After becoming one of the state’s first schools to reserve seats for English language learners in its lotteries, Success Academy Charter Schools are now planning to roll back the special treatment. The charter school network is making the revision under pressure from the U.S. Department of Education, which has mandated the change as a condition to continue receiving $15 million in grants aimed at helping Success expand its reach.

The concession comes despite an all-out effort to reverse the decision by Success CEO Eva Moskowitz, who made her case in dramatic terms directly to Secretary of Education Arne Duncan.

“[T]he millions of dollars in funding that your Department is threatening to withdraw is a gun pointed at our head,” Moskowitz wrote in a letter to Duncan in April.

The dispute has to do with a disagreement over the interpretation of federal education laws about how a charter school must structure its admissions process. A federal reading of the law is that school lotteries can’t reserve seats for at-risk students, unless their state’s charter school law specifically allows it.

In New York, charter school law requires that admission preferences be given for three student groups: returning students, siblings, and students who live nearby.

But policymakers here say that a 2010 provision in the law, which requires schools to meet quotas for at-risk student groups, meets federal compliance on lottery preferences.

The provision left it up to schools and their authorizer to figure out how to hit enrollment targets. State officials have argued that a lottery preference will end up being the best way, making it effectively required.

“For these charter schools, we believe it is, practically speaking, necessary for them to implement [an at-risk] lottery preference to comply with the NY Education Law,” Susan Miller Barker, executive director of SUNY Charter Schools Institute, which authorizes charter schools, wrote to a federal education official earlier this year.

Update: In a statement, Commissioner John King said, “We are optimistic the USED will reconsider their legal interpretation. We are certain the USED shares our commitment to ensuring equal access for high needs students to a high quality education, whether that is in a district school or a charter school.”

Success’ 20 charter schools are the state’s first to be affected by the U.S. DOE’s interpretation. But the change will eventually force many schools into the same dilemma: Eliminate their at-risk lottery preference or forfeit grants seen as crucial during the start-up years.

“It’s to the detriment of charters and the students we want to serve,” said New York City Charter Center CEO James Merriman.

Many charter schools already reserve seats for at-risk students. Some offer seats to poor students and, increasingly, new charter schools are opening with preferences for specialized groups of high-need student populations.

For instance, the Children’s Aid Society’s charter school allots seats for students from single-parent households. The Neighborhood Charter School of Harlem leaves open 15 percent of its seats for students with autism spectrum disorders. And Mott Haven Academy provides two-thirds of its seats to students who are a part of the child welfare system.

But these types of new schools would have to eliminate their lottery rules to qualify for some of the $113 million in start-up grants that New York was awarded in 2011.

“These funds are just critical,” Merriman said. “They hire the people who put together the school.”

The federal grants, called the Charter Schools Program, have also been awarded to charter networks such as Success. Since 2010, Duncan has awarded the Success network two grants totaling more than $15 million to open or expand 24 schools by 2016.

U.S. DOE spokesman said that grant guidelines have been consistent and disputed the notion that any changes have been made.

“The Department of Education has not offered new rules nor have we made changes to any existing rules,” said the spokesman, Cameron French.

Despite their objections, authorizers have taken the federal grant guidelines seriously as they prepare to review a new slew of charter applications. In a memo sent last month, a SUNY CSI official warned new charter applicants that they would be ineligible for federal grants if they include admissions preferences as part of their school’s development.

Merriman said that threatening to withhold federal funding sent a message that would discourage schools from finding ways to serve at-risk students.

“It’s a fundamentally misguided policy,” he said.

A frequent criticism lodged at charter schools is that they don’t do enough to serve as many high-need students as district schools. In the case of Success, the criticism was renewed last week in a series of Daily News articles about families whose students attended Success schools.

Spokeswoman Jenny Sedlis disputed the criticism that Success schools didn’t do enough to serve its special education population. She said that 15 percent of the Success student population — 1,000 students — are classified a special education, near the city average.

Success schools don’t give preferential seating for poor or special education students, which Sedlis said were not under enrolled at the network’s schools. A legal memo sent by Success lawyers to the U.S. DOE argued that an ELL lottery preference is necessary because its schools struggle to attract families who aren’t proficient in English to apply. At Cobble Hill Success, for instance, just 4.1 percent of first-year students were ELLs, 19 percentage points lower than what was set aside in its lottery, according to the memo.

Success managed to convince the U.S. DOE to reverse the funding threat for this year. But yesterday, the city sent out public notices about revisions to the Success charters, which would affect lotteries for next year’s admissions.

“We have worked with Success Academy regularly over the last few months for them to remain eligible for the grant program,” French said.

In a statement, however, Moskowitz suggested she wasn’t done fighting.

“We were the second school in New York state to offer this preference because of our strong commitment to serving English Language Learners and we are fighting to reinstate it.”

Eva Moskowitz letter to Arne Duncan

Success Academy Legal Memorandum to U.S. DOE