As the pandemic raged this spring, the iLearn chain of charter schools in North Jersey received $1.4 million in stimulus funding to offset the outbreak’s blow to public education.
The grant was part of a pot of money divvied among traditional school districts and charters like iLearn, which educates nearly 4,400 students at arts and sciences schools in Bergen, Passaic and Hudson counties. The funds were provided by the CARES Act, a $2 trillion package that aimed to rescue an economy suddenly addled by disease.
But for charter schools, that wasn’t the only bailout that the massive federal law offered for coronavirus recovery.
Unlike conventional public schools, charters were also in line for millions of dollars in small business aid under the Paycheck Protection Program, another piece of CARES. And get in line they did, with at least 39 charter schools in the Garden State quietly receiving hefty forgivable loans from PPP, a review by NJ Advance Media showed.
In the iLearn network, Bergen Arts & Science Charter School and Passaic Arts & Science Charter School were each awarded $2 million to $5 million, according to the Small Business Administration, which broke the loans down only into broad ranges. Paterson Arts & Science and Hudson Arts & Science were granted $1 million to $2 million each, and a sister school in the Bronx was approved for $350,000 to $1 million.
Ilearn’s central office, a Fair Lawn nonprofit that manages the charters, also applied for PPP money, and got $350,000 to $1 million.
That aid has charter school critics bristling, as they note it was unavailable to school districts that face their own budgetary woes. Those advocates accuse charter schools of using their unique structure — they are publicly funded, but privately managed — to reap a windfall by qualifying for money on both the public and private sides of the ledger, while still collecting their standard per-pupil, taxpayer-funded revenue.
“They’re double dipping, in effect,” said Julia Rubin, an associate professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. “They’re getting funds as nonprofits and they’re getting funds as public schools.”
ILearn’s chief executive, Nihat Guvercin, defended the decision to seek PPP dollars, which were meant to reward businesses and nonprofits that kept their employees on the job. Guvercin and other charter school operators said the money did just that, allowing them to prepare for deep budget shortfalls that Gov. Phil Murphy has warned of in the coming months.
“In the spring the PPP loan proceeds assisted us in avoiding layoffs from COVID-19,” Guvercin said in a statement. “Governor Murphy has projected ‘Armageddon’ school funding cuts this school year. Consistent with Governor Murphy’s advocacy to optimize federal support to New Jersey local governments during the pandemic, our schools applied for PPP loans.”
In total, between $33.9 million and $55.1 million went to New Jersey charters through PPP, Small Business Administration data shows. On top of that, some chains like iLearn were granted money not only for their schools, but for the nonprofits that oversee them.
Harry Lee, the president of the New Jersey Public Charter Schools Association, said the aid was a lifeline that came as New Jersey underfunds charter schools. His organization estimates they receive 73 cents on the dollar in per-pupil funding compared to their traditional counterparts, which he said left charters vulnerable to the outbreak’s impact.
“Charter schools saved hundreds of jobs because they got access to this money,” Lee said. “We should applaud them for using federal assistance to save jobs.”
Michael Piscal, the chief executive of the College Achieve chain of charter schools, called it “ridiculous” to criticize charters for taking PPP, when they lack the financial girth of school districts and do not have the power to raise taxes to plug budget gaps.
College Achieve’s three charter school systems in Plainfield, Asbury Park and Paterson received a combined $1.7 million to $4 million in loans, and its Tinton Falls-based nonprofit got $150,000 to $350,000. Piscal said the schools employ more than 300 people, with the funds keeping their jobs intact despite cuts to state aid that may only get worse.
“Every nonprofit in the country applied for this money and we’re a nonprofit,” Piscal said. “We were contemplating layoffs too, and this prevented us from doing that.”
PPP was part of the stimulus package that Congress rushed into law in the early days of the pandemic as life ground to a halt and the shutdown caused businesses to hemorrhage money and jobs. The $660 billion program was meant to inject money into the economy and encourage a wide range of organizations to keep their workers off unemployment.
