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Bay Area charter schools tap tens of millions in federal small business loans

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WASHINGTON — Charter schools in the Bay Area received tens of millions of dollars from a federal coronavirus relief program intended for small businesses, money they say is necessary to stay afloat amid the pandemic.

The schools are alternatives to traditional public schools and are exempt from many state regulations related to class size, curriculum and teacher tenure, yet still receive state funding. Some of the Bay Area charters that got federal bailout money are also backed by Silicon Valley billionaires, and the board chairman of one school conceded that taking the aid could be an “optics issue.”

It’s the latest instance of the federal Paycheck Protection Program coming under scrutiny for giving money to businesses that fit the letter of the law, but which don’t fit the traditional notion of a small business. Among aid recipients were Shake Shack, the owner of Ruth’s Chris Steak House and the Los Angeles Lakers basketball team, all of which gave back the money after it was reported that they were beneficiaries.

But some Bay Area charters say they are well within the spirit of the program. Many teach students from low-income or lesser-served communities, and they say they will accept any resource that keeps their teachers paid and schools open amid uncertainty about state education budgets.

The federal aid is in the form of low-interest loans that recipients don’t have to repay if they meet certain requirements, including keeping all their employees on the payroll. During the initial window for loan applications in May, Bay Area charter schools received funds from the program in amounts ranging from a few hundred thousand to several million dollars.

How we reported this story

The Chronicle was approached by Parents United for Public Schools and In the Public Interest, which oppose charter schools and the privatization of education, with research they had done on schools that had received aid under the federal Paycheck Protection Program. The Chronicle then independently verified the information and conducted further research, including contacting policy makers.

The Chronicle was able to review charter boards’ meeting videos, audio recordings, minutes, documents and agendas to identify loan amounts and recipients. The Chronicle then contacted high-dollar recipients and schools named in the story to verify the information and to give them an opportunity to share their perspective on taking the low-interest federal loans.

Fourteen charter schools or chains in Oakland combined to receive roughly $20 million from the program. They included Education for Change, which runs six schools in the city and received $5.25 million, and Lighthouse Community Public Schools, which has two campuses and got $2.3 million.

Eight charter schools or chains in Santa Clara County combined to receive roughly $20 million. All but one received at least $1.5 million. Summit Public Schools, which has three schools in the county and a total of eight in the Bay Area, received $6.8 million.

At least two schools in San Francisco received loans. San Francisco Creative Arts Charter School got nearly $600,000. Envision Education’s City Arts and Tech High School also received a loan, but says the money will go to its consulting business — not the school that is supported by public funds. It did not divulge the amount it received.

And the St. Hope charter schools in Sacramento, whose board is chaired by school choice advocate Michelle Rhee and which was founded by her husband, former Sacramento Mayor Kevin Johnson, received more than $1.5 million.

Some of the loans were first publicized by Parents United for Public Schools and In the Public Interest, which oppose charter schools and the privatization of education. The Chronicle independently verified their research and conducted its own.

Traditional public schools are not eligible for the Paycheck Protection Program, and state-funded charter schools’ access to the loans raises questions among their critics about fairness.

“Because charter schools are currently receiving full funding as public schools intended to maintain employees, while at the same time receiving funding as private entities that are also intended to maintain employees, taxpayers are left covering what appears to be the same bill twice,” the groups said in a report questioning whether Oakland schools were “double dipping” on funds.

Some of the charter schools say they need the money to maintain their programs. While none has had state funding cut yet, they argue the uncertainty over falling tax revenue and increased demands on schools amid the pandemic creates a murky enough fiscal future that they need the low-interest loans.

Former Sacramento Mayor Kevin Johnson (center) founded St. Hope charter schools, which received more than $1.5 million in small business loans.

St. Hope’s chief of schools, Kari Wehrly, said the schools are expecting a coronavirus-related budget crunch. She also said the schools serve mainly low-income children and students of color.

