February 10, 2000

Good afternoon Mr. Chavous and members of the Education Committee. I am Malcom Peabody, President of Friends of Choice in Urban Schools (FOCUS) and Chairman of the D.C. Public Charter School Coalition. I am testifying today to summarize the funding and facilities problems that continue to damage individual charter schools, the charter school movement, and ultimately the District as a whole . The most pressing problem is a proposed 20% cut to nine of the charter schools, under the pretense of enforcing student residency requirements but in fact to cover a $5 to $10 million shortfall in the amount of money appropriate in FY1999 for public education. The cuts would cripple these nine schools and jeopoardize as many as a thousand D.C. students, and I urge you as strongly as possible to help secure a supplemental appropriation to fund these schools at the levels required by law.

Mr. Chavous, the creation of public charter schools was only one half of the reform equation instituted by the D.C. School Reform Act of 1996. The other half is per pupil funding, which should benefit public charter schools and DCPS schools alike. As you know, public education budgets traditionally have been produced through an arbitrary process of political bargaining. Per pupil funding, in contrast, demands that each student be funded according to a formula that estimates as closely as possible the real costs of education, regardless of other budgetary pressures. The D.C. School Reform Act thus establishes in law what most people strongly believe: that education should be our top priority, that our children should get everything they need to succeed.

This is a radical change from the way things have been done in the past and, unfortunately, the city has lacked the imagination to implement it. The funding formula passed under your leadership in 1998 was a great step forward. But there is no statutory mechanism for estimating charter school enrollment, and the Mayor and Council have fallen far short in the amount appropriated for the growing schools. By law, charter schools are supposed to receive 75% of their budget by October 1^st. This year, existing schools saw no money for new students until January. This was a great hardship for the many charter schools that added a grade level or more. Things were even worse for the nine new public charter schools, which can least afford delays in revenue. The new schools received just over 25% of their budget in October and received nothing else until right before Christmas, when the Control Board released emergency funds. Many schools were forced to seek emergency bridge loans and put off creditors to meet payroll. Several came dangerously close to missing payroll. Nine schools that according to the Control Board did not properly collect residency documents still have not received 20% of the money they rightfully expected – even though it is very unlikely that any of their students really live outside of the District.

Even for the schools that have at last received their full Fall payments, the cashflow crisis damaged instructional quality and threatened the well being of children. In November and December, many schools were forced to cut back on day-to-day spending and delay long-planned purchases. Even in the best managed schools, classes did without textbooks and supplies. Technology-dependant program elements stayed on the drawing board.

Personnel levels were also affected . One high school that doubled from 100 to 200 students was unable to hire a second, necessary security guard. The same school also delayed hiring two support staffers and was forced to resort to "contract" teachers -- temps with no benefits or long-term investment in the school. None of this would have happened if the payment received in October had been anywhere close to the level required by statute.

A less tangible consequence has been management strain. The funding uncertainty creates an environment in which careful planning is impossible . Further, the precious time of school leaders must be spent hustling bridge loans and putting off creditors. A seemingly small detail adds exponentially to the problem: payments to schools come over the wires with no documentation. It is often impossible for administrators to deduce the source of the payment or the basis for its calculation.

Perhaps the greatest long-term consequence of the cashflow failure has been its affect on public charter school credit relationships. Businesses and banks this year were just beginning to understand how charter schools are funded – how they are supposed to be funded, in any event. Now, through no fault of the charter schools themselves, many in the business and financial community have come close to concluding that these new schools are still too closely connected to the old D.C. government way of doing things.

The 2001 budgets under construction by the Mayor and Council again fail to adapt to the realities of per pupil funding. We urge you, Mr. Chavous, to continue your leadership on this issue and to press forward with the reforms being developed by your working group on school finance. A repeat of this year's fiasco will replicate in the public charter schools the same conditions of dysfunction that crippled our public education system in the past.

In addition to fixing things for next year, however, we must avert the disaster that threatens the nine schools singled out by the Control Board for budget cuts this year. The cuts really have very little to do with student residency, as the Control Board claims. The schools in question reportedly collected fewer than two proofs of residency for a high proportion of their students. But the accuracy of the auditors' work is very questionable. And, more importantly, many District students – who deserve a free public education as much as anyone else – simply can not produce the documents in question: utility bills and tax returns and driver's licenses and leases and such. People in severe poverty or from immigrant families do not have easy access to these kinds of documents, and, unlike DCPS, public charter schools were given no alternate means of verifying residency. The Control Board has promised to set up an appeals process. But the real problem is that the money in the charter school appropriation has been exhausted. $10 million of the $30 million set aside to fund charter school growth this year was transferred to DCPS because the total public school enrollment, DCPS and charter together, is 2,000 less than was estimated. The residency issue is simply a pretext, an arbitrary way of determining who gets the ax.

The only solution is to make a $10 million supplemental appropriation for public charter schools, from the reserve fund or another source. The reserve fund was set up for unexpected needs and, while the jump in public school enrollment can be easily explained, it certainly qualifies. And it is difficult to imagine what would be of higher priority than giving schools the money that for all intents and purposes they are owed.