CPC paid bus operators $ 30 million to keep drivers on hand. The companies fired them anyway.

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While the federal government moved to support small businesses and help avoid layoffs in the first weeks of the pandemic nearly two years ago, Chicago public school bus companies and operators Charter schools have secured more than $ 70 million in repayable public relief loans.

Yet the school district, facing a potential financial crisis at the time, still handed over nearly $ 30 million to bus vendors for the same purpose of avoiding layoffs, but without any written guarantees that the money would be used as intended.

In the end, the majority of these companies laid off a total of over 600 bus drivers anyway.

And dozens of the district’s private charter operators who run publicly funded schools got millions of dollars in these federal loans even though they hadn’t lost any of their normal taxpayers, giving them a run for its money. ahead of traditional public schools and other employers who had no other source of relief.

The findings were released Monday afternoon by the office of CPS Inspector General Will Fletcher in its annual report documenting its most notable investigations of the previous calendar year.

In total, CPS paid $ 28.5 million to 14 bus companies in the spring of 2020 when schools closed due to the pandemic. The district expected these vendors to continue paying their workers and be ready when buses are needed again when schools reopen – which at the time was supposed to be a matter of weeks, not months like it has been found.

Illinois education officials had advised districts to make these types of payments to keep buses ready, but urged due diligence to ensure workers were paid and suggested changing policies. contracts to obtain guarantees.

Yet at the CPS, those payments came without written agreements to ensure that bus drivers and helpers would be paid, the IG office found. And despite issuing the payments in May, two months after the schools closed, the district has not verified whether companies have paid their workers. By that time, the vendors had already laid off 453 drivers and helpers.

A company previously told a “key CPS student transportation official” in April that it had fired all of its drivers and assistants, but that official apparently did not share this information with his superiors, according to the report.

Then, after the payments were made, officials did not check whether they had been used as intended. An anonymous senior CPS official told investigators, “We assumed that businesses would do well for their people if the district did well for businesses. Another said to the office: “Why should I [check]? There is no mechanism to do it.

“The failure of the CPS (…) triggered a series of unintended consequences,” the report said.

Without written guidelines for the money, 10 of 14 vendors fired more than 600 bus drivers for varying durations during school closures in the spring of 2020, the survey found. Meanwhile, nine of the companies secured a total of $ 13 million in federal paycheck protection program loans, which were repayable if a certain portion was spent on payroll. One supplier laid off all of its drivers but received payments from the CPS and federal PPP loans while spending 0.5% of its normal payroll, the IG office said.

The laid-off workers were entitled to an additional $ 600 per week in unemployment benefits under another COVID-related program, meaning it is possible that three different sources of taxpayer funds could have been used to cover the costs. same wages of bus vendors, according to the report.

After the IG office informed district officials of the problems in September 2020, the CPS made written agreements with some of the companies to reimburse the district $ 3 million.

The district also researched other similar payments made to vendors, not all of which were reported as such at the time. CPS found that 37 other vendors offering various services received an additional $ 10.9 million in those payments, of which nearly $ 5.2 million went to a single company.

Buses have become one of CPS’s biggest problems this school year, with a driver shortage affecting thousands of student routes and leaving many without means of getting to school. The IG office did not name any of the companies involved, so it’s not clear whether any of the vendors who received the extra money last year were involved in this year’s shortages.

Charter schools see federal and district cash boon

The charter school investigation, meanwhile, was prompted by a Sun-Times report in July 2020 which found that 30 operators from 56 schools had applied for and received federal money even though they had not. not lost their normal Illinois taxpayer funding. The Sun-Times estimated that charter schools in Chicago and elsewhere in Illinois received a total of $ 31.2 million to $ 74.7 million in federal loans.

The CPS Inspector General reported that $ 59.2 million in PPP loans have been made to 38 CPS charter schools and related entities.
Tyler LaRiviere / Sun-Times

$ 43.5 million specifically used for charter operations. The rest of the money was used for other nonprofit programs.

All but one charter school followed the program’s rules for applying for loans and spending the money, the IG office found. “They likely qualified for eligibility to participate in the PPP program” as they filed claims certifying “economic uncertainty” before CPS officials announced they would fully fund charter schools for the 2020-2021 school year, according to the report.

Yet the CPS did not factor in PPP loans or other pandemic relief funding when distributing its own pandemic-related aid to schools, the investigation found. Fletcher’s office recommended that the CPS ensure that “future COVID-19 relief funding is distributed equitably between charter schools and district-run schools, taking into account any Covid-19 relief funds received. by schools to date, including canceled PPP loans ”.

But CPS officials apparently told the OIG they were “unable to implement the OIG’s recommendation to equalize future funding for pandemic relief.” According to the CPS, it is required to allocate future pandemic relief funding according to its state-approved funding formula that does not distinguish between district schools and charter schools or consider funding. external pandemic relief, such as PPP loans. “

In 2020, U.S. public schools gained access to a separate $ 13.5 billion pool under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, which Congress passed in late March. , shortly after the closure of all except essential businesses and institutions. . CPS’s allocation was $ 205 million of the $ 569.5 million set aside for Illinois, part of which was for charters.

As a result, the ongoing pandemic has done little to endanger the funding of the charter. An Inspector General’s review of internal charter school records showed that charter schools that took out P3 loans either increased their cash reserves or used the money freed up by the loans to pay for other expenses. At least eight charter schools bolstered their cash reserves by more than $ 1 million each between the end of the 2018-19 school year and the end of the 2019-2020 year. Five charters that have obtained PPP loans said they have doubled their cash flow “which CPS considers to be in excess of the recommended level of cash reserves for charter schools.”

Five operators have since repaid a total of $ 7.4 million in PPP loans while almost all of the other charter operators who have kept their PPP products have had their loans canceled. A small number of loans remain outstanding. The OIG report did not name the operators who repaid their loans or those who had theirs.


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