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Education

Charter Schools Say They'll Return Illegal Loans Made Outside Miami-Dade County

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Miami Herald Archive
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Keys Gate Charter School in Homestead

Representatives for two charter schools that illegally loaned public money to schools outside Miami-Dade County gave their word to the MDCPS School Board Tuesday that they plan to get it back. 

Representatives for Keys Gate Charter School, in Homestead and SMART Management, the company that operates Bridgeprep Academy in Miami, did not go so far as putting that promise in writing.

Chris Norwood, a lawyer who sits on the school district's Audit and Budget Advisory Committee, told the School Board Tuesday that  he's seen schools threatened with closure for less. “I’ve represented charter schools in termination appeals for moving from one block to the next,” he said.

The district, whose contract with charter schools it oversees includes a termination clause, has already spent months going back and forth on the illegal loans with the schools themselves and with the state Department of Education.  A letter sent to the schools in question Monday gives them until March 31, 2017 to return the loans.

Think about a 90-day notice of termination and then let's figure it out if they're going to give the money back or not. —Chris Norwood

“I would encourage the administration to think about a 90-day notice of termination and then let's figure it out if they're going to give the money back or not,” Norwood said.

At issue is more than $900,000 in funds from the Florida Education Finance Program, which allocates roughly $7,000 per student per year to public schools (including charters), based on a headcount conducted twice a year.

The Florida Department of Education issued its formal legal opinion on the matter in a letter to the district in October: “A Florida nonprofit organization that operates charter schools may not use FEFP funds to extend loans to charter schools outside the school district where the funds were appropriated,” wrote General Counsel Matthew Mears.

 

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Credit MDCPS / FLDOE
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MDCPS / FLDOE
Part of an October 21, 2016 Letter from the Florida Department of education to the lead attorney for the MDCPS School Board, Walter Harvey.

Armed with that opinion, Superintendent Alberto Carvalho assured members of the district’s Audit and Budget Advisory Committee  that his administration is working to “fortify the contract” with charter schools to prevent similar practices in the future. 

What remains to be seen is how the district plans to address transfers and loans from a given school to a corporate account or a nonprofit that operates other schools within the same district. In 2015, guidance from the Florida Department of Education to MDCPS’ office said those choices would be  left to individual districts. MDCPS is in the process of developing a policy to govern such transactions.

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Public funds transferred from individual charter schools to parent/corporate accounts, as reported by the MDPCS auditor's office.

There appears to be much more money at stake with transfers within the county: Currently, close to $24 million  originally allocated to 15 MDCPS charter schools has been transferred or loaned to corporate accounts affiliated with the parent organizations of those schools. Once the money is transferred away from an individual school, it's harder to tell how it has been used.

 

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Credit MDPCS
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MDPCS
Documents provided to the office of MDCPS' chief auditor show how state funds transferred from Mater Academy schools into the parent organizations' corporate account was used.

In some cases, however, the MDCPS auditor has sought and received clarification as to how charter school organizations have used those "transfers" or "advances." Two million dollars transferred to corporate accounts for Mater Academy Schools which runs schools throughout Miami-Dade County, for instance, was used to pay rent and on “capital expenditures” at other charter schools it operates.