Richmond: Federal Paycheck Protection Program Offers Loans for Covering Salaries at Nonprofits. That Includes Charter Schools

On April 8, a charter school in southwest Idaho became one of the first nonprofit organizations in the country to be approved for a loan under the Paycheck Protection Program, part of the federal government’s recent $2 trillion stimulus package.

The criticisms started even before the loan was made.

The Paycheck Protection Program provides loans to small businesses and nonprofits to pay employees during the COVID-19 crisis. According to the Treasury Department, “The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the 8-week period after the loan is made; and employee and compensation levels are maintained.”

The point of the program is to keep income flowing to employees who would otherwise be laid off.

The loan to the Heritage Community Charter School of Caldwell, Idaho, population 55,000, does exactly that. Heritage is a K-8, dual-language immersion school that will use the funds to continue to pay teacher assistants, cafeteria staffing and other hourly aides whose hours were reduced because of the nature of their jobs. The lack of students in school and minimized contact with other staff created a scenario in which reduced hours were inevitable, even after the school found other tasks for these staffers to perform off-site.

Idaho’s state government enacted an immediate 1 percent cut to school funding in late March, and more draconian cuts are expected in coming months. Across the country, schools are starting to lay off employees, and the paycheck program is a way to keep them employed.

One law firm that works with charter schools recently warned clients incorrectly that the program is not really designed for charters and that charter leaders who do apply may be committing a federal offense.

Meanwhile, in Washington, D.C., the chairman of that city’s education committee said restaurants and retailers should be prioritized ahead of charter schools in the awarding of these funds. While employees of these businesses clearly have expenses that need to be paid, it would be a sad day if our country prioritized workers at the chic restaurants and designer boutiques of DuPont Circle over the teaching assistants, cafeteria staff and school aides of Caldwell, Idaho, and other cities and towns across the nation. These essential school staffers have been there for our children; it is time for us to be there for them.

The reality is that the law clearly states that all 501(c)3 organizations are eligible to apply for paycheck protection, and charter schools are 501(c)3 organizations. After that, to qualify for a loan, any eligible entity must meet the criteria for the program, noted above. If an entity is eligible and qualifies, then it may receive a loan.

In the months ahead, we can expect charter school opponents to add the Paycheck Protection Program to their menu of attacks. They will say the program was meant for small businesses while ignoring the fact that the program is also for nonprofits. They will say charter schools did not immediately lose all funding this spring, like some businesses, while ignoring the deep cuts that are coming later this year. They will say school districts were not eligible for the program, putting them at a supposed financial disadvantage versus charters, while ignoring the fact that districts have access to local property tax levies and low-interest loans that many charter schools cannot access. It will be important for charter school advocates to correct the record every time this program is mischaracterized.

Congress is considering increasing funding for the program in the coming weeks. Charter school leaders who have not yet done so would be wise to familiarize themselves with the program and, if their schools meet the program’s criteria, submit an application.

Greg Richmond is chief officer for growth and strategy at the Boise, Idaho-based nonprofit Bluum and was the founder of the National Association of Charter School Authorizers.

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