Budget woes threaten REALM Charter Schools

The Realm Charter Schools are facing financial and space challenges. Photo: Nancy Rubin

Berkeley’s only charter school is suffering financial woes and space constraints that pose serious challenges to its continuing viability.

A recent independent audit of Revolutionary Education and Learning Movement (REALM) Charter Schools revealed the middle school ended the 2015-16 school year with a negative fund balance of more than $1.1 million. The high school ended with a positive balance of $243,646.

The deficit and recurring cash flow challenges “cause substantial doubt about the Schools’ ability to continue as a going concern,” according to the REALM auditor’s report.

The budget gap prompted the Berkeley School Board to issue a notice of violation to REALM in January for fiscal mismanagement and a failure to meet the conditions of its charter renewal in 2015. REALM has until July 1 to come up with a plan to remedy the financial problems. If the board is not satisfied with the plan, or REALM does not follow the plan, revocation of the schools’ charter is on the table.


Meanwhile, REALM’s high school is out of a home at the end of the current school year. The district’s plans to repurpose the West Campus at 2020 Bonar Street as a “swing site” during construction at other schools will displace the high school, which currently leases space at the site from the district. The School Board denied REALM’s request for an extension of the lease for the 2017-18 school year while the school continues to search for a permanent facility.

REALM families and staff packed into the March 8 Berkeley School Board meeting. Photo: Natalie Orenstein

When the board renewed REALM’s five-year charter in December 2015, it did so on several conditions — including that the middle school would climb out of its deficit by the end of the 2016-17 school year. Instead, the deficit has grown since then.

REALM Executive Director Victor Diaz did not respond to Berkeleyside’s request for comment, but he described some of the sources of his schools’ financial troubles in a November 2016 letter to the School Board, and during the public comment period at the March 8 board meeting.

In the letter, Diaz said REALM’s special-education costs have increased as it has enrolled a growing number of students with special needs and hired staff to serve them.

At the board meeting, Diaz said high operating costs contributed to REALM’s financial struggles during its early years.


Then, “over the last two years, a contributing factor was not having a sufficient admissions and registration policy, and connecting that to staffing,” he said. “We’d staff folks based on projections and not on actual enrollment. That was one of our learnings over the past two years and something we’re going to correct.”

As for the facility issue, Oregon-based company Charter School Capital has agreed to finance the purchase of a building it would lease to the high school, according to a March 1 letter from Diaz to the school board. REALM has identified two facilities in Berkeley and one in El Cerrito that may be able to house the school, but none would be available until 2018-19, Diaz wrote.

Parent: “This is the city that’s too expensive for these families to live in”

On March 8, dozens of REALM teachers, students, and families packed into the board meeting to advocate for their schools.

REALM High School student Genesis Rodriguez kicked off an impassioned public comment period, telling the board that the school provides a refuge for her classmates. Many come from districts outside of Berkeley and do not otherwise have access to a safe, stimulating school environment, she said.

REALM admits applicants from anywhere, by lottery. The schools serve more disadvantaged students and students of color than BUSD. In the 2015-16 school year, 78.4% of REALM High School’s students received free or reduced-price lunches, were English learners, or were in the foster care system, according to the California Department of Education. By contrast, just 31% of Berkeley High School’s students were in one of those categories that year.


Last year, REALM High School’s student body was 64% Latino and 22% black, compared to the 21% Latino and 19% black student body at BHS.

“Our school represents exactly what Berkeley is always bragging to the planet from the highest towers about,” said Pablo Paredes, parent of two middle school students, at the School Board meeting. “We talk sanctuary city, but what does that look like? This is the city that’s too expensive for these families to live in.”

At REALM’s Studio H, students design and build solutions to community problems. Photo: Tracey Taylor

Paredes has been active in organizing other REALM parents to advocate for the school. The parents, along with REALM staff, helped draw up a proposal for a temporary facilities arrangement. The proposal, submitted by Diaz to the board in March, includes a couple ideas. One involves moving the high school to the middle school’s current site at 2023 8th St., and squeezing the middle school into a smaller space at the West Campus.

