Charter Schools Undermined in Delaware

Published February 1, 2008

Delaware state government and union officials have undermined one charter school’s efforts to secure alternative financing for construction costs and nearly stopped another’s.

Choice supporters cling to the hope that the state legislature may finally start appropriating capital construction funds to public charter schools in 2008.

The Delaware Military Academy (DMA), a four-year secondary charter school in Wilmington, twice was denied in its attempt to receive conduit bond financing during a one-month period in 2007. Such financing provides tax-free bonds through government bodies. Applicants are required to have a strong bond rating, and investors assume responsibility for all financial liability.

“When it’s processed, the government as the middleman gets a fee for processing, so it’s a moneymaker for them,” said Rob Clemens, executive director of Delaware Charter Schools Network, an organization providing support and advocacy for the state’s 17 charter schools.

One month after the state denied DMA’s request, another charter school, Providence Creek Academy, secured conduit bond financing from Kent County over DSEA’s opposition.

It is not known how many states allow charter schools to use conduit bond financing for construction.

Union Roadblock

Opened in 2003, DMA projected it would save more than $100,000 a year in building costs through conduit bond financing. The school now is raising funds to help offset the loss by selling commemorative bricks that will line the campus walkway.

“That’s money that could be used for more teachers, more textbooks,” Clemens said. “It’s money being used on buildings that could better be used elsewhere.”

In late August 2007, Delaware’s Council on Development Finance, an advisory government committee, sanctioned DMA’s financing request by an 8-1 vote. But in an unprecedented move, the director of the Delaware Economic Development Office, at the urging of Gov. Ruth Ann Minner (D), ignored the committee’s advice and turned down DMA’s request.

Barbara Grogg, president of the Delaware State Education Association (DSEA), which represents public school employees statewide, testified before the council on August 27. She said DSEA opposed the request “based solely on the fact that this action represents a major change in the state’s educational policy” that she said should be addressed by the legislature. She acknowledged it was perfectly legal for charter schools to receive conduit bond financing.

DSEA declined a request for further comment for this article.

More Pushback

Besides the teachers union, some state lawmakers also have acted in opposition.

Clemens said state legislative leaders from both parties intervened in August 2007 to stop New Castle County officials from introducing a measure to support DMA’s financing bid.

A memorandum from House Minority Leader Robert Gilligan (D-Sherwood Park) and House Minority Whip Helene Keeley (D-Wilmington South) commended the county’s decision “for the restraint it demonstrated from entering further into the area of public school construction finance, an area that historically has been the domain of state government.”

Breathing Room

Greg Meece, director of Newark Charter School, disagrees with the memorandum’s contention.

“Just because it’s a state responsibility doesn’t mean that a school should not continue to explore other avenues to increase its financing,” Meece said.

Newark’s request for conduit bond financing was approved by New Castle County in 2006, enabling the school to refinance debt on its original facility and to construct a new elementary school building.

Newark was able to hire two new instructors, including a needed coordinator of special-education services, as a result of the savings.

“That breathing room was provided by a lower interest rate for our mortgage,” said Meece.

Finding Funds

Since Delaware approved public charter school legislation in 1995, the only dollars the legislature has provided for construction needs have been included in the general operating funds. Other public schools receive additional facilities funding.

A 2006 bill that would have provided Delaware charter schools roughly half the capital funding given to other public schools never reached a vote on the House floor.

State Sen. David Sokola (D-Newark), chairman of the Senate Education Committee and a co-sponsor of the 2006 bill, sees no better prospects for enhancing state financing of charter school construction in the 2008 session, but he remains optimistic.

“I hope we can get things worked out,” Sokola said.

Clemens shares that view.

“I believe that the legislature is going to look closely at these issues this session,” Clemens said, “and I’m hopeful that we can work well with the legislature and DSEA to move things forward.”

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.

For more information …

Delaware Military Academy:

Delaware Charter Schools Network: