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Charter Funding Study Calls For Money To More Closely Follow Students

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State should fund “target aid,” increase funding that follows special needs students, and reduce district reimbursements

BOSTON – Massachusetts’ charter school funding formula should maintain the shared responsibility of state and local governments to fund education, but improvements could address a number of weaknesses and allow money to more easily follow students, according to a new study published by Pioneer Institute.

“Given that the impact of the current charter school funding formula on school districts varies dramatically based on the characteristics of each district, the fairest approach is to have money follow the student as closely as possible,” said Salem State Professor Ken Ardon, who co-authored “Assessing Charter School Funding in 2016” with Pioneer Senior Fellow Cara Candal.

Ardon and Candal call for a number of changes to the current formula.  A larger portion of tuition – the amount of money that follows students from district to charter schools – should be allocated to special needs students to better reflect the cost of educating those students.  This is currently done for English language learners and low-income students.  The percentage of charter school special needs students has increased significantly in recent years and more closely resembles district figures, but this funding change would create an incentive for charters to enroll more special needs students and allow local districts to retain more funding for special needs students if charter schools fail to do so.

The complexity of the charter funding system leads to misunderstandings about the impact of charters on local school districts.  Many opponents call for the state to fund charter schools, but for students coming from so-called foundation aid districts, that is already happening.  Under the commonwealth’s progressive education funding system, the state pays the vast majority of education costs in many low-income communities.  In these communities, the combination of state aid and district reimbursements for students who choose to leave for charter schools is already roughly equal to the money flowing to charters from those school districts.

“Assessing Charter School Funding in 2016” updates “Follow the Money,” a charter school funding analysis authored by Prof. Ardon in 2009.  In the interim, the portion of charter students coming from foundation districts has increased from 18 percent to about half.  Despite having little impact on those districts, requiring the state to pay tuition directly through a separate line item would make charter funding more vulnerable to budget cuts.

For the half of charter students who don’t come from foundation districts, the impact of charter schools varies dramatically.  One reason why is the disparity in the amount of state aid districts get for each additional student, which can range from $25 to $13,000 under the current formula.  Those that receive little for additional students are more hurt by the loss of funding that follows students to charter schools.

The state education funding formula, known as Chapter 70, includes a target share of education costs that should be covered by the commonwealth.  Unfortunately, target aid is typically the last category of aid to be funded and the state sometimes (including in the current fiscal year) contributes nothing.  If target share aid for changes in enrollment were funded, it would make it easier to have a system in which funding follows students.

Ardon and Candal recommend that the fairest approach would be for the commonwealth to fund target aid, which would significantly increase district funding, but reduce reimbursements to districts that lose students to charter schools.

“As public schools, charter schools are as entitled to public money as their district counterparts,” said co-author Cara Candal.  “Funding target aid and reducing reimbursements would achieve the ideals of local communities and the state sharing the cost of public education and education funding following students.”

Under the current formula, school districts receive a 100 percent reimbursement the first year after losing a student to a charter school and 25 percent reimbursements for each of the next five years.  The reimbursements are subject to appropriation.  Since 2000 they have been fully funded about two-thirds of the time but were only about 65 percent funded in the current year.

Reimbursements are meant to allow districts time to adjust to the loss of students to charter schools.  Because it is based on increases in the amount of money flowing to charter schools rather than increases in charter enrollment, the current reimbursement formula essentially continues a portion of reimbursements in perpetuity.  Reimbursements should be based solely on the growth in charter enrollment so they can sunset if charter enrollment is not growing.

Neither New Orleans nor Washington, DC, the cities with the largest percentages of students attending charter schools, reimburse the local district for students that leave for charters, but both provide additional money for special education students.

The authors also recommend that charter school capital funding increase from the current $893 per student to $1,500 to better reflect actual facilities costs.  Unlike district schools, charters don’t have access to Massachusetts School Building Authority funding and the current allotment covers a significantly smaller portion of their capital costs.

Reimbursement is the only charter-related cost that can be traced, since it’s outside the larger Chapter 70 funding formula.  To increase the transparency of education finance and provide a more accurate charter school funding picture, the authors recommend that the amount of additional Chapter 70 aid to local school districts that is generated by charter school students should be published annually.

About the Authors   

Ken Ardon received a Ph.D. in economics from the University of California at Santa Barbara in 1999, where he co-authored a book on school spending and student achievement. He taught economics at Pomona College before moving to Massachusetts, and from 2000 to 2004, Dr. Ardon worked for the Commonwealth of Massachusetts in the Executive Office of Administration and Finance. He is a professor of economics at Salem State University, where he has taught since 2004. Dr. Ardon is a member of Pioneer Institute’s Center for School Reform Advisory Board.

Cara Stillings Candal is an education researcher and writer. She was a founding team member at the National Academy of Advanced Teacher Education, where she continues to consult; an adjunct faculty member in educational leadership and policy studies at the Boston University School of Education; and a Pioneer Institute senior fellow.

About Pioneer

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.