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Bring Some Clarity to School Building Debate

December 28, 2009 By John Fitzgerald, Education Policy Fellow

In the recent folderol about charter school buildings, who is paying to build them and who's getting public money under the table, one important piece of information is missing.

If a school district sells a building, that money can only be used for other building costs such as buying land, building schools, maintaining existing buildings or buying down debt from previous construction projects. If a district leases unused space, the cost of maintenance and utilities usually takes most of the starch out of the additional income.

In other words, selling or leasing a school building does not likely result in a district being able to hire a new teacher, buy a new book or create one smidgeon of help for students.

This is an important fact to remember as we decide what to do about abandoned school buildings that groups such as charter schools might want to buy.

The issue comes to the fore after a Star Tribune report found that several charter schools were skirting the law. Charter schools are not allowed to own their own buildings; instead, they must lease space. Several schools maneuvered around this law by forming non-profit foundations to build their own schools, then lease space to the charters who would pay with public taxes. The result was not only a violation of the intent of the law, but also in schools being built ultimately with public funds that aren't owned by the public. In the process, several unsavory people became involved with charters and several shady deals were reportedly conducted between contractors and charter school officials.

State law clearly tries to stop this situation. Statutes separate capital funds from general funds, which mean that money raised from the sale of voter-approved bonds can go toward buying land for a school, building a school and maintenance project on school buildings. The money cannot be transferred to the general fund, which is used to pay salaries, utilities, books and other costs of running a school.

Income from leasing a property can be placed in the general fund, but only after the building is repaired. This is a problem for school districts looking to repurpose older buildings.

Steven Liss, the Chief of Policy and Operations for Minneapolis Public Schools, offered some examples. First, he listed the status of MPS's empty school buildings. He said two buildings - Morris Park and Putnam - have been sold to charter schools for up to $6 million. A contract has been struck with a charter school to buy Franklin. Northrop and Howe have contracts for sale to senior housing companies. Holland, Lincoln, Whittier and Shingle Creek are being studied for future use. The district is looking for tenants to lease space at Tuttle and Cooper. The district is currently leasing part of North to a charter school.

The sale of Morris Park, Putnam, Franklin, Northrup and Howe will go toward buying down the district's general operating bond debt, Liss said. "In the Minneapolis district, all the buildings are carrying some debt."

Leasing space carries its own problems. Even though the money can be deposited in the district's general fund, employees must maintain the building and utilities must be paid. While some lessees pay some of these costs, the amount going into the general fund is minimal.

There are those who will argue that selling empty buildings to charter schools or other groups is desirable because any income off an empty building is better than no income at all. There are those who will argue that charters need a place to teach and empty district buildings would seem to be an appropriate place for this to occur.

The pros and cons of putting charter schools in empty public school buildings are certainly debatable, but financially the process doesn't help students get better in school. That is important to remember in this debate.

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