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October 4, 2025

[1]www.publicschoolsfirstnc.org
[2]Facebook [3]Instagram [4]YouTube [5]LinkedIn [6]TikTok

Federal Government Shutdown

October 1 marked the beginning of a federal government shutdown that may
have severe negative implications for public schools. Superintendent Mo
Green outlined the potential impact on North Carolina in a message released
on Wednesday.

The good news is that most of the basic funding for public schools is
determined by already established formulas and is disbursed on a set
schedule that will continue despite the shutdown. Funding for programs such
as Elementary and Secondary Education Act (ESEA)—including Title 1-A for
low income districts, Title II-A for professional development, Title III
for English Language Acquisition—Individuals with Disabilities Act (IDEA)
and Career and Technical Education (CTE) should continue. As long as these
disbursements do not require staff involvement or decision-making, funds
that were allocated as part of the 2025 fiscal year may continue during the
shutdown.

Federal funding that goes directly to districts with a military base or
Native American lands is funded on a different timeline and was set to
start on October 1. These funds have the potential to be adversely affected
by the federal shutdown.

However, Superintendent Green stated that, “I would ordinarily feel
comfortable that we will receive the formula funds as we typically do…we
have to be prepared for circumstances to be different with this federal
administration. As we experienced earlier this summer, the administration
withheld certain formula funds that were previously appropriated by
Congress…”

In other words, although the formula funding could and should continue,
nothing is guaranteed given the recent actions of the current
administration.

The USDOE Secretary of Education Linda McMahon noted in a memo that the
following will stop during a federal shutdown:
* New Grant Activities: The USDOE will cease all new grantmaking
activities.
* Civil Rights Investigations: The Office for Civil Rights will pause
review and investigation of complaints.
* Technical Assistance: Development of guidance, technical assistance,
and regulatory actions will pause unless required for funded activities.

School meals are likely to remain unaffected for three months. An official
in the U.S. Department of Agriculture (which funds child nutrition
services) has shared that the agency typically has funding on hand for
three months of school meals following a shutdown. The agency will issue
further guidance if the shutdown nears the three month mark.

A separate issue for federal education funding is the massive cuts to these
programs proposed by the administration for the coming fiscal year. As
Congress works through details of future budgets, we hope that they choose
to reject funding cuts to public education.

[7]READ SUPT. GREEN'S MEMO

Should NC Conduct An Audit Too?

The Louisiana Legislative Auditor just [8]released a report of South
Louisiana Charter Foundation, Inc. (an affiliate of Charter Schools USA)
detailing numerous cases of improper use of state dollars. The report
raises important questions about whether similar issues exist in the North
Carolina charter schools managed by Charter Schools USA.

[9]Charter Schools USA (CSUSA) is a for-profit charter school management
organization (CMO) based in Florida. It operates more than 100 charter
school campuses serving over 80,000 students in Florida, Louisiana, North
Carolina, and South Carolina.

Like many for-profit charter management organizations, CSUSA typically
manages all parts of a charter school’s operations. The focus of the
Louisiana audit report is the non-profit corporation, South Louisiana
Charter Foundation, Inc. (Foundation), which was set up to open charter
schools in the state. The Foundation secured approval to operate multiple
charter schools in Louisiana, including the primary focus of the audit,
Iberville Charter Academy (ICA). The Foundation then hired CSUSA-ICA (the
Iberville, Louisiana branch of CSUSA) to manage its operations.

In North Carolina, charter school applications must be submitted by a
non-profit organization, but the governing board of the non-profit is
allowed to contract with a for-profit CMO (like CSUSA) for some or all of
its operations. In the case of CSUSA-affiliated schools, the non-profit
board may turn over all operations (and funds) to CSUSA. However, the
non-profit board—often with members from the CMO—is still responsible for
making key decisions about contracts, hiring, etc.

The Louisiana audit was initiated due to numerous complaints against the
charter school’s practices. The audit found multiple serious issues:

Questionable Payments to CSUSA-Affiliated Companies. CSUSA-ICA paid
affiliated organizations more than $6.9 million dollars between 2019 and
2023 without Foundation (the non-profit) board approval, written contracts,
or adequate documentation. These payments were not disclosed in audited
financial statements.

