Response to DJUSD Regarding Montessori Charter Petition

(Editor’s note: the following is the formal response by Jonathan Feagle to the school district staff’s recommendation to deny the chart petition)

 Dear President Daleiden, Trustees, and Superintendent Roberson,

On behalf of the Montessori Charter School of Davis (“MCSD” or “the Charter School”), we thank you for your time in considering the charter petition, which is scheduled for action at the May 1, 2014 Davis Joint Unified School District (“DJUSD”) Board of Trustees meeting. We also greatly appreciate the DJUSD staff for their hard work in reviewing the MCSD charter petition and producing the DJUSD staff report that was released on April 28, 2014. The staff report raises important points and MCSD will comply with all necessary conditions on opening and operating as a DJUSD authorized charter school.

The staff report contains a number of findings regarding the MCSD charter petition, to which we offer responses as outlined below. The findings in the DJUSD Staff Report concern resolvable matters that the District could have more appropriately dealt with through minimal communication with the petitioner. The district findings do not constitute sufficient legal grounds to deny the Montessori Charter School of Davis petition.

                   I.                        Educational Program

A.                Instructional Minutes and School Calendar

The staff report correctly indicates inconsistencies in the charter petition regarding the instructional minutes and school calendar.

The basis for these findings are two errant fragments (one sentence and one paragraph) that unfortunately remain from a previous calendar model that had been considered. The errant sentence is on page 80 and the errant paragraph is on page 105 of the charter petition. The sentence and paragraph were thought to have been deleted or edited before submitting the petition. The fact that they were not is certainly a mistake on our part and we are grateful to the district for pointing this out.

Regarding the errant sentence on page 80, it reads:

“The MCSD program currently proposes 23 full and 45 minimum teacher work days for the 2014 – 15 school year.”

We request a technical amendment to change this sentence as follows, rendering it consistent with the rest of the charter petition:

“The MCSD program currently proposes 4 full and 41 minimum teacher work days for the 2014-15 school year.”

Regarding the errant paragraph on page 105, we request a technical amendment to delete that paragraph in its entirety.

Once the paragraph is removed and the sentence on page 80 is corrected, the inconsistencies of the charter referenced in the district’s report are no longer present. It is common for authorizers to request technical amendments for just such circumstances.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

               II.                        Governance Structure

B.                 Non-Profit Corporation

The bylaws of WCEF state that the “number of trustees shall be no less than five and no more than twelve.” The staff report indicates that this is problematic because it does not “clearly establish a defined number of trustees on the WCEF Board [and] would likely be problematic because the public would not be aware of how many votes were necessary to take action…”

A charter petition is not required to specify a specific number of trustees. The charter petition met the statutory requirements under EC Section 47605(5)(d). The district’s finding contains no factual or legal basis for denial of the charter petition.

Furthermore, California nonprofit public benefit corporations are legally required to have at least one director or trustee. We are not aware of any other restrictions in law on the number of board members for public benefit corporations in California.

It is common practice for some nonprofits to indicate on each agenda the number of members required for quorum. This will address the concern DJUSD staff have for any potential confusion on the part of the public.

If the DJUSD Board requests that the WCEF bylaws be amended to fix the number of members at one number, we are more than willing to comply.

If the DJUSD Board requests that the WCEF bylaws be amended to require a statement indicating the number of board members required for quorum on the front of each agenda, we are more than willing to comply.

If the DJUSD Board would like to make reasonable recommendations to address these concerns, we are willing to comply.

C.                 Conflict of Interest

                 (i)            WCEF Conflict of Interest Policy

The staff report states that WCEF has committed to adopt a conflict of interest policy but has not done so.

A conflict of interest code is not a required element of a charter petition.

However, WCEF does have a conflict of interest policy. We apologize for not being aware that the DJUSD staff required this documentation nor is it an explicit requirement of charter law that such document be included in the charter petition. A copy of WCEF’s conflict of interest policy has been attached with this letter.

If the DJUSD Board would like to make reasonable recommendations to our conflict of interest policy, we are willing to comply

               (ii)            Government Code 1090 does not apply to charter schools.

The staff report also states that WCEF and the Charter School have not stated a willingness to abide by Government Code section 1090.

