Federal Update: Charter Schools

1. Federal Update: Charter Schools • David DeSchryverBrustein & ManasevitDec. 2010ddeschryver at bruman.com

2. Agenda • Election Impact • Charter Schools Program • FY2010 Consolidated Appropriations Act • Emerging fiscal pressures • Outlook

3. E The new normalcal Context bruman.com

4. 112th congress

5. Implications for charter schools • Chairman (?) John Kline (R-MN): priority issues the education committee will address in the 112th Congress– (Nov. 3) • pursuing education reform that restores local control, empowers parents, lets teachers teach, and protects taxpayers. • Giving employers the certainty, flexibility, and freedom to create jobs; • Conducting robust oversight of education and workforce programs across the federal government to protect students, families, workers, and retirees; and • Modernizing and streamlining training programs to help job-seekers get back to work.

6. Implications for charter schools • Sen. Alexander upon introducing the State Student Achievement Contract Act in 2007:“In other words, instead of saying: ‘Do it exactly this way’ to the States, the federal government would be saying: ‘Give us results, and we will give you more flexibility.’” • S.2312 – A bill to amend the Elementary and Secondary Education Act of 1965 to provide for State student achievement contracts. http://www.opencongress.org/bill/110-s2312/show

7. The new normal This New Normal is a reality. And it is a reality that everyone seeking to improve education must grapple with. Yet, there are productive and unproductive ways to meet this challenge of doing more with less. [….] The wrong way to increase productivity in an era of tight budgets is to cut back in a manner that damages school quality and hurts children. [….] Broadly speaking, there are two large buckets of opportunity for doing more with less. The first is reducing waste throughout the education system.. [….] The second bucket of opportunities is doing more of what works and less of what doesn't. That is a simple sounding idea. Yet, as experience shows, that simple mantra is often not followed. [….] Sec. Duncan, November 17, 2010

8. Charter Schools Program, Title V, Part B, CFDA 84.282, et. seq. • SEA Planning, Program Design, and Implementation & Dissemination, 84.282A • CSP Grants to Non-SEAs for Planning, Program Design, and Implementation & Dissemination (84.282B and 84.282C) • FY2010 Consolidated Appropriations Act • Replication & Expansion of High Quality CSs FY 2010 (84.282M). • National Leadership Activities grant competition (84.282N).

9. SEA Planning, Program Design, and Implementation & Dissemination, 84.282A • CSP - Planning and implementation subgrants: • Awarded by an SEA to non-SEA eligible applicants for a period of up to 36 months (3 yrs): • no more than 18 months for planning & program design; and • no more than 24 months for the initial implementation of a charter school. • So ... if 18 months on planning, only 18 more permitted for implementation

10. SEA Planning, Program Design, and Implementation & Dissemination, 84.282A • A non-SEA eligible applicant receiving a subgrant under this program may use the subgrant funds only for— • (a) Post-award planning and design of the educational program, which may include (i) refinement of the desired educational results and of the methods for measuring progress toward achieving those results; and (ii) professional development of teachers and other staff who will work in the charter school; and • (b) Initial implementation of the charter school, which may include (i) Informing the community about the school; (ii) acquiring necessary equipment and educational materials & supplies; (iii) acquiring or developing curriculum materials; and (iv) other initial operational costs that cannot be met from State or local sources. (20 U.S.C. 7221c(f)(3)).

11. FY2010 Consolidated Approps Act • FY2010 Consolidated Approps Act added 18.5% new funding to the CSP (from $216,031,000 in FY09 to $256,031,000 in FY 2010). • New programs & new focus on quality authorizing & high performing schools. • http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ117.111.pdf

12. FY2010 Consolidated Approps Act • Consolidated Act allowed ED to reserve up to $50 million to make multiple awards to nonprofit charter management organizations and other entities that are not for-profit entities for replication and expansion of successful charter school models. • Charter Management Organization grant competition (84.282M) • The Department awarded 12 charter school grants totaling $50 million for charter management organizations to replicate and expand high-quality charter schools that have demonstrated success.

13. FY2010 Consolidated Approps Act • Consolidated Act requires the U.S. Department of Education (ED) to reserve $10 million to carry out technical assistance, including such assistance to authorized public chartering agencies, in order to increase the number of high performing charter schools. • National Leadership Activities grant competition (84.282N). • 5 Charter Schools Program 2010 National Leadership Activities grants, totaling $3.5 million to non-profit organizations for projects of national significance to improve charter school quality across the country.

14. FY2010 Consolidated Approps Act • Consolidated Act beefed the CSP! • Added new conditions to the Charter Schools Program (CSP) • (Title V, Part B, Subpart 1 of the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left Behind Act of 2001 (NCLB)).

15. FY2010 Consolidated Approps Act • That each [SEA] application submitted pursuant to section 5203(a) shall describe a plan to monitor and hold accountable authorized public chartering agencies through such activities as • providing technical assistance or • establishing a professional development program, which may include planning, training and systems development for staff of authorized public chartering agencies to improve the capacity of such agencies in the State to authorize, monitor, and hold accountable charter schools.

16. FY2010 Consolidated Approps Act • That each [SEA] application contain assurances that State law, regulations, or other policies require: • (l) each authorized charter school in the State to operate under a legally binding charter or performance contract, conduct audits, and demonstrate improved achievement; and • (2) authorized public chartering agencies to use increases in student achievement for all groups of students as the most important factor in renewing or revoking a school's charter.

