State board recommends more than $25 million in controversial new charter school loans-- investing in poor performing and untested new schools
10/09/2015
In the waning hours of the 2015 legislative session, a new low-interest loan program specifically for charter schools was inserted into Indiana’s budget. Legislators gave the program $50 million from which charter schools can borrow from Indiana’s common school fund at a low interest rate of 1 percent.
A two-prong deal was made in response to Gov. Pence’s calling for an additional $1,500 per charter school student. Lawmakers ended up offering a grant program consisting of $500 more per charter school student plus this $50 million low interest loan program.
The State Board of Education was charged with establishing the application process and distributing the loans to charters schools. The board is set to move forward with the loans at its meeting next Wednesday. A memo outlining the approval of the charter school grants can be found on the board’s agenda.
According to the memo, the State Board is set to release more than half of the $50 million budgeted to 12 charter schools. Not only are the loan amounts raising eyebrows, but so is the list of schools getting the taxpayer-backed loans. Seven of the 12 charter schools are either new schools that opened just months ago or are schools that have received an accountability grade of D or F.
Charter School of the Dunes, a charter school that has received a grade of F for the past three years in a row has asked to receive a half-million dollars. The failing charter school will use $25,000 of the loan to buy a sign. The school also intends to use $100,000 just for “a reserve,” a tactic that calls into question legislative intent in providing the loans under the program.
Carpe Diem’s two news schools in Indianapolis are asking for roughly $3 million each at a rate of more than $45,000 per student. Carpe Diem’s flagship school is also asking for $2 million. The school received a D for its more current accountability grade.
The charter school loan program’s risk to taxpayers has been called into question by many, including ISTA.
Senate Appropriations Chairman Luke Kenley, R-Noblesville, told the Indianapolis Star, "Some of these charter schools have some pretty enormous debt pictures right now. I don't think they have the ability to retire that debt. It's really a problem."
Taxpayers have reason to be concerned about being left on the hook for charter schools not being able to pay back the state. In 2013, legislators forgave $92 million in debt owed to taxpayers by charter schools. Several of the charter schools ended up shutting their doors anyhow. According to the Indianapolis Star, currently, 43 of the state's 79 charter schools are in debt for a total of $120 million.