Charters face cuts after dispute with school district

March 29, 2013 - Atlanta - Khari Kelley (left) gets a word from 7th grade Hunanities associate teacher Kate Michalak during class presentations by students at Atlanta Neighborhood Charter School. Atlanta's 10 startup charter schools are having to do without millions of dollars from the school district that they had depended on, even though the charters already won in court. Atlanta Public Schools appealed the court decision, resulting in the money likely being withheld for another year and the charter schools having to cut costs. The charters don't think the money will break them, but it will cause them pain. BOB ANDRES / BANDRES@AJC.COM

Credit: Bob Andres

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March 29, 2013 - Atlanta - Khari Kelley (left) gets a word from 7th grade Hunanities associate teacher Kate Michalak during class presentations by students at Atlanta Neighborhood Charter School. Atlanta's 10 startup charter schools are having to do without millions of dollars from the school district that they had depended on, even though the charters already won in court. Atlanta Public Schools appealed the court decision, resulting in the money likely being withheld for another year and the charter schools having to cut costs. The charters don't think the money will break them, but it will cause them pain. BOB ANDRES / BANDRES@AJC.COM

Credit: Bob Andres

Credit: Bob Andres

Atlanta’s charter schools are increasing class sizes, reducing staff and trimming budgets because nearly $3 million is being withheld from them in a legal dispute with the city school district. One judge has ruled the charters should have the money.

Because Atlanta Public Schools appealed to the Georgia Supreme Court, the money is tied up until until the case, which involves APS’ pension cost, is decided. The state’s highest court may not rule until next spring, meaning the charters have to do without until then even if they ultimately prevail.

“We can only be starved so much,” said Kamau Bobb, chairman of the board for Wesley International Academy, which reduced salaries of its paraprofessionals and called off raises for teachers. “We definitely won’t be able to deal with it for more than this one year unless something magical happens with our income. It’s going to be difficult.”

The city’s 10 startup charter schools – those that weren’t converted from traditional schools – sued after the Atlanta school district decided last summer to require them to help pay off a $550 million pension liability that dates to the 1970s.

Fulton County Superior Court Judge Wendy Shoob ruled in December in favor of the charter schools, whose lawyers argued that their employees don’t benefit from the pension system and their funding can’t be altered.

The school system believes the pension problem should be shouldered by the entire district, Atlanta Public Schools spokesman Stephen Alford said. About 10 percent of Atlanta public school students attend charter schools.

“We’re dealing with a pension obligation that should have been managed better years ago,” Alford said. “Our teachers aren’t benefiting from it anymore either.”

But Rocco Testani, an attorney for the charter schools, said charter schools operate on tight budgets and they’re less able to pay a cost they have nothing to do with. “It’s a much more disruptive issue for the charter schools than it is for the system as a whole,” he said.

The loss of funding contributed to the closing of one charter school: Tech High, which released a statement in July saying it couldn’t afford to stay open while waiting for the legal system to resolve the pension liability issue.

The money dispute may continue to threaten charter schools. Atlanta Public Schools Chief Financial Officer Charles Burbridge testified in December that he wouldn’t recommend renewing or expanding charter schools unless they shared the pension burden.

But Alford said last week the school system plans to continue approving and renewing charter schools case by case.

“APS is charter-friendly. We have approved more charter schools than any other district in the state. The administration has not made any changes to the charter school approval or renewal process,” Alford said.

The funding loss averages about 8 percent of each charter school’s allocation from the school district, forcing them to find savings, Testani said.

Atlanta Neighborhood Charter School may have to lay off employees, expand class sizes and cut programs, said Matt Underwood, the school’s executive director. His school has been raising money from parents and spending its reserve funds.

“It’s not just unfair, but it’s also illegal. It’s pretty clear to us and the judge that they’ve taken a problem that’s been on the books for decades and then tried to make charter schools somehow responsible for it,” Underwood said.

At The Kendezi School, class sizes are on the rise and a plan to hire a vice principal has been put on hold, said Principal Dean Leeper. Other charters, such as the three metro Atlanta KIPP middle schools, are handling the shortfall by dipping into reserve funds.

The pension cost came on top of a 9.5 percent cut to all schools last year because of a drop in property tax revenue.

“It’s sort of adding insult to injury,” Leeper said.

Atlanta’s traditional public schools planned to pay about $39 million this year toward the pension liability, Testani said. The pension plan covered non-certified employees such as bus drivers, janitors, secretaries and cafeteria workers. Most teachers participate in a different retirement plan.

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