Audits tell a different story on charter finances

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Catalyst’s Summer 2010 story on the financial health of charter schools contained a number of inaccurate claims and misrepresentations. We would like to correct these errors for the record and provide you with additional information, which we hope you will share with your readers.

Sarah Karp’s report made the bold claim that half of Chicago charters have run a deficit in recent years.  While we are not sure what numbers she used, our analysis shows that the true number is quite different: over the last three years, only 37 percent of charter schools ran a deficit.

From fiscal year 2007 to 2009, 30 different charter schools operated in Chicago. Eleven of the thirty schools experienced a deficit at some point (37%), while just 6 experienced a deficit in more than one year.  The average deficit was $836,372. Looking at the data by year:

•    In FY07, 4 of 27 charters (15%) ran a deficit, with an average deficit of $164,468
•    In FY08, 7 of 28 charters (25%) ran a deficit, with an average deficit of  $1,112,777
•    In FY09, 7 of 29 charters (24%) ran a deficit, with an average deficit of  $943,912

Each year, every charter school, pursuant to the charter agreement  between the operator and the Chicago Board of Education, performs a Financial Statement Audit and Financial and Administrative Procedures Controls Review (collectively, the “Financial Audit”), and provides the Financial Audit to CPS. Each charter school must contract an outside auditor, deemed acceptable by the Board of Education, to conduct this annual Financial Audit.  Anyone can obtain these audits in their entirety by submitting a request to CPS.

In addition to inaccurate facts concerning charter schools’ financial status, Catalyst also erred in representing the number of priority communities served by Renaissance 2010 schools. While Catalyst reported that Renaissance 2010 served just 14 of the 25 priority communities (as identified by the Illinois Facilities Fund’s 2004 Here and Now report), the real number is 20 of 25. You can find a full list of Renaissance schools located in priority communities attached to this letter.

My team would welcome the opportunity to provide you with more information or clarification on these issues. We hope you will consider providing the correct figures to your readers.

J. Terence Patterson
Acting Executive Officer
Office of New Schools
Chicago Public Schools

(Editor’s Note: Under the Freedom of Information Act, Deputy Editor Sarah Karp requested charter school audits from Chicago Public Schools. Her FOIA request was denied, although the district had supplied audits to her several years ago. Ms. Karp relied on forms submitted by charters to the Internal Revenue Service, called 990’s, as well as the district’s own annual charter school report, to examine charter finances. She analyzed finances at a campus level (the district now has some 70 charter campuses). This may account for the difference between your 37 percent and our 50 percent, since different campuses run by the same operator may be experiencing different financial situations. Finally, your letter correctly notes that 20 of 25 priority communities are served by some type of Renaissance school. However, our story counted just charters, not performance and contract schools, which are included in your list. )