Yesterday the D.C. Public Charter School Board released the results of a required by law analysis of the financial health of the local charter school movement. The 2012 study was conducted by the PCSB, the Office of State Superintendent of Education (OSSE), and the Office of the Chief Financial Officer (OCFO). It demonstrated the huge public investment in these institutions that now educate 43 percent of all public school students. 53 charters were included in the review which received $408 million in operating funds and another $96 million for the per pupil facility allotment for a total of $504 million. Another $110 million was earned through fundraising and Federal grants.
Overall the financial picture for charters improved over 2011. The press release announcing the results states that “the median charter school now has sufficient cash on hand to cover 59 days of operating expenses, up from 41 days a year before.” I once worked for a nonprofit that calculated the same indicator. The CEO called it the number of days in orbit, defined as how long the organization could keep operating if not another penny of contributions came in. His goal was 90 days.
The Washington Post’s Emma Brown points to one charter facing severe financial difficulties. She says that Ideal Academy had only one day’s cash on hand. The elementary and middle school’s principal was unavailable to comment for Ms. Brown’s story. She recalls that the PCSB closed Ideal’s high school in 2011 for poor academic results.
There were four categories of schools that were flagged for “financial circumstances.” However, the number of schools in each bucket decreased from last year. These include:
1. Charters with reportable audit findings. The schools include Arts and Technology Academy, Cesar Chavez Charter Schools for Public Policy, Hope Community, Integrated Design and Electronics Academy, Perry Street Preparatory, Seed of D.C., Shining Stars Montessori Academy, and Thurgood Marshall Academy and Subsidiary. The total number dropped from 18 in fiscal year 2011 to 8 in 2012.
2. Charters with unresolved reportable findings from the previous year. These include Perry Street Preparatory, Integrated Design and Electronics Academy, DC Bilingual, and Hope Community. The total number here deceased from 15 last year to 4 in 2012.
3. Charters with negative cash flow. The schools in this category are DC Bilingual, Integrated Design and Electronics Academy, Latin American Youth Center Youthbuild, and William E., Doar PCS for the Performing Arts. The total number of charters here went from 8 in 2011 to 4 in 2012.
4. Charters with negative net asset positions (total assets minus total liabilities) indicating the schools use borrowed money to finance operations. These include E.L. Haynes, Hope Community, and William E. Doar PCS for the Performing Arts. The total number in this group now is 3 compared to 7 last year.
When the notion of the Performance Management Framework was first brought up there was talk of including a financial health of the school component in this tool. I still think this would be an excellent addition.
Based upon the 1996 school reform act the PCSB has the ability to close charters for “specified financial reasons.”