TAMPA, Fla. — Charter schools in Florida received millions of dollars in loans intended to help small businesses avoid laying off workers.
While it isn’t illegal, I-Team Investigator Adam Walser has uncovered these schools are double-dipping from taxpayers, and a local Congressman now wants them to pay the money back.
The COVID-19 pandemic hit just as Tampa’s busy wedding season was supposed to start. For local wedding photography company AV Stat Media, business came to an abrupt halt.
“All of the sudden — bam, you’ve got 18 people all calling you up and canceling,” said business owner Greg Huskin.
Huskin, like millions of other small business owners, had to lay off workers. After letting six of nine employees go, he then applied for a Paycheck Protection Program loan, which he said was the only thing that allowed him to keep his remaining employees working.
“We would be in bad shape,” Huskin said. “This business wouldn’t be open anymore, that’s for sure. “
Congress approved the PPP Loan program in late March as part of the CARES Act, which was intended to help small businesses keep paying employees.
But the I-Team has uncovered 125 Florida charter schools, which already received appropriations from the state, took in at least $50 million in loans.
The PPP loans are available to non-profit companies under the CARES Act.
Since Florida charter schools are operated by non-profit foundations, they were eligible to apply for the loans.
More than half of the PPP loans received by Florida’s charter school foundations came during the first round of funding, which ran out in late April.
At the time, small businesses nationwide were unable to keep paying employees and had to shut their doors.
That led to the second round of funding of PPP loans, which are forgivable if they are used for their intended purpose.
“It was supposed to help companies that were not gaining their revenue, in order to keep them afloat,” said Denise Clemence, a Small Business Association loan specialist for Dogwood State Bank.
Clemence says the PPP loans are only supposed to fund paychecks, mortgage interest, rent and utilities.
“That application says that you can apply as long as you have been negatively impacted,” she said.
Among the charter schools that applied for and received the loans is the Sports Leadership and Management, or SLAM, Academies. There are two campuses in Hillsborough County, but the original SLAM academy was founded in Miami by rapper Pitbull.
“No matter what they throw our way, we’ll find a way to pivot and make it happen,” Pitbull said in a video he shot at the original SLAM Academy in Little Havana, which he posted on his Instagram page in early April.
Days later, the SLAM Academies received at least $1,350,000 in PPP loans.
The SLAM Board of Directors Vice-Chairman emailed the I-Team that they applied for the loans because, “Times are uncertain and we have to be prepared.”
Records show 14 PPP loans totaling at least $12 million and claiming to retain 1,700 jobs listed the same address which is the location of the Miami headquarters for the for-profit charter school management company Academica.
Academica declined an interview, but a spokesperson told us in an email the money was used to “conduct community service activities independent of the charter schools they operate.”
When asked for examples of those services, she didn’t provide any, but she did say Academica provided charter schools technical assistance with the application process and said some schools used Academica’s address because their office is open year-round.
“Charter schools have no problem paying their employees because their revenue hasn’t disappeared,” said Dr. Carol Corbett Burris, Executive Director of the National Education Policy Center.
That organization conducts academic research and supports strong public schools.
“It’s not saving any jobs,” Burris said. “They’re taking the money and they’re squirreling it away in order to increase their fund balance.“
Twenty-seven Tampa Bay area charter schools got PPP loans.
Back to Basics Charter School in Thonotosassa reported a fund balance of $2.3 million in May, including $446,000 the board said “has to be allocated to payroll” as a condition of the PPP loan.
The board’s treasurer told us they took out the loan to prevent a possible fiscal emergency in the comings months, in case there were to be a reduction in state funding.
Lutz Preparatory Academy received $856,000, despite a $224,000 budget surplus.
Community Charter School of Excellence in Tampa received more than $200,000 from the program days after it permanently closed, during an ongoing a forensic audit and embezzlement investigation.
Congressman Gus Bilirakis (R-Palm Harbor) thinks PPP loans could be better used.
“It’s just not fundamentally right. I’m a supporter of charter schools. Most people are. But this money was intended for small businesses,” Bilirakis said.
When asked whether he thought the schools that took the loans should pay the money back, Bilirakis said he thinks they should.
“We’ve got to change the law. Because the money should be going to the small businesses,” Bilirakis said.
We contacted all 27 Tampa Bay area charter schools that received PPP loans. None agreed to an on-camera interview and only three responded to our emails.
We also received a response from the Florida Charter School Alliance, which represents 650 public charter schools.
Here are their responses:
Good Afternoon Mr Walser, Your email mistakenly states that “several of the schools you serve received a substantial amount of money through this federal program.” That is incorrect. Charter schools did not apply or receive PPP loans. Instead, some nonprofit organizations that operate charter schools may have qualified for PPP loans. Those non-profit organizations conduct community service activities independent of the charter schools they operate. Those community service activities were severely curtailed by the COVID-19 pandemic. The non-profit organizations obtained the loans to preserve those jobs and livelihoods. Without PPP loan funds, these non-profits, like many other organizations, would be unable to employ the persons providing those services. As Congress intended, the PPP loans were a lifeline that enabled numerous organizations, including vital non-profits, to continue to serve their communities with minimal disruption. We ask that you include this quote in its entirety in any article about the PPP loan funds to the non-profit organizations Academica works with. Thank you,
The SLAM Academies:
I received your inquiry from Ms. Williamson at SLAM Apollo this afternoon. Please see responses to your questions below.
