Richmond: Federal Paycheck Protection Program Offers Loans for Covering Salaries at Nonprofits. That Includes Charter Schools
On April 8th, a charter school located in the southwest region of Idaho became one of the early nonprofit organizations in the United States to be granted a loan through the Paycheck Protection Program, which is a part of the recent $2 trillion economic stimulus package implemented by the federal government.
Criticism surrounding the loan began even before it was approved.
The Paycheck Protection Program offers financial aid in the form of loans to small businesses and nonprofits to help cover employee salaries during the COVID-19 crisis. According to the Treasury Department, as long as the loan proceeds are used to cover payroll costs and certain expenses such as mortgage interest, rent, and utilities for an 8-week period following the loan disbursement, the loan amounts will be forgiven. This program aims to ensure that employees who would otherwise face layoffs continue to receive income.
The loan provided to Heritage Community Charter School in Caldwell, Idaho, a town with a population of 55,000, perfectly fulfills this objective. Heritage is a K-8 school with a dual-language immersion program and intends to utilize the funds to sustain the payment of teacher assistants, cafeteria staff, and other hourly aides whose working hours were reduced due to the nature of their roles. Despite efforts by the school to find off-site tasks for these employees, the lack of students physically present in the school and limited interaction with other staff made reduced hours inevitable.
The state government of Idaho imposed an immediate 1 percent reduction in school funding in late March, and more severe cuts are expected in the coming months. Schools across the nation are initiating employee layoffs, and the paycheck program serves as a means to retain their employment.
A law firm specializing in charter schools recently provided inaccurate advice to its clients, suggesting that the program was not actually designed for charters and that applying for funds may constitute a federal offense.
Meanwhile, in Washington, D.C., the chairman of the education committee emphasized that priority should be given to restaurants and retailers over charter schools when distributing these funds. Although it is evident that employees of such businesses have bills and expenses to pay, it would be regrettable if our country prioritized workers at trendy restaurants and upscale boutiques in DuPont Circle over teaching assistants, cafeteria staff, and school aides in Caldwell, Idaho, and other towns and cities nationwide. These essential school employees have consistently supported our children, and it is time for us to reciprocate.
The fact is that the law clearly states that all 501(c)3 organizations, including charter schools, are eligible to apply for the paycheck protection program. However, organizations must meet the outlined criteria to qualify for a loan. If an eligible entity qualifies, it may then receive financial assistance.
In the forthcoming months, it is anticipated that opponents of charter schools will add the Paycheck Protection Program to their list of criticisms. They may argue that the program was intended solely for small businesses, disregarding the fact that it also encompasses nonprofits. They may claim that charter schools did not experience an immediate loss of funding this spring, unlike some businesses, while ignoring the substantial budget cuts anticipated later this year. They may argue that school districts were ineligible for the program, placing them at a financial disadvantage compared to charters, while neglecting to mention that districts have access to local property tax levies and low-interest loans that many charter schools do not. It is crucial for advocates of charter schools to correct these misconceptions whenever this program is misrepresented.
Congress is contemplating increasing funding for the program in the upcoming weeks. Charter school leaders who have yet to do so would be wise to familiarize themselves with the program and, if their schools meet the program’s criteria, submit an application.
Greg Richmond serves as the Chief Officer for Growth and Strategy at Bluum, a nonprofit organization based in Boise, Idaho. He also founded the National Association of Charter School Authorizers.
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