Delaware charter schools face obstacles to growth

School leaders and parents at successful Delaware charter schools say the state can and should do more to help them grow.

While understanding that the Department of Education has to crack down on charters showing evidence of financial mismanagement or a failure to provide high-quality education, parents and educators wonder: If a school has top test scores, deep community connections and parents clamoring for expansion, can't the state help?

Take the case of Odyssey Charter School.

The percentage of students there who scored proficient on a tough new statewide test beat the state average by more than 20 points in every grade and subject. The school has blossomed from 376 elementary students when it opened in 2009 to 1,104 students in kindergarten through eighth grade today.

School leaders tried for several frustrating years to expand its facilities to meet that swelling demand until this February, when the school obtained $34.6 million in conduit bonds to obtain 35 acres of the Barley Mill property in Greenville, formerly owned by the DuPont Co.

Conduit bonds mean the state used its borrowing authority to get Odyssey a good deal, but no taxpayer money went to the bonds and the state wasn't on the hook for repaying them. Charter schools do not receive major capital funding the way traditional school districts do when they build new schools.

The school was able to refurbish office buildings into new classrooms to house its growing populations of elementary and middle school students, much to parents' relief.

But now Odyssey may have to postpone its planned expansion to a high school – and force the families of 200-some eighth-graders to scramble and find a school for next year because it is having trouble getting the money it needs for further renovations.

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"We are faced with a truly astronomical endeavor," said George Chambers, Odyssey's board president. "A school that has proven itself over the years, that has achieved the expectations that are set for it, its challenges should be reviewed in a different way."

Charter skeptics maintain that the state shouldn't spend a cent more on charters while traditional school districts cry out for more resources to serve at-risk students. They argue charters don't serve enough of the kids who need the state's help the most, and every dollar that goes to a charter is a dollar less for districts charged with that mission.

"With all due respect to the charter school community: Nope!" said state Rep. John Kowalko, a charter opponent. "I don't agree with the funding we're giving charter schools now. For them to ask for more capital funding, I'd say absolutely not."

Odyssey's dilemma

Odyssey's purchase of the Barley Mill property was a joyful moment for a school community that had seen several previous efforts to find a new home fall apart.

The bond financing allowed Odyssey to renovate Barley Mill buildings to house grades K-8. The school had previously been split between two different locations, and parents and staff were happy to come together in one place.

It wasn't just Odyssey families who cheered news that the school had space to expand. The Barley Mill property was the center of a fierce legal and political fight when Stoltz Real Estate Partners proposed a mixed-use development project there, first 2.8 million square feet, then 1.6 million square feet.

Neighbors worried the development would snarl traffic in the area and depress their quality of life. When it obtained the property, Odyssey cut by more than a third the space for Stoltz to develop.

Stoltz has not announced publicly any plans for what it would do with the rest of the site, but company representatives recently said work there would be "kicked into high gear" after Stoltz sold five properties in Greenville.

When Odyssey school sought another, smaller round of bonds to expand to the high school, it ran into roadblocks again.

Bond officers looked at the school's books and expressed concerns that the school would not be able to repay another bond in such short order. School leaders sent a letter to parents saying they might need to wait another year to build stronger cash reserves and get on more solid fiscal footing before obtaining the bonds to create a high school.

Even without the new bonds, Chambers said the school probably has enough money to add a ninth and 10th grade.

"There's still a potential that we could do that," he said. "The question becomes: What does the program look like, and is it something we can be comfortable is up to the standard we've established so far?"

The Odyssey school board has called a special meeting next week to decide how to move forward.

Walking financial tightrope

The school expansion has clearly strained Odyssey's finances.

The state Department of Education performs annual reviews of charter schools' fiscal health. Between 2010 and 2013, Odyssey passed those reviews with flying colors.

But in the 2013-2014 school year, the school did not meet standards. And after last year, it received a rating of "falls far below standard." Out of the eight categories on which school finances are judged, the school met the standard on only two and fell far below the standard on four.

The problems reported include deficits, high debt-to-asset ratios, low cash reserves and negative cashflow over the past three years.

The report makes clear that low ratings on the financial framework do not mean a school's finances are being mismanaged. Creating new programs or building and renovating schools can lead to lower marks.

Kate Klemas has a daughter in seventh grade at Odyssey and is a parent representative on the school board. She describes her experience with the school as "nothing short of fabulous."

At Odyssey, her kids have flourished, enjoying subjects like math and Greek. She would love for them to continue there through high school and wants to see the school be able to accommodate more students.

"It kind of breaks your heart to know that there's such a wonderful program, but there's just that one piece missing that prevents it from serving more children," Klemas said. "You know, as a charter school, Odyssey has had to make a lot of very tough decisions. But I'm going to keep the faith and believe that we find the right solution for our kids."

