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New charter schools put a focus on finances
by Tim Pugmire, Minnesota Public Radio
September 2, 2003

Executive Director MongSher Ly, left, and Ralph Elliott, the school's site director, look forward to the opening of the Urban Academy for the new school year. (MPR Photo/Tim Pugmire)

Eleven new charter schools are opening for business this week, bringing Minnesota's total to 88. The operators of these public schools, which are run independently of the traditional system, say they're eager to meet the educational needs of their students. But they say they're under increasing pressure to also keep their financial books balanced.

St. Paul, Minn. — Construction was well behind schedule last month at the new charter school in downtown St. Paul called Urban Academy. Workers were busy converting the former offices of the state Commerce Department into classrooms. Ralph Elliott, the school's site director, used his imagination while describing the still empty space.

"This will be the library," Elliott said. "And around some of the pillars will be bookshelves. And around other pillars there'll be seating areas that go around it so they can sit down. Over here will be one of the bean bag areas."

After four years of planning, Elliott and his co-founders view the construction delay as just one more hurdle for the school. They pitched their concept of a school with a multicultural focus to several school districts, universities and non-profit organizations. Hamline University finally signed on as a sponsor. They also had to find a suitable building. The school will pay $24,000 dollars a month to lease its downtown location.

	Under construction

Executive Director MongSher Ly says Urban Academy is opening with more than 150 students in kindergarten through third grade. And since the school gets its funding based on the number of students, he says they've intentionally made a low estimate.

"When you over-project, say we were aiming for say 200 kids, but you only end up with 160, that's a big financial cutback that the state eventually takes back funding from you," Ly said. "So that is something that weighs heavily on all charter schools across the board."

Ly says Urban Academy is trying hard to avoid the financial pitfalls outlined in a recent state report. The Office of the Legislative Auditor found one-quarter of the charter schools operating in 2002 were in debt, and concluded many of the financial problems were the result of schools opening without sound business plans in place.

Debt has forced more than a dozen schools to close over the last decade. The report recommended more clearly defined oversight responsibilities for charter school sponsors. Sponsors are required by law to monitor and evaluate both the academic and financial performance of charter schools.

Justin Testerman oversees education projects for Volunteers of America in Minnesota. The non-profit organization sponsors charter schools in Bemidji, Duluth and Rochester. Two more schools are in the works.

"I think there is increased scrutiny on charter school sponsors, and I think that's a good thing," Testerman said.

	Justin Testerman

Testerman says charter schools enjoy greater freedom from government regulations, but are held to higher standards of accountability. He says good sponsors should have an active role, while respecting a school's independence.

"We try to be very involved with the schools because ultimately our name is on, our stamp of approval is on these schools," Testerman said. "And if something were to go wrong, it impugns us as well."

Charter school advocates agree that new schools are especially vulnerable to financial problems. But they say the number of schools in debt has been declining.

Steve Dess, executive director of the Minnesota Association of Charter Schools, says the recent attention on financial issues will make schools even stronger. He says charter schools will always be fiscally tight operations.

"Financial management at a charter school is about working within your resources," Dess said. "There's no ability to levy and say, we can't make it with this amount of money, therefore we need more and go to the taxpayers. It's a different kind of setup there. They have to stay within their resources or not continue."

Dess says his association will host a three-day financial management workshop this fall to help charter school operators improve their business skills.

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