2 charter schools agree to return $900K loaned to sister schools out of county

Keys Gate Charter School in Homestead
Keys Gate Charter School in Homestead Miami Herald archive

Two Miami-Dade charter schools improperly transferred taxpayer funds by lending a combined $912,094 to sister schools outside the county, the top lawyer for the Florida Department of Education has determined.

As a result, Miami-Dade County Public Schools has sent the schools letters demanding the money be returned by March 31 of next year. On Tuesday, the district also hinted that it might consider further actions, including a 90-day notice of termination.

The state concerns were first raised in an Oct. 21 letter from state education department general counsel Matthew Mears to school district attorney Walter Harvey. Mears said Keys Gate Charter School in Homestead and BridgePrep Academy in Miami’s Little Havana neighborhood were prohibited from making loans to affiliated schools not in Miami-Dade.

“Funds that are appropriated to a local school district are for the education of the students within the school district,” Mears wrote.

When initially contacted by Florida Bulldog, Colleen Reynolds, a spokeswoman for Florida Charter Educational Foundation, the nonprofit organization that owns Keys Gate, disputed Mears’ conclusion that the $700,000 loaned to Clay Charter School in Middleburg, Florida, was unauthorized. Keys Gate and Clay are operated by Charter Schools USA, one of the country’s largest charter school management companies, under a contract with the foundation.

“We have not received any direction or concern regarding this issue,” Reynolds said before the Miami-Dade school district had sent the schools letters about the money. “However, we believe we are in full compliance with the law.”

Juan Carlos Quintana, a principal with S.M.A.R.T. Management, the company that developed and operates BridgePrep Academy, did not return three phone calls and an email message seeking comment about the $212,094 loan given to an unidentified affiliated school in another county. Two other Miami-area charter schools under the BridgePrep name also had loaned a combined $18,949 to sister schools outside the county, but those funds have already been paid back, according to a Sept. 12 memo from Miami-Dade Public Schools auditor Jose Montes de Oca to the audit committee.

But at a School Board audit committee meeting on Tuesday, representatives for both of the schools said that in light of the information from the Florida Department of Education, the schools intended to return the funds.

The issue, however, may not be over.

Committee member Christopher Norwood suggested that the School Board consider issuing a 90-day notice of termination indicating that the board intends to end its contracts with the charter schools. Superintendent Alberto Carvalho responded that the school district’s letters to the charter schools demanding that the money be returned “do not preclude further action.”

“What is sad is the amount of resources and time dedicated to this issue which to us was so clear,” he said.

The dispute over the use of district school funds for loans initially arose in May when Montes de Oca notified the school board’s audit and management committee about the problem following his review of annual financial statements for 2015 submitted by Keys Gate and BridgePrep. At the time, Keys Gate had loaned Clay Academy $750,000 with zero interest. Since then, the loan was paid back, but Keys Gate issued another loan for capital improvements at Clay Academy. This second loan is for $700,000 with a five percent interest rate and a term of five years, according to Montes de Oca’s September letter.

Opinion sought

The school board attorney sought an opinion from Mears after Keys Gate officials informed Montes de Oca that the loans were acceptable under state law, according to a Nov. 30 letter by the school district auditor.

Mears’ response that the loans are illegal prompted Montes de Oca to recommend that the money be returned. “The district administration plans to formally notify these schools of the state’s guidance and that the loan funds must be repaid,” Montes de Oca wrote.

Charter school watchdogs told Florida Bulldog that the loans illustrate a total disregard for taxpayer funds diverted from public schools to private educational institutions. Lisa Guisbond, executive director for Citizens for Public Education, an organization that advocates against charter schools and standardized testing in Massachusetts, said Keys Gate and BridgePrep should be held accountable for the mishandling of school district funds.

“It seems bizarre that a charter school would have an extra $750,000 to loan out when so many public schools are scraping by to meet the needs of their students,” Guisbond said. “That kind of blows my mind. It’s outrageous, even.”

Carol Burris, executive director for the New York-based Network for Public Education, said Keys Gate and BridgePrep should not have given out the loans in the first place.

“In the case of these charter schools, their allegiance to their sister charters was greater than their allegiance to the children of Miami-Dade County they are supposed to serve,” Burris said. “They put the needs of the charter schools ahead of the needs of the kids. That is a problem.”

It’s a good thing both schools were caught, she added. “Hopefully, it will discourage other charters from doing the same,” Burris said. “And I hope the citizens of Miami-Dade have all of their tax dollars returned.”

Miami Herald staff writer Kyra Gurney contributed to this story.

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