Last week, the 19 educators who hope to run Washington’s first charter schools pitched their dreams to the state commission that will decide their fate.
In what basically were job interviews, the candidates had to show they have not only the vision for a great school, but the financial savvy to run — with taxpayer dollars — what is essentially a small business.
They also had to show they have money, or a credible plan for getting it, to cover the many startup costs they’ll incur in the long months before the public funds start flowing.
Two potential operators with established charter-school networks in California — Green Dot Public Schools and Summit Public Schools — have multimillion-dollar grants already in hand from the Bill & Melinda Gates Foundation to expand into Washington if they’re selected.
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But most applicants plan fundraising campaigns, and some say they might go into debt — a riskier option that is raising legal questions about whether the schools can pay back the loans with the public money they would receive to educate each enrolled child.
Communities in the Seattle-Tacoma area will hear from the charter schools that want to open in their neighborhoods at six public forums this week, beginning Monday at South Seattle Community College.
Charter schools are free, privately operated schools that aren’t bound by many of the rules and regulations governing traditional districts. But they’re considered public schools because they receive taxpayer dollars on a per-student basis, like school districts.
Charter schools operate in 42 states and the District of Columbia, accounting for about 5 percent of all public-school students, according to the National Alliance for Public Charter Schools.
For years, opponents successfully fought back efforts to allow them in Washington, but in 2012, voters narrowly approved a law allows the state and approved school districts to issue contracts to nonprofit organizations to operate up to 40 new charter schools over a five-year period.
The Washington State Charter School Commission is considering 19 applications and is expected to announce its choices at a meeting Jan. 30. The Spokane school district is expected to vote Jan. 22 on whether to authorize any of the three nonprofits it’s considering.
The stakes are high to get it right with this inaugural class of charter schools.
National charter-school advocates have praised Washington’s law for setting a high bar for financial and academic accountability, which they hope will prevent the kinds of headline-grabbing scandals that have tarnished the reputation of charter schools in states with less rigorous oversight.
“I do think it puts some pressure on Washington to be the exemplar,” said Marta Reyes-Newberry, interim CEO of the Washington State Charter Schools Association, a statewide nonprofit organization that supports charter-school startups.
“We’re lucky to have come on the scene now and learned from some of the errors of our brethren.”
After 13 years in public education, Kristina Bellamy-McClain knew she could handle the educational part of creating a new charter school.
“This is the work that I love, this is what I’ve been doing, so that part was kind of second nature,” said Bellamy-McClain, the former principal of Seattle’s Emerson Elementary School.
Becoming the CEO of a complex business was the new part for her.
This summer, the Washington State Charter School Association awarded Bellamy-McClain and two other educators fellowships to learn the business side of charter-school startups.
Maggie O’Sullivan, who was principal of Mirror Lake Elementary School in Federal Way, and Brenda McDonald, a Spokane middle-school principal, also received fellowships.
Bellamy-McClain would run SOAR Academy, a K-8 school in Tacoma. O’Sullivan is planning
a middle school in the Highline school-district area called Rainier Prep. McDonald is among the applicants seeking authorization from the Spokane school district to open a school called PRIDE Prep for grades 6-12.
Although the fellows received $100,000 stipends to help plan their schools, they’ll need more to cover startup costs, which they hope to accomplish with fundraising.
But if their efforts fall short and they need money in a pinch, they may turn to a Portland financial firm called Charter School Capital.
The three fellows and one other applicant have submitted letters from Charter School Capital indicating that they qualify for $500,000.
The firm — which has invested more than $600 million in charter schools in seven states since 2007 — typically buys a charter school’s future state payments in exchange for the convenience of immediate cash.
Each deal is different, but the schools on average surrender 3 to 5 percent of the value of their payments, according to CEO Stuart Ellis.
That might not work in Washington, where the law narrowly says that a charter school can issue debt, but it “may not pledge, assign or encumber any public funds received or to be received.”
Reyes-Newberry said she doesn’t think the law allows schools to sell their future payments, so the schools instead would need to receive a simple loan from Charter School Capital with a 1 to 2 percent interest rate that they would have to pay back with private fundraising, not public funds.
Ellis says that’s one option, but his firm’s lawyers will review relevant laws in Washington to see if purchasing future state payments is possible.
“In every state we’ve been to, we were told by some initial legal counsel, yeah, that won’t work here,” Ellis said. “But in every state except Michigan, it turned out that the best model was what we were using elsewhere and it does work there.”
The Charter School Commission may also need lawyers to sort it out, said commission Chairman Stephen Sundquist.
“It’s clear that we’ll need this interpreted so that we can fairly evaluate the risk to the parties, the risk to the taxpayer, etc., before we’ll be able to, in essence, judge an application where that financing mechanism was part of the plan,” Sundquist said.
Charter schools in other states commonly establish lines of credit or loans to help with cash-flow problems that they can pay back with public funds, said William Haft, of the National Association of Charter School Authorizers, which is managing the application process for the commission.
“We know that the answer in many places is yes,” Haft said. “It may be an open question for Washington state.”
An Ohio charter-school operator who wants to open one in Seattle hopes the answer will be yes.
“We’ve got a company that’s willing to lend us $100,000 for these startup expenses,” said Lance Weber, who wants to open a school in Seattle’s Rainier Valley area that would primarily serve children of Somali immigrants and other English language learners.
He plans to pay back the loan with part of the public funds he’d receive if and when the school — CAL Elementary School — is up and running this fall.
Weber will be answering questions about this plan at the Monday public forum.
Some may want to know more about why the school he runs in Ohio, the UBAH Math & Reading Academy, had the lowest test-score rating of any charter school in the state last year, according to the Ohio Department of Education.
Weber says his students in Columbus are children of East African and Latin American immigrants who started out behind and need more than a year with his program to catch up.
He said the application process for Washington is much more rigorous than what he’s used to in Ohio.
“My completed application was roughly 65 pages, not including attachments,” Weber said. “In Ohio, the longest I think I ever had with attachments was 30.”
But he understands why Washington has set a high bar.
“You’re talking about a lot of public tax dollars,” Weber said.
John Higgins: 206-464-3145 or email@example.com On Twitter @jhigginsST