Charter Schools “Highjacked” More Than $1 Billion in CARES Relief Intended for Small Businesses

by Vins

During the COVID-19 pandemic, the charter school industry has sought small business relief aid that was earmarked for minority-owned businesses and redirected it to schools that “further isolate Black families,” Jeff Bryant reported for Citizen Truth in September 2020. This “highjacking” of small business relief aid adds to “systemic inequities that afflict Black communities,” Bryant wrote.

In North Carolina and South Carolina, for example, emergency aid for small businesses “bypassed” most Black-owned businesses. Of the 2,026 small businesses and nonprofits that received aid, only 64 identified as Black-owned. Other news outlets reported comparable figures in other communities, including San Diego, CA; and Kansas City, MO; and Milwaukee, WI. Nationally, a Color of Change survey found that just twelve percent of Black and Latinx business owners who applied for federal relief received their requested funding.

Meanwhile, Bryant reported, charter schools across the country have reaped significant financial benefits from the very same programs. According to another analysis, conducted by Good Jobs First, “approximately 1,200 charter schools… received an estimated $1.3 billion” in Paycheck Protection Program (PPP) loans under the CARES Act.

The CARES Act earmarked more than $30 billion or governors, state and local education agencies, and institutions of higher education, including $13.5 billion for K-12 schools. Both public and charter schools were eligible for these funds. Public schools were not eligible for PPP loans, but charter schools were permitted to apply for PPP loans.

The original intent of the PPP loan program was to “prioritize borrowers in underserved markets,” including “rural, minority and women-owned businesses” and nonprofits. However, as Bryant reported, “lobbyists for the charter school industry successfully influenced lawmakers to ensure their schools would have access to loans for small businesses.” As Education Week reported, charter school lobbying organizations, such as the National Alliance for Public Charter Schools, encouraged charter schools to apply for loans from the Paycheck Protection Program.

In North Carolina, at least fifty charter schools and their management organizations have received a total of between $21.1 million and $53.6 million, according to a report from NC Policy Watch. Nationally, the Network for Public Education found that charter schools and their management companies have collected “between $926 million and $2.2 billion in funding” from the small business loan program.

According to Good Jobs First, the CARES Act allocated $13.2 billion for all 98,158 public K-12 schools in the country, yielding an average relief loan of $134,500 per school. By contrast, if approximately 1,200 charter schools received an estimated $1.3 billion, as Good Jobs First found, the average relief loan for a charter school amounted to $1,083,333 per school, eight times more per school than what public schools received.

“The harm charter schools may have inflicted by sopping up relief funds that could have gone to Black-owned small businesses,” Bryant wrote, is compounded by the charter school industry’s “already troubling track record of isolating Black communities.”

A 2017 study conducted by AP  and based on 2014-15 enrollments concluded that charter schools contribute to school segregation, putting “growing numbers” of minority students “in racial isolation.” The AP study confirmed the findings of a 2012 UCLA study, which concluded that charter schools are “more racially isolated than traditional public schools in virtually every state and large metropolitan area in the nation.”

Bryant’s report documented the racial diversity of schools in numerous public school districts in North Carolina, noting that in that state and across the country, charter schools that received checks from the Paycheck Protection Program do not reflect the diversity of the communities in which they operate.

Although racial inequalities in the distribution of small business loans under the CARES Act have received significant corporate news coverage, such as an October 2020 CBS News report, the corporate press have not covered how charter schools have successfully applied for and received Paycheck Protection Program (PPP) loans intended for “underserved markets,” or how this redirection of federal relief funds contributes to increased school segregation at the expense of students of color.

Source:

Jeff Bryant, “Charter Schools Find Gold in Federal Government Aid to Small Businesses While Black-Owned Firms Get the Shaft,” Citizen Truth, September 3, 2020, https://citizentruth.org/charter-schools-find-gold-in-federal-government-aid-to-small-businesses-while-black-owned-firms-get-the-shaft/.

Student Evaluator: Madison Young (Sonoma State University)

Faculty Evaluator: Suzel Bozada-Deas (Sonoma State University)

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