Improper Operation of Charter School Off-Site Locations. In 2019, CSUSA-ICA
started using a CSUSA-affiliated organization to enroll students in
“learning pods/online learning centers” at multiple off-site locations. The
students were reported as enrolled at Iberville Charter Academy (resulting
in more funds from the state) even though the pods didn’t use the same
curriculum or staff and state law prohibited charter schools from
establishing learning pods until 2021.

Improper Fees Charged to Students. Three of ICA’s learning pods collected
$511,538 from the parents of enrolled students between February 2019 and
April 2023. Records from these pods described the payments as “program
fees,” “registration fees,” “technology fees,” and “tuition.” According to
the audit report, charter schools in Louisiana are prohibited from charging
certain fees to students.

Overpriced Leases to CSUSA-Affiliated Organizations. The Foundation leased
its school facility from a CSUSA-affiliated organization for much higher
than fair-market value. Over the 20-year lease term, total payments will be
nearly $14 million higher than the actual cost of the property. The
learning pod organization is also leasing facilities from CSUSA-related
organizations at higher than fair market rate. These lease arrangements
raise serious issues regarding compliance with the state's requirement for
prudent use of public funds.

Improper Cash Transfers totaling $931,895. CSUSA-ICA made transfers of
$681,895 from the charter school’s bank account to its own account and
$250,000 from the charter school to the organization running the learning
pods. The foundation board approved none of the transfers and some have
inadequate documentation.

Failure to Produce Records in a Timely Manner. CSUSA-ICA sometimes took up
to 184 days to produce records to which it is contractually responsible for
ensuring timely access. The delays appear to violate multiple contracts as
well as state law.

The full report provides more details about the severity of the financial
mismanagement, lack of documentation, and degree to which unauthorized
funds were directed to CSUSA-affiliated organizations.

The Louisiana audit report should alert North Carolina to investigate
similar issues that may exist in the CSUSA schools operating in North
Carolina. For example, the Louisiana audit found improper payments made
from ICA to Red Apple Services, LLC (renamed as [10]Good Hearts Gear),
which is the designated uniform/accessory vendor for North Carolina’s CSUSA
schools.

Improper payments were also made to [11]10Jin (technology provider for
charter schools), [12]Noble Education Initiative (teacher certification,
school management), and [13]Altitude Education USA (college guidance
counseling).

The nine CSUSA charter schools operating in North Carolina in 2024-25,
their non-profit governing entities (e.g., foundations) and their school
performance grades are shown below:

North Carolina Charter Educational Foundation
* Cabarrus Charter Academy (F) Closed in 2025-26
* Langtree Charter Academy (B)
* Iredell Charter Academy of Arts and Sciences (D)
* Concord Lake STEAM Academy (C)

Steele Creek Charter Education Foundation, Inc.
* Steele Creek Preparatory Academy (D)

Triangle Charter Education Association
* Cardinal Charter Academy (B)
* Cardinal Charter Academy at Wendell Falls (C)

Union County Charter Education Association
* Union Preparatory Academy at Indian Trail (C)

West Lake Education Foundation
* West Lake Preparatory Academy (C)

Just last week the U.S. Department of Education Secretary McMahon announced
new grant funding of [14]$53 million for NC charter schools.

With tens of millions of new grant money flowing to charter schools and
their management organizations, NC should conduct an audit to ensure that
procedures and payments are following NC state law.

Legislative and SBE Updates

The NCGA is scheduled to resume work in Raleigh on October 20, though some
committees are scheduled to meet in the coming weeks. This is a good time
to reach out to lawmakers to urge them to deliver a state budget ASAP!

The [15]Joint Legislative Oversight Committee on General Government meets
at 1:00 on Tuesday, October 7. ([16]Stream)

The [17]House Select Committee on Government Efficiency meets on Wednesday,
October 8 at 1:00. ([18]Stream)

Read our [19]Week in Review for a summary of recent legislative activity.
Keep an eye on the [20]legislative calendar for upcoming changes.

[21]Charter Schools Review Board meets Monday, October 6 and Tuesday,
October 7 at 9:00 a.m. ([22]Stream)

Don't Miss Our Webinar with Diane Ravitch!

Wednesday, October 22, 7-8 p.m. We are excited to announce that we will be
hosting a special event with Dr. Diane Ravitch to discuss her new book,
published by Columbia University Press, [23]An Education: How I Changed My
Mind About Schools and Almost Everything Else. You don't want to miss this
great conversation!

