Charter School Tests Boundaries on Finance

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March 15, 2012; Source: San Jose Mercury News

One of the challenges posed by charter schools is figuring out the boundaries between what they can do and what they might be limited in doing as institutions within public school system. This is especially true when charter schools would like to do something that is different with money. In Santa Cruz, Calif., the Pacific Collegiate School (PCS) is creating a nonprofit foundation that would “collect and spend funds on behalf of the 12-year-old charter school, which receives state and federal funding.”

County Schools Superintendent Michael Watkins is asking legal questions about how PCS’s private fundraising will relate to its use of public education funds. For example, PCS plans to use moneys in its reserves to purchase a new facility. If PCS shifts to a nonprofit form, would the school run afoul of restrictions on public school dollars or assets being transferred to a private entity? The president of the PCS board said that no public funds would be transferred to the private nonprofit entity.

However, that isn’t all that clear, as PCS apparently asks parents for an annual donation of $3,000 per child. It is hard to imagine traditional public schools asking parents to ante up for their kids. We would guess that PCS doesn’t make the $3,000 donation mandatory (or else it turns from public charter school into private school), but the social peer pressure on parents to fork over the money undoubtedly feels to some as a must-do for their kids.

Watkins is apparently a supporter of PCS, but is raising these questions as a matter of his responsibility to the public. The PCS board responded with more than a little irritation. PCS Board President Sharmaine Cheleden attacked a companion letter from Santa Cruz City Schools Superintendent Gary Bloom that stated that the situation “is another action in a series of politically motivated attempts to incorrectly focus attention on PCS and divert time and energy away from…truly pressing issues…[such as] how do we work toward serving the needs of students in Santa Cruz County and how do we improve public education in a time of historic financial constriction and diminishing resources.”

Cheleden explained that PCS’s desire for its own school building is due to its “need…to be free of an acrimonious landlord relationship with a district intent to block its growth,” the Mercury News reported. Toward that end, despite being charged $340,000 a year in rent for the school it uses, PCS has gathered a reserve of $3.3 million, a substantial piece of which is dedicated to the purchase of the new school. Critics express concern that the reserve co-mingles public money and private contributions so that, in the end, using the reserve to pay for a new school would mean gifting public funds to a private (nonprofit) entity.

Charter schools operate within but often quite close to the boundary of public school systems when it comes to teaching curriculum, labor relations, and more. In this case, PCS is testing some of the boundaries on issues of finance, which are bound to be contentious in tight economic times. PCS might want to remember that and realize that being asked questions by the city and the county school boards is part of public accountability, not necessarily a politically motivated attack. And if the questions can be answered satisfactorily, what would the motivations matter if the end result is a good one?—Rick Cohen