At least three New Orleans charter school groups have received federal Payroll Protection Program relief and several others have applied to the lifeline program.
The wildly popular loans are a stimulus program of the U.S. Small Business Administration, created in response to the economic downturn caused by COVID-19. They have also been the subject of controversy as big businesses collected significant sums of money while some smaller businesses haven’t able to access them. Locally-born restaurant chain Ruth’s Chris Steak House returned millions after facing criticism. (The Lens has completed one application for a PPP loan. The status of that application remains unclear as of this writing. The Lens’ business and development staff is working on a second application. As of Monday afternoon, it had not yet been submitted.)
Elsewhere, charter schools have faced criticism for utilizing the program while some businesses, like restaurants, face more immediate financial needs.
Charter schools are uniquely eligible among most educational institutions for the small business loans because they are run by nonprofits and most have fewer than 500 employees. The NOLA Public Schools district, for example, did not apply because, as a government agency, it is not eligible, a district statement said.
In mid-April, local leaders joined in asking the White House for financial relief for schools. Last week, the state distributed $260 million to districts and charters from the Elementary and Secondary School Relief Fund, part of the CARES act. Local schools received between tens and hundreds of thousands of dollars.
Multiple city agencies are preparing for budget gaps due to the virus’s hit on tourism and local sales tax, some of which goes to fund schools. New Orleans Mayor LaToya Cantrell is preparing to ask for a $100 million loan to cover a coronavirus-driven budget gap and school board officials are also projecting financial losses for next school year. While K-12 funding in Louisiana is uniquely protected, schools still face an uncertain financial future. New Schools for New Orleans, a local education nonprofit has encouraged charters to apply for the relief.
New Orleans College Prep received one of the payroll protection loans, CEO Joel Castro told The Lens in an email. The network got $1,673,800, Castro wrote. The charter group runs two schools, Lawrence D. Crocker College Prep and Walter L. Cohen College Prep, in Uptown.
“The funds will be used almost entirely for salaries/payroll,” he wrote. “We may use a small percentage for utilities.”
The loans will be forgiven if they are used for payroll, rent, mortgage interest, or utilities. Seventy-five percent of the loan must be used for payroll to qualify for forgiveness.
Encore Academy received $913,000 through the program, CEO Terri Smith wrote in an email Monday.
“Given the current economic uncertainty we made this loan request to support ongoing operations such as retention of staff and maintain payroll, make rent/lease payments and utilities,” she wrote. “We will be diligent in ensuring the funds are used for these purposes.”
A spokeswoman for the Greater New Orleans Collaborative of Charter Schools, which represents 15 charter groups in the New Orleans area, said all their schools have applied for the program.
“We do know that every school represented in GNOCCS has applied for a loan through the Payroll Protection Program, but we are unable to confirm that everyone has been successful as of today,” Heather Harper wrote in an email.
Asked what the funds would be used for, Harper wrote, “At this point, any receipt or expenditure of federal assistance is a work in progress and still a bit unpredictable.”
“The main thing is that due to expected cuts in federal, state and city revenues for public education, every charter school is encouraged to go after every federal dollar they are eligible for since our children already need a lot of extra supports,” she wrote. Thus, our members have been aggressive in seeking funds with our encouragement.”
FirstLine Schools, a charter network which runs five schools, also received a loan, but did not disclose the amount.
“We are spending it solely for payroll,” FirstLineCEO Sabrina Pence said in an interview. “We spread our payments out across 12 months so that people have continuous funding. So there’s not a drop in the summer.”
“I think there’s a lot of questions out there on cost at this time. I know for the FirstLine we’ve certainly had an increase in cost,” Pence said. “We’ve chosen to print out materials for kids and send them home. We’re using our transportation to give our meals.”
Pence said the network has spent nearly $110,000 on printed materials for lessons and another $32,000 on sending that material to students.
“We had to figure out how to do that at a distance so we had to use a printing company,” she said.
At the same time, charter schools and other organizations have had to cancel fundraisers as Gov. John Bel Edwards’ “stay-at-home order” has stretched on for two months.
“We’ve had a pretty significant funding decrease because we had to cancel our spring fundraiser,” Pence said.
That event typically brings in $250,000 to $300,000, she said.
While some charter schools were able to secure the loans, other organizations weren’t eligible.
“KIPP New Orleans did not apply for the PPP because we employ over 500 employees and therefore we are ineligible for this form of federal relief,” spokesman Curtis Elmore wrote in an email.
The city’s second largest charter group didn’t apply either, InspireNOLA CEO Jamar McKneely told The Lens in an email. “By the federal guidelines and advisement by financial institutions we did not qualify.”
New Beginnings Schools Foundation, which operates John F. Kennedy High School and Pierre A. Capdau Charter School until June 30 when it will surrender the charters, did not apply. After a graduation scandal last spring, the nonprofit voted to give up the schools at the end of this school year.
“In this time of extreme need, NBSF sees it as our duty to be responsible community members, which is why, after careful consideration, we did not apply for federal assistance through the Payroll Protection Program,” New Beginnings board president Raphael Gang wrote. “Since NBSF will no longer operate schools and therefore have no employees, we felt it best to leave those funds to organizations who would continue to exist and could benefit from having the resources immediately.”
Plessy Community School, Crescent City Schools, Choice Foundation, Foundation Preparatory Academy, and Algiers Charters did not respond to inquiries about whether they had applied for the program or received funds.