When the state rewarded Hawaii island charter school Na Wai Ola with a $95,000 check last fall for ranking as one of the state’s top-performing public schools, Principal Daniel Caluya’s first thoughts gravitated toward desperately needed improvements in the aging buildings the school leases.
The Mountain View elementary school rents a former tuberculosis treatment center built in the 1920s from the Roman Catholic Church — an expense that consumes as much as 30 percent of its nearly $1 million operating budget, leaving little left for core expenditures like salaries and instructional materials.
But the prize money couldn’t be used for facilities.
The school had to eliminate its middle school this year because it didn’t have the space. And with funding already stretched thin, Na Wai Ola has had to hold fundraisers to pay for a breakfast and lunch program for its 130 students.
"We couldn’t afford it," Caluya said of the meal program. "We had to use our funds to pay for facilities. We need to provide a safe learning environment."
Caluya’s predicament underscores the challenge charter schools face when budgeting for school expenses: The state’s 33 charter schools don’t get separate state funding for facilities and capital improvement projects.
Charter schools get public operating funds in the form of per-pupil dollars, which this school year amounts to $6,009 per student.
"Their operating dollars have to cover their capital needs or facilities needs," said Tom Hutton, executive director of the Hawaii State Public Charter School Commission. "The need to address facilities costs is arguably the single greatest unaddressed challenge for Hawaii’s chartering system."
In all, charter schools statewide spent more than $8 million, or $817 per student, last fiscal year to operate and maintain their facilities, with most of that likely representing rent, Hutton said.
By comparison, the Department of Education spends on average about $10,100 on operations for every student in a DOE-run school. These schools don’t pay rent and have access to state-backed bond financing for their campuses.
The DOE has a $239 million budget for capital projects this year (or $1,362 per student), in addition to its $1.7 billion operating budget. Gov. Neil Abercrombie in recent weeks released $128 million worth of bond proceeds for DOE-run facilities, including $26 million for a new auditorium at King Kekaulike High School on Maui and $15 million in design and construction funds for a modernization project at Farrington High.
Charter school advocates are hopeful lawmakers will help address what they call a major inequity in funding. (Charter schools, which educate about 6 percent of public school students, use public funds and offer a free education but report to their own governing boards rather than the Board of Education.)
Three bills in play at the Legislature seek to establish dedicated funding streams for charter school facilities.
The package of bills — the result of an informal working group of stakeholders convened last year by Senate Education Committee Chairwoman Jill Tokuda — is seen as a comprehensive approach, recognizing the wide-ranging facility needs of charters.
For example, per-pupil allotments weren’t seen as a way to adequately address the needs of all charter schools: some are on state land, some rent commercial spaces, others are so-called conversion schools that use former DOE-run campuses, and others are online schools that don’t have facility needs.
"We need some combination of tools so we’re not in a situation where we can only help a handful of schools," Hutton said. "At the same time we don’t want to create all these creative tools just to pay rent."
"We really do need multiple strategies to address this from multiple angles," added Lynn Finnegan, executive director of the Hawaii Public Charter Schools Network, a nonprofit that supports and advocates for public charter schools.
Senate Bill 2517 would authorize the charter school commission to request the issuance of general obligation bonds and allow it to allocate the proceeds for the design, planning, construction, repair and maintenance of charter school facilities.
The bill also would establish a working group to come up with criteria for eligible projects and a way to prioritize them. The bill stipulates that any facility built with bond proceeds would be owned by the state.
Charter schools can request CIP funds through the state budget now, but Hutton said those requests historically have been denied.
"Rather than going through the state CIP process, bonds could be floated that the commission would then allocate," Hutton said. "There would be a fund from which the commission can draw for proposals so that schools don’t have to convince 76 lawmakers and the governor of the worthiness of a project."
Meanwhile, SB 2516 would infuse an existing pilot program run by Hutton’s office with an unspecified amount of general funds that charter schools would be able to request for facilities expenses, based in part on the need and performance of a school. An earlier version of the bill included a $1.2 million appropriation.
Some have criticized using a charter school’s performance for facility funding decisions, arguing that DOE schools don’t have to hand over test scores when seeking money for a campus project. But Hutton defends the approach.
"I am very comfortable with the notion that performance of schools be a factor in all kinds of decisions," he said. "Charters are here to be catalysts for the overall school system, and at the end of the day, you’re looked at through a performance lens. That’s the deal."
House Bill 2576 would create a new special fund for charter school facilities — initial startup moneys have yet to be added to the bill — and establish an income tax credit to encourage contributions to the fund. The charter school commission would administer the fund.
After clearing the state Senate, the House Education Committee Friday advanced SB 2516 and SB 2517 to the House Finance Committee. The Senate Education Committee will take up HB 2576 Monday.
Officials at Kihei Charter School in South Maui are hopeful the bills will be enacted and offer some relief.
The school, with 550 students and a waiting list, pays more than $50,000 a month in lease rent to three different landlords to run its elementary, middle and high school programs.
"That’s a real number. It’s a number that is way too high to be sustainable as a percentage of the gross budget. It should be much lower," said Gene Zarro, one of the school’s founders and vice chairman of its governing board. "We’re hoping the Legislature will provide some serious relief in this area."
As an alternative, the nonprofit that founded the charter school in 2001, South Maui Learning Ohana, recently secured a $17.7 million federal loan to build two stand-alone campuses.
At SEEQS charter school — an acronym for The School for Examining Essential Questions of Sustainability — the lack of facility funds comes at a cost to students, said founder and school leader Buffy Cushman-Patz.
This is the charter’s first school year, and it launched with 60 students and pays more than $9,000 a month in rent and utilities for a facility in Kaimuki.
"The purpose of a school is to provide the best learning environment for our students. We don’t currently have enough funding at the level that it deserves. We are just strapped financially with the $6,000-per-pupil funds to pay our rent and utilities in addition to educating kids," Cushman-Patz said.
She added, "The more time I spend fundraising — which I have to do — the less time I spend on instruction for the kids. Having funding for facilities and having that weight lifted off my shoulders would let our school flourish even more."
Several charter school leaders acknowledged they’ll need to be good stewards of any funding privileges, given the negative reputation caused by alleged criminal activity and misconduct at some charters and concerns about mismanagement and unaccountability raised in audits.
"I think the optimal outcome would be to allow the charter system to make progress on this issue for all of the schools," Hutton said. "I know we won’t solve this problem this year. We still have work to do to build trust by the public and lawmakers. But we’re saying, can we finally have a breakthrough in making progress and then continue to build the trust and credibility and relationships?"
The challenges aren’t unique to Hawaii charter schools.
A report last year by the National Alliance for Public Charter Schools found of the 42 states with charter laws, only 17 provide any kind of direct facilities aid, either through grants or per-pupil funding, and just three of those provide per-pupil capital funding of more than $1,000.