Another mom, Amber Fulginiti, said her son comes home knowing things and understanding concepts she never knew at her age. She also praised school administrators for being responsive and communicating well, but at the end of the day, she may have to find another school for her child.

"Unfortunately, as charter school parents, this is something we know we're going to have to deal with," Fulginiti said. "We always have a plan B and backup plans because we know that's how the system works."

Still, Fulgitini would like it to be easier for Odyssey to add space.

"I do wish we had a system that saw how well the school was doing and would help support that," she said.

A larger issue

Kendall Massett, executive director of the Delaware Charter Schools network, said Odyssey is hardly the first charter school that has struggled to meet parent demand because of trouble paying for new buildings.

"This is has been a major issue for charters for a while now," Massett said.

Massett pointed to the Delaware Academy of Public Safety and the Design Lab, two charter schools that had originally planned to open in Wilmington but were forced to relocate near Christiana.

The Community Education Building, which Bank of America donated to the Longwood Foundation to house four Wilmington charter schools, was an enormous boon because it opened up affordable space in a premium location, Massett said.

Kuumba Academy, La Academia Antonia Alonso and Great Oaks currently are tenant schools in the CEB, with room left for one more.

"Without Bank of America and Longwood, I don't know what the situation for those schools would have looked like," she said.

The problem is, that unlike traditional schools, charters cannot receive major capital funding from the state to buy new buildings or make major renovations. Charters are free from some of the rules that sometimes make buildings more expensive, but Massett said they often find themselves unable to grow to meet parent demand.

"If any public school, not just a charter, is doing great things for kids, we should be enabling them to do more of it," Massett said. "Odyssey is a great example of that."

Lawmakers tried to make it easier for successful charters to expand in 2013 when they created the Charter School Performance Fund.

Each year, the Legislature can set aside up to $5 million in the fund. Charters that have proven they are successful can then apply to the Department of Education with proposals to expand programs.

The state's budget has been slim, however, and only $2.5 million has been appropriated to the fund for the past two years. For the 2015-2016 school year, the maximum grant a single school could receive was $250,000.

Critics balk

One reason lawmakers haven't poured much into the performance fund is that some don't believe it should exist at all.

They are skeptical of – and sometimes openly hostile toward – charter schools because they believe charters sap much-needed resources from the traditional school system.

Kowalko fiercely protested the creation of the performance fund and has pushed each year for no money to be allotted to it.

"We have an obligation to our traditional schools to refurbish and revitalize their buildings and their schools," he said. "I can name a dozen schools that are badly in need of repairs and improvements. Are we going to neglect that?"

Kowalko said charters need to "live within their means."

Some lawmakers and district-school educators scoff at charter schools' claims that test scores show they are superior schools.

That's partially because they don't think test scores truly measure students' success. But it's also because they believe many charters with the best scores serve affluent students who typically test better.

Some schools can set specialized admissions requirement for the students it accepts, which critics contend keeps low-income and minority kids out.

"Until you can prove to me, and I mean show me proof on a piece of paper, that these schools are taking in the same kind of students as our districts and doing a better job, then maybe we have a different discussion," Kowalko said. "Until then, it is unconscionable for us to be sending additional taxpayer dollars to them."

Last year, 22 percent of Odyssey students were black and about 18 percent were from low-income families. Students in the state's public school system as a whole were 31 percent black and 35 percent low-income.

Charter skeptics also point to a string of high-profile financial problems at charter schools in recent years.

In June, the state auditor released a report blasting a former Academy of Dover principal for spending $127,866 in school money on personal purchases and $129,458 that the school couldn't justify.

Earlier this year, the co-leaders of Family Foundations Academy were fired after they were caught making $94,000 in personal purchases with school money.

In 2013, state officials closed Pencader Business and Finance Charter School, but the Department of Education was forced to fork over $350,000 to the school because it did not have enough money to finish out the year.

Other charters, like Moyer Academy and Reach Academy, have been shuttered because of sub-par academic performance.

Massett and other charter school leaders have argued those incidents unfairly cast a bad light on schools like Odyssey, which have done a good job managing their finances and academics.

Despite challenges finding new school buildings, the charter school sector has seen explosive growth in northern New Castle County in recent years. It has grown so fast that some state leaders have worried about the impact the schools are having on traditional school districts.

During the last legislative session, lawmakers approved a moratorium on new charters until June of 2018, or until the state finishes a comprehensive strategic plan that would address how charters fit into the state's overall public education system.

Contact Matthew Albright at malbright@delawareonline.com, (302) 324-2428 or on Twitter @TNJ_malbright.