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The Charter School Business

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he money while the getting's good"
- Palisades Charter High School Board Member

The approximately twenty-seven million small businesses in the United States are an essential component of the American economy, generating nearly 50 percent of our GDP. When COVID-19 shut down the American economy, these businesses were especially hard hit and began shedding employees. This contributed to an unemployment level "not seen since the Great Depression".

In order to soften the blow to the economy, Congress passed the Payroll Protection Program (PPP). This is "a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll." If these businesses avoid layoffs and pay cuts, there are provisions included that allow these loans to be written off, turning them into grants.

While Congress originally put $350 billion into the program, "the money quickly ran out during a rocky start to the process marked by complaints". When companies like Shake Shack and the owners of Ruth's Chris Steak House were outed as participants, they were shamed into returning the money. The program was then "replenished with $310 billion in new funding". Upon the reopening of the program, an influx of applications crashed the system.

Since the government funds its operations, Palisades Charter High School's revenue has not been affected by COVID-19. The school is also supposed to operate as a non-profit, not a business. Still, the school's Chief Business Officer, Greg Wood, applied for a $4.606-million-dollar loan from the PPP. He did so without receiving prior approval from the school's governing board.

Having already been approved to receive the funds, the Palisades governing board finally got to discuss this loan at their May 12, 2020, meeting. In asking for their approval, Wood made a presentation that gave the board the basics of the loan program but lacked specifics, especially about the ability to have it forgiven by the government. Even though the program is supposed to give an immediate boost to the economy by maintaining payrolls, Wood told the board he is considering it as a "line of credit" to be held for use if the state cuts funding during the next school year.

Since the school had no immediate plans to spend the money, Wood stated that he would park the money in their county treasury account where he thought that it would earn 1.5%. Since this is above the 1% interest cost of the loan, he speculated that they could be earning income on the loan. None of the board members pressed him on the exact amount of interest that the school is currently earning to actually verify that they would not lose money by holding onto the funds.

In discussing the proposal, one board member acknowledged that the school could be taking away funding from businesses in need as the funds "may dry up". Another specifically stated that he had friends who could not get the loans to help keep their businesses afloat. Instead of discussing the morality of what they acknowledged could be considered "double-dipping" at the government trough, they decided it would be better to "get the money while the getting's good".

Even without the specifics, the board decided unanimously to "get the loan first and then... worry about that part later". With that vote, the school incurred $4.606 million in debt without a plan of how to spend it or pay it back. They did not have all the information that they needed but decided that "dwelling on some of these questions is pointless right now."

A video of the board's complete conversation can be found at https://www.palihigh.org/apps/video/watch.jsp?v=10066784.
Carl Petersen is a parent, an advocate for students with special education needs, an elected member of the Northridge East Neighborhood Council, an appointed alternate to theLAUSD's CAC, and was a Green Party candidate in LAUSD's District 2 School Board race. During the campaign, he was endorsed by the Network for Public Education (NPE) Action and Dr. Diane Ravitch called him a "strong supporter of public schools." Links to his blogs can be found at www.ChangeTheLAUSD.com. Opinions are his own.

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Carl Petersen is a parent, an advocate for students with special education needs, an elected member of the Northridge East Neighborhood Council, a member of the LAUSD's CAC, and was a Green Party candidate in LAUSD's District 2 School Board race. During the campaign, the Network for Public Education (NPE) Action endorsed him, and Dr. Diane Ravitch called him a " (more...)

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