Applicants were eligible for up to 2½ times their monthly payroll costs, provided they certified that “current economic uncertainty” made the loan necessary. The program offered a big incentive: If the funds were spent on salaries and other business expenses such as rent and utilities, the debt will be forgiven — turning it into a grant.
Charter schools have long been a lightning rod, with critics charging they siphon money from traditional school districts and supporters saying they give families needed choice, particularly in struggling urban communities with failing school systems. Across New Jersey, they are a small but influential part of the education landscape, with 59,000 of the state’s 1.3 million public school students enrolled in charter schools.
Not every charter school sought PPP money. Statewide, there are 87 charters and three renaissance school systems, a hybrid in charter-rich Camden that is also publicly funded but privately run.
Reporters reached out to more than a dozen schools that apparently did not accept funding, but got no responses.
Two of the renaissance school systems were among the largest recipients of PPP. Mastery Schools of Camden, which enrolls 2,600 students in six schools, received a $5.2 million loan in April, the school disclosed.
KIPP Cooper Norcross Academy, another renaissance network in Camden that educates 1,500, received $2 million to $5 million, and the Newark-based nonprofit that manages it also got $2 million to $5 million.
Critics like Rubin note that as even as those schools applied for the money, they continued to receive their standard per-pupil funding that is covered by state and local taxpayers. The schools were also in line for the federal K-12 coronavirus relief that was another part of the stimulus law.
In May, the state Department of Education announced more than $200 million of that public school aid. KIPP Cooper Norcross received $1.1 million from the kitty, Mastery Schools of Camden got $1.2 million and iLearn’s four charters got their combined $1.4 million.
Some of those schools appear to carry healthy fund balances, well-compensated administrators and political clout, said Darcie Cimarusti, a spokeswoman for the Network for Public Education, a national advocacy group that has scrutinized PPP loans to charter schools.
“Are you public or are you private?” asked Cimarustri, who is also a Highland Park school board member. “If you’re public, well, the other public schools in New Jersey are facing just as much uncertainty.”
Nina Rees, president of the National Alliance for Public Charter Schools, said that because charter schools don’t receive as much public revenue as traditional public schools, they have to find other pots of money.
“Fundraising is in the DNA of every single charter school leader,” Rees said, adding that charters couldn’t afford to ignore PPP. While conventional public schools can be kept open even if they are losing money, if a charter is in the red too long, it will have to close its doors, she said.
Across the nation, the Network for Public Education has tallied between $929 million to $2.2 billion in PPP funding for charter schools and their management organizations. The awards were disclosed last month in a massive database of loans released by the Small Business Administration after complaints about the program’s transparency.
Funding for charter schools is just one of many aspects of PPP that has generated controversy. Critics have also questioned aid that went to publicly traded companies, religious groups, and private prep schools with well-heeled parents and alumni.
In written statements, KIPP Cooper Norcross and Mastery Schools of Camden called their decision to accept PPP money financially prudent, considering the strains of the pandemic.
“This loan has allowed us to protect jobs today and help prepare for the possibility of additional school funding cuts,” wrote Jessica Shearer, a KIPP spokeswoman.
Chris Cerf, a former state education commissioner and superintendent of Newark Public Schools, said the only question should be whether charters were eligible for the money, which isn’t in dispute.
“Traditional public schools in N.J. have received billions of dollars to support their construction and building needs. Charter schools have not received a penny,” Cerf said. “To me, that doesn’t raise a question of propriety, but rather one of policy. The authors of the PPP presumably had a reason for setting the eligibility requirements as they did.”
Without further federal coronavirus aid, schools in New Jersey face a rocky future. Late last month, Murphy said the state may have to scrape $1 billion off school budgets, even as the schools are scrambling to assemble plans for pandemic education.
Mark Weber, a researcher at Rutgers Graduate School of Education who has studied the state’s charter school system, said he understands why charters turned to PPP and doesn’t blame them for taking the money.
Still, Weber questioned why they qualified for more aid than traditional public schools.
“Why does one set of schools get this, but another doesn’t?”
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Riley Yates may be reached at ryates@njadvancemedia.com. Payton Guion may be reached at pguion@njadvancemedia.com.
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