Solving Special Operational Issues

6 Solving Special Operational Issues Operating outside of state and district bureaucracies gives a charter school the chance to forge an ambi‑ tious mission and then be highly inventive in aligning its day‑to‑day activities with those goals. Autonomy comes at a price though. The more independently a charter school operates, the more it is cut off from the practical supports offered by established educa‑ tional systems. For district schools, having a facility is a given. The central office takes care of services From Promising to Proven 123 SOLVING SPECIAL OPERATIONAL ISSUES like accounting, transportation, food service, security, employee benefits, regulatory compliance, purchasing of equipment and curricula, annual testing, and staff training. Governance is handled by the district superin‑ tendent and board of education. Charter schools have to manage all of that, and more, on their own. Few charters would trade their freedom of operation in order to obtain those services, and if they did, most would lose their performance edge. Yet the lack of logistical support that many charters feel can create heavy operational burdens and hamper their ability to function as effectively as they might. Some examples of a few of the practical responsibilities that can dog charter operators today: • Charter school leaders sometimes spend a lot of time dealing with back‑office issues (financial management, supply purchases, state reporting). • Special‑education requirements apply to charter schools, as they do to all public schools, pulling charters into complicated and expensive regulatory compliance. • The oversight boards required for each charter are legal entities that carry fiduciary and statutory demands. Keeping up with these can eat time and resources that principals would rather put into improving instruction. • Perhaps most taxing are the demands of acquiring and maintaining facilities. At last count, only 15 states plus D.C. provided charter schools with any financial compensation for the cost of facilities. Most charter schools are thus forced to take a significant chunk of the money that states apportion them for instructional expenses (an amount that already averages much less than what conventional schools get per child) and devote that to their building. When you ask charter school founders and operators about the toughest problems they face, financing facilities regularly tops the list. The costs of buying land, erecting a large building, or renovating an existing structure can be prohibitive for an enterprise that doesn’t yet have any income stream. Since charter schools can go out of business or be shut down for poor performance, lenders often see them as a risky investment. Exacerbating this is the fact that charters are often first ven‑ 124 tures for those who start them up, while most founders are educators without a lot of business or real‑estate experience. Financiers charge a premium to cover these perceived risks, and charter schools end up pay‑ ing carrying costs heavier than those of regular school districts. While financing a facility remains very difficult for many charter schools, it has become somewhat less lonely and expensive than it used to be. The Local Initiatives Support Corporation has surveyed dozens of nonprofits that began offering financial assistance for charter school buildings over the last decade. By mid‑2012, their research showed, a total of 583 facilities costing $6.4 billion had been helped with bonding. The assisting groups were partly encouraged to enter this arena by the U.S. Department of Education’s Credit Enhancement Program, which assists nonprofits who develop such programs. The best long‑term solution would be for state, federal, and local education authorities to treat charter schools like other public schools when it comes to facilities. This could involve allowing them access to public financing and bonding, folding an allotment for building costs There are many superb schools operating out of strip malls, closed big‑box stores, converted warehouses. Don’t get hung up on fancy facilities. into the per‑pupil payments made to charter schools, and allocating closed or surplus schools to charter operators. Putting charters and con‑ ventional schools on equal footing in this area should be an important priority within the advocacy work discussed in Chapter 5. Groups like StudentsFirst and the various state charter associations are emphasizing this problem, and may get traction if sustained in their efforts. In the meantime, there are growing numbers of ways that donors can help talented charter founders and operators jump the difficult hurdle of acquiring a home for their school. We’ll sketch several options in the first sections of this chapter. Giving charter schools direct support for facilities Building grants to charter schools are one simple way for givers to ease facilities pain. Or something more involved can be undertaken—like the From Promising to Proven 125 SOLVING SPECIAL OPERATIONAL ISSUES donation of a building directly to a charter school operator, or its lease at a low cost. The Longwood Foundation of Delaware, for example, worked with Bank of America to turn an office building the bank no longer needed into the Community Education Building. Along with other philanthropic and civic partners, Longwood provided management and financing to remake this space into a facility for high‑performing charter schools and community organizations, which will eventually serve some 2,000 of Wilmington’s children. Philanthropists may also offer loans or loan guarantees. To make char‑ ter schools a more attractive investment for lenders, several donors put foundation backing behind the mortgage debts of one or more charter schools. By placing funds into a reserve account or simply signing a guarantee letter, funders can provide lenders with a degree of security that encourages their lending and reduces interest rates. This is known as “credit enhancement” because it boosts a school’s standing to operate in the private financial marketplace. Interventions like these where philanthropists act almost like inves‑ tors or banks rather than simply giving donations are sometimes referred to as “program‑related investments.” Foundations can sometimes put portions of their endowments into PRIs, with the expectation of get‑ ting their principal back, and perhaps also some modest return on their money. Several donors—the Walton Family Foundation and the Ewing Marion Kauffman Foundation, for instance—have been making PRIs to help charter schools acquire useable campuses. When loans get repaid, or rent or interest installments are returned, the giver can recycle that money into additional PRIs for other operators. In this way, a given sum of capital can get multiple uses in kickstarting buildings and new schools. Donors should be aware that many of the best charter operators are exceptionally frugal with physical facilities. Most would rather put discretionary funds into teachers, curriculum, or technology, so charter schools are often quite spartan in their physical plants. There are many superb schools operating out of strip malls, closed big‑box stores, con‑ verted warehouses or call centers, old tortilla factories, and former car dealerships. Many do without full gyms, auditoriums, cafeterias, large playing fields, or decorative flourishes. Schools need not reside in clas‑ sical structures to have great academic results. Many creative school founders have improvised unusual real‑estate solutions, and donors who aim to help with the facilities crunch should encourage school leaders to research the workarounds already pioneered by others. 126 While in many older Northeastern cities there are vacant buildings, and often even vacant schools, that can be repurposed efficiently, there are other places and times when new construction is the best choice. In newer cities in the South and West that are less dense and have cheaper land, it may be smarter and even less expensive to build from scratch, yielding exactly the campus a school wants at a modest cost. In short, there is no single best way to house a school. Several charter networks have perfected fast, no‑frills construc‑ tion, including BASIS, Carpe Diem, National Heritage Academies, and Rocketship. BASIS has been putting up modern steel and glass school buildings in Arizona at a cost of around $8 million including the land. That is less than half the cost of a typical school built in the Phoenix area. They do it by prefabricating the building in Texas, trucking to the site in pieces, and assembling it in just a few months. Education Next reporter June Kronholz recently visited a new BASIS school building and described some of their secrets of cost control. There’s no cafeteria or library. Floors are polished cement. The ductwork is exposed. Theater and orchestra audiences assemble on the parking lot—a garage door in front of them opens into the performing‑arts room. I noticed overhead projectors and a cart of laptop computers, but there’s no technology lab. “Of course if proscenium stages and audiovisual equipment made a dif‑ ference in student learning,” Kronholz concludes, “the U.S. wouldn’t be struggling to keep up with the international average.” In some places, the quickest and most efficient way a donor can help a charter school find a physical home is to help arrange a facilities‑sharing agreement with the local school district. Even as charter schools across the country clamor for more space, many districts are facing declining

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