“We felt it was critically important to access available funding to help us keep teachers employed and avoid layoffs due to upcoming budget cuts,” Wehrly said in a statement. “It would be irresponsible for us to leave any resources on the table as we work to close the achievement gap and provide the best learning environment possible.”

That sentiment was echoed by Education for Change CEO Hae-Sin Thomas, who said the schools serve a “very vulnerable community” where many families have lost their jobs.

“They cannot afford instability in the form of fewer services and unstable cash flow,” Thomas said. “This community deserves so much more, not less. I don’t feel I can walk away from any resources that I can secure for my community.”

Charter schools have long been controversial. Supporters say they can help spur innovation in education, keep traditional schools competitive, and offer parents choices about how to teach their children. Critics argue they siphon resources from public schools that serve neighborhoods better, and say Republicans have pushed school choice as a way to undermine public financing of education in lower-income areas.

Rhee has been a central figure in the debate for years. Supporters have heralded her as a vanguard reformer of teaching. Others, including teachers unions, say she vilifies public schools and senior educators. Rhee is a Democrat, but met with President Trump when he was first elected and was briefly considered as a candidate for education secretary, before taking herself out of the running.

Charter schools in California are funded through the same formula as traditional public schools. The state budget deal approved by the Legislature on Friday holds funding for traditional public schools steady, though it defers nearly $13 billion to future years, meaning districts could borrow against it or dip into reserves and await state repayment.

Some charters, however, also have wealthy benefactors and fundraising not available to traditional schools.

A 2018 tax document for Summit Public Schools, for example, showed it received $48.5 million in non-government funds, and had nearly $35 million in net assets at the end of the year. Its Summit Learning teaching platform has the backing of the Chan-Zuckerberg Initiative, led by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan. Its year-end summary from last year showed donors also included the Bill and Melinda Gates Foundation, Bloomberg Philanthropies and the Silicon Valley Schools Fund.

Board meetings of the charters posted online reveal an internal debate even within some of the schools over whether to take the federal bailout money. During a May 6 meeting of Summit Public Schools, CEO Diane Tavenner presented the decision as fraught.

“I know it’s not a completely … a no-brainer, but I do think it’s the right decision,” Tavenner said. “I think the benefits far outweigh the risks at this point, and I’m confident that we will use this money in the way that it’s intended, and that our use will stand up to any future program or public scrutiny.”

But board member Blake Warner, an investment banker and merger and acquisition specialist, noted the risk “is boiling up to be one really big PR battle.”

“I can’t really opine on the charter school versus not charter school war being waged in California … but I do think that since PR is 90% of the issue, that is a pretty significant consideration,” Warner said. “It’s the court of public opinion that seems to continue to prevail in this environment, and so we need to be extraordinarily cautious.”

Ultimately, the board voted to take the loan, with Tavenner saying that under the “worst-case scenario,” it would be paid back. The school declined to comment further.

In a May 13 meeting of Education for Change’s board, Mike Barr, a financial consultant, noted that “we are all facing massive economic uncertainty going into next year.”

Barr and board Chairman Nick Driver advocated taking the federal money as a “cheap form of cash-flow financing,” as Driver put it. Driver conceded, however, that “the optics issue” was deterring some charter schools from applying for the money.

“I freaking welcome that conversation,” Barr said, adding that charter schools have not gotten as much as school districts over the decades and usually face higher interest rates when borrowing money.

The amounts received by many charter schools were accessible to The Chronicle because of a 2019 California law requiring that minutes of their board meetings be open to the public. But there is not yet a public national database of businesses that have received Paycheck Protection Program funds — something congressional Democrats led by House Speaker Nancy Pelosi of San Francisco have urged the Treasury Department to publish.

Sen. Kamala Harris, D-Calif., introduced legislation Thursday that would require a public database. The Treasury Department recently pledged to create one, but has no estimate of when it will be available.