It appears the loan was applied for by Academica on behalf of the SLAM Academies, using their address in Miami. What role did the local non-profit have in applying for this loan?
SLAM Florida, Inc., a Florida non-profit organization, qualified for and applied for the PPP loan. Academica is the Education Service Provider for SLAM Florida, Inc. We ask Academica to prepare a variety of documentation for our review and approval. In this case, our governing board asked Academica to assist with preparing the documentation for the PPP loan.
The address that was used is our registered mailing address. We choose this office as our mailing address to ensure that correspondence coming from various counties/districts is properly sorted and routed to us.
Board minutes indicate the application was "ratified" three days after the loan was received. Did Academica actually apply for this loan before it was approved by the Board?
As mentioned above, Academica did not apply for the loan. SLAM Florida, Inc. applied for the loan. Our board approved for Academica to assist us in submitting the necessary documentation, all of which was approved by us prior to submittal.
What jobs were saved by this loan? Did you plan to have to lay off staff before it arrived?
What is the money being used for?
SLAM Florida, Inc. has a fiduciary duty to various schools and employees in three different school districts. The schools we operate were quick to transition to online learning. Some had to hire more staff to assist with the transition. Computer and internet equipment was provided to families who needed it in order for their student to be able to continue learning from home. PPP Loan funds would help cover those costs.
We have folks who run our schools’ pre-schools, after care programs, lunch programs and summer school. Those positions are not funded by the State’s funding program for charter schools.
As a governing board it is our responsibility to take the steps necessary to ensure that students at our schools continue learning. We also have to protect the jobs of the teachers and staff that make that happen. Times are uncertain and we have to be prepared.
Why did you need to protect paychecks if you received $3,575,941.48 from the Hillsborough County School District to fund your school?
To clarify, a charter school receives the funding from the State with the district serving as fiscal agent. SLAM Florida, Inc. does not receive funding from a school district.
As you are well aware, a pandemic occurred this year. That was certainly not budgeted for last year when the organization prepared budgets for the 2019–2020 school year. Your questions suggest that you are unfamiliar with the difficulties faced by organizations like our own serving low income families during these uncertain and difficult times. Is your story covering all the Hillsborough County non-profits and charter schools who applied for or received PPP loans?
Joseph A. Mesa III, Esq.Governing Board Vice Chair
SLAM Florida, Inc.
New Beginnings High School, Lakeland:
Good day Mr. Walser,
We appreciate the invitation, but unfortunately, we are unable to participate in an interview at this time.
At New Beginnings High School, our mission is to create the best educational environment for students who are seeking a New Beginning.
We provide educational opportunities with curricula designed to provide students a chance to get back on track.
Our mission is critical, and we remain committed during these challenging times.
Once again, we appreciate your consideration.
New Beginnings High School
Statement from Lynn Norman-Teck, Executive Director, Florida Charter School Alliance:
When the pandemic required the closure of school buildings, learning at public charter schools went on, uninterrupted. Charter schools across Florida transitioned to distance learning, making a quick pivot to support their learners. They used a variety of tools – from live, online instruction to packets sent home, and daily calls were made to students to keep teachers and staff connected and engaged with the families they serve.
Charter schools had the flexibility to lean in and do what was required to make sure students had the resources for successful distance learning. The federal loans helped ensure that unexpected expenses – like hiring substitute teachers, paying overtime hours for staff working to provide student support -- were covered. The federal loans allowed them to keep existing staff and cover the new expenses.
You asked why charter management organizations, or education management organizations, applied for funds made available through the Paycheck Protection Program (PPP) administered by the Small Business Administration.
As Congress intended, the PPP loans were a critical source of near-term funding during a time of economic uncertainty. It was awarded to organizations that met the criteria outlined by federal guidelines. Those organizations included 501(c)(3) nonprofits, small businesses, and other for-profit entities. The goal was to protect those entities against layoffs, support their ongoing operations, and help them meet certain financial obligations. Under Florida law, nonprofits operate most charter schools and are therefore eligible, provided they meet the criteria in the federal guidelines.
PPP funds enabled organizations to continue to serve their communities with minimal disruption. They provided a lifeline for organizations that had unique, immediate financial needs during an unprecedented public health crisis. Without PPP funds, thousands of school children would not have had computers and other learning resources during school closures.
Regarding funding allocated under the CARES Act for K-12 schools -- If charter schools are their own local educational agencies (LEAs), they may receive additional funding if they received Title I funding in the past year. Few are LEAs. A majority of charter schools will only receive funding if their school district chooses to provide it to them. Furthermore, the deadline to apply for PPP funding prevents many charter schools from taking into account any funds they may receive when evaluating meeting unexpected expenses. Therefore, it is reasonable to apply for available PPP funding, if needs exist, rather than hoping for other funding later.
It is important to remember that charter school board members have a fiduciary duty to assess the potential impact that the national economic downturn could have on school operations. They have to take available steps to mitigate negative consequences. While districts can seek bonds and other sources of revenue to mitigate financial challenges, charter schools do not have those options. Yet they all have an obligation to continue to serve the families and communities that depend on them. The PPP loans served students and communities well by allowing charter schools and their supporting organizations to provide uninterrupted services and support.
If you have a story you think the I-Team should investigate, email us at email@example.com