they hope to make more in interest than they are paying for the loan.

Neither charter schools nor their public counterparts had their funding cut during the period where applications were being accepted for the PPP. The charter industry’s willingness to tap into funds meant to help organizations not already funded by taxes highlights that they are not the “public schools” they claim to be. As noted by LAUSD Board District 3 representative Scott M. Schmerelson: “Charter Schools benefit from the perception of being public organizations, but are actually private entities authorized to manage public schools.” He believes that “Charter schools should either be eligible for loans offered by the Small Business Administration or be eligible to collect public tax dollars based on Average Daily Attendance, but not both.”

His opponent in the November election, Marilyn Koziatek, did not respond to a request for comment. She is currently on the leadership team of Granada Hills Charter, a school that has taken over $8 million from the PPP.

Public schools are facing the same budget shortfalls next year. Therefore, the ability of charter schools to double-dip from public funds will put the 80% of students attending LAUSD schools at a disadvantage. In LAUSD Board District 7, school board candidate Patricia Castellanos says that “if the federal government is going to provide additional funding to Charter schools, outside California’s school funding mechanism, then neighborhood public schools should be eligible as well.”

Castellanos’ opponent in November is Tanya Ortiz Franklin. She was also asked for her input, but replied that “dwelling on some of these questions is pointless right now.” I wonder if the owner of a small business who has lost everything during this crisis and could not get access to these funds would agree.

Schmerelson and Castellanos’ complete answers to the questions asked of them can be found below:

• Are charter schools businesses or public organizations?

Scott Mark Schmerelson: “Charter Schools benefit from the perception of being public organizations, but are actually private entities authorized to manage public schools. Some of those private entities operate as if they were driven by a profit motive while others operate as a non-profit organization.”

Marilyn Koziatek: Koziatek did not provide a response to the email asking for her opinions.

Patricia Castellanos: “Charter schools are privately run but publicly funded. That’s why last year the California Legislature passed several measures that require them to follow the same transparency and accountability laws that public entities are required to follow, such as the California Public Records Act and the Brown Act. Also, thanks to the passage of AB 1505, the District can now ask how a new charter will affect the fiscal health of nearby schools, and whether the school’s teachers are qualified to educate our children.”

Tanya Ortiz Franklin: Franklin did not provide an answer to this question.

• Should charter schools be eligible for loans offered by the Small Business Administration?

Scott Mark Schmerelson: “Charter schools should either be eligible for loans offered by the Small Business Administration or be eligible to collect public tax dollars based on Average Daily Attendance, but not both.”

Marilyn Koziatek: Koziatek did not provide a response to the email asking for her opinions.

Patricia Castellanos: “We must do everything we can to protect our schools from the immense economic hardship brought on by the COVID-19 pandemic. Fortunately, as public entities, our schools have benefited from a continued funding stream from the state, plus access to federal CARES Act funding. Charter schools continue to be funded by these public sources as well.  However, as the pandemic continues and revenues for the state decline, public education — which is already underfunded — is at risk for further cuts and underfunding. If the federal government is going to provide additional funding to Charter schools, outside California’s school funding mechanism, then neighborhood public schools should be eligible as well.”

Tanya Ortiz Franklin: Franklin did not provide an answer to this question.

• Should loans be used as a way for schools to earn money on the spread between the interest that they are paying on the loan and the interest that they are receiving by keeping the money in a bank account?

Scott Mark Schmerelson: “Schools are not banks, financial institutions, or investment firms. No school should profit from ‘the spread between the interest that they are paying on the loan and the interest that they are receiving by keeping the money in a bank account.’"

Marilyn Koziatek: Koziatek did not provide a response to the email asking for her opinions.

Patricia Castellanos: “Philosophically, I do not believe this is an appropriate use of public funds. I’m not familiar with where this is happening and would like to learn more about the details. I’m not aware of any banks paying an interest rate significant enough to make a difference. However, some charter schools in California have used the loans as a ‘cheap form of cash-flow financing,’ according to the New York Times, and that doesn’t seem fair since our neighborhood public schools do not have the same access.”

Tanya Ortiz Franklin: Franklin did not provide an answer to this question.