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Education: Charter school uses loan for startup capital
By Charles Swenson
With 157 students enrolled, $248,000 in grants approved and a first-year budget that projects a $137,000 surplus, Coastal Montessori Charter School lacks only one thing: cash.
When it comes to finance, a school is like any other business. It needs capital. And although Coastal Montessori is in a more affluent community than some charters, it shares a common problem.
The school is scheduled to open in August in vacant wing at Waccamaw Middle School in Pawleys Island with students in grades one through six. Charter schools receive public funds, but have their own governing boards.
A $75,000 federal grant for planning and implementation followed approval of Coastal Montessori’s charter by the state Department of Education and the Georgetown County Board of Education. But the grant funds are only available to reimburse money that has already been spent. So Kristin Bohan, one of the school’s organizers and now its project manager, had to open a credit card account on behalf of the school, said Rob Horvath, who chairs the charter school board.
This week, the charter board approved a $50,000 bank loan that had to be guaranteed personally by a school supporter.
“That’s happened several times,” said Mary Carmichael, executive director of the Public Charter School Alliance of South Carolina. That hasn’t always been the case, and she said the change is due in part to the economic crisis.
Financial problems are the main reason charter schools close, said Lonnie Yancsurak, who was hired this month as principal of Coastal Montessori. He is due to move to the area from Los Angeles at the beginning in May, but has already started work to hire staff even as he and the charter board formalize his contract.
A background in business before he turned to education is one of the things that made Yanscurak an ideal choice, charter board members said. The board also hired a consulting firm, Kelley-Moser, with experience in charter schools to manage its finances, and the firm agreed to let the school defer payments until it had the funds.
“It’s a business. The business happens to be education,” said Bill Moser, a partner in the consulting firm.
It would be easier for startups if the rules for the federal grant were relaxed to allow schools to have access to the money sooner, Moser said. But he believes that the obligation of charters to raise startup funds isn’t onerous.
“It’s not the place of government to bankroll these things,” he said.
Riverview Charter School in Beaufort raised $80,000, he said. Loans and fundraisers are common. At a school in North Carolina, board members took second mortgages on their homes to fund a new building, Moser said.
“You talk to bankers, they want to see a balance sheet,” he said. “You have $50,000 worth of desks. They don’t care. They want cash.”
Coastal Montessori is the second charter school in Georgetown County. The Harbor School for the Arts and Sciences opened in 1998. The county school board revoked its charter in 2000 after the school ran into financial problems.
“Your cash flow is critical,” Carmichael said. She has worked with the Coastal Montessori board since its inception.
The draft budget for the charter school shows $1.16 million in revenue, with most coming from the state based on enrollment. That’s money that the county school district currently receives. Unlike the school district, the charter school can’t issue a tax anticipation note until the state money begins to flow.
“It’s going to be nip and tuck for six to eight months,” Moser said. “Cash flow is tenuous.”
A second federal grant of $173,000 will be used to buy supplies and fund teacher work sessions during the summer. It will also pay Yancsurak’s salary during the summer.
The planning sessions are important to make sure the Montessori curriculum is aligned to state standards, Carmichael said.
“It takes a lot of time,” said Heather Teems, who resigned from the charter board this week so she can apply for one of its teaching positions. She currently teaches at the private Pawleys Island Montessori School. “While training is taking place, we’re doing a lot of that.”
And Carmichael told the charter board this week they need to include funds for a data clerk to enter information about students into the school’s computers this summer. “Your data is everything,” she said.
The draft budget lists $490,960 in instructional expenses, or 58 percent of the school’s operating expenses.
The $137,000 surplus will be used to establish a six-month operating reserve and start a capital fund for the day the charter school is ready to start construction of its own facility. The budget projects it will take five years to create the operating reserve.
The school has $5,000 a month budgeted for leasing classrooms at the middle school. Charter board members have discussed the deal with county school district staff, but the agreement hasn’t been approved by the county school board yet.
“It looks like it’s going to be more than fair,” Bohan said. It includes a variety of services that the school will have to arrange when it eventually moves to its own building, such as pest control, trash pickup and fire extinguishers.
Moser called it “a sweet deal.” What makes Coastal Montessori unique is its close relationship with the school district, he said. Elsewhere in the state, relations between charters and their districts run from “hateful” to “benignly accepting,” he said.
The district will also clean the carpets before the charter school arrives, but the charter board plans an “Extreme School Makeover” to decorate the space. Businesses have offered donations for that project.
“Which is good, because we really don’t have money budgeted to spruce up the classrooms,” Bohan said.