17. FY2010 Consolidated Approps Act • Lack of clarity… • There is no clear definition for "other policies," "legally binding charter," "improved achievement," "increases in student achievement," and "all groups of students." • The terms do lend themselves to practical application and they dovetail, in part, with terms defined in the ARRA.

18. ESEA Reauthorization and CSP • FY2010 Consolidated Appropriations Act • ARRA • SFSF • RTT • Congress • HR 4330, HR 5488 • Advocacy • NAPCS • NACSA

19. ESEA Reauthorization and CSP • ARRA: SFSF • State must collect and publicly report data and other information on the … extent to which charter schools are operating in the State.

20. ESEA Reauthorization and CSP • ARRA: RTT • A. State Success Factors … • E. Turning Around the Lowest-Achieving Schools (50 points) .. • F. General Selection Criteria (55 points) • (F)(2) Ensuring successful conditions for “high-performing charter schools” and other innovative schools (40 points)… • (i) charter caps… • (ii) quality authorizing … • (iii) equitable funding … • (iv) equitable access to facilities.

21. ESEA Reauthorization and CSP • ARRA: RTT • Definition: High-performing charter school means a charter school that has been in operation for at least three consecutive years and has demonstrated overall success, including: • (a) substantial progress in improving student achievement; and (b) the management and leadership necessary to overcome initial start-up problems and establish a thriving, financially viable charter school.

22. ESEA Reauthorization and CSP • Congress • HR 5488 — Charter School Transparency and Accountability Act. Sponsor: Baca, Joe (D-Calif.) • Each authorized chartering agency shall publish on the Internet … a detailed breakdown of the financial expenditures … of each charter school authorized … • HR 4330 — All Students Achieving through Reform (All-STAR) Act of 2009. Sponsor: Polis, Jared (D-Colo.) • Competitive grants to eligible public charter schools … to allow such schools [with a record of success] to serve additional students through the expansion and replication of such schools.

23. ESEA Reauthorization and CSP • Advocacy • National Alliance for Public Charter Schools • National Association of Charter School Authorizers

24. Increased Accountability • U.S. Department of Education Office of Inspector General, Fiscal Issues Reported in ED-OIG Work Related to LEAs and SEAs, ED-OIG/X05J0005 (Washington, D.C.: July 21, 2009).

25. Increased Accountability

26. Increased Accountability • Final Management Information Report, Supplement: Charter School Vulnerabilities (US Department of Education, Office of Inspector General: March 2010) control # ED-OIG/X42K0002. www2.ed.gov/about/offices/list/oig/invtreports/x42k0002.pdf

27. Increased Accountability • Since January 2005, the OIG has opened more than 40 charter school criminal investigations which have resulted in 18 indictments and 15 convictions of charter school officials. • Twenty-four of these investigations are still open with criminal prosecutions being actively pursued, generally against multiple subjects in each case.

28. Increased Accountability • In 2006, the Principal and Chief Administrative Officer of the Center for Economics and Law, located in Philadelphia, PA, was sentenced to prison and ordered to pay $206,553 in restitution for his role in a scheme to inflate the student count of the school. • He directed school employees to report students as enrolled who had actually dropped out of school or who had transferred to out-of-state or private schools.

29. Increased Accountability: Philly • “Philadelphia School District Controls Over Federal Expenditures” (Control Number ED-OIG/A03H0010), January 15. • Objective of OIG audit was to determine if the Philadelphia School District (PSD) had adequate fiscal controls in place to account for Federal funds for the period July 1, 2005, through June 30, 2006.

30. Increased Accountability: Philly • Expenditures, totaling $138,376,068, from grant funds were either unallowable or inadequately supported.

31. Increased Accountability: Philly • PSD needed stronger controls over personnel expenditures charged to Federal grant funds ($2,912,440 in unallowable costs and $107,005,052 in inadequately supported costs, totaling $109,917,492); • OMB Circular A-87 Appendix A, C. Basic Guidelines. • OMB Circular A-87, Appendix B, 8. Compensation for Personal Services, h. Support of Salaries and Wages. • 34 C.F.R. § 80.20 (b)(6) Standards for Financial Management.

32. Increased Accountability: Philly • PSD supplanted state and local funding with Federal funds ($6,979,063 in unallowable costs and $1,293,386 in inadequately supported costs); • Supplanting is presumed when… • 1. An LEA used Title I funds to provide services that the LEA was required to make available under Federal, State, or local law. • 2. An LEA used Title I funds to provide services that the LEA provided with non-Federal funds in the prior year(s). • 3. An LEA used Title I funds to provide services for children participating in a Title I program that the LEA provided with non-Federal funds to children not participating in Title I.

33. Increased Accountability: Philly • PSD’s policies and procedures were not adequate and/or enforced ($6,358,792 in unallowable costs and $11,976,434 in inadequately supported costs, totaling $18,335,226); • 34 C.F.R. § 80.20 (a) requires that grant funds be expended according to state procedures. • PSD did not have written policies and procedures for various fiscal processes ($622,572 in unallowable costs and $52,705 in inadequately supported costs, totaling $675,277). • 34 C.F.R. § 80.20 (b)(3).

34. The new normal: more with less & more accountable with less

35. “This federal portion LOOKS small…. but its BIG enough to wreck everyone's’ fun.”

36. Questions & Discussions

37. Disclaimer • This presentation is intended solely to provide general information and does not constitute legal advice. Attendance at the presentation or later review of these printed materials does not create an attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.