When Charter School Goes Under, Bond Holders Get Paid But Teachers Don't
Furious teachers at a recently shuttered Detroit charter school were notified this week that they won’t be paid thousands of dollars they earned during the last school year.
Teachers at the Michigan Technical Academy had contracts that required the school to pay them through the summer for work they did during the school year. But the school’s management company, Matchbook Learning, alerted teachers in an email Wednesday that the money would instead go to pay off the school’s debts.
“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.”
The school, which Chalkbeat wrote about last fall, closed its doors forever last month when Central Michigan University revoked the school’s charter citing academic and financial difficulties.
The school was one seven Detroit area charter schools that closed this year including five that had been overseen by Central Michigan.
Matchbook Learning, which had been running the school since 2015, had a contract with the school’s board that expired on June 30, George wrote in the email to teachers.
“Matchbook Learning never received and does not expect to receive any funds from the MTA Board, CMU or the bondholders to fund payment of any July or August payroll — meaning Matchbook Learning is not in a position to make payment to you,” George wrote. “Unfortunately, the closing of MTA has had a severe effect on everyone involved. We thank you for your time at MTA, sympathize and empathize with your position, and wish you the best in your future endeavors.”
George told Chalkbeat that his New Jersey-based school management organization, a non-profit, hasn’t been paid by the school’s board since February due to lack of funds. Matchbook is owed what he characterized as “a couple hundred thousand dollars.”
He said he knew Matchbook wouldn’t be paid for the last few months of the school year but that the organization stayed until the last day of class in June.
“If we left, the employees wouldn’t get paid and the school would shut down,” George said.
He said Matchbook asked the school board to approve payments that would enable the teachers to get paid in July and August. The board knew it would receive payments from the state in July and August and authorized a portion of that money to go toward paying teachers. But the bondholders are priority creditors, meaning they get paid first. The bondholders have refused to allow money to go to the teachers, George said.
“Ultimately it wasn’t in our control,” he said.
The school borrowed about $16 million for building improvements when it first opened and only about $1 million had been paid off when the school closed last month, George said. Had the school stayed open, it would have continued to receive money from the state that could have been used to make payments on the debt. Without money coming in, the creditors moved to collect as much as they could.
Angry teachers say they’re contacting lawyers in hopes of trying to collect what they’re owed.
“That’s money that we’ve all worked for,” said Maeve Rochon, a kindergarten teacher who said she’s owed around $5,000. “That’s for time we spent in those kids’ lives, doing our jobs. We all stuck it out to the end and now you’re telling us the money we worked for, we’re not going to get?”
Janelle Brzezinski, a spokeswoman for the Governor John Engler Center for Charter Schools at Central Michigan University, said there’s not much the university can do to help the teachers.
“Some creditors of Michigan Technical Academy have ordered an acceleration of payments due on Academy loans,” Brzezinski wrote in an e-mailed statement. “The acceleration of payments means that the Academy received no funds from the scheduled July 20, 2017 state school aid payment sent by the state of Michigan. The Academy board and the Center had been working with the Michigan Department of Education and Michigan Department of Treasury officials to ensure continued flow of state aid through July and August to allow the Academy to meet payroll and other outstanding obligations. Unfortunately, the decision of the creditors to accelerate payments under the Academy loans means that there will not be sufficient funds for the Academy to process the July 31, 2017 scheduled payroll and there may not be sufficient funds to meet the August payrolls.”
Brzezinski encouraged teachers to contact Matchbook or the Wage and Hour Division of the Michigan Department of Licensing and Regulatory Affairs.