With honesty and grace, Diane retraces her journey from her Houston
childhood to her service in the government, including a stint in the
conservative Department of Education, and her eventual transformation into
one of our fiercest defenders of public schools. Blending personal
reflection with a historian’s rigor, Diane explains how she came to embrace
equity, professional teachers, and democratic public education, becoming an
inspiring activist whose life’s work continues to uplift the promise of our
public schools. There will be time allowed for Q&A.

Make a tax-deductible donation to Public Schools First NC and we will mail
you a copy of this wonderful book! Your donation helps us keep working to
protect and strengthen our public schools. [24]DONATE

[25]REGISTER HERE

Did You Know?

Only a few dozen bills typically make it “across the finish line” and
become law each legislative session.
* For the current 2025 legislative session, 1,800+ total bills were
introduced.
* Of these, 101 bills have become law so far.

Of these 101 new laws, NCGA staff have noted [26]38 laws relate to
education in some way.

Career Tech Ed Moves to Labor Department

The U.S. Department of Education is transferring day-to-day management of
career and technical education programming to the U.S. Department of Labor,
with the logistics and funding responsibilities laid out in an interagency
agreement.

Officials at the Education and Labor departments say this [27]sharing of
CTE responsibilities…is “commonsense” and will benefit students through
streamlined services to states and districts.

CTE and education administrative organizations, however, are concerned that
since the Labor Department’s focus is on workforce needs, the educational
part of job awareness and career exploration will be lost. In addition, it
seems that the CTE funding to NC will be cut.

A separate but similar debate is occurring in special education. Secretary
McMahon has said she would like to shift the Education Department’s
[28]oversight of special education programming to the U.S. Department of
Health and Human Services, although no formal plan has been made public.

[29]READ MORE

In Case You Missed It

[30]Federal shutdown will affect some NC schools, officials monitoring
possible impact on meals

[31]NC education chief Green: State school spending is subpar

[32]Lessons learned: Fully funding public schools is the answer

[33]What happens when a community loses its only licensed child care
program?

[34]While western North Carolina waits for millions in FEMA reimbursements,
a charity steps in to fill the need

October is Farm to School Month

This year’s National Farm to School Month theme, Growing for the Future,
emphasizes the role of farm to school and early care in creating thriving
communities now and in the future. All of our futures depend on the farmers
who feed us, take care of our soil and waterways, and protect seeds for the
next harvest—but their work often goes unseen and undervalued. By investing
in programs that support local farms, producers, and fishermen, and allow
school meal programs across the country to easily buy directly from them,
we can create a thriving food future that puts people and planet first.

Farm to school ensures that young children and students eat healthy, fresh,
and locally grown meals in schools, and that farmers earn a reliable source
of income by feeding their community.

[35]LEARN MORE

Mark Your Calendar!

Multiple Dates, 7:00-8:30 pm: Resilience and ACES. Learn about Adverse
Childhood Experiences (ACES) and resilience. Join us for this
award-winning, 60-minute film, Resilience: The Biology of Stress & The
Science of Hope. This documentary examines how abuse, neglect, and other
adverse childhood experiences affect children’s development & health
outcomes in adulthood. This powerful movie is a conversation starter and a
perspective changer.

[36]REGISTER HERE

All screenings are on Thursday and include time for discussion.
* October 23, 2025
* January 22, 2026
* February 26, 2026
* March 26, 2026

Words to Remember

"Public education is not broken. It is not failing or declining. The
diagnosis is wrong, and the solutions of the corporate reformers are wrong.
Our urban schools are in trouble because of concentrated poverty and racial
segregation. But public education is not ‘broken.’ Public education is in a
crisis only so far as society is and only so far as this new narrative of
crisis has destabilized it."

— Diane Ravitch

Help us support public schools!

Public Schools First NC is a statewide nonpartisan, 501(c)(3) nonprofit
focused solely

on pre-K to 12 public education issues. We collaborate with parents,
teachers, business and civic leaders, and communities across North Carolina
to advocate for one unified system of public education that prepares each
child for productive citizenship.

[37]DONATE HERE

[38]www.publicschoolsfirstnc.org

Questions? Contact us today at [email protected]

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