CHARTER SCHOOL BUSINESS MONTHLY NEWSLETTER:  JULY 2006 ISSUE

CHARTERING SCHOOLS IN MINNESOTA:
A NEW OPPORTUNITY FOR FAMILY FOUNDATIONS
BY John A. Cairns, Briggs and Morgan, P.A.

For foundations in Minnesota committed to improving public education, is spending money the only? best? way? Can adding new funds to a huge school district budget in any way result in meaningful, accountable improvement for students? Is an operating 501c3 making all the impact it can or should on public education? Can our social welfare, health and criminal justice systems cope effectively at all with more and more undereducated adults?

For several years, parents and teachers in Rogers, Minnesota (a rapidly growing third-tier suburb northwest of Minneapolis) had brought nearly 150 of their children to a popular, successful K-6 school. The popularity stemmed in large part from use of a "direct learning" program not otherwise available in the District. When a new superintendent decided to close the school, they were startled. When all the other buildings in the district were overcrowded and getting worse, why close the only optional program?

They explored the option of finding grant money to keep the program open. Little interest was shown, most likely for at least two reasons. First, funding capacity is tight due to market conditions; and, perhaps more critical, there is reasoned and proper skepticism that adding more money to traditional public schooling has little measurable impact on what students learn. As importantly, nearly all private funding goes to a district, not to a particular school.

There was, however, another option. In Minnesota since 2000 (and Ohio since 2003) 501c3 organizations, including Family Foundations gained authority to sponsor and create public (charter) schools. Instead of giving money, qualified entities (those having a net worth of $2MM or more) could authorize creation of a new public school. Soon the concerned organizers connected with Volunteers of America - Minnesota and made application for a charter. The school opened this September with over 200 students.

As a sponsor, a foundation oversees the academic program of the school, i.e., monitors whether or not student learning meets or exceeds pre-determined goals

A similar series of events began when parents and teachers in Minneapolis realized that an “experience” based curriculum that would likely have significant positive impact on high school students likely to drop out. They knew, too, that the needed curriculum was far different than one currently required by the district.

Efforts to seek approval to implement such an alternative program were frustrated by bureaucratic resistance, lack of flexibility arising from teacher contract provisions, and an all-too-common malaise about taking on new projects.

The organizers, being thoroughly committed to improving education for these students, took a different option. They contacted Pillsbury Neighborhood Services, an operating foundation long involved in dealing with children, young adults and families in the city. Discussions led to consensus that the new program was a promising, likely better method to reduce the drop-out rate. Pillsbury decided that approving a charter would meet their own concern that social services, health needs, and improving employability required much more effective high school education. The school opened in September 2003 with about 350 students. Many were 18-21 years old who came back to finish high school in a setting where their learning needs and support were available.

Why Should Foundations Have Authority To Charter Schools?

The authority to charter schools came about by adoption of legislation developed by St. Sen. Bob Kierlin (R – Winona) and CEO of Fastenal, Inc., a $1BB+ publicly held company based in Winona, Minnesota. He and his colleagues at Fastenal were and continue to be contributors to and managers of several significant foundations, family and corporate. They had a long history of support from both public and parochial schools in southern Minnesota. By the mid-90's, it was becoming clear to Sen. Kierlin that financial support was alone insufficient to achieve needed positive change in student learning.

He was involved in efforts of several charter school efforts to seek authority without success. Only school districts or institutions of higher learning had authority to start any charter school and only in rare circumstances were either institution willing to consider seriously doing so. Sen. Kierlin concluded that the resistance was, in large part, attributable to the dominant influence of teachers’ unions upon these sponsoring authorities.

Giving charter authority to sizeable 501c3 entities met two key objectives. First, quality screening of charter school proposals could be based on analysis of the probability of improving student learning unencumbered by the political conflicts. Second, focus on and oversight of student learning had a higher prospect of occurring.

