Revoked charters could be forgiven $12M in loans

Indiana lawmakers are considering forgiving $12 million in loans that "failing" charter schools accepted from the state, as part of a broader package of state aid for charters.

The Indiana Department of Education loaned roughly $12.9 million to eight charter schools to help with startup costs, and they still owe $12 million to the state, according to documents obtained by The Associated Press. Seven whose charters were revoked by Ball State University in January would be absolved of payments, along with another school which did not seek to renew its charter.

"Why did they get their charter revoked?" asked Senate Appropriations Chairman Luke Kenley, R-Noblesville. "If they were (educating students) and it was a good faith effort and they were in good standing at that time, maybe it should be paid for them."

The Senate has budgeted roughly $80 million to repay loans taken out by a range of charter schools, many of them performing well by state standards. The goal of the loan program was to put charter schools on equal footing with public schools. Because charter schools operate on a calendar year —unlike the state budget — each one started out having to find six months' worth of operational money, which the state answered with loans, Kenley said Monday.

"So what we're doing is funding what we should have funded when we first started this exercise," he said. But he added that fiscal analysts are working fast to determine if the revoked charters should share in that benefit.

Charter school supporters say the loan forgiveness is merely setting straight a budgeting technicality, but public school advocates point out they still have to pay back loans from the same state fund that gives to charters.

Ball State revoked charters after determining the schools were not meeting performance standards. An eighth school which received aid from the state's Common School Fund withdrew its application for an extension from the university. The schools also scored "Fs" or "Ds" under the school grading system unveiled by former School Superintendent Tony Bennett.

Loan forgiveness could translate into a windfall for each revoked school. A trio run by the national group Imagine Schools — two in Fort Wayne and one in Indianapolis — borrowed a little more than $6.3 million and still owes roughly $6.28 million. Imagine is appealing Ball State's revocation of its charters.

Rachel Cirullo, regional director for Imagine, said many of their students are either transient or come from low-income families, making it harder to improve performance. The students also frequently enter the charter school a few levels below where they should be performing.

"A lot of times kids will come to us far behind where they should be according to those standardized tests," she said. "So we're still not bringing them up to the grade level in that time that we're allowed, so that's obviously a big challenge for us."

Whether loan forgiveness survives negotiations is yet to be seen — lawmakers are racing against an April 29 deadline to approve a biennial budget and a slew of controversial measures before the 2013 session ends.

Public school advocates say Indiana's school corporations accept loans from the same account and are forced to repay those loans. But giving charter schools six months' worth of operating money in advance is like a worker getting a six-month advance payment from an employer: It should be repaid, said Frank Bush, executive director of the Indiana School Boards Association.

"There's been a debt created by the charter school. And just like school corporations, charter schools should pay their debt," he said.

Even if the loan forgiveness is not approved, it's possible the state would still have to cover the revoked charters. If the school closes, the loan would be repaid from the state's tuition disbursement fund, said Dan Altman, spokesman for the Department of Education.