Pelosi previously called on large companies, including major San Francisco landlord Veritas, to return their federal small-business loans, but she declined to comment on the funding for charter schools. Harris also declined to comment.

Gov. Gavin Newsom’s office declined to comment, beyond noting that it was up to the federal government to decide who gets the money and that keeping Californians employed was important.

Scott Roark, spokesman for the California Department of Education, said the agency was “reviewing the eligible expenditures of the loan funds and how they interact with what the schools are receiving in state aid,” but referred all further questions to the federal government.

The Alameda County superintendent of schools said her office was reviewing the situation as well.

“We requested information on the PPP funds that have been dispersed to authorized charters,” Superintendent L. Karen Monroe said in a statement. “That information will be incorporated into upcoming financial reviews.”

UC Berkeley sociologist Bruce Fuller, who has studied charter schools for decades, said the issue speaks to a “long-term irony” of the system.

Charter schools “declare themselves as beacons of innovation, as showing how market competition can improve public schools, but then the instances arise where they basically benefit from being politically connected or politically powerful,” Fuller said. “It just is startling that charters that are supposed to be these beacons of market players actually benefit from federal largess in ways that regular public schools cannot.”

San Francisco Chronicle staff writer Jill Tucker contributed to this report.

Tal Kopan is The San Francisco Chronicle’s Washington correspondent. Email: tal.kopan@sfchronicle.com Twitter: @talkopan

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Schumpeter – Elon, Masa and Boris in low-Earth orbit | Business

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SCHUMPETER IS ONLY an amateur stargazer. His equipment is no fancier than a pair of eyes and a place in the countryside, away from London’s light pollution. That is enough to make out Venus, Mars, Jupiter and Saturn—and, occasionally, the International Space Station crossing the firmament. In the past few years a new spectacle has appeared, in the form of the Starlink satellites. Launched in batches by SpaceX, an American rocketry firm founded by Elon Musk, the tech billionaire behind Tesla’s electric cars, they resemble nothing else in the heavens, floating like a train of white dots in tight formation. Bad weather delayed the launch of the latest batch on July 8th. When they do go up, they will total nearly 600, making SpaceX the world’s biggest satellite operator.

SpaceX is a remarkable firm. It was founded in 2002, to further Mr Musk’s dream of colonising Mars. It is a case study in disruption—a startup with no track record has humbled incumbents like Boeing and Lockheed Martin. Its rockets cost half as much as its rivals’ do, thanks in part to their ability to land their first stages for reuse rather than dumping them in the sea in line with standard industry practice. The firm was last valued at $36bn, more than better-known tech darlings such as Airbnb, DoorDash or Palantir.

SpaceX’s rocket business alone does not justify this rich valuation. The market for launches is small and stagnant. Mr Musk himself has said that the most his firm could hope to earn from them is around $3bn in revenue a year. If he is to make it to Mars—and if his investors are to see big returns—he needs another plan. This is where Starlink comes in. Those satellites visible from Schumpeter’s garden are the vanguard of a planned constellation of over 1,000, designed to beam the internet to every corner of the globe.

Satellite broadband is not a new idea. But existing options are expensive and slow. Starlink’s cheap, mass-produced, low-flying satellites would, SpaceX claims, offer a service comparable to earthly broadband at competitive prices. It could serve poorly connected villages in rural Africa (or rural America for that matter), as well as oil rigs or cargo ships at sea. Mr Musk has noted that the global telecoms market is worth roughly $1trn. If SpaceX captured even a fraction of that, Morgan Stanley, a bank, recently opined, it could be worth anywhere from $50bn to $120bn or more, making its present valuation look like a bargain.

The world has been here before. Iridium announced similar plans in the late 1990s with gales of hype: the first call on its network was between Al Gore, then America’s vice-president, and a distant descendant of Alexander Graham Bell. Nine months later the firm went bust, swamped by the upfront capital costs of launching satellites. LeoSat, a firm based in Luxembourg, was founded in 2013. It shut down last year for lack of investor interest.

