Report uncovers financial woes at charters-WEB ONLY

Three out of 16 charter school sponsored by Mayor Greg Ballard spent more money than they took in during their most recent fiscal year, according to a report the city released this morning.

Fountain Square Academy, Christel House Academy and Indianapolis Lighthouse Charter School all overspent revenue during the 12 months ended June 30, dipping into reserves or borrowing to cover expenses.

Although charters get state and federal funding tied to the number of students enrolled, they do not get public money for facilities, transportation or start-up costs. As a result, financial stumbles can have serious results.

“More often than not, when schools have failed, they have failed not because of academic shortcomings but because of operational and financial factors,” said David Harris, CEO of the MindTrust, an Indianapolis not-for-profit that encourages education entrepreneurs.

Lighthouse appears to be in no financial danger; it has the second largest chest of cash and investments among the 16 schools, with $782,000.

But the cash cushion for Fountain Square and Christel House is significantly narrower.

Christel House, founded and supported by Indianapolis philanthropist Christel DeHaan, has $138,500 in reserve, or about 3 percent of its annual expenditures.

Fountain Square, run by the Indianapolis-based GEO Foundation, has cash and investments of $20,400, or 1 percent of its annual expenditures.

A report released yesterday by Ballard noted “some financial difficulty” among the three schools that fell short of their enrollment goals, which included Fountain Square and Lighthouse, as well as the Lawrence Early College High School.

Overall, however, the mayor’s report took a sunny view of the schools’ financial fitness.

“Finances at mayor-sponsored charter schools were adequately managed in 2007-2008, and many schools ended the school year in satisfactory fiscal health,” said the report, which the mayor’s staff prepared with the help of education experts from Indiana University and Indianapolis-based accounting firm H.J. Umbaugh & Associates.

The report also looked favorably on charter schools’ academic performance. The schools continue to attract a challenging demographic of students but are helping those students improve faster than students at public schools statewide, the report showed.

The percentage of students passing ISTEP+, the state’s standardized test, rose by 5.8 percentage points in 2007 compared with 2006, the report showed. Statewide, the percentage of students passing ISTEP+ crept up 0.6 points.

The charters’ growth was led by a gain of 15.8 percent at Fall Creek Academy. Two schools saw declines: Fountain Square and Lawrence. Both Fall Creek and Fountain Square academies are operated by the GEO Foundation.

“The key for all mayor-sponsored schools is continuous improvement,” Ballard said in a statement. “I will always challenge these schools to keep improving.”

Charters in Indianapolis draw 76-percent minority students, the same percentage as in Indianapolis Public Schools. Charters draw slightly more black students, but slightly fewer Hispanic students than do IPS schools.

IPS draws a somewhat larger portion of poor students: 79 percent of its students receive free or reduced lunches, compared to 72 percent at charter schools.

Ballard is the only mayor in the country with the power to launch charters, which are publicly funded schools given more freedom than their traditional public peers.