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Until now, new charter schools in Tennessee got between $600,000 and $700,000 in federal grants to cover startup costs in their first three years, including big-ticket items such as building leases.
The money has dried up, a factor of the rapid rise of charter schools in Tennessee.
"It's a significant strain to say the least," said Freedom Prep principal Roblin Webb. "That's the money you use to find and lease facilities, pay your teachers.
"We could not have started without the money. This is huge."
Former Memphis mayor Willie Herenton expects he will have to delay opening of several of the seven charter schools he hoped to open in the fall of 2012 in Orleans Elementary, Manassas High and Booker T. Washington High in Memphis.
"In all candor, I was shocked to hear the new startups would not have necessary ingredients to launch new programs," he said.
He plans to seek funding from philanthropic and corporate sources.
For years, Tennessee charter operators got $225,000 to use the year before the school opened, followed by another $250,000 to cover operational costs before state per-pupil tax money began flowing to the schools, said Rich Haglund, director of charter schools at the state Department of Education.
"If a school opened with 100 students, they would get one-tenth of their (Basic Education Program tax funds) that August. That is not going to pay their operational costs," he said.
The following year, the charter would get $125,000 to continue covering costs while enrollment was building, for a total of $600,000.
For a couple of years, the pot was as high as $700,000, Haglund said.
All the money came from a $22 million federal grant the state received in 2009 and expected to disburse to start-ups through 2012-13.
Although there were conversations last year that the money was running short, charter applicants as late as June 2011 were told to follow the same procedures for getting the funding for the 2012-13 year.
The money was such a given for charter operators that Stacey Thompson in the Memphis City Schools charter office doubts any applicant did not include it in its preliminary operating budget.
"I would say most did. For all these years, it's been a 'give me,'" she said.
By late fall, funds were running so short that Haglund sent applicants a memo on Nov. 28 saying the awards would be made on a competitive basis.
On Tuesday, he said very little was left for this year and he doubted there would be any for next year.
"People have assumed this money was there. But it is not. It's just like any other grant or donation that may or may not be available," he said.
Charter schools were approved by Tennessee legislature in 2002.
Since then, 41 have opened statewide, including 25 in Memphis.
The shortfall is one of two hurdles facing operators who planned to open in the fall of 2012.
The other is the appeal process after the unified school board rejected 17 applications in late November, citing a new state law that says charters can be rejected if their opening would financially harm the traditional public school system or community at large.
State treasurer David Lillard will decide if the board was justified. Tuesday, he sent applicants and both Memphis City Schools and Shelby County Schools a list of data he still needs.
