July 7 — 11:08 am, 2020

Philly-area charters receive $30 million-plus in PPP loans

One of the largest loans went to Chester Community Charter School.

Neena Hagen and Dale Mezzacappa

THIS STORY HAS BEEN UPDATED to reflect that KIPP Philadelphia did not accept its loan and make some other clarifications.

More than 20 Philadelphia-area charter schools and management organizations received a total of at least $30 million in low-interest loans from the federal government’s Paycheck Protection Program, designed to help struggling small businesses weather the COVID-19 pandemic. 

Among the recipients are the state’s largest brick-and-mortar charter, which is run by a for-profit company in Chester, and Mastery Schools of Camden.

The $660 billion federal Paycheck Protection Program (PPP) was intended to help businesses keep employees on the payroll and off unemployment benefits. The program has supported 51 million jobs, according to the Small Business Administration (SBA). The loans will be forgiven if businesses meet certain conditions, such as retaining or rehiring employees.

According to a list released Monday by the SBA, most of the charter recipients in this region are single schools rather than large charter organizations. Mastery decided against applying for a loan for its Philadelphia schools — even though its April board of trustees meeting minutes show that the board approved loan applications. 

“The boards gave approval to apply, but as we learned more about the program, we decided not to pursue the applications,” said Michael Patron, Mastery Schools’ Right-to-Know officer.

Mastery Schools in Camden, however, run by a different board, was one of three area charter organizations that received among the largest loans, between $5 million and $10 million.

Green Woods Charter School, in Philadelphia, stated in its April board meeting minutes that it would not apply for PPP loans because the school’s board believed the public school aid from the federal CARES Act to be sufficient. Other charters, including Folk Arts-Cultural Treasures (FACTS) came to a similar conclusion.

UPDATE After this story was published, a spokeswoman from KIPP Philadelphia said that the organization had declined its $1 million to 2 million loan in June.  “KIPP Philadelphia Public Schools was awarded but will not receive PPP loans. Once we understood the terms, we did not accept the loans,” wrote KIPP’s external affairs associate Logan Michelle Wilson in an email. END UPDATE

The propriety of charter schools using the program has been hotly debated, both by critics of the charter sector and within the charter community itself, because they operate with public dollars and were given relief funds through the CARES Act earmarked to help elementary and secondary education. Pennsylvania got $523 million through the CARES Act to distribute to its school districts and charters, which in the Commonwealth are the legal equivalent of districts, or Local Education Agencies (LEA).  

The critics say charters are either public schools or small businesses, but can’t be both. 

The data released Monday did not specify the exact loan amounts, but instead listed five ranges spanning from “$150,000 to $350,000” to “$5 million to $10 million.”

One of the largest loans, between $5 million and $10 million, went to Chester Community Charter School (CCCS), which is operated by a for-profit management company owned by wealthy Republican donor Vahan Gureghian.

The loan was received by Archway Charter School of Chester, Inc., which is the nonprofit name for CCCS under which it files its 990 tax form.

School spokesman Max Tribble said the loan was necessary because the financially troubled Chester Upland School District, which has long been in state receivership, has been unreliable in making its payments to the charter in a timely fashion.

This “unique financial uncertainty” plus the “additional and unprecedented uncertainty of the Covid-19 crisis, made it necessary for CCCS to participate in the PPP program,” Tribble said via email.  

During the pandemic, he said, “CCCS was able to maintain its entire staff payroll while offering distance learning, including the distribution of thousands of computers at no cost to students, and provided daily meals to any students who needed them throughout the crisis. Beyond that, CCCS has invested heavily in distance learning for summer school and to prepare for all possibilities for the 2020-2021 school year.” Tribble said the school distributed 4,000 computers to families and provided meals.

Tribble did not state the extra cost of doing this or the specific amount of the PPP loan. CCCS also received more than $2.5 million through the CARES Act.  

In its SBA filing, CCCS said the loan allowed it to retain 479 jobs. The school, which has nine buildings, is the largest brick-and-mortar charter in the state, and it has more than 4,300 students. More than UPDATE 1350 END UPDATE of those students live in Philadelphia and attend CCCS, at a cost to the District of $17 million. 

The most recent 990 form on file for Archway and available in Guidestar, which is for 2017, reports that almost all its more than $66 million in revenue comes from “government grants.” Gureghian has resisted releasing any information about his management company’s profits, but the 990 reports $18 million in management costs.

Chester Community is among those pursuing a court case that could privatize the management of all the schools in Chester. Charters already educate most of the K-8 students in the district.

Only one other local school, Collegium Charter School in Exton, received a loan in the highest possible range – $5 million to $10 million.

A number of other charters in the Philadelphia area received the next-highest loan amounts — between $2 million and $5 million. Those schools include Esperanza Academy Charter School and Franklin Towne Charter High School. Two cyber charters, PA Leadership Charter School and PA Virtual Charter School, also received that amount.

Both Esperanza and Franklin Towne said in the SBA disclosure that the loans helped them save more than 100 jobs, but other charters that received loans said they either saved zero jobs or did not disclose how many jobs were saved by receiving the loan.

KIPP Philadelphia Charter School, People for People Charter School and Sankofa Freedom Academy Charter School, all in Philadelphia, as well as Chester Charter Scholars Academy, received between $1 million and $2 million in PPP loans, with an additional 10 charters receiving between $150,000 and $1 million. (KIPP is not accepting it; see UPDATE above.) Sankofa did not disclose how many jobs were saved by receiving the loan. 

Representatives from the other above charters did not respond to phone calls, emails or Twitter direct messages seeking information about what they’re using the loan money for. (The Notebook is still seeking responses and will update this story once they are received.)

Charter schools in Pennsylvania maintain that the 25-year-old state reimbursement formula is inadequate for them to fully meet their needs, a reality especially acute for those, like Sankofa, that are operated by people of color in the neediest neighborhoods. 

U.S. Treasury Secretary Steve Mnuchin has long resisted giving out the loan information to the public, citing privacy concerns for businesses that applied. Eleven news organizations sued the Small Business Administration for Mnuchin to authorize the release of the loan information, and even now, not all of it has been released. 

The spreadsheet released Monday included listings of about 600,000 businesses that received more than $150,000 in loans, but that accounts for only 14% of institutions that received funding. Therefore, there could be charters in the Philadelphia area that received PPP loans under $150,000, but the names of those businesses weren’t publicly released. 

The deadline to apply for a PPP loan has now been extended to Aug. 8.

Screenshot of area charter recipients:

 

 

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