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Buffalo Public Schools are going after millions of dollars overpaid to charters

Buffalo Public Schools overpaid local charter schools nearly $7 million the past decade.

Now, the district is taking back the money.

Apprised by findings of a recent state audit, the school district determined it overpaid 19 area charter schools a total of $6.83 million between the 2007-08 and 2017-18 school years.

So the Buffalo Board of Education has authorized district officials to recoup that money by deducting from disbursements the district makes to charters every other month. The deductions will be spread out over four payments starting in March, said Nathaniel J. Kuzma, the district’s general counsel.

The amount to be paid back varies from charter to charter, ranging from more than $16,000 for Elmwood Village Charter School on Hertel Avenue to as much as $784,000 for Tapestry Charter School on Great Arrow Drive, said Geoffrey F. Pritchard, chief financial officer for the school district.

The charters were notified in a letter sent on Feb. 14, Pritchard said.

“We’re certainly willing to work with the charter schools to minimize the impact that these deductions will have in their ability to educate the students that attend those schools,” Kuzma said.

“I would hope that we would be able to work cooperatively to ensure this money comes back to its rightful place,” Kuzma said. “I suspect there will be certain charters that are willing to work with us and some that may take a more aggressive stance."

Charters are not looking to pick a fight with the district, but in this case feel they have no other choice. Losing the money this late in the school year would be a huge financial blow for some of these schools, charter representatives said.

"It’s very unfortunate that the district made this error," Yomika Bennett, executive director of the New York Charter Schools Association said in a statement. "However, trying to claw back funding now would be unprecedented and unfair."

Funding is a touchy topic between the two sides.

Charters are public schools, but they are run independently by their founders – often educators or parents – to provide dissatisfied families with an alternative to “traditional” public schools. In turn, the home district pays the charter schools for each student those schools enroll.

That funding mechanism long has been a source of tension between the charter schools and the school district, which disbursed a total of $125.3 million to charters during the 2018-19 school year.

In fact, those payments to charter schools are the fastest growing portion of the school district’s budget.

An audit released last year by the state Comptroller’s Office showed that during the 2017-18 school year, the district overpaid charter schools by $1 million.

The overpayments were related to funding that districts give to charters for providing services to children with disabilities.

The state Comptroller’s Office found that “district officials did not include the proper formula ... in the billing template they provided to charter schools” and noted that school district officials should review invoices and use the state aid handbook to “ensure proper rates and formulas are being used.”

When the auditors brought the matter to the district’s attention, officials made the correction and avoided a potential $1.7 million overpayment for the 2018-19 school year.

It also forced the district to take a closer look at prior charter payments dating back to the 2007-08 school year, when the state Education Department changed the formula for determining special education funding to the charters.

That's when the district realized it had overpaid by $6.8 million during that period. Three of the charters, accounting for more than $817,000 in overpayments, have since closed.

"The schools operated on good faith that the formula provided by the district was correct," Bennett said. "Charter schools already receive reduced aid compared to district schools. The fiscal impact on charter schools and, most importantly their students, would likely be significant."

Charter representatives said one avenue for them may be to appeal to the state Education Department.

There's already a process in place to "intercept" state aid when it comes to reconciling disagreements between the districts and charters over funding.

In essence, the school district could reclaim the $6.8 million by deducting money from the regular payments it makes to charters. But, charter representatives said, the state could then withhold that same amount of aid due to the district – redirecting it to the charters.

"Ideally, everyone will work together to sort it all out," Bennett said. "We fully support district-charter collaboration. That’s what’s needed here."

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