Report: Arizona charter schools risk closing amid financial woes

PHOENIX — A new report by an Arizona think tank found that more than 100 Arizona charter schools are failing financially and could soon close.

“Based on our research findings, I wouldn’t be surprised if we see a few failures within the next school year, unfortunately,” Amy Pedotto, spokeswoman for the Grand Canyon Institute, which released the report this week, said.

Pedotto said of the estimated 100 charter schools facing financial stress, 33 are in “dire straits.”

The report looked at the finances of Arizona’s charter schools over the last few years. It found as a whole they owe more money to creditors than they’re worth as businesses contracted with the state to educate K-12th graders.

In the third report in a series about charter schools, GCI found that 20% of charter sites are at risk of closing in the near future and that charters are $2.56 billion in debt compared to having $1.4 billion of property and assets.https://t.co/bFTS9iVsJl pic.twitter.com/4xnvN5FxtB

— Grand Canyon Inst. (@GrandCanyonInst) January 10, 2019

The report also found dozens of charter schools were allowed to borrow money based on projected student enrollment growth, but student enrollment did not grow as expected for some schools.

According to the report, about a third of charter schools saw their student populations decline over a three-year period.

Pedotto said the report includes recommendations with the goal of “strengthening the charter sector” and ensuring charter schools are “in a more financially sustainable situation.”

One of the recommendations includes not allowing charter schools to borrow money based on projected student enrollment growth unless they have a “well-documented” student population growth history and get approval by the Arizona State Board for Charter Schools.

Pedotto added that her group is concerned about the disruption to a student’s education that a charter school closure could produce.

“This leaves students and their families scrambling to find a new school,” she said. “In some cases, those new schools that they go to – if that student enters that school late in the year – they won’t get any public funding because that funding has already been handed out.”

The report comes about a year after Discovery Creemos Academy in Goodyear closed suddenly due to financial woes. The report noted the school’s closure “stunned many, but not if you had traced their finances for the prior years.”

Matt Benson, a spokesman for the Arizona Charter Schools Association, called the report “ludicrous” and disputed that so many charters are in danger of closing.

“We typically see about one charter school out of 500-600 close each year due to bad finances, so this notion that we’ve got 50-100 charter schools on the brink of bankruptcy is simply false,” he said.

Benson added that his group welcomes legislation expected to be introduced in the upcoming legislative session to increase transparency and oversight of Arizona charter schools.

“It’s really important that we take steps that strengthen the system but that don’t take away what has made charter schools successful in this state, and that’s the freedom and the autonomy to be innovative and to do what’s best for their students,” he said.

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