Charter schools do not fall within the scope of Government Code Section 1090, which apply to “agencies of the state.” WCEF is a California nonprofit public benefit corporation and, as such, is not an agency of the state. Therefore, charter schools are not required to abide by Government Code 1090.

However, if the district has concerns that 1090 would address, we are willing to work with the district to address these concerns. The Montessori Charter School of Davis will agree to abide by Government Code Section 1090 as a condition of authorization.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

D.                School Director

The staff report states that the Charter School has not hired a School Director.

As a charter school is not required to hire a director prior to authorization, this finding is impermissible and does not constitute a legal reason for denial of the charter petition.

Because there can be no charter school prior to board approval, it would not be appropriate to attempt to hire a School Director since there is currently no school for which to hire one.

Nevertheless, we agree with the staff report that it is imperative to have leadership currently in place and we believe we do. Jonathan Feagle’s official title as indicated on our website is Executive Director and President. While Jonathan is not currently compensated in any way whatsoever for this position, he remains qualified and willing to accept the role of School Director at such time that a school exists

Jonathan has an Administrative Certificate of Eligibility. According to the Commission on Teacher Credentialing, the Certificate of Eligibility “verifies completion of all requirements for the preliminary administrative services credential and authorizes the holder to seek employment as an administrator” (http://www.ctc.ca.gov/credentials/FAQ/faq-admin.html).

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

            III.                        Employee Qualifications

                 (i)            Charter school administrators are not required to hold an Administrative Credential.

The staff report states that the description of employee qualifications is not reasonably descriptive because it does not require the School Director to hold an administrative credential yet the Petition states that the School Director must have extensive administrative experience.

Charter school administrators in California are not required to hold an administrative credential. The district’s finding contains no factual or legal basis for denial of the charter petition.

Also, an individual can acquire administrative experience without holding an administrative credential. Therefore, we maintain that the description of employee qualifications in the Petition is reasonably comprehensive and descriptive.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

             IV.                        Dispute Resolution

                 (i)            Dispute Resolution Policy between Charter School and District

The staff report states that the Petition’s description of dispute resolution procedures between the Charter School and DJUSD are not reasonably descriptive.

We dispute the staff’s findings. The first paragraph of Element N of the MCSD charter petition states:

“The Montessori Charter School of Davis (MCSD) recognizes that it cannot bind the District to a dispute resolution procedure to which the District does not agree. The policy below is intended as a starting point for a discussion of dispute resolution procedures. MCSD is willing to consider changes to the process outlined below as suggested by the District.” (page. 171)

A dispute resolution policy that applies to both the district and the charter school requires both parties to be involved in its development. Forus to unilaterally describe such a program in the charter petition would be problematic for a number of reasons, not least of which is that such unilateral action would be against the spirit of what a dispute resolution policy is supposed to embody.

Nevertheless, a reasonably comprehensive dispute resolution policy has been offered in the charter petition as Element N.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

               (ii)            Internal Dispute Resolution Policy

The staff report states that the Petition does not provide information about procedures to resolve internal disputes.

Educational Code does not require a charter petition to contain information about procedures to resolve internal disputes. This finding is impermissible and does not constitute a legal reason for denial of the charter petition.

The requirement set forth in California Education Code §47605(b)(5)(N) is:

“The procedures to be followed by the charter school and the entity granting the charter to resolve disputes relating to provisions of the charter.”

MCSD agrees with the DJUSD staff that such policy is important. A well-developed internal dispute resolution policy will be in place before classes are held and the charter school is in full operation. However, it is not legally required that such a policy be fully developed at the time the charter petition is submitted to the district and therefore does not constitute a legal reason for denial of the charter petition.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

             (iii)            Reporting Internal Complaints

The staff report disputes the right of the charter school to refrain from referring internal complaints to the district.

The district would increase its liability by being regularly informed of internal conflicts. Also, there is no legal requirement that independent non-profit organizations report internal conflicts to school districts. There are concerns that such a reporting process will violate privacy laws and further endanger those individuals involved.

However, if the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

                V.                        Facility Location

                 (i)            Charter Schools are not required to have a facility acquired prior to approval.

The staff report states that the Petition’s description of the site and/or facility to be used by the Charter School is not reasonably comprehensive per Education Code §47605(g). The staff report suggests that the Petition should have been accompanied by such documents as “lease agreements and other documentation regarding the sites’ compliance with legal requirements” (staff report, p.4).

