John Geil

Sandy Carmany

Kate Alice Dunaway

J.D. Willis

Sarah Ellington

Richard Clontz

Simon Johnson

Jessie Dingle

Dianne Harlow

Lisa Kane

Arlene Ferren

Michael Dixon

Absent: Nancy Farmer

Kathy Taft

Jack Moyer, Director

Matthew Lanner, Admin. Assistant

Jackie Jenkins, Consultant

Carl Pridgen, Consultant

Joel Medley, Consultant

Philip Price

Laura Crumpler

Paul LeSieur, Director

Scott Douglass

New members to the Charter School Advisory Committee were introduced and are settling in for their service to the state of North Carolina. Each member briefly described their backgrounds and expressed delight at their appointed positions to work with charter schools. As a special note of interest, Mr. Moyer announced the new consultant, Jean Kruft, would be coming aboard in February 2006 with much experience in the charter school realm; and she was present for this CSAC meeting.

The draft minutes from the December 8, 2005 meeting were presented for review. A correction needed to be made in the Visions Charter School section by adding one word. With that exception, a motion to approve the minutes was made by Tannis Nelson and seconded by Lisa Kane. A motion carried without dissent.

Jack Moyer then walked the committee through the agenda with one addition – possible changes in the meeting dates to align the CSAC recommendations with the State Board of Education item submission timelines.

Chair Carmany asked if there are any known conflicts in moving the meetings to the second week of the month. No such conflicts were mentioned. A motion was made by Simon Johnson to move the CSAC meetings to the second Thursday of every month. A second was made by Diane Harlow, and the motion carried without dissent. John Geil made a motion to leave the meeting time at 11am, and it was seconded by J.D. Willis. The motion carried without dissent. These new changes will hopefully begin in February.

The first premise of the legislation is that charter schools are not to cost the state any money. The money comes from the LEAs and is transferred to the charter schools based on ADM numbers; but that format is not how the LEAs receive funds. So, there was a "reserve" created to handle additional students coming in from private and home-schooled children. The initial charters were to be funded as their own stream to prevent the "reduction" process, which would create adversarial relationships with charters and LEAs.

Concerns arose from local school districts in that charter funding came from LEA funds – if a charter school grew greatly from one year to the next, the LEA would lose funding after school began and would have to readjust accordingly. To resolve the issue, three sources of funding can support charter schools: (1) LEAs (2) contingency reserve and (3) continuation budget. The continuation budget is the primary source of revenue for charters, and it guarantees funds for the services provided to students. This budget can grow based on expansion projections that are projected or are specifically outlined in the school’s charter. The contingency reserve only holds $4 million and is to serve all charters and LEAs for children not funded in the previous school year.

Charter schools are given a couple of years to get solidly established, and they project numbers in their initial applications. Beyond that second year of not meeting enrollment projections, the ADM is reset to the number of the second year. They can grow 10% based on that enrollment, and the schools can come before the SBE (if they meet certain criteria) to grow beyond the allowed 10%. The confusion has always been around the phrase "or as otherwise allowed by the charter."

Simon Johnson asked if the ADM adjustments are original legislation or if that is a change. Philip Price said the change did come after the original legislation as passed. The 10% growth each year was to prevent schools from having to appear every year before the SBE because of additional growth.

Lisa Kane asked if there are any allowances for schools that go beyond the 10% growth. Philip Price responded that if the school has additional students, there is no legal requirement for funding those schools. If a school has not notified DPI of growth and it is not built into the continuation budget, the only solution is to take funds from LEAs. This practice is frowned upon because of the public relations issue and it causes problems with the LEA which may also be experiencing growth. Charters need to provide information to DPI, so that appropriate planning can be made with the limited budgets.

John Geil asked for more information on the ADM reset if the school has not met their original charter projections. Philip Price said that his question was correct – if the school has not met their original charter projections, a reset on the ADM would take place. He believed the legislation was passed in 1999 or 2000, and, again, the reset only occurs if the school does not meet projections. If a school exceeds their charter projections, they would be funded as long as it was allowed by their original charter.

Philip Price said that DPI needs to know this upfront, and Chair Carmany asked when charter schools know their numbers. The communication of planned numbers goes out in the spring while expansion requests are a fall timeline. He is trying to make sure the funding is built up-front instead of surprises arriving later in the year for both LEAs and charters. Chair Carmany suggested the greater communication be presented to all charters informing them of this process to prevent confusion in the future.

