Millions in COVID-19 business loans go to charter operators and private schools in Michigan

Empty classroom
18 June 2020, Saxony-Anhalt, Gardelegen: Tables and chairs of an empty classroom of the secondary school "Am Drömling". Photo: Klaus-Dietmar Gabbert/dpa-Zentralbild/ZB (Photo by Klaus-Dietmar Gabbert/picture alliance via Getty Images)

Dozens of charter school operators and private schools in Michigan received millions of dollars in federal coronavirus loans designed to help small businesses weather the pandemic.

Global Educational Excellence, a network of charter schools with 4,500 students, was approved for $2 million to $5 million through the Payroll Protection Program. The Detroit Country Day School, an upscale private school in the Detroit suburbs, is set to receive a similar amount.

Other education organizations to receive funds include the Michigan Education Association, the state’s largest teachers union and the Michigan Association of School Boards.

Businesses across the country struggled to stay afloat as the coronavirus brought the economy to a virtual halt in recent months. Facing record unemployment rates, federal lawmakers passed one of the largest rescue packages for businesses in U.S. history.

With schools facing budget cuts because of the pandemic, many education organizations rushed to apply for PPP loans.

The names of some loan recipients were released for the first time on Monday by the Small Business Administration and the U.S. Department of Treasury. That money supported about 26,000 jobs in Michigan’s education sector, which includes colleges and trade schools, according to data self-reported by the loan recipients.

Like all public schools in Michigan, charter schools receive taxpayer dollars to operate. The volunteer school boards that oversee charter schools typically use public dollars to contract with private management companies, which do much of the work of running a school, including hiring teachers and choosing curriculum. These companies received the PPP loans, not the schools themselves.

Charter schools’ decision to apply for federal business aid has spurred controversy: The schools have continued to receive state funding during the pandemic. Traditional public schools are not eligible for the forgivable small business loans. Charter and traditional schools are tapping other federal aid designed specifically for schools. (Chalkbeat is a nonprofit and received a loan through the program.)

Detroit Achievement Academy, a nonprofit linked to two small charter schools in Detroit, was approved for $350,000 to $1 million, according to the new data. But the organization hasn’t received any money.

“Detroit Achievement Academy has received no dollars from this fund and are unclear about whether we are eligible or not, as a public school with a no for-profit management arm,” Kyle Smitley, president of the nonprofit and founder of the two schools, said.

Here is a full list of companies in Michigan’s education sector (as defined by the North American Industry Classification System) that have been approved for the loans so far:

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(Editor’s note: This story was updated to make clear that it was the management companies that run charter schools, not the charter schools themselves, that applied for the PPP loans.)

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