Education Code §47605(g) requires that petitioners provide information regarding “where the school intends to locate.” It does not require that petitioners must have acquired a specific site and/or facility. A description of intended facilities and information regarding location of facilities has been provided on several occasions, including but not limited to, the April 7th DJUSD School Board meeting and in emails to district staff. Additionally, the charter petition includes information on the projected number of classrooms over the first nine years of operation on page 13.

The petitioners state that they intend to locate within the geographical boundaries of the Davis Joint Unified School District. Furthermore, the petitioners state they intend to locate within the South Davis area within the geographical boundaries of the DJUSD school district. However, should a facility not be available in the South Davis area, the Charter School shall be located within the boundaries of DJUSD. The Charter School shall work with DJUSD to minimize any potential unwanted effects on the District when deciding on a location.

It is extremely rare for charter school petitioners to have identified a specific location prior to securing approval of the charter petition. While we have attempted to acquire facilities, without funding real estate brokers and owners have been hesitant to enter into negotiations with us. If it were required that charter petitions be submitted with proof that facilities have been acquired, it is not clear how any charter school would open unless they were obliged to large private or corporate interests, something we believe is potentially detrimental to the autonomy of charter schools.

Furthermore, Education Code §47605(g) requires that the petitioners provide information on where the school “intends” to locate. The use of the word “intends” necessarily implies that a facility has not been acquired nor does it imply that a specific site or facility is what is being referred to in this case. Stating a general area within a school district is also a reasonable answer to the question of “where the school intends to locate.”

It was expressed during the April 7^th DJUSD Board meeting and in response to Trustee Mr. Taylor’s questions that MCSD intends to locate in South Davis. However, we also expressed at that meeting that it is not possible to predict such an outcome given that much of what will determine the school’s location is currently outside of our control.

However, if the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

             VI.                        Operational Budget and Financial Statements

A.    Projected Enrollment / ADA

The staff report states that the Petition fails to provide documentation to support the Charter School’s enrollment projections.

This finding is factually inaccurate. The petition provides an adequate number of signatures of individuals meaningfully interested in enrolling at the charter school. The district is asking for documentation in excess of the requirements provided in Education Code. This finding is, therefore, an impermissible basis for denial of the Petition.

However, if the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

B.                 Funding Overstated And / Or Expenditures Unsupported

                 (i)            Cash Flow Projections

The staff report states that the cash flow projections do not appear to be complete or they do not accurately identify funding sources which appear overstated. The staff report also states that any shortfalls in revenues or overages of expenditures of a combined $56,000 will create a negative cash flow situation.

It is common for charter school’s expenditures to differ from those experienced by school districts and charter schools frequently operate on leaner budgets. The estimates shown are based on the experience of dozens of other charter schools during their first years of operation.

The cash flow assumptions are based on standard and conservative assumptions, including conservatively assuming that the existing inter-year deferrals continue despite the state’s ongoing efforts to reduce such deferrals. Funding sources are identified in detail in Table IV and include standard sources, principally the Local Control Funding Formula.

Yes, cash flow is anticipated to be tight during much of the initial start-up period. We plan to budget to minimize the need to borrow for working capital needs. Should the need arise, based on the experience of other charter schools and our preliminary discussions with experienced lenders, the charter lending market is now sufficiently developed that we can readily borrow to meet unanticipated needs at economical rates.

While one can always quibble with the assumptions reflected in any financial plan, we believe the plan we have developed shows that the proposed school is readily sustainable. The key revenue and expenditure assumptions are generally very conservative. The plan projects operating surpluses and positive cash flow throughout. It also projects substantial reserves that, if needed, would more than address unanticipated contingencies.

               (ii)            Assumptions for Facility’s Costs

The staff report indicates that it is not possible to assess the accuracy of the facility’s costs factored into the Charter School’s financial plan because the petitioners have not acquired a specific facility and, therefore, the facility’s costs are unknown.

It is extremely rare for charter school petitioners to have identified a specific location prior to securing approval of the charter petition. The figures shown in the plan are also based on the experience of other charter schools during their start-up years and are reasonable—including space of 50 square feet per student and a net lease cost of $1.65 per square foot, per month.

