Charter school draws heat over $100 referral reward

Carpe Diem Meridian charter school embarked on an aggressive plan to boost enrollment this winter.

The north-side Indianapolis school wanted to grow its roster by nearly 40 students by Feb. 2 — one of two critical dates when the state uses student attendance to determine the school’s 2015 funding levels — so board members approved a strategy to get the word out that included distributing fliers to parents and day care centers, making TV and radio appearances and hosting two open houses.

That wasn’t all.

Carpe Diem also offered $100 Marsh grocery gift cards to anyone who referred a student who enrolled — an incentive that some critics say went too far.

“My concern is that instead of a parent making a rational choice about where to send their child based upon who their child is and what they see the schools doing, we’re asking parents to discount that,” said MaryAnn Schlegel Ruegger, an Indianapolis attorney who has been skeptical of charter schools. “It’s not something that should count.”

Recruitment practices like these are legal in Indiana but have been outlawed elsewhere.

Those leading the charge against such giveaways say they are an unintended consequence of the state’s increasingly competitive school marketplace where schools must vie for students and the state dollars that follow them. Indiana has seen a recent expansion of charter schools in recent years as the result of new state laws that foster their growth.

“I think we’re creating something people didn’t necessarily anticipate,” said Lori Schlabach, a former Washington Township school board member who currently sends her children to township schools. “Now we’ve got a situation where a lot of districts have to do advertising or big public relations efforts just to survive. Do we really want our education dollars, be they donated dollars or taxpayer dollars, going to efforts like that, or would they be better spent elsewhere?”

Carpe Diem Meridian’s interim principal is LaNier Echols, who also was just elected to the Indianapolis Public Schools board. She said the gift card promotion helped capture parents’ attention about the school. The school now has 250 students enrolled, compared with 206 at the beginning of last month.

“People are more excited to do something where they get something out of it,” Echols said. “Parents are like, ‘Oh I do have a cousin that was looking for a school.’ It’s just to encourage people.”

But she said she is confident offering a gift card wasn’t the reason the school ultimately exceeded its enrollment goals. Two more Carpe Diem campuses are slated to open this fall in Indianapolis, each aiming to eventually enroll 300 students. Carpe Diem combines traditional classroom instruction with online lessons.

“We are a blended learning school and that’s what parents love about it,” Echols said. “We have children coming from everywhere, not because of the gift cards, but because we’re offering something different. We are filling a niche.”

Though at least one other state — Colorado — has declared illegal the practice of schools offering gift cards to students as an enrollment incentive, state charter school sponsors say there are no rules restricting the practice in Indiana.

Indiana Charter School Board Director Nick LeRoy, who manages the state’s oversight of more than 10 charter schools, said he asked the board’s attorneys to look into the legality of the practice in Indiana after Chalkbeat’s inquiry. He said he was not aware of the school’s plan to use gift cards as an enrollment incentive.

“That doesn’t sound right,” LeRoy initially said.

Later, LeRoy said state law “does not limit the use of general fund dollars … and schools have flexibility to use those dollars for supplies, salaries, fundraisers, etc.  This flexibility is determined by the board of directors for the school.”

The practice of using taxpayer dollars on marketing materials is relatively common, LeRoy said, even among public schools.

“(Indianapolis Public Schools) in particular uses billboards extensively to raise awareness and support their student recruitment efforts,” LeRoy said.

Robert Sommers, Carpe Diem’s chief strategy officer, said spending money up front to attract students is worth it to reduce the cost it takes to educate students in the long run. Carpe Diem’s Indiana office budgeted $30,000 in 2015 for marketing and advertising. The gift cards came out of that budget.

“I’m not one of those folks who sees it as a problem,” Sommers said. “The real shame would be if taxpayers built the building, bought the computers and nobody showed up. That would be the ultimate abuse of taxpayer dollars.”

But who watches the spending?

LeRoy said the Indiana Charter School Board reviews Carpe Diem’s financial expenditures quarterly and completes an annual third-party audit.

“We do this for every school that we authorize,” LeRoy said. “This additional safeguard serves as a further means of transparency and accountability for how our schools use state funds.”

Another of Indiana’s charter school sponsors — Indianapolis Mayor Greg Ballard’s office, which oversees more than 30 schools — requires schools to have detailed plans when it comes to marketing and recruitment before they are up and running, said Deputy Mayor Jason Kloth.

“We require schools to have robust recruitment plans in both the application and pre-opening phases which is an opportunity for our team to review those practices and make sure they’re activities that are going to lead to enrollment and that are ethical,” Kloth said.

But some things inevitably slip through the cracks.

Last year, one of the mayor’s charter school drew scrutiny after it began charging an enrollment fee. Charter schools are supposed to be free public schools just like traditional public schools, which do not charge enrollment fees.

In light of cases like this, Ruegger said it may be time to clamp down harder on schools to limit how they can spend taxpayer dollars.

“We’ve over-regulated, and now, at least for charters and vouchers, we seem to be afraid to regulate at all,” Ruegger said. “But in this area, we really need to. Is this really something we want our public schools to be doing?”