Starlink’s chief competitor is OneWeb, with 74 satellites in orbit and hundreds more planned. It, too, went bust in March, after failing to persuade even Son Masayoshi (also known as Masa), a Japanese tech billionaire with a stake and a well-documented affection for risky startups, to pony up more cash. But it has new backers. On July 3rd Boris Johnson, Britain’s shaggy-dog prime minister, announced that his government had stumped up $500m for a 45% stake in OneWeb, and a golden share giving it control over its future. Bharti Global, an Indian telecoms firm, also put in $500m.

Mr Johnson’s decision drew general bafflement—and an instant flurry of speculation about its rationale. Could he be trying to safeguard a domestic high-tech gem? Britain has long tried to nurture its small but sophisticated space sector and OneWeb is notionally a British firm; its parent company is based in Jersey, an island in the English Channel. But many of its operations, including satellite manufacturing, are in America. Perhaps the reasons were strategic? China was circling, claims one person close to the deal, and Britain pounced to frustrate its ambitions. Except that the American court administering the bankruptcy may be reluctant to hand OneWeb over to a Chinese firm. Politics almost certainly played a part. Britain’s exit from the European Union has limited its access to Galileo, the EU’s alternative to America’s GPS satellites. A bombastic promise to build an all-British replacement, at a cost of £5bn ($6.3bn) or more, looks dubious. Bolting a less capable navigation service onto OneWeb’s satellites may offer Mr Johnson a face-saving way to back down, while pushing back against the perception that Brexit has made the country parochial.

Yet there are also hopes, according to insiders, that the bizarre acquisition may work on purely commercial grounds. OneWeb has priority over SpaceX for the bits of the electromagnetic spectrum needed to beam the internet from the heavens. Those satellite companies that survived bankruptcy—such as Iridium—have come out on the other side as viable, if somewhat dull businesses. Like railways in the 19th century and subsequent infrastructure projects, globe-spanning satellite broadband may become a viable proposition once the initial investors, who often overpay exuberantly, have been wiped out.

And Mr Musk could use a rival in low-Earth orbit. Jeff Bezos, the biggest tech tycoon of all, is working on a similar project, but has yet to put any satellites into space. In the meantime, competition from OneWeb would spur innovation and prevent SpaceX from settling into a celestial monopoly.

A giant leap of faith

Can the British government be a source of competitive pressure? The politest description of its entrepreneurial record is “spotty”—just ask owners of clunkers such as an Austin Allegro or Morris Marina, produced after the partial nationalisation in 1968 of British Leyland. OneWeb may need a further injection of cash if it is to complete its constellation. British taxpayers may never see a financial return on their investment. But if OneWeb keeps Mr Musk on his toes even for a little while, their loss may turn out to be global consumers’ gain. Stranger things have happened in space.

This article appeared in the Business section of the print edition under the headline “The battle for low-Earth orbit”

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San Diego’s Elite Private Schools Take Millions in Small Business Loans – NBC 7 San Diego

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Some of San Diego County’s elite private schools received as much as $23.5 million in federal coronavirus relief loans aimed at helping small businesses that are struggling to stay afloat during the coronavirus pandemic. 

Tuition at the schools range from $16,500 to as much as $37,130 in yearly tuition. 

On Monday, the U.S. Treasury Department and Small Business Administration released data on all businesses that took out Paycheck Protection Program (PPP) loans as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

Introduced as a relief fund for small businesses to keep employees on the payroll during the shutdown order, the size and scope of the PPP loan program grew. 

Since May 30, the federal government has issued more than 4.4 million loans to businesses throughout the country. In San Diego County, more than 44,000 businesses applied for and were granted PPP loans, ranging from as little as $100 to $10 million. 

Recipients, as first reported by NBC 7 Investigates, included some of San Diego’s most popular brewers and chain restaurants such as Karl Strauss, Modern Times, and San Diego chain restaurants Rubio’s and Claim Jumper.   

