Staff report: City-operated charter school system on path to run out of funds
A review of the Cape Coral Charter School System conducted by city staff was shows the city-operated schools could run out of money by 2021, City Council was told Monday.
City Manager John Szerlag told the elected board at its monthly workshop meeting that he thinks the problem is too big to be solved by the school board and administration alone and he would like some direction from council before the end of February when City Auditor Margaret Krym is set to retire.
“What we did to bring a $700 million city budget to sustainability I think we can do for a $20 million charter school budget,” said Szerlag. “By the next meeting (Feb. 27) I want to show what the model articulated and ways to fix it. We need to know if council needs to write them a check or how we can address the best practices for sustainability.”
It is Szerlag’s time constraint of the end of February that is problematic for Councilmember Jessica Cosden, who represents council on the charter school’s governing board.
“It’s being rushed because the auditor is retiring,” said Cosden. “The timing of this action is unfortunate. I would prefer to wait for the new auditor before going forward.”
Cosden also had issues with the figures that were plugged into the financial reports that were drawn up by Krym and Finance Director Vicki Bateman.
“Some numbers provided by the school system were used and some were not,” Cosden said. “I think the numbers are being used to fit an agenda by the city manager. Why the rush? I do think it’s a good idea to bring in (consultant) Burton & Associates and figure out the sustainable model.”
Cosden said the charter schools have not operated with a three-year projected budget like the city has, but currently is working on creating a three-year budget for the upcoming year.
Another issue facing the charter schools is capital improvements in the future. There is no money in the budget being planned to meet that need. Student population among the four schools stands at 3,157, according to Bateman’s figures.
“The student population can’t continue to rise without expansion,” said Councilmember Marilyn Stout.
“Revenue will grow as the student population grows,” said Krym. “That also grows the operating and delivery expenses. Upward costs will continue even when the population will hit its peak.”
Stout also questioned what appeared to be frivolous expenditures – what she said was up to $50,000 for lunches, gifts and other things as well as $1.3 million not designated in the schools’ budget.
Krym said both of those figures were the result of separate fundraising activities over the past 21 months.
“It is not uncommon and it is not a violation of policy,” Krym said. “Most of the funds are designated for a specific purpose and totally unrelated to the budget.”
Charter school superintendent Nelson Stephenson and all but one governing board member were not in attendance Monday night.
Szerlag responded to a question about the administrators being invited saying he had multiple discussions with them and was under the impression they would attend the meeting.
Council members Rick Williams, Jim Burch and Rana Erbrick all expressed a need to hear from the charter schools before deciding on what path the city takes.
“There is so much misinformation out there on this whole situation,” said Burch. “I am not an expert. I need to hear from their board. That governing board needs to decide what’s best for the system. Obviously there is a problem. They are going broke.”
Erbrick and Williams both said they are not comfortable going forward without getting input from the school system at a joint meeting.
Szerlag said he will arrange for council to have a face-to-face meeting with the charter board and administrators at the next workshop meeting on Feb. 27.