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Charter schools scrutinized over use of sales tax dollars

Duval Schools earned more than $110 million for building projects during the first year of the half-cent sales tax.
Claire Heddles
Duval Schools earned more than $110 million for building projects during the first year of the half-cent sales tax.

An independent oversight committee wonders whether Jacksonville charter schools are breaking the law by using Duval Schools sales tax dollars to pay off debts.

The district says it's unlawful, but officials are letting charter schools do it anyway — for now — until they get a formal opinion from a state auditor, superintendent Diana Greene told School Board members Tuesday.

The Duval Schools sales surtax oversight committee is tasked with monitoring how the district spends the money it earns from a new, half-cent sales tax that took effect last year. The 22-person committee issued its first annual report this week to the School Board.

"While we appreciate the district’s reporting, the oversight committee continues to be concerned with the lack of transparency of some of our charter schools’ reporting," the committee's report reads.

More than $14 million from the new half-cent sales tax went to charters last year.

The 30 charter schools getting that money submitted quarterly reports, but those reports provide far less detail than the district's reports for the rest of the $110 million the half-penny sales tax garnered last year.

The charter schools' use of the taxpayer dollars — which range from paying rent to hiring security officers to sitting on the funds — have raised both eyebrows and legal concerns.

District and charters clash over spending

According to state law, charter school operators can use the money to lease or buy property, technology, vehicles and media for their schools. Not on that list? Bonds and debt service.

According to Greene, that's the most significant point of contention with some charter schools. Quarterly finance reports show that at least four charter schools have used sales tax dollars to repay debt and interest on the bonds they used to buy school facilities.

"The way we find out who's right or wrong is we need an audit opinion," Greene said. "And the real issue relates to bonds."

That's part of why the sales tax oversight committee wants outside counsel to weigh in, according to oversight committee Chair Hank Rogers.

"The district has one opinion, our charter schools have another opinion, so who addresses that?" Rogers said to School Board members Tuesday. "We ask that, maybe, an outside opinion be clarified to help us with that, so moving forward we can really understand if our charter schools are following the law."

Unlike the state law about charter school spending, separate guidance authorizes school districts to use half-penny sales tax dollars on bonds and debts for building and capital projects.

The oversight committee's interpretation of state law about what expenses are allowable with the sales surtax dollars.
Screen capture
Duval County Public Schools
The oversight committee's interpretation of state law about what expenses are allowable with the sales surtax dollars.

The charter schools in question say these payments shouldn't be categorized as bonds at all, because a third party issues the bond and then loans the money to the charter school.

"This is no different than a traditional bank loan that is used to acquire or improve real property," attorney Shawn Arnold, who represents some local charter schools, wrote in a letter to the school district earlier this year.

"Going forward, [the charter school operator] will improve how it describes this type of expenditure to avoid any potential confusion," Arnold wrote, advising that the payments should fall under the category of lawful property payments.

Superintendent Greene said the state Auditor General's Office is auditing the district, and the district will ask that office to decide whether charter school spending has been unlawful by the end of this year. She hopes that decision will satisfy the oversight committee's request for an outside opinion, so the district won't have to pay an outside consultant.

In the meantime, the district is letting charter schools use the taxpayer money on debt payments, but "with an asterisk," as Greene put it.

"When we get an opinion, if the opinion says that charter schools are correct, I mean that this is allowable, they would continue. We would remove the asterisk and move forward," Greene said.

"If they indicate the district is correct — under this guidance, you cannot — then we would require them to take all those dollars and reallocate it to an allowable expense."

Setting a Florida precedent

The outcome of the legal questions could set a precedent for other school districts in Florida, according to the superintendent.

In 2020, when Duval County Public Schools was trying to garner support for a half-cent sales tax for updating the districts' buildings, the Florida Legislature passed new guidance requiring districts that get surtax money split the revenues proportionately with charter schools.

Duval Schools was among the first to implement a sales surtax referendum after the new state law took effect.

"We've talked to [the Department of Education], and actually this is the first time this has come up," Greene said. "Because we're the first that literally is sharing their dollars proportionately with charter schools. Just as an FYI now all other districts are going to have to do the same thing, but we were the first."

The charter schools counter that they've previously used taxpayer capital dollars for debts related to bonds, so the allowable uses for the sales surtax dollars should not be a new issue.

But the lack of consensus in Duval has, in many ways, left the oversight committee in limbo about how to enforce lawful charter school spending.

"I think the committee members are probably now sort of in this space like all right, who is actually right and who's wrong?" School Board Chair Darryl Willie said. "It does kind of taint the conversation because they don't know."

Calls for transparency

In addition to the conflict and confusion about what kind of spending is allowed, the oversight committee's report also raises alarms about how transparent charter schools are with their surtax spending in the first place.

The first point in a list of recommendations from the oversight committee is that "the School Board and Superintendent should work with an outside agency to develop a Charter School dashboard that is housed on the same website as the district’s dashboard."

Right now, charter school spending is readily accessible only by two short quarterly spreadsheets posted on the district's website. Most of the expenditures have few details or specifics. By contrast, the district has produced detailed progress reports extensively outlining the projects the taxpayer money has funded thus far.

"We do believe [a dashboard] will help to deal with some of the transparency issues that has been brought to us in almost every meeting," Rogers, the oversight committee chair, said of the proposed dashboard.

The School Board was somewhat conflicted about who should pay to maintain the proposed dashboard.

"We spend a lot of time, energy, resources and personnel trying to provide transparency to the community for our charter partners, and that's time, energy, resources and personnel that could be serving our students in a different way," School Board member Elizabeth Andersen said.

Greene said the district plans to develop a dashboard that allows charter schools to enter information using software the district already has. She did not provide a timeline for when this might be accomplished.

Read the full oversight committee report below. The report is about the first year of the sales surtax. The half-penny sales tax is set to stay in effect for 15 years.

Claire joined WJCT as a reporter in August 2021. She was previously the local host of NPR's Morning Edition at WUOT in Knoxville, Tennessee. During her time in East Tennessee, her coverage of the COVID pandemic earned a Public Media Journalists’ Association award for investigative reporting. You can reach Claire at (904) 250-0926 or on Twitter @ClaireHeddles.