Kansas City charter, private schools received millions in PPP funding. KCPS got zilch
To Dean Johnson, the math just doesn’t add up.
The coronavirus forced schools to rethink how they delivered education as they sent kids home this spring and prepared for an uncertain fall term. That reimagining came with real costs as schools had to invest in new technology, deliver meals in new ways and stock up on cleaning products.
Yet as costs were rising, the government was slashing education funding: The economic collapse pushed Gov. Mike Parson to cut $131 million from school budgets last month.
“It’s a perfect storm of financial difficulty,” said Johnson, executive director of Crossroads Charter Schools. “It’s less revenue due to the pandemic and added costs.”
The governor’s action withheld nearly half a million dollars from Crossroads’ three charter schools, he said. So the more than $1 million loan recently awarded by the federal Paycheck Protection Program couldn’t have come at a better time. That program aimed at injecting small businesses and nonprofits with cash to help keep workers on payrolls.
“I understand the economic realities, but one way or another we need to be able to meet our expenses,” Johnson said. “And if we’re trying to provide a more complex learning model what we certainly can’t be doing is laying off staff.”
But PPP loans were not an option for public school districts.
Across the Kansas City metro, charter and private schools — including some of the area’s priciest institutions — received millions in relief funding.
The Barstow School, where annual tuition can top $22,000 per student, received between $2 million and $5 million. St. Thomas Aquinas, a Catholic school in Overland Park, received at least $1 million from the program. The French immersion charter school Academie LaFayette received a loan of at least $1 million. And the Ewing Marion Kauffman School, a charter school backed by the well-endowed foundation of the same name, received a loan of at least $1 million.
Collectively, dozens of charter and private schools in the metro received between $19.9 million and $55.9 million from the program. That figure excludes childcare centers, private colleges and separate religious organizations and churches that also received funding.
The Small Business Administration recently published data on all organizations that received at least $150,000 in funding. The loans carry an interest rate of 1%, but can be forgiven if enough of the funds were used for payroll costs.
While President Donald Trump has called on elite private schools to return their funds, the nonprofit status of private and charter schools allowed them to receive funding under the rules administered by the SBA.
A national database published by The Washington Post shows more than 100 charter schools received loans of at least $1 million — representing a collective haul of at least $220 million.
In Kansas City, private schools say the program provided needed support at a time when schools saw drops in philanthropic support. Charter schools say they are already underfunded in Missouri.
But with traditional public schools left out, the federal relief program has revived familiar divisions about the roles and funding of charter schools and traditional public schools.
“I don’t think it’s fair,” said Andrea Flinders, president of the Kansas City Federation of Teachers. “If charter schools are eligible for those kinds of loans, then they should be available to traditional public schools.”
Flinders believes charter and public schools’ inclusion in the program is further evidence of the political agenda of U.S. Education Secretary Betsy DeVos, a champion of school choice measures like charter schools and vouchers. Earlier this month, several states sued the education department and DeVos, claiming that policy dictating states share federal relief dollars with private schools was unconstitutional.
“It’s interesting because charter schools are considered public schools in the state of Missouri when they want to be public schools,” Flinders said. “Then when they don’t want to be public schools, they get to qualify for things like the PPP loans.”
‘It was a lifeline’
In Missouri, charter schools are public schools that receive about the same per-pupil allotment in state education funding as public school districts. But they don’t receive funding for facilities and can’t initiate bond efforts or raise property taxes.
“We weren’t on equal footing before,” said Doug Thaman, executive director of the Missouri Charter Public School Association. “If they really are looking for fair, then it would only be fair that the charter schools receive the exact same local tax dollars that the local school district receives.”
Missouri’s 36 charter schools, all located in Kansas City or St. Louis, educate about 25,000 students and employ about 4,000 people. Thaman said PPP loans allowed them to keep hourly workers like food service workers and custodians employed.
“Really it was a lifeline for them,” he said.
While he acknowledged that charter schools receive philanthropic support, he said most are small, independent operations with limited budgets. Discrepancies in state support mean charter schools can receive 15% less in public support compared to traditional public schools.
The pandemic also disrupted private fundraising, which charter schools rely on to make up the difference and to help pay mortgages or rents, Thaman said.
At Crossroads Charter Schools, Johnson estimates the pandemic hurt fundraising efforts by as much as $1 million. The schools, which employ nearly 140 people, had been working to raise funds for renovations of the Crossroads Preparatory Academy building on Broadway Boulevard.
