Private and charter schools in North Carolina received millions in PPP loans

More than 50 charter and private schools in Raleigh, Durham and Charlotte received loans of $150,000 to $2 million in recent months from the federal Paycheck Protection Program.

The program, which was organized by the U.S. Small Business Administration, allows companies and nonprofits with fewer than 500 workers to get a low-interest loan to cover up to two months of payroll and expenses like rent and utilities. If the loan is used to retain workers and the company doesn’t cut wages, the loan becomes a grant.

Of the 53 schools that received more than $150,000 in PPP loans, 13 were charter schools.

Charter schools are public schools – they don’t have tuition and are funded by public money per student – but they are held accountable independently of school boards and don’t have to follow local or state curriculum.

Jennifer Andrew, communications director for Public Schools First NC, told The N&O the organization was disappointed that charter schools were allowed to use the funding while traditional public schools were not.

“For years, we’ve listened to charter schools say that they’re public schools,” Andrew wrote in an email. “Now they’re saying they’re a business.”

“The movement to privatize education is decimating our traditional public schools. Vital resources are being siphoned from already cash-strapped public schools and reallocated to charter schools. We want to see our traditional public schools fully funded.”

Federal aid for schools

N.C. public schools are receiving over $400 million in federal funding to help them deal with pandemic-related costs, The N&O previously reported. The funding was distributed across school districts; Charlotte-Mecklenburg school system could get as much as $40.3 million, the Wake County school system $28.8 million and Durham Public Schools $13.5 million.

The National Alliance for Public Charter Schools contends that charter schools are public and need funding just as much as traditional public schools do.

Debbie Veney, vice president of communications and marketing for the National Alliance, said charter schools have more expenses than traditional public schools, such as building costs.

“So we have to do fundraising in the charter sector,” Veney said in an interview. “These schools in many cases were not able to do the type of fundraising they were typically able to do for operating expenses and that created a budget shortfall for them.”

She said charter schools have been “really fast” in their shift to remote learning and some have fed entire communities in the past few months of the pandemic.

“Charter schools go above and beyond what they are legally required to do,” Veney said.

Sugar Creek Charter School in Charlotte, which received a $2.1 million PPP loan, said in a press release the money was used to meet payroll needs that account for around $13 million of its operating budget every year.

“When we applied for and received the proceeds of the PPP loan, there was significant uncertainty concerning the availability and timing of these funding sources primarily as a result of the effects of the COVID-19 pandemic,” the school’s press release said.

Sugar Creek Charter School has around 1,700 students across its elementary, middle and high schools – nearly all of the students are on free or reduced-price lunch.

Central Park School for Children, a K-8 charter school in Durham, used a PPP loan of $1 million to $2 million to keep around 110 employees on payroll.

“No one knows how future school enrollments will shake out, so there could be the double whammy of lower enrollment and lower per child funding,” John Heffernan, executive director at Central Park, told The N&O.

“Week in and week out we have been hearing all sorts of dire predictions about large budget cuts by the state and by local governments. Our school’s board felt that applying for the loan was the prudent and responsible thing to do.”

Increased expenses due to the pandemic

Private schools accounted for most of the largest loans from the federal program.

According to The Asheville Citizen-Times, the Asheville School accepted a loan of $1.7 million despite its tuition of $60,000 for live-in students and an endowment of around $43 million.

“We realized it was going to be a challenge to get through this year,” Anthony Sgro, head of school at Asheville School, told the Citizen-Times. “If we hadn’t taken the money, we were in the process of developing a plan to either furlough or lay off employees because we weren’t going to be able to pay them.”

St. Timothy’s School, a private Episcopal preparatory school in Raleigh, received between $1 million and $2 million to keep 72 full-time employees and 40 other employees on its payroll.

Tim Tinnesz, head of school at St. Timothy’s, told The N&O the school has no endowment and was uncertain how the pandemic would affect enrollment.

“We also faced the unknown impact and duration of this crisis on unplanned expenses for teacher training, technology, equipment/supplies, facilities, and cleaning relating to social distancing requirements, hybrid at-home and in-person learning, and other operations if we hoped to resume on-campus offerings at any point,” Tinnesz said in an email.

He said the school, like other private schools in the area, is projecting losses of income and significantly increased expenses related to the coronavirus pandemic, so the loan provided assurance as annual contracts were reissued for the new school year.

“The school’s most important assets are our teachers,” Tinnesz said.

This story was originally published July 28, 2020 at 6:00 AM with the headline "Private and charter schools in North Carolina received millions in PPP loans."