Thursday , 18 September 2014
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PECO funds diverted from public to charter schools

PECO funds diverted from public to charter schools

peco-fraud-600Charter schools will receive $91 million for their construction and maintenance needs, state lawmakers have agreed. The figure represents a $36 million increase over last year’s allocation, but it falls just short of the $100 million proposed by Gov. Rick Scott and the Florida House. The deal was struck during budget negotiations that lasted late into the night. The one-time allocation will come out of the Public Education Capital Outlay (PECO) fund. PECO dollars are generated from the state’s gross receipts tax on cable, electric and landline telephone bills.

Charter school advocates had hoped to secure a recurring source of funding for capital outlay projects this year. That doesn’t mean the fight is over for good. Charter schools enroll more than 200,000 students statewide and are run by nonprofit governing boards that function independently of local school districts. Some are managed by for-profit companies. The state’s 350 charter schools will share $91 million, while the approximately 3,000 traditional public schools will go without.

If the facts show funding went to where it was needed most, so be it; but those school officials who are forced to work under leaky roofs, around struggling air conditioners and in ill-equipped facilities certainly don’t see it that way.

Like traditional public schools, charter schools receive state money for operating expenses, including teacher salaries and instructional materials. But while traditional school systems can levy property taxes to fund construction and maintenance, charter schools cannot.

For the past several years, the Florida Legislature has given charter schools an extra boost through the PECO fund. Those dollars used to go to traditional public schools, too. But because fewer people are using landline phones, the fund slowly has been dwindling. State economists predict it eventually will dry up.

Opponents argue that charter schools should not receive taxpayer dollars for capital projects because their facilities are not public assets. They also make the case that charter schools were allowed in Florida because they promised to do more with less.

Advocates, however, say children statewide should receive the same amount of money, regardless of whether they attend traditional or charter schools. A steady stream of facilities funding, they say, would help level the playing field.

According to Florida Watch, as of the 2010 debt affordability report, an annual report detailing the impact of future debt obligations, PECO bonds account for $11.2 billion of the state’s outstanding debt. Out of the $28.2 billion in total state debt, $15.8 billion is for the construction of educational facilities, with PECO as the primary issuer, followed by the lottery.

Over the past decade, there has been a net increase of $4.2 billion in PECO bond issuances. It is projected that over the next decade there will be another $5.8 billion in PECO issuances. PECO bonding for this year alone is over $300 million, of which half has been appropriated to institutions so far.

For at least the next couple of years, the PECO revenue stream has been leveraged fully. Looking back, Florida’s insistence on issuing close to the maximum amount of PECO bonds possible during the period of high tax revenue has effectively tied the state’s hands from issuing any new bonds during lower growth periods, regardless of need. This means that a sharp enough drop off in revenue from the gross receipt tax could leave the PECO fund insolvent and reliant on other state revenue to meet their debt obligations.

Florida’s PECO bonds are currently rated AAA (Prime) by both Fitch and Standard and Poor’s, but have a negative rating outlook. Moody’s has rated these bonds as AA1 (High Grade) with a stable outlook.

Much like the Social Security Trust Fund, legislators just can’t keep their hands off money within reach for their preferred projects. It appears likely the current state government is following that tradition and using whatever means are available to implement a larger placement of charter schools, at the expense of all others.

How the amount of $91 million grew from what was initially proposed from the Florida Senate and House might need to be looked at. And how legislatures came to the conclusion that all institutions other than charter schools fell short of needing any assistance also may need some investigating. But one thing is clear, all is not on the table when it comes to how Tallahassee does business, and if legislators need a compass, they might want to visit the Florida Constitution, and they might find it on the floor.

Article IX, Section 1 reads as follows: The education of children is a fundamental value of the people of the State of Florida. It is, therefore, a paramount duty of the state to make adequate provision for the education of all children residing within its borders. Adequate provision shall be made by law for a uniform, efficient, safe, secure and high-quality system of free public schools that allow students to obtain a high-quality education and for the establishment, maintenance and operation of institutions of higher learning and other public education programs that the needs of the people may require.

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One comment

  1. Don't think these people defunfing public shools haven't found a way to profit from charter schools. Follow the money and you wise improvcing education is not their goal.