Florida Politics

Stop charter schools from profiting off taxpayers? Nope, deal kills proposed ban.

Since the 2016 session, lawmakers have wanted to stop businesses from profiting off public funding for charter school capital projects. The proposal was on track to be approved this year, but it vanished and was left out of a final compromise bill on education policy.
Since the 2016 session, lawmakers have wanted to stop businesses from profiting off public funding for charter school capital projects. The proposal was on track to be approved this year, but it vanished and was left out of a final compromise bill on education policy. Miami Herald file photo

Lawmakers were on track this spring to enact long-sought safeguards to stop businesses from turning a profit off public money intended for charter school capital projects.

But for the second year in a row, that proposal abruptly vanished and was left out of a late-session compromise House and Senate leaders struck in private.

Despite being sought and supported by both chambers, the proposed accountability restrictions on charter schools didn’t make it in the final education budget bill released Friday evening — a 278-page proposal that combined four K-12 budget measures and lumped in myriad other education policies unrelated to spending. Lawmakers will cast up-or-down votes on HB 7069 Monday, along with other bills that make up the 2017-18 budget; they can’t amend the bills.

MORE: “Parents, school leaders urge ‘no’ vote on mammoth education bill”

Last year, it was primarily only the Senate that prioritized a prohibition on the “personal financial enrichment” of charter school operators who receive capital dollars for maintenance and construction. Senators wanted to require those operators’ school facilities to be publicly owned or owned by non-profit organizations or businesses unaffiliated with the school and its administrators.

This spring, the crux of that idea was revived in House and Senate bills moving separately in both chambers all of session — indicating it had a viable chance to pass. Most significantly, the provisions were in the final iteration of a Senate bill the House amended when legislative leaders last month decided to include it in budget conference negotiations.

Altamonte Springs Republican and Senate pre-K-12 education budget chairman David Simmons, who sponsored the Senate’s original bill, said Monday he didn’t realize or know why the personal enrichment restrictions were left out of HB 7069.

“These things are compromises, so the effort is to try to find something that works,” said Simmons, who was among the senators to provide input and negotiate the education budget policies.

House Republican leaders led the rewrite of HB 7069. The office of Speaker Richard Corcoran, R-Land O’Lakes, told the Herald/Times in a statement Sunday that the capital outlay restriction on charter schools would have been too burdensome. The schools are privately managed but funded with taxpayer dollars.

“The new requirements would have reduced funding for a majority of charter schools, simply through a change in the law and not because of any action or performance by the charter school,” the statement said.

However, when the crackdown on charter operators’ personal enrichment gained steam in the 2016 session, it was in direct response to the actions and performance of failed charters. An Associated Press analysis in December 2015 found that, since 2000, the state had lost $70 million in capital funding given to charter schools that later closed, and the state often couldn’t recoup any dollars.

Corcoran’s office did not respond to a follow-up question referencing the AP’s findings.

Florida Legislature (3)
Sen. Tom Lee, right, R-Thonotosassa, talks with Speaker of the House Richard Corcoran, R-Land O’Lakes, on the House floor during late negotiations Friday May 5, 2017 at the Florida Capitol in Tallahassee. Mark Wallheiser AP

Charter schools are eligible for capital dollars after two years in operation, among other criteria they have to meet. They can use the money for a variety of facility expenses such as insurance, rent payments and construction costs.

Nothing in state law prohibits charter schools from working with for-profit businesses that are run by or connected to the same individuals operating the school. For example, a charter school could lease space in a building owned by a school administrator or a business they work for, and that business could then profit off the rent payments the school paid using its capital dollars.

FROM THE ARCHIVES: “Florida gave about $70M to charters that later closed; state recouped little”

For many years, the House, in particular, has been friendly to charter schools, as several of its Republican members are school-choice proponents. Some lawmakers in the House and Senate also have personal ties to charter schools or companies affiliated with them, particularly Academica — a for-profit company that manages the most charter schools in the state, including many in South Florida.

In its statement, the speaker’s office noted the “significant amount of private equity” required of charters in the two years before they can receive capital dollars.

The statement also said House and Senate leaders this year “decided to maintain the current statutory requirements that have been used to determine eligibility for state-funded capital outlay.” But there is one small but significant change to eligibility criteria in the compromise bill.

Similar to a measure lawmakers tucked in last year’s late-session education policy bill, the one-character change would help some charter schools to receive capital dollars one year sooner.

This year’s language takes the 2016 change a step further by saying a charter school governing board has to be in operation only for two years, instead of three. When the capital outlay bill was sent to budget conference, the Senate wanted to keep that criterion the same, while the House sought to remove it altogether.

Corcoran’s office argued in its statement that the ban on private enrichment was “never in” the House bill that changed capital aid to K-12 public schools.

While the bill did not included a paragraph the Senate had to explicitly explain the “legislative intent” of why lawmakers wanted to prevent private enrichment in capital funding, the House and Senate both called for largely the same restrictions to limit which charter schools would receive future dollars.

Both said in order for charter schools to be eligible, the facility the school operated out of would have to be either:

▪ publicly owned — such as property owned by a school district, municipality, the state or a state college or university;

▪ owned by a non-profit organization;

▪ or, owned by and leased “at fair market value” from a person or business “that is not an affiliated party of the charter school.”

In 2016, the Senate made it a top priority to crack down on businesses that used capital dollars for profit. But that year, as well, the House wouldn’t accept the language. On the final day of session, the Senate agreed to drop its plan in trade for other formula changes that prioritized capital aid first to charter schools that served students from low-income families and those with disabilities.

Kristen M. Clark: 850-222-3095, kclark@miamiherald.com, @ByKristenMClark

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