As a sponsor, a foundation oversees the academic program of the school, i.e., monitors whether or not student learning meets or exceeds pre-determined goals. The goals are negotiated and set out in a "performance" contract between the foundation and teachers/parents who seek to operate the school. The financial management of the school is monitored by the State Department of Education as is the case for any public school district. Thus the sponsoring entity has no obligation to provide funds or give any assurances of proper use of public dollars.

A sponsor may, but is not required to, add funding. If it chooses to do so, the use of funds and determination of whether desired outcomes result is far easier and certain. There is no doubt that funding enhanced programming at the school level is far easier to monitor than providing funds to a school district.

Are Foundations Using This Authority?

Of the 135+ charter schools now authorized or operating in Minnesota about 54 are sponsored by 501c3 entities including several by Family Foundations. Minnesota law requires each school to pay $10 per student to the sponsor as an inducement to assure regular oversight of the school's academic program and student outcomes. Annually, the foundation meets and confers with the School leadership followed by a written assessment of the year's activities. Every 3 years, the foundation must decide that the school's authority (charter) is to be renewed because student academic performance is as good or better than first expected; if not, the school my be closed or permitted to go forward on a year-to-year basis in order to reach expectations.

Most observers of charter school development in Minnesota expect foundations to be the sponsor for most schools within the next several years. Charter leaders see great advantage to have an active partner in their efforts in contrast to the practice of school district and college sponsors to regard their chartered schools as a modest priority. This is particularly true for school district sponsors who, for the most part, have concluded that giving a positive assessment of a sponsored charter school serves simply to make their own managed schools seem inadequate. Many consider this logic to be peculiar at best since, at least at first glance, school districts claim to be in the business of providing the best possible public education to their students.

Family Foundations which support public education may or may not have staff competency or capacity to perform the oversight function. In Minnesota, this has lead to emergence of a network of skilled educators who provide assistance by contract. Typically, the sponsoring foundation funds this oversight and assessment which is fully integrated into the school programming from the outset. Several of the evaluation providers are other 501c3 entities already having such capacity on their staffs. Volunteers of America-Minnesota is one such entity. Fees paid for the oversight represent a way, certainly not the only, to add financial support to the school.

Sponsoring foundations may also make grants to the school. In such instances, the funds go directly to the school for mutually determined and understood program enhancements. The connection with a school, rather than a district, allows far more transparency on use of funds and outcomes.

What’s Next?

Foundations around the U.S. continue to have a high interest in improving public education. Under the Minnesota rules, foundations that have made major commitments to restructuring public education (the Gates and Walton Foundations being two of the most notable), but domiciled elsewhere can charter schools too. They need only to become a member (at nominal fees) of the Minnesota Council on Foundations or the Minnesota Council of Non-profits. Foundations having decided to support alternative programming, could seek a connection with parents and teachers in Minnesota to establish a charter. If successful, the chartered school becomes a model easily replicated elsewhere.

Similar legislation is in place in Ohio and is now being considered actively in several other states. Some advocates are seeking changes in No Child Left Behind that would increase the likelihood of other states permitting this process.

Traditional public school advocates have, for the most part, resisted and rejected significant growth of charter schools. Protecting their own franchise when far too many kids are not learning seems to many to be contradictory to the essence of public schooling: help more kids learn more of what they need to be parents, workers, and community members. Many constituent groups such as the Urban League have become strong advocates of charter schools. With little evidence of real change by traditional school district leadership, charter schools are increasingly seen as a viable option to avoid failing yet another generation of kids who learn only if taught in better ways.

Minnesota’s experience is proof positive that foundations can act directly to improve public education, more so than merely contributing money. Such foundations should consider seriously seeking authority to charter schools in their own target states.

John Cairns, Esq., is a shareholder in the law firm of
Briggs and Morgan, P.A., in Minneapolis, Minnesota
Phone: (612) 977-8532 Fax: (612) 977-8650
Email: jcairns@briggs.com