Set to top 1,000 students this fall, Crossroads Charter Schools continues to grow and expand. But that means it must invest more and more into its facilities.
Since the pandemic began, he said private endowments have shrunk and some foundations have shifted priorities to public health causes. Generally, philanthropy represents about 5% to 10% of the schools’ total spending, Johnson said.
The largest driver of private support comes from an annual fall gala. That event has been moved to a virtual format this year, but Johnson said he doesn’t know how that or other fundraising efforts will be impacted by the coronavirus.
“We’re kind of holding our breath,” he said. “We don’t know yet if people will continue to contribute to the school under the current conditions.”
Meanwhile, costs are expected to continue to rise as the schools work to spread kids out in classrooms and on buses. Johnson said the pandemic has increased spending on technology and even desks: Communal tables are now a no-go as students need separate desks that can be spaced apart.
“None of us knows where this ends,” he said.
Funding cuts at KCPS
The state budget cuts cost Kansas City Public Schools about $6 million in June and July.
“Those are revenues that are gone,” said Linda Quinley, chief financial officer. “They’re not temporarily withheld and coming back later.”
Separate from the PPP loans, Congress made billions available in emergency school funding. Quinley said the school district received about $5 million designated for digital learning purposes.
But other costs increased: each prepackaged meal cost about $1 more on average to make than scratch-cooked batches ordinarily served in cafeterias. And KCPS served about 300,000 prepackaged meals at no cost to students after schools closed in March.
Since then, the district has spent more to prepare for in-school learning. District officials decided last week to delay starting school until after Labor Day, and then hold classes online only.
Quinley said KCPS spent $100,000 on food warmers in anticipation of serving meals in classrooms. The district has spent more than $300,000 on tablet devices for at-home learning and spent half a million dollars on extra cleaning supplies and thermometers.
The CFO has already told the school board to prepare to pull several million dollars out of the reserve fund. And she said more tough decisions may be in store if state funds don’t come through.
“We don’t have any reason to be confident there won’t be additional withholdings this year,” she said.
Quinley said she doesn’t blame charter or private schools for accessing PPP funds. But if the pandemic continues and the program is reauthorized, she said it should be opened up to public schools as well.
“I certainly can tell you that if I were the finance officer for one of those schools, I would have (done the same),” she said. “If KCPS could have accessed those, we would have. We just cannot under the federal rule.”
How private schools benefited
At Rockhurst High School, more than 40% of students were receiving some sort of financial aid prior to the pandemic.
“We’ve seen several of those families who needed additional financial aid assistance and even some newer families that may not have been on financial assistance,” said Allen Roberson, chief financial officer at the all-boys Jesuit school.
Though it’s a Roman Catholic school, Rockhurst receives no financial support from local dioceses, Roberson said. And it’s very dependent on fundraising: expenses generally outpace tuition revenues by $5 million per year, he said.
“We start the year every year with a significant gap,” he said. “We make that up through fundraising and the generosity of our benefactors and programs that support the school.”
Tuition for the upcoming term is set at nearly $15,000 per student.
The school’s investment portfolio, which funds student scholarships, has suffered losses from the pandemic. And it’s unclear whether regular fundraising will hold up.
SBA data show Rockhurst received between $2 million and $5 million in PPP funds, though Roberson said the precise number was “on the lower end” of that range. The money helped keep all faculty and staff employed while the school worked with families who were unable to pay tuition, he said.
“Every single employee we have is important to the mission to the education and to the formation of the young men we serve,” he said. “We were — albeit it different — still providing that education and formation to those students.”
The Barstow School said PPP funds allowed it to avoid furloughs and layoffs. School officials said they lost significant revenue from canceling extended care and summer programs. But a spokesperson could not provide specific numbers about the pandemic’s financial impact.
The spokesperson noted that the school qualified under the program rules and its application was vetted by an auditing firm and its bank partner.
“We prioritized the health and safety of our community by canceling in-person Summer at Barstow programs, which serve thousands of Kansas City-area children every year,” President and Head of School Shane Foster said in an emailed statement to The Star. “Combined with deferred tuition payments and a decline in annual philanthropic giving related to the economic impact of COVID-19, we would have been in a very difficult situation without PPP funds.”
This story was originally published July 26, 2020 at 5:00 AM.
