Specialty firms sprout to support charter school start-ups
The rapid expansion of North Carolina's charter schools is pushing the startup schools toward specialty finance companies that find funding to acquire buildings, a network of companies and consultants that run the schools and even a flow of Chinese investment funds.
The result is that taxpayer money flows to entities across the country and around the world to repay debts and cover outsourced services, The Charlotte Observer reported.
Charters are public schools free of many restrictions facing other taxpayer-funded schools because they agree to target a particular student population. If the state approves it, the school gets state and local money based on enrollment.
Chinese funding reached Thunderbird Preparatory Academy, a two-year-old Cornelius charter school now fighting for survival, through the EB-5 visa program, according to a review of the school's finances, governance and facilities last week by the state's Charter School Advisory Board.
The little-known federal program provides visas to wealthy foreign investors in return for their investments in U.S. projects. EB-5 investors gain permanent U.S. residency and a path to citizenship for them, their spouses and children.
It's common to see new schools borrow to get off the ground because charter schools don't get public money for buildings and must begin paying bills before the first state funds arrive, said Lee Teague, executive director of the N.C. Charter Schools Association. He said he had never heard of the Chinese investment in charter schools.
Thunderbird's EB-5 program funding was acquired through Education Fund of America, which specializes in channeling foreign investments pooled through the program toward public charter school projects. The Arizona company's web site lists 13 schools funded through EB-5 investment. They include schools in Harrisburg, Charlotte and Goldsboro, North Carolina; and West Columbia and Beaufort, South Carolina.
Thunderbird's EB-5 loan and financial arrangements are "all standard products that are used by charter schools," said the school's board chairman Peter Mojica, a software executive.
Besides scouting for start-up funds, volunteer boards that want to start a charter school often pay for outside expertise to run one. Some are affiliated with for-profit companies like Charter Schools USA and National Heritage Academies or KIPP, which is nonprofit. Others are independent but contract for help.
Thunderbird gets almost $4 million a year in state and local money to educate 500 students in kindergarten through sixth grade.
In 2014-15, the first year Thunderbird was open, expenses outstripped the money it took in. The 2015-16 audit isn't due until October, but the school provided the state panel an informal report showing it had ended the year in the black.
But Alexis Schauss, the state Department of Public Instruction's director of school business, said those numbers don't seem to match what she has seen on monthly reports.
"I don't feel comfortable with the data I have," she told the advisory board.
- North Carolina
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