In addition, NBC 7 Investigates found that numerous charter schools claimed more than $15.8 million in PPP loans.

But among the 47,000 companies were some of San Diego County’s elite private schools where tuition is just under the mean income as calculated by the U.S. Census Bureau. The federal PPP data gives a dollar range of loans over $150,000.

The loans are in contrast to statements given by Treasury Secretary Steve Mnuchin in March when he took to Twitter and demanded that elite schools with endowments return any PPP money they received.

Despite the treasury secretary’s warning, elite private schools across the nation applied for and received the funds. San Diego County schools were no different. 

At La Jolla Country Day School, tuition or daycare costs $20,690 a year while tuition for high school students starts at $37,130 for a year. Federal data shows La Jolla Country Day received a $2-$5 million check in the form of a PPP loan.

A few miles away in Linda Vista, tuition at Francis Parker School is $33,740 for high school students while grade schoolers pay $20,860 a year. As was the case with La Jolla Country Day, Francis Parker received a $2-$5 million small business loan. 

North on Interstate 5 on Del Mar Heights Road is home to Cathedral Catholic High School. Administrators there, where tuition costs $19,368 annually, also took out a $2-$5 million PPP loan.

As for other elite schools to large PPP loans; San Diego Jewish Academy where annual tuition is $29,480 took out a $1-$2 million loan;  Academy of Our Lady of Peace (OLP) where tuition is listed at $20,200 received a $1-$2 million loan as well, Mater Dei High School where students pay $17,680 in tuition received $1-$2 million, and Saint Augustine’s School which costs $20,346 per school year also took the same amount.  

Other elite private schools to get an economic boost include Cathedral Catholic.

Ed Hearn has served as President of Saint Augustine High School since 2006. Hearn tells NBC 7 that COVID-19 didn’t discriminate when it came to economics and his school, like so many other institutions, suffered since the shutdown. 

“Our school’s tradition goes back 98 years, said Hearn. “We have a lot of families, 52 percent of which are on financial assistance.”

Hearn said Saint Augustine received $1.24 million in PPP money.

“We thought we were going to lose a lot of students,” said Hearn. “Turns out we are starting to gain those students back for a lot of reasons. We have been able to pay our teachers. We did some fundraising with the alumni and the alumni were very generous in helping families pay their back tuition so they could register for classes.” 

Hearn said that the school will return the money if after the pandemic, it is not needed. 

“We have tremendous alumni out there in the community doing great things all the time in San Diego. I feel that it’s an investment for a better day in San Diego. There are going to be a hundred catholic schools that will close their doors across the country because of this pandemic.” 

Mater Dei High School in Chula Vista is one of those Catholic schools that took millions in coronavirus relief. Federal data shows school administrators received a $1-$2 million PPP loan last April.

A spokesperson for the diocese says the PPP loans for Cathedral Catholic and Mater Dei, both of which operate under the authority of the Diocese, “helped with the payroll of 216 employees and the loan Mater Dei received helped with the payroll of 112 employees.”

Meanwhile, public advocacy groups say those loans could potentially come at a cost for small businesses. 

Sean Moulton is a Senior Policy Analyst for the Project On Government Oversight (POGO), a non-partisan watchdog group based in Washington DC.

“I think there are valid questions to be asked of recipients,” said Moulton in an interview with NBC 7 Investigates. “This was a program that was meant to go to small businesses that did not have forms of other capital during this crisis.”

Moulton says that while he didn’t want to comment specifically on private schools and whether or not elite schools should have received PPP loans, he did say the public has the right to ask. 

“This is taxpayer’s money and they have the right to ask questions,” he said. “And, that is why it’s so important for this information to come out, so that we can evaluate whether the money went to the right places or not.” 

NBC 7 INvestigates also reached out to Francis Parker School, San Diego Jewish Academy, La Jolla Country Day. Click on the links above to see their full comments. Our Lady of Peace declined to comment.