John Geil asked why this issue has not been brought forward before. The language is there, and the new applications will reflect this language. Kate Alice Dunaway suggested that there be further discussion on this issue because she does not feel comfortable about how the process works. She also requested an update on the one school that waits further funding – if a school has 50 students beyond their MAX, then she believed the school should receive the funding for those children. Her point is that situations arise, thereby, increasing a charter’s enrollment, and they should not be penalized for it. Philip Price stated that the issue is how the growth is built into a funding structure because he believes that charter school students should be funded. The legislation does not prevent schools from growing but leads to more planning on the part of the charter.

Lisa Kane asked if outside of the challenges in moving funding from a traditional LEA to a charter LEA after the start of the year or the final enrollment reporting date, is there anything actually prohibiting moving funds to follow the student. Philip Price responded there was not. At that point, Kathy Taft addressed the CSAC. She offered her respects for the concerns presented by the committee but reminded them it was not an issue the SBE asked them to address. This seemed to be a legislative and financial issue involving only a few schools.

A motion was made by Tannis Nelson to forward their grade expansion request to the SBE, and it was seconded by J.D. Willis. The motion carried without dissent. Simon Johnson, due to his position as principal of Quality Education Academy, abstained from voting.

A motion was made by Kate Alice Dunaway to forward their enrollment/grade expansion request to the SBE, and it was seconded by Michael Dixon. The motion carried without dissent.

Presently, they have 71 students enrolled and have turned away prospective children because of the school’s uncertain future. The item was pulled from the last SBE agenda due to these findings, but without written proof of the donation, the item would go forward to the SBE. The attorney being out of town is the cause in the paperwork delay.

Jessie Dingle asked what got this school into its present circumstance, and Jack Moyer briefly explained the history – low enrollment led to the dire financial situation at this charter.

Tannis Nelson made a motion to rescind the revocation recommendation to the SBE, and it was seconded by Lisa Kane for discussion. The motion failed.

Tannis Nelson then asked if the CSAC makes the recommendation to the SBE what timeline is there for it to go before the State Board. Laura Crumpler stated that the Office of Charter Schools does not "sit" on a decision unless those making the SBE agenda indicate otherwise. If the money does not arrive at Rowan, then the recommendation for revocation would be forwarded to the SBE for their March 2006 meeting.

John Geil asked if the school provided an answer for not appearing at the previous meetings. Jack Moyer said that he did not ask the question, but John had raised a valid point.

Kathy Taft said that she would have liked the item to have gone before the SBE in February as a discussion item. She said the recommendation could go before the SBE in February as a late item.

Bethel Smith, the director of Imani, Paul Calloway, their CPA, and Dr. Smith, the chairman of their board, were in attendance on behalf of the school. The board chair acknowledged their delinquency in audits and explained what occurred – one director left while another died leaving the school in a poor position and without knowledge of what to do financially. They are in the process of trying to get the 2002 audit completed and submitted.

Paul Calloway stated that many records are being located because a previous director hand-wrote checks instead of going through the CPA. The check would clear the bank, but the difficulty would arise in matching that check with an invoice. During this period, enrollment dropped below their "break-even" number; so a communication with the auditor began – they could not pay the $10,000 for the audit due to the low enrollment. Now, all the records are finally in one location, and they have been trying to schedule an audit with their firm; however, they have requested additional information which has continued to prolong the process. Once the 2002 audit is completed, the remainder audits can be undertaken. Yet, they do not have a contract with an auditor at this time; but they do have funds with which to pay those audits. Paul LeSieur stated that DPI is controlling their cash flow due to the non-compliance in audits, and requests must go forward on a monthly basis.

Richard Clontz asked for a specific date that the 2002 audit would be completed. Ms. Smith stated that the auditors are in the process of completing the audit, and they have supplied all the information to the auditors. They do have a signed contract to audit for the 02-03 year, but they have not done so for others (the Local Government Commission will not allow that process to occur until the 02-03 audit is submitted). If the audits are of a similar expense, the school would be able to afford two of the three audits; and they could afford all three audits if they receive additional funding as requested.

John Geil asked if Paul LeSieur’s office would be satisfied if the school submitted the audits. He said School Business is satisfied with their efforts and have been working with the school. However, they must have the audits by June 30. Without these reports, he does not have knowledge of where the school is financially.

Alan Hawkes commented that he has a concern with the irresponsibility of financial practice at this charter school, especially considering the funding comes from taxpayer dollars. He made a motion that if the audits are not supplied to DPI by June 30, 2006 then the CSAC make a recommendation to the SBE revoke their charter. It was seconded by J.D. Willis, and the motion failed.

