February 10, 2000

Thank you Mr. Chairman for the opportunity to testify before this committee. My name is Donald Hense and I am the President of Friendship House, one of the oldest social service and community development agencies in the city.

Since September 1998, we have been operating, in partnership with the national school management company, Edison Schools, two elementary schools serving over 1300 children. A third school, a middle school serving over 700 students in grades 6-8, opened off Benning Road in Ward Six in September 1999. As you are aware, we plan to open the first two grades of a high school in September 2000 and have bid on the Carter Woodson Junior High School building in Ward Seven.

As Chair of the Board I am very pleased with our schools. The children are flourishing. They are learning to write and speak clearly and to think for themselves. They are exuberant but very well behaved in public and considerate of each other. Our principals, Ms. Clara Canty, Dr. John Pannell and Ms. Vonnelle Middleton, are extraordinary. We have hundreds of satisfied parents.

This Year's Charter School Funding

But I am very troubled by our experience of the past few months with city funding of charter schools. I even more concerned that the funding situation may not be resolved next year.

Starting and operating a charter school is one of the most challenging kinds of non-profit businesses. According to the D.C. funding law, passed by the City Council to implement the DC Public School Reform Act we are to be funded on the basis of the children who enroll. No children, no funds. If we are not successful and parents pull their children out, we will not be funded. We have attracted and kept our parents, and we have given their children an excellent education in three brand new schools.

It was also agreed that we will get additional funding for special education students requiring different levels of care. You, Mr. Chairman, chaired a working group with all parties to agree on the weightings and levels of payment for each student and additional payments for each special education student.

In October 1999, the D.C. Chief Financial Office gave the Board of Education and the Public Charter School Board the forms for supporting evidence required to document schools' enrollments. We prepared every form and every supporting document they required and submitted them to the Public Charter School Board, which in turn submitted them to the Chief Financial Office.

At first all went well. We got an initial payment for our existing elementary schools in October under the continuing resolution. Then the appropriation bill was signed in early November, but we received no additional money. We were told we were “too big” to be funded in December.

Finally, in January we got our second payment, months after it is required under the charter school law. The payment is about $650,000 less than we requested and documented. No explanation was given of the amount of the payment for several weeks.

Finally, Mr. Davila of the CFO's office was kind enough to give us the first draft of a spreadsheet of the factors used to calculate the payment. There were two serious problems:

1. One hundred fifty two (152) documented special education students went unfunded. The calculations relied entirely on the enrollment audit conducted in October and November and did not consider any of the supporting documentation for special education that had been supplied to the CFO's office by the Public Charter School Board. However, the enrollment auditors never said to principals or staff at any of our three schools that they needed to see special education documentation, namely the Individual Education Programs (IEP's) for each student. Under Federal law, these IEPs are kept in separate locked files.
   
   Nor did they ask for any explanation of how Special Education Levels are assigned. This is slightly more complex under the new DC Public Schools IEP forms which we used for some of our children, but our levels were well documented in what we submitted to the CFO's office.
   
2. Our enrollment was arbitrarily cut from what we can easily document with no explanation of how the auditors arrived at the number. The spread sheet used the enrollment audit which was 57 students below our documented enrollment. We have never received a copy of the audit document or a written explanation of how this number was arrived at. It is significantly less than the number of children we are serving.
   

Yesterday we reviewed a second draft spreadsheet which added two more problems:

1. Another 61 students were removed from our enrollment because of inadequate proof of residency. Again, we have never received an explanation of how this number was arrived at or which students are affected. The number does not correspond at all to our own notes on the oral feedback from a member of the audit team, nor to our own assessment of student records. This cut will cost us another $416,566, presumably to be taken out of the spring allotment.
   
2. All funding for summer school was cut. The funding law provides $559 per student for summer school. We have made plans to teach about 25 percent of our students this summer to give them the help they need to perform at grade. This cuts another $299,065 presumably out of the spring funding.
   

Thus in total we have been cut more than $1.3 million dollars with no explanation of the enrollment audit process on which this cut was based, and in the case of special education a clear disregard of the CFO's office own procedures.

If all or most of this funding is not restored, we will have to start laying off teachers, even though we are still educating the children we are not being given credit for.

Even more serious, if we are being denied funding on the basis of inadequate proof of residency of particular children, we will have to determine who those children are and ask them to leave our school. The auditors will have to identify these children for us.

In virtually all the cases these children are D.C. residents. We observed that the auditors missed documentation that was in fact in folders. In other cases, folders that were incomplete in November are now complete. In a few cases, parents are resisting providing documentation that they claim they already presented or for other reasons. What will happen to these children when they are put out of D.C. charter schools? Will they seek reentry to regular D.C. public schools?

We will also have to identify the 152 Special Education students who are not being funded. All these children have IEPs which mandate services under Federal Law. We will have to say to the parents that we cannot continue to teach your child because we are not being paid for the many services—speech therapy, occupational therapy, psychological counseling, etc.—that the child's IEP requires. What explanation can we give to the parents for this lack of funding?

Next Year's Funding

The Charter School Coalition and the Public Charter School Board staff inform me that those who are preparing next year's budget are still not recognizing legally mandated funding of charter school enrollment.

Rather they are preparing a budget in the traditional manner, base funding for this year's enrollment plus “enhancement” for planned next year's enrollment.

Our enrollment for next year's high school opening is known and predictable. We made 90 percent accurate predictions of enrollment in our three previous schools. The budget process is treating this growth as an “enhancement” not a right to funding under the D.C. School Reform Act.

Per student funding is the essence of charter school funding throughout the country. Does the District of Columbia want to be the only jurisdiction where per student funding is honored “but only if there is enough money?”

Impact on the Business Reputation of the District of Columbia

Charter schools, like it or not, are part of what contributes to the reputation of the business climate of the District of Columbia. We were told by our financing consultants last year the reputation of the District of Columbia is so bad that it adds one or more percentage points to every financing.

We and other charter schools are seeking bond and mortgage financing. Edison Schools is traded on the New York Stock Exchange to raise money to fund renovations like those they paid for in our three schools. On January 20, 2000, the Wall Street Journal published an article about the unfriendly climate for charter schools in the District of Columbia.

Does the City Council really want to risk teacher firings, dismissal of many children, the bankruptcy of some schools and a rippling contribution to the city's reputation for an unpredictable business climate by leaving all these arbitrary cuts to charter schools in place?

We need two simple things and a third critical but not-so-simple thing:

1. The Chief Financial Office should follow its own procedures and requirements for enrollment and special education documentation
   
2. If we are to be deprived of more than $6500 per student on the basis of an enrollment audit, we need a clear school-specific explanation of the students which were denied funding, and on what basis. And we need the chance to rebut those findings if we have the documentation.
   
3. Above all, we need a budget process next year that guarantees funding for documented charter school enrollment and sets aside adequate funds to pay for it.
   

You, Mr. Chairman, have supported charter schools. We need your help now, and it will be to the benefit of parents, children and the city.