Good Morning Next Gen'ers,
Yesterday, there was a little progress towards the AEL exemption downtown, but we are still far from the finish line. As promised, here is the first loophole: The Return of P3 - ESA Edition.
This is a reverse strategy from how ESAs became legal in the first place. You insert a middle man...they used parents, but we can use a private entity. You have your parents take an ESA from the State on March 1 and let them know that this is the only way you can finish the school year. They then pay the ESA amount to a private entity. The private entity pays you to lease your campus and staff. You continue paying your staff and keep your doors open. The alternate option is to have your parents take the ESA and then pay you as a tuition-based student.
This replaces a 17% funding loss with a 50% funding gain since you will be eligible for the Q3 and Q4 ESA payment. This leaves plenty of room to pay the private entity an administrative fee for being the middleman (or let the parent keep a portion if you are just working directly with the parents). This strategy can be used any year and for multiple years. The current statutes only prevent a student from returning as a public school student in the same year after taking an ESA. It doesn't prevent the return of the student in the subsequent year. On March 1, we are beyond the 100th Day so your ADM is not impacted.
This will be difficult to explain to parents, and it takes their cooperation to be successful. It is going to be difficult to manage administratively within your student management systems, but the easiest way would be to toggle their tuition payer code so everyone on the ESA is treated as a tuition-based student.
ARS 15-1105 allows school districts to lease out their properties and charge a reasonable use fee. "Reasonable use fee" means an amount that is at least equal to the school district's cost for utilities, services, supplies, or personnel that the school provides to the lessee pursuant to the terms of the lease. It also allows you to cover the cost associated with providing the lease. ARS 15-2402.4.k states the following in reference to how ESA funds may be spent: (k) Services provided by a public school, including individual classes and extracurricular programs. This means you could just do this directly without a private entity. I just feel that having the private entity in between strengthens the legal case, and it's a little dig at their workaround on the Constitution.
This strategy will work well for small to midsize Districts who have high trust from their parents and limited competition in their area. If you are in a competitive area, then I believe that people being worried about your financial position makes it difficult to retain students and staff.
Feel free to run any of these loopholes by your legal counsel or auditor, and I always welcome feedback on why the logic isn't sound. If this one doesn't work for you, then don't worry...tomorrow is Day #2.
Jeremy
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