Kathy Taft asked why the 2002 audit was not completed and the others. Paul Calloway stated the school was struggling at the time, and all other audits can not proceed until the 2002 audit passes.

Chair Carmany requested that the Division of School Business keep the CSAC informed monthly of the audit’s progress. Paul LeSieur said that he could do so. Imani also received a charge from the chair to have those audits submitted by June 30, 2006 or a likely revocation recommendation will be made to the State Board of Education.

A motion was made by John Geil to forward conversion of this charter from preliminary charter to a final one to the SBE for consideration. It was seconded by Arlene Ferren, and the motion passed without dissent.

In student achievement, a contact with Lenoir-Rhyne College will come into the school to work directly with their teachers. They are also using the "Problem Solver" program that Mr. Willis used in Charlotte. These real-life problems will help the students on their EOGs. They believe that if the scores rise then the number of students will increase.

For enrollment, the school has created a new brochure and website. These two items have helped motivate the parents to begin marketing the school via word-of- mouth. They are also visiting churches, recreation centers, and summer programs to attract future students. The school would like to move into a more visible location that is also closer to a population center.

Regarding the financial situation, the school is in the process of forging a partnership with Imagine Schools (a non-profit management corporation). Imagine has the ability to inject the needed capital for the school to survive throughout the year. The funding provided to the school will not create a debt for them; but it is an investment that, over time, would lead to efficient operation by the school and a return of the capital to Imagine. The school has already begun to investigate new sites and potential property acquisitions; thus, with the additional capital of Imagine, Visions could realistically purchase and move into another site.

Imagine is not just interested in getting the school "over the hump," but they are seeking a long-term solution. A long-term goal would be to increase the enrollment beyond the maximum number listed in the charter. If the school receives their renewal next year, they have 10 years on the charter, thereby, assisting them in the viability of procuring a new facility. The agreement with Imagine is concurrent with the charter and no longer.

Chair Carmany provided a short overview of the renewal process and rubric for the new committee members to have a better understanding of where Visions exists as this time. John Geil mentioned that the CSAC could not move forward on renewal at this time because of the noncompliance in enrollment. Further, he questioned what sort of binding paperwork exists on a partnership with Imagine and the reduction of the current facility lease. The board will possibly sign the agreement at their next meeting. The lease amendment is verbal and not written. He specifically requested that the committee receive both of those items in written format for their information but also for the protection of Visions.

Chair Carmany summarized the school does not meet the rubric for renewal; however, the school has one more year to create the action plan and implement it. They have created the action plan, but must follow through with results. The school will go through the normal renewal process as with other schools.

Regarding a timeline, Imagine will have to wait on the facility issue until they see if the school has received the renewal. They cannot make the investment without assurances they school will survive beyond the current charter. The likely date for a facility would be August 2007 to assist in growth for the future. In order to justify doing a new building or anything else, the school must have 65 students to satisfy the statutory requirement.

Jack Moyer asked if they move the location of the school what will happen to the students in the present site. Craig Willis does not want to see these children miss out on the education being offered, but they are uncertain as to whether the families of the school would not follow. Richard Clontz shared that the school does have a history of moving from site to site, but he is uncertain as to whether the Claremont children would follow. Craig Willis stated that they provide transportation from Hickory to Claremont and would do the reverse. He has also sent a note home to parents indicating their desire to relocate.

In the Carolina International letter, they claim the funds would arrive in late fall; but the school was informed in April that the school had to expend the money by September 30. Further, the school was using the federal money as collateral in a loan which is not allowable. The school was using the funding for construction of new facilities, which, again, is not allowable in the Federal expenditures. Finally, the process for drawing funds involves an upload process, and the schools can access that information within 3 days of its upload. The school, instead, waited 7 months before making any questions about the presence of the funding.

Again, the Office of Charter Schools takes full responsibility for missing the communication; but Jack Moyer said it is a moot point considering the potential use of the funding.

Carl Pridgen has visited several schools and all are doing well – Dillard Academy, SPARC Academy, Torchlight Academy, and East Wake Academy.

Joel Medley updated the committee on the recent visits to Guilford Preparatory Academy (going through some board issues) and Quality Education Academy (doing well).

She also announced that the State Employees Credit Union is offering two $10,000 scholarships for graduating charter school seniors. This is the second year of the program, and she is heading up the project.

Also, there are discussions with the IT folks at DPI to set up a "mailbox" system for the charter schools. Required reports would go into this box for charter school administrators to access and then submit. This process would promote a flow of communication instead of "missed emails." The goal is to have this completed by the end of the school year.