North Carolina Charter Schools Under Closer Scrutiny

(Photo: Flickr, Creative Commons)

(Photo: Flickr, Creative Commons)

Mention charter schools and you’re sure to get an opinion. Some love them, some hate them – but either way, North Carolina is getting 11 more this year.

North Carolina’s State Board of Education unanimously approved 11 new charter schools to open in August amidst questions over whether the schools will be ready and state scrutiny of another charter school’s financial troubles: Thunderbird Prep.

Following the latest approval of the new schools, there will now be 167 charter schools open across the state for the 2016-17 school year. This expansion is pushing some of the startup schools toward specialty finance companies. These companies, some of which use Chinese investment funds, help the schools fund the buildings.

Although charter schools receive taxpayer funding, they don’t receive money until they open their doors. This means they need to retrieve financing in order to secure facilities and pay bills just to open up, according to Lee Teague, executive director of the NC Charter Schools Association. Once a state approves the charter, the school gets money based on enrollment.

This is, in part, why schools like Thunderbird Preparatory Academy, which has been open in Cornelius for two years, is in financial distress. After a review of the school’s finances and facilities last week, North Carolina’s Charter School Advisory Board revealed that Thunderbird obtained Chinese funding through the EB-5 visa program. According to the Charlotte Observer’s Ann Doss Helms, Thunderbird received $3 million in startup money from Chinese investors.

These funds were obtained through Education Fund of America, a program that gives visas to wealthy foreign investors. The EB-5 investors receive US residency; in addition, it opens the door for them, their spouses and children to eventually become citizens. In return, the investors provide funds for US projects such as charter schools like Thunderbird. Education Fund of America, an Arizona company, specializes in obtaining foreign investments and pooling them toward public charter school projects. According to the website, 13 schools are currently being funded through EB-5 funds, including seven in North Carolina and South Carolina.

Although Thunderbird gets almost $4 million each year in state and local money to educate its 500 students (K-6), its expenses surpassed its input in the first year it was open (2014-15). Last year’s school audit isn’t yet available, but the school provided informal data to a state panel that showed a similar trend for 2015-16, according to the Citizen-Times article.

Thunderbird’s techniques have some Charter School Advisory Board members shaking their heads. Board Chair Alex Quigley called it ‘exceedingly messy and complex.” It also means that taxpayer money from North Carolina is going across the country and the globe to repay debts.

However, Thunderbird board Chairman Peter Mojica said the EB-5 loan and other financial arrangements are “all standard products that are used by charter schools.”

At this point, Thunderbird has convinced the state board to continue publicly funding the school. However, the state has vowed to keep a close eye on the school in the coming year.

In addition to the funding issues of some charter schools, North Carolina’s newest additions have other questionable issues. In a June progress report, seven of the new charter schools had insufficient ratings in one or more areas: facility, enrollment numbers or financial information. Eight of the schools still don’t have a certificate of occupancy, according to T. Keung Hui of the News Observer.

“It’s July 7th and these are some key sort of principles, issues that in our business world they get covered way early,” State Board member Greg Alcorn said. “Here we are 30 to 45 days from opening and some key areas aren’t covered.”

According to Alex Quigley, chairman of the state Charter School Advisory Board, these questions might not matter. According to Quigley, many successful charters scramble up to the last minute to open their doors .