Home > Uncategorized > When Charter Schools are in Debt, Business Rules Apply… So… Bondholders Win…. Employees Lose

When Charter Schools are in Debt, Business Rules Apply… So… Bondholders Win…. Employees Lose

Erin Einhorn’s recent Chalkbeat Detroit post reports on how the rules of business played out in that city when the education management firm Matchbook Learning lost it’s charter license and, as a result, Michigan Technical Academy was forced to close. Matchbook, a non-profit charter school, floated a bond to pay for its facilities and to cover its operating costs. When they were unable to raise sufficient funds to pay for their operations and lost their charter license, someone had to get the short end of the stick. As Einhorn reported in her post, it was the teachers who lost out as they learned in an email sent by Matchbook’s CEO:

“Last Friday, Matchbook Learning became aware that the holders of MTA’s outstanding bond debt are refusing to allow use of funds for any summer payroll and instead, are requiring that any available funds be used toward payment of the bond debt,” Matchbook’s CEO Sajan George told teachers in the email. “We are disappointed and deeply saddened by this development because this means funds will not be there for July or August payroll.”

But it isn’t just the teachers at Michigan Technical Academy who got the short end of the stick. Seven charter schools closed in Detroit… which means seven sets of teachers, seven sets of students, and seven sets of parents are without a school. But the parent’s needn’t worry: they have school choice in Michigan. Their students will be able to choose from among a host of charters who might have spiffy facilities paid for with bonds or underfunded public schools whose taxpayers are unwilling to pay for any improvements whatsoever. This is the price we are paying as a society for running schools like a business.

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