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WHO: Coronavirus may be airborne, could float beyond 6 feet indoors

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  • The World Health Organization on Thursday acknowledged for the first time that it’s possible the coronavirus may be transmitted through aerosols, which can linger in the air over several feet.
  • This kind of airborne transmission had previously only been acknowledged by the WHO in hospitals, where aerosol-generating procedures like intubation and resuscitation occur. 
  • Previously, the WHO maintained that the virus is generally spread from person to person through respiratory droplets, which are heavy, and fall to the ground within a few feet.
  • But there is lots of new evidence that major coronavirus outbreaks have spread at churches, in bars, restaurants, offices, nightclubs, and other closed, stuffy settings.
  • Visit Business Insider’s homepage for more stories.

On Thursday the World Health Organization acknowledged for the first time that the coronavirus may be passed around in the air across a poorly-ventilated room, even between people who may be spaced more than 6 feet apart. 

Until now, the WHO had maintained that this virus is generally spread by contaminated droplets — which are a fraction of the width of a human hair but much larger and heavier than aerosols, which float in the air. Droplets typically drop to the ground soon after they leave the mouth or nose of an infected person.

As such, the agency said that, outside of hospital settings, there was no evidence the virus can stay aloft in the air for very long or travel very far, meaning that we are relatively safe if we maintain a few feet of distance from others.

But after hundreds of scientists and engineers drafted an open letter targeted at the WHO earlier this week, begging the agency to reconsider its stance, the WHO issued a new scientific brief on coronavirus transmission.

dive bar



ALEX EDELMAN/AFP via Getty Images


“There have been reported outbreaks of COVID-19 reported in some closed settings, such as restaurants, nightclubs, places of worship or places of work where people may be shouting, talking, or singing,” the WHO said in new guidance issued Thursday, referring to the disease caused by the coronavirus.

“In these outbreaks, aerosol transmission, particularly in these indoor locations where there are crowded and inadequately ventilated spaces where infected persons spend long periods of time with others, cannot be ruled out.”

The WHO still stressed that more research is needed to better understand how coronavirus transmission could work over such long distances in closed spaces, because the transmission route “has not been demonstrated,” yet, in any published study. 

“These are fields of research that are really growing and for which there is some evidence emerging, but it is not definitive,” Benedetta Allegranzi, the WHO’s infection prevention lead, said during a press briefing on the subject on Tuesday.

The new guidance pressed that certain high-transmission indoor settings — “during choir practice, in restaurants, or in fitness classes” — have all shared some common features: they’re crowded, poorly ventilated places where people have spent a “prolonged period of time” with infected individuals.

The WHO says airborne transmission might be possible in bars, offices, casinos, and churches, especially if the airflow is bad

las vegas customers no masks

Guests play blackjack at a table with plexiglass safety shield dividers and only three seats, for social distancing, as the Bellagio Resort & Casino on the Las Vegas Strip reopened on June 4, 2020.

Ethan Miller/Getty Images


The WHO is still cautious about declaring, for certain, that airborne transmission is at work in such scenarios.

“Detailed investigations of these clusters suggest that droplet and fomite [surface] transmission could also explain human-to-human transmission within these clusters,” the agency said, stressing that bad hand hygiene, a lack of adequate social distancing, and forgoing face masks could also all play a role in the spread. 

From a layperson’s viewpoint, it may not seem so critical to know whether the virus spreads through droplets or aerosols, as both contain tiny little doses of virus.

But the distinction subtly changes your risk perception of everyday actions and may change how close people decide to get to others when indoors during the pandemic.

“It’s increasingly clear that these big outbreaks where lots of people get infected are one of the most important ways in which this pandemic keeps going,” University of Maryland virologist Don Milton, who co-authored the open letter to the WHO previously told Business Insider. “We need to stop those superspreading events, and the way to stop those superspreading events is to pay attention to airborne transmission.”

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