Furthermore, we have very conservatively assumed that the school is not eligible for any facilities funding and have very conservatively assumed that the school does not receive rent-free facilities despite state law to the contrary.

             (iii)            Start-Up Costs for Montessori Programs

The staff report states that the Charter School’s financial plan does not account for the start-up costs associated with a Montessori school.

While not ideal, we believe the $86 thousand budgeted for first-year furnishings, materials, and supplies is adequate. Many materials can be acquired through more economical means than those suggested by the district staff.

Furthermore, the petitioners collectively have experience purchasing, equipping, and setting-up dozens of Montessori classrooms across multiple Montessori charter schools. A Montessori classroom can be well-equipped for much less than what is stated in the staff report.

              (iv)            Special Education Encroachment Costs

The staff report states that the $400 per student special education encroachment cost is too low.

The $400 per student estimate is significantly higher than statewide average encroachment costs which typically run in the $250-350 per student range—though there is no legally-defined or consensus methodology for calculating or estimating such costs. We recognize that, whatever methodology is used, that individual districts’ costs vary. We would be happy to discuss these costs and services with the district. Should we be unable to reach agreement with the district, we would explore other options, including the several expanding charter-specific SELPAs.

                (v)            Legal Expenses

The staff report states that the Charter School’s financial plan underestimate legal expenses.

Absent unanticipated litigation, we do not anticipate major legal costs. In addition to the $5,000 shown in first-year legal costs, we have budgeted an additional $8,000 for other non-instructional consulting costs that may include legal or similar costs (e.g., incorporation expenses, policy development, review of contracts/leases, etc.).

              (vi)            Projected Federal Grants and Local Sources

The staff report states that no information is provided to support projected federal grants and local sources.

Table IV shows the detailed revenue assumptions, including a federal charter school implementation grant and a loan from the state’s low-interest Charter Revolving Loan Fund. Such grants and loans are received by a large proportion of California’s charter schools during their initial implementation phase. Charter Schools apply for these funding sources only after they have been approved.

            (vii)            Cash Receipt of $120,000

The staff report states that the source of these funds has not been identified.

This finding is factually incorrect. Information about the source of these funds was requested in an email sent by Mr. Bruce Colby to Jonathan Feagle and CC’d to Mr. Winfred Roberson on April 10, 2014. Mr. Feagle replied with two emails providing information that explained the source of these funds on April 11, 2014 and April 14, 2014.

The beginning cash receipt of $120,000 during the first month is from projected sales of receivables. The Year I cash flow table also includes a corresponding repayment of these funds in January, identified as “Cash Flow Repayment.” The funding commitment letter from Charter Asset Management, provided as part of the charter submission package, indicates an ability to provide the school with up to $300,000 in start-up funds. The budget reflects a lesser amount, $120,000, because the school intends to fund through factoring transactions only the amounts sufficient to meet its actual need.

         VII.                        Affirmations

                 (i)            Charter Schools Shall not Charge Tuition.

The staff report states that the Petition does include the required Affirmations and Assurances. However, the staff report claims that the particular affirmation made in the Petition that the Charter School will not charge tuition is called into question.

As discussed above regarding the instructional minutes and school calendar at the beginning of this letter, the staff correctly point out inconsistencies in the charter document due to the errant sentence on page 80 and the errant paragraph on page 105 of the Petition. The proposed technical amendments requested above resolve this problem completely.

Charter schools in California are not permitted to charge tuition for program instruction provided to students. As stated in the Affirmations and Assurances section of the charter petition, the Charter School shall not charge tuition.

The Charter School’s before and after school care program, which is currently being referred to as the Enrichment Program, is separate from the Charter School’s instructional program and is not counted toward the instructional minutes offered by the school. The current working model for the Enrichment Program follows the common practice of many charter schools of charging a small fee to cover the costs associated with the maintenance of this program.

However, MCSD will operate the program on a somewhat innovative basis. The fees charged for this program will be on a sliding scale. The program will be free for families that qualify for the federal free and reduced price school meals program.

If the DJUSD Board would like to make reasonable recommendations to further address these concerns, we are willing to comply.

Sincerely,

Jonathan Feagle
Lead Petitioner
Montessori Charter School of Davis