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Indiana charter school loans moving ahead despite questions

October 18, 2015

The Indiana State Board of Education is moving ahead with a plan to distribute up to $40 million in loans to charter schools despite questions about a per-student funding cap included in the program.

At least a dozen charter schools have requested $25 million through the loan program approved by legislators this spring. More could apply before the deadline at the end of October.

The board on Wednesday approved guidelines that include a $1,836-per-student cap on loans if requests exceed the $40 million level.

Charter schools have wildly different enrollment numbers than traditional public schools, which complicates setting such a limit, said James Betley, executive director of the Indiana Charter School Board. Among those already applying for loans, two schools have fewer than 70 students and another has 1,040.

"If you are school that has an enrollment of 100 but want to take out a loan in order to purchase a building you're unlikely able to do that at a capped per-pupil rate," Betley told The Indianapolis Star.

The cap is meant to help ensure schools can repay the loans and to make sure charter school students can equally benefit from the program, Board of Education spokesman Marc Lotter said.

Board staffers devised the cap by dividing the $40 million in available loans by the number of students attending eligible charter schools. Two of the school loan requests seek about $45,000 per student.

The two-year state budget that took effect in July allows for $50 million in loans to the taxpayer-supported schools that are typically run by private operators. The education board's plan sets aside $10 million of that money for next school year.

The program was added to the state budget in the final days of this year's legislative session and has drawn questions from Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, over the debt loads charter schools already carry. Two years ago, the state forgave and paid off more than $90 million in charter school loans.

Indiana State Teachers Association lobbyist John O'Neal questioned whether it was proper to provide the loans to charter schools that perform poorly on the state's A-F grading system.

"Should we be giving that much money to schools that have D and F grades? Or brand new charters that don't have grades at all?" O'Neal asked.

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