Charter Schools Find a Way to Get School Construction Funds Without Accountability

Green Lantern · #1 08-30-2007, 08:48 AM

Charter Schools Find a Way to Get School Construction Funds Without Accountability
Ever since the charter school law was signed into law in 1995, the state's clear policy has been not to provide capital construction financing for charter schools.
As a result of a vote this morning by the Council on Development Finance, that may be about to change. By an 8-1 vote --- with only Sen. Nancy Cook (D-Kenton) dissenting --- the Council recommended to Judy Cherry, Director of the Delaware Economic Development Office (DEDO), that she authorize issuance of 501 (c)(3) conduit bonds in the amount of $12 million for the Delaware Military Academy, a charter school authorized by the Red Clay School District.
Despite a request from DSEA that he oppose the Academy application for broader policy reasons, Rep. Greg Lavelle (R-Wilmington), the only other legislator on the nine-member Council on Development Finance, made the motion to recommend issuance of the bonds and spoke supportively of the Academy's application during Council deliberation.
Under Delaware Code, the decision to permit these bonds to go to market with the approval of the State of Delaware now resides solely with DEDO Director, Judy Cherry.
It is imperative that DSEA members communicate their opposition to issuance of these bonds by the State as soon as possible both to Gov. Ruth Ann Minner http://governor.delaware.gov/comments.shtml and DEDO Director, Judy Cherry judy.cherry@state.de.us

DSEA President Barbara Grogg and Jack Polidori, DSEA Director of Legislation and Political Organizing, both testified http://www.dsea.org/pdf/DMAGroggTestimonyAug07.pdf before the Council in opposition to the Academy's application. Grogg pointed out that DSEA's opposition was based on the long-standing policy of the General Assembly and urged the Council and DEDO Director to reconcile their actions with the state's clear and unambiguous educational policy.
Grogg noted that charter schools construction proposals would not have to undergo the high degree of scrutiny and accountability that local community public schools must undergo in order to obtain approval for capital construction even though charter schools are "public schools" under Delaware Code. For example, charter schools would not have to obtain local voter approval via referendum; a Certificate of Need from the state department of education; and or have their projects reviewed by either the state's Office of Management and Budget or the General Assembly's Bond Committee.
Conduit bonds are permitted under federal tax law and IRS regulations to be issued by state and local government bodies and agencies for capital construction purposes by eligible 501(c)(3) entities. While charter schools are "public schools" under Delaware Code, charter schools usually also go through the process of obtaining 501(c)(3) status in order to receive tax-free contributions from individuals, corporations, foundations, and to make themselves eligible for this type of bond financing.
While there is no direct appropriation from the state involved in conduit bond financing, the Delaware Military Academy will be able to obtain substantial annual savings on its financing costs as a result of the tax free status provided to purchasers of the bonds. According to the Academy's Commandant, this will save the school between $100,000-125,000 per year in interest charges.
"Approval of this back door policy change, unless stopped by Gov. Minner, will allow charter schools to skirt the accountability process that local public schools must meet," Grogg said. "We call upon DEDO Director Cherry to refuse to issue the Academy bonds. Clearly, this is a finance avenue that must be closed by the General Assembly."
Members of the Council were not persuaded by the prospect of other charter or local community public schools subsequently requesting use of this financing method if DEDO Director Cherry approves the Academy application.
In 2006, the Charter School Network returned to the General Assembly with a proposal to change the charter school law (HB 422) and provide funding to charter schools, ostensibly for school construction. The bill died an unceremonious death in the House Infrastructure committee.
Also in 2006, the General Assembly passed a bill that allowed Kent County to assess an impact fee on all building permits in excess of $30,000 and to use these funds to offset the local cost of school construction costs. Attempts by charter school proponents, both in the House and Senate, to direct some of these funds to charter schools were rejected by the full House and Senate as the bill was passed and then signed into law by Gov. Minner.
Just this year, the House amended HB 197, an economic development bill for New Castle County, to ensure that any bonds issues in special tax districts for economic development purposes, could not be used for school construction.

Green Lantern · #2 08-30-2007, 08:49 AM

Here is what I am getting at just from reading this, and I did not do any research on my own about it to verify what is being written, but based on this letter there was a vote to allow public taxpayer monies to fund construction projects for charter schools. Charter Schools are generally privately funded organizations and usually receive little if no taxpayer funds for projects. If this gets approved by the governor than it opens up the door for more charter schools to get monies that would otherwise have gone to school districts like BSD, Red Clay, etc....

That is what I am understanding Maybe MO would have more info on this as he is more politically knowledgeable than I am.

Charter Schools Find a Way to Get School Construction Funds Without Accountability

Family & Schools