California school districts are required to provide facilities to charter schools — but only if the schools enroll 80 students who live in the district. Neither of REALM’s campuses does. Additionally, the amount of per-pupil funding REALM receives from the state for its high-needs students is based on the much smaller number of high-needs students in BUSD, putting more financial pressure on the charter schools, noted the board’s vice president Josh Daniels.

Daniels said the board has suggested that REALM pursue a charter with another district, such as West Contra Costa, where the schools would receive facilities and more state dollars.

REALM has an independent charter, which means BUSD provides oversight but not funding. However, the district has occasionally provided REALM cash advances amounting to three months of their share of local property taxes, said Javetta Cleveland, BUSD deputy superintendent, on Monday. REALM also pays below market rate rent, about $3 a square foot, for its West Campus space.

At the meeting, the board members praised REALM’s academics and program but said BUSD has exhausted its ability to support the schools.

“At some point, we have a fiscal responsibility to our district,” said Director Judy Appel.

When the board renewed REALM’s charter in 2015, “it was clear REALM was providing an education to students that was a model in many ways,” said Director Karen Hemphill.

“I certainly struggled myself about how do you communicate to a community that a school that is obviously so well-regarded is in deep financial trouble,” she said.

Cathy Campbell, president of the Berkeley Federation of Teachers, asked the board to do anything it can to keep REALM in operation. She proposed appointing someone from BUSD to serve on REALM’s board and offer fiscal advice.

“There is a significant lack of governance right now at the REALM charter schools,” she said.

There are only three other board members besides Diaz, according to REALM’s website.

Daniels said he was skeptical that further support from the district would help.

“When they asked for help facilities-wise we granted them a facility,” he said. “When they asked for financial advice we provided that and it doesn’t seem like the REALM leadership is listening or taking that advice.”

Charter schools in the spotlight

REALM’s charter was approved in 2010 and the schools opened the following year. The program emphasizes college readiness, social justice, and project-based learning. The schools have received some national attention for Studio H, an elective program run by a nonprofit. Studio H students learn to identify community needs and design and build solutions — so far including tiny homes, a pop-up park, and a crowd-funded library for their own school.

Prior to opening REALM, Diaz was principal of Berkeley Technology Academy, where he introduced technology and social justice elements into the curriculum. Berkeleyside interviewed Diaz in 2010 right after REALM was given the green light.

If REALM ends up closing, it would join other local charter schools with similar fates. Two of Oakland’s 30-plus charter schools recently shuttered shortly after opening. Berkeley used to be home to another charter school, CAL Prep, a partnership between UC Berkeley and Oakland-based Aspire Public Schools, but it moved to Richmond in 2015.

Charter schools have faced heightened criticism in recent months in light of President Donald Trump’s pick for education secretary. Betsy DeVos, a fierce charter school proponent, spearheaded their proliferation across Michigan, where they have not yielded desired outcomes. Opponents of charter schools say they evade regulation and take money, but not always vulnerable students, from public schools. Often they are run by for-profit corporations.

REALM is “kinda the polar opposite” of the stereotypical charter school, Paredes said.

The schools serve a higher portion of high-needs students than the surrounding district, and the teachers are unionized. In 2015, the California Charter Schools Association estimated that around 30% of charter schools in the state have some form of collective bargaining agreement.

Many REALM staff members showed up at the March 8 school board meeting to support their place of work.

“The school that I work at is extraordinary, it is growing, it is strong,” said Chloe Erskine, a middle school social studies teacher. “We serve everyone who needs to be served, let’s put it that way.” She asked the board to consider the REALM community’s facility proposal.

Board Director Beatriz Leyva-Cutler said: “I’m hopeful that between now and July some magic can happen that will be some support there for REALM staff to find a location.”

If the board revokes REALM’s charter, the schools can appeal the decision and remain in operation throughout that process.