Arizona Education Network

.

Q and A on Public School Finance and Equalization: Charter Schools

Part II

It is recommended that you read Part I of this series before moving on to Part II.   Click here to go to that article.

.

.

I have heard that charter schools get different funding than traditional public schools. Is this true?

Charter schools are funded using an equalization formula that is similar to that of traditional public schools. However, because charter schools do not have geographic boundaries and taxing authority, property taxes do not provide any of the funding that goes to charter schools. Charter schools get the majority[1] of their funding from the state’s general fund.
.

You say the funding formulas are very similar. How is the charter school funding formula different?

Charter school funding is the total of the Base Support Level (BSL) and a funding category entitled Additional Assistance. The BSL is computed in the same way as traditional public schools–weighted student count times the statutory base level–which is discussed in Part I of this series. Additional Assistance is a per-pupil dollar amount set by the legislature and multiplied by the simple, non-weighted student count. Additional Assistance is intended to fund capital and transportation costs for charter schools. However, charter schools can use this money flexibly and are not limited to using it for capital or transportation expenditures[2].

Charters do not receive additional funds for teacher experience or performance-based compensation systems. Charters also do not qualify as isolated schools when computing their weighted student count, though they do qualify as small schools (under 600 students) when weighting the student count.
.

Are there other ways in which funding for charters differs from that of traditional public schools?

Yes, because charter schools do not have a property tax structure upon which their funding is based, they do not have access to the funding mechanisms this provides to traditional public schools. Further, since charter schools are exempt from the uniform building requirements set by the School Facilities Board (SFB), they receive no funding for building renewal[3], emergency deficiency correction or school construction from this state-funded entity.
.

I have heard many times that charter schools are less expensive to operate on a per- pupil level than traditional schools. Is this true?

When you compare the average dollars spent at traditional and charter public schools, it may initially appear that charters are cheaper to operate[4]. A large portion of this difference can be attributed to the fact that charter schools enroll significantly fewer special-needs students than do traditional public schools. Also, some of the state mandates that apply to traditional school districts do not apply to charter schools–the requirement to hire certified teachers does not apply to charters, for example. The absence of these mandates can, in some instances, translate into lower operating costs.
.

What do special-needs students have to do with it?

For whatever reason, charter schools enroll fewer special-needs students than traditional schools. The Arizona Department of Education report entitled 10/1/2009 Federal Child Count by PEA (Public Education Agency) updated as of 2/1/2010 indicates that nearly 93% of all special needs students in the state are enrolled in traditional public schools. When calculating a simple average expenditure per student, traditional schools will average a higher cost per student than charters because they are getting more dollars for the special-needs students. If the distribution of special-needs students in traditional versus charter public schools was more even, you would expect the simple per-pupil average to be nearer to that of traditional schools.
.

Outside of the special needs funding issue, do charter schools receive more or less funding than traditional schools?

Traditional schools claim charters receive more funding; charters claim traditional schools receive more funding. In reality, it is too simplistic to state that one type receives more or less funding than the other. It depends on the individual characteristics of the traditional and charter schools used for comparison. While both charter and traditional schools receive the same Base Support Level funding from the state, they each receive (or may be eligible to receive) other unique funding. Below is a simplified comparison.

.

Additional funds only traditional schools can receive:

• Desegregation funds: These funds are limited to districts named in federal or state desegregation cases.
• Adjacent Ways funds: This is tax money spent on construction projects not related to education but which improve access to and/or the functionality of the school property, including street, water and sewer improvements that are adjacent to school property.

• Isolated school adjustments: A small number of rural schools in isolated areas receive funding to adjust for lost economies of scale.
• Drop-out prevention funds: A small number of at-risk schools are eligible for these funds.
• Career ladder funds: These funds are available to a limited number of districts that opted into qualified performance-based compensation programs before the state closed the program to new schools. The state is awaiting a higher court decision on a successful lawsuit that declared this system unconstitutional. If the high court upholds the lower court decision, the future of these dollars is unknown.
• Tax overrides and bonds: These funds are available only in those districts in which voters have agreed to tax themselves to fund the measures. See Part I of this series for more information on overrides and bonds.
• School Facilities Board funding for construction, building renewal (building renewal funding has been cut to zero for the past three fiscal years), and emergency deficiency corrections.
  .

Funds only charters can receive:

• The state general fund provides Additional Assistance to replace capital and transportation funding provided to traditional schools.
• Charters can borrow funds from lending programs dedicated to charters. For more information, see the article entitled JP Morgan Chase Creates $325 Million Funding Initiative for High-Performing Charter Schools here.
• The AZ Charter School Incentive Program provides funds to start new charter locations. This addresses the lack of funding by the State Facilities Board to which traditional public schools can turn when building schools.
• In addition to state and federal grants for charter schools, there are many national foundations (i.e. Walton, Gates, Broad and Dell) awarding grants specifically to charters.
• Buildings and land are owned by the charter. If the charter sells capital assets—including land and buildings—the proceeds belong to the owner of the charter school.
  .

As you can see, different schools have access to different types of funds, depending upon the schools’ individual characteristics. An apples-to-apples comparison is difficult to make, given the number of variables between schools.

.

So why isn’t funding between charters and traditional schools the same?

As noted in part one in the series Q and A on Public School Finance and Equalization, access to funding between traditional public school districts is not equal. Local voter support for property taxes, desegregation agreements, the size of the school and other factors combine to determine an individual school’s access to funds. The same principle holds true when you compare funding for charter schools with traditional public schools.
.

Different characteristics between schools translate into eligibility for different funding sources. Many public education stakeholders view this state of affairs as inequitable. Two lawsuits against the state—Foley v. Horne and Hobday v. Horne—are currently pending. Both cases contend that access to public education funding in the state is not equal and is therefore unconstitutional.

---

[1] Like traditional public schools, charters can receive miscellaneous revenues from special state and federal grants, charitable contributions, parent contributions and other miscellaneous funding streams called for by voter propositions and other measures. (i.e. Prop 301 funds, English Immersion program funds, etc.)

 

[2] Unlike traditional public schools, charter schools are exempt from both the minimum facilities standards set by the School Facilities Board (SFB) and the requirement to provide transportation to school for their students. This gives charters maximum flexibility in spending Additional Assistance funds for non-capital and transportation purposes.

[3] Though traditional public schools are eligible to receive funding from the SFB, the state has defunded building renewal dollars for three consecutive fiscal years beginning in 2008. The traditional schools must continue to comply with the SFBs minimum building standards even in the absence of funding for such.

[4] According to the Arizona Department of Education State Superintendent’s Report, 2008-2009, traditional schools spent $2,330 more per student than charter schools.

.

.

Tags: az charter schools, public school funding

This entry was posted on Friday, June 25th, 2010 at 9:12 AM and is filed under Education Funding, Featured Articles, Your Questions Answered. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.