By Jaime Sarrio • THE TENNESSEAN • July 16, 2010
The collapse of a Nashville charter school is increasing attention to the way new charters are managed and triggering changes to protect the school district against bad business practices.
Nashville Global Academy closed this month after sinking $500,000 into debt, leaving its 155 students to look for other options. The school still owes hundreds of thousands of dollars to the district and has not produced financial reports requested by school administrators.
The debacle is making the district and new charter school providers more sensitive to what can happen when a charter is approved without proper planning.
"It reaffirms that well-intentioned people don't always make decisions that are well researched or well founded," said Marsha Edwards, head of the Martha O'Bryan Center. "It's easy to get into trouble when you're operating a complex business."
The Martha O'Bryan Center is one of two providers approved this year to open charter schools in the fall of 2011. East End Prep will serve kindergarten through fifth grade and offer longer school days and years.
A second school, STEM Prep, eventually will serve fifth though eighth grades mostly in the Glencliff and McGavock areas.
Charter schools receive about $8,100 per student in public money but are operated by an independent school board. Next year, Metro will have five charter schools serving about 1,200 students, including New Vision Academy opening this fall. By fall 2011, the district will have seven.
East End and STEM were the first applicants approved under a more rigorous process designed to prevent another jarring school closing. Now, schools are approved about 15 months before they open, rather than eight months.
Financials scrutinized
District officials are scrutinizing new schools' financial plans to ensure they don't promise services and programs — like a laptop for every child — that are financially unfeasible.
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2Previous PageThe collapse of a Nashville charter school is increasing attention to the way new charters are managed and triggering changes to protect the school district against bad business practices.
Nashville Global Academy closed this month after sinking $500,000 into debt, leaving its 155 students to look for other options. The school still owes hundreds of thousands of dollars to the district and has not produced financial reports requested by school administrators.
The debacle is making the district and new charter school providers more sensitive to what can happen when a charter is approved without proper planning.
"It reaffirms that well-intentioned people don't always make decisions that are well researched or well founded," said Marsha Edwards, head of the Martha O'Bryan Center. "It's easy to get into trouble when you're operating a complex business."
RelatedCharter school's failure shows system is workingNashville officials study charter school's failureNashville charter school closes, laying financial blame on former leadersNashville school board to decide charter school's fateTroubled Nashville school is asked to surrender its charterThe Martha O'Bryan Center is one of two providers approved this year to open charter schools in the fall of 2011. East End Prep will serve kindergarten through fifth grade and offer longer school days and years.
A second school, STEM Prep, eventually will serve fifth though eighth grades mostly in the Glencliff and McGavock areas.
Charter schools receive about $8,100 per student in public money but are operated by an independent school board. Next year, Metro will have five charter schools serving about 1,200 students, including New Vision Academy opening this fall. By fall 2011, the district will have seven.
East End and STEM were the first applicants approved under a more rigorous process designed to prevent another jarring school closing. Now, schools are approved about 15 months before they open, rather than eight months.
Financials scrutinizedDistrict officials are scrutinizing new schools' financial plans to ensure they don't promise services and programs — like a laptop for every child — that are financially unfeasible.
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"We've been attentive to (financial management) in the application process," said Alan Coverstone, Metro's executive director of charter schools. "We're approving groups that take that seriously and have that in place."
Also, the district currently sends monthly payments to charter schools based on a predetermined enrollment figure. The schools reimburse the district if the enrollment is smaller than anticipated and pay the district for any contracted services such as rent, transportation or food.
In Nashville Global's case, the school was overpaid for enrollment and could not repay the district. It also owed money for contracted services.
Now, the district is considering deducting money for contracted services before a school is paid for enrollment.
District financial officials are in conversation with the Tennessee Department of Education over whether this is legal.
Nashville Global opened in fall of 2009, less than a year after the Metro school board approved its charter. The school ran into financial trouble almost from the beginning.
When the application was approved, leaders didn't know where the school would be located. The spot eventually found in Whites Creek meant higher-than-anticipated student transportation costs.
In addition, fewer students enrolled at the school, meaning less revenue. And enrollment continued to sink throughout the year, meaning the revenue kept dropping.
Greg Thompson, head of Nashville's charter incubator, designed to nurture new schools, said facility costs are one of the major drains on charter schools. In addition, schools can have trouble finding the seed money for textbooks, staff and payroll, although they can apply for startup grants through the state.
"Rarely do you have a nest egg," Thompson said. "If you're starting a school, you've got to pay for all that on the front end."
Fundraisers used
Schools that are successful make modest plans, Thompson said. He pointed to Martha O'Bryan as a school with a smart plan — starting with kindergarten and growing one grade at a time — launched by an organization with experience securing donations.
The O'Bryan model aims to raise $250 for every student to supplement what taxpayers contribute. East End also will contract with the center's financial, maintenance and human resource officials for a fraction of the market costs.
"Not all schools spend the same amount per kid," Thompson said. "Your budget has to match your ability to fundraise."
Despite the bad press surrounding Nashville Global, charter school parent Ricky Lattimore said they are still a great option for underserved students. His children attend Smithson-Craighead Academy, Metro's oldest charter. All schools have problems, he said, and they should see Nashville Global as a cautionary tale.
"It's a head's-up for a lot of other schools," he said.
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