Why Charters Cause Fiscal Havoc in Local Districts.

            Charter proponents such as the Thomas Fordham Institute and others often cite rhetoric about charters being less expensive. The facts presented in this report suggest something quite different.  The reality is that total costs to a community for the same total number of students rises, quite substantially, when charter schools open.  When charter proponents try to argue that charter schools cost less, they are using very selective figures concerning where the costs lie. This report will take you step-by-step through the impact of charter schools on the fiscal health of a school system.

How Are Charter School Funding Formulas Determined?

            In a somewhat simplified example, take an entire school system's spending, and divide this amount by the number of students in the district. Multiplying the number of students in each charter school by this "per-pupil" amount, minus perhaps a small percentage for overhead costs incurred by the district responsible for the charter, determines that school's funding. Is this valid?  Let's see how it plays out in practice. Keep in mind that this "per-pupil" amount is not the actual dollar amount spent on each student. It is an average amount, only. You will see why understanding this is important.

             A school system's costs includes those of central administration functions, most of which are related to costly mandates from state and federal governments. The costs include requirements under No Child Left Behind (NCLB) policies that even the U.S.  Secretary of Education Arne Duncan now admits are failures. The extensive, and expensive costs of evaluating and meeting the specific needs of students qualifying for special services under the Individuals with Disabilities Education Act (IDEA), and the costs of programs to educate homeless children and those of migrant workers are also very costly, on a per student basis. State and Federal dollars dedicated to these programs do not cover all of the costs.

            The costs of specialized programs for students identified under IDEA seem, and often are, very expensive, yet you should consider two factors.  If you are the parent of such a child, you know how important these specialized programs can be in the quality of life and in the education of your child. If you don't think it is financially prudent to spend the money necessary to meet the needs of a child with severe challenges, you might take heart in knowing that such specialized education pays large economic dividends to the community. In the not so distant past, children who now are educated to the level of being able to care for themselves, and to work in and benefit our communities in so many ways, and even to pay taxes, were instead placed in public institutions where the costs of supporting them in sometimes horrid facilities was vastly more expensive than the "costly" education they now receive.

            Charter supporters will sometimes point to research by other charter supporters that suggests that, on average, charter schools in a certain location have a similar percent of students qualifying for these specialized programs.  What is missing from their calculations is the startling reality that the qualifying students in charters often have very mild challenges (requiring fewer compensating services) compared to those remaining within the regular public schools. And overall, the claims fall short of meeting the "veritas" standard anyway, since in most places charters have far fewer students having Individualized Education Plans (IEPs) than the surrounding traditional public schools.

            In addition to costly functions mandated by law we also find in the budgets of most school districts expenses known by accountants as "legacy costs."  These costs include debts already incurred by the district, but not yet paid, such as the cost of providing mandated health benefits to retirees and the costs of prior construction and renovations to be paid in upcoming years. These costs are real, and ongoing. When charters are not required to cover any of these costs (the argument by charter supporters being that charters did not "cause" these costs) then the per-pupil funding is improperly inflated. Why?  These very real legacy costs are to fund past costs to a district. When charter schools do not contribute to the payment of these just "pre-charter" debts, the remaining debt is then heaped upon those remaining in the regular public schools.

There Are No Savings Realized When Students Enroll in a Charter School.

            What about the claim promulgated by charter school advocates that the public schools save money when charters open? "You are paying us less than what it costs to educate students in your school district, therefore you are saving money each time a charter opens!"  If only this were true, then there would not be quite as many public school closures and school programs cut across the nation due to the impact of charters. Let's play out a very real scenario. 

            Let us take a moment to examine what really happens to "per-pupil" funding in a district when it reaches the public school level. The central administrative costs of the district are first removed, the "legacy costs" are removed, and in Louisiana, the costs of transportation for all students living a mile or more from school are removed from the funding actually making it to schools. In Louisiana it is also required that public school systems provide transportation to certain private and parochial schools. These funds are also removed from what is ultimately available to fund the education of students in the schools. Per-pupil funding available for the school itself is obviously less than the system wide "per-pupil" funding used to determine charter school funding. For the sake of our example below, we will use an average amount of $7,500 available at the school level to fund the education for each child.

            Imagine a charter school opening in your community. Imagine that the new school opens with 100 students the first year.  These students are drawn from applicants applying from ten area schools, from grades one through five. Now, imagine the district is sending $1,000,000 to the new school for the first year.  This would be the district level per-pupil amount of $10,000 per student. Each of the ten "sending" schools is losing ten students, evenly distributed across first through fifth grade. That would then mean, that each school is losing two students from each grade. Your child's school loses the school-level funding for each of these charter students, and now it is necessary to cut the school budget by $7,500 for each charter school student. Please explain where in the school these "savings" are realized?  With ten students leaving, two from each grade… the school loses  $75,000 per year.  If you are the principal, where do you save $50,000?  In the second grade you have 26 students in each of three classes.  You lose two students in this grade to a charter.  You now have two classes of 25 and one of 26 students. Can you cut a teacher to save money?  How?  Did you stop heating the classrooms, or cut the hours of the librarian, or the counselor?  There are not, in reality, even marginal savings for the school, unless you impact the services of your remaining students, often in drastic ways. To save the money necessary you would have to cut something… but what?  If a charter group takes over a school, an entire school, with all of the students in that school, then there would be "some" savings to a district. However… the impact of legacy costs now shared by fewer students, often negates any savings even in that unlikely circumstance.  The fact is, that "savings" due to charter schools are a huge myth!

            Worth noting in this examination of the impact of charter school on the local school districts is the additional revenues most charter schools acquire through a variety of funding sources.  Start-up funding for charters is often significant, and comes from state and federal education funds allocated specifically for charters, and from private foundations pushing the privatization of public education.  While charter school supporters often scoff at the amount of such start up funds, compared to the costs of starting a new school, the evidence is clear that the charters are often "showing a profit" with a few short years.  Illinois charter supporters, for example, point out that charters in Illinois are required to be "non-profit" schools, but the history of charters across the country points to charter school "management" companies who are claiming, or promising, quite healthy profits to their investors. In addition, local organizations and or wealthy individuals and foundations such as the Bill and Melinda Gates Foundation and the Eli Broad Foundation are funneling increasingly lucrative grants to charter schools. Might these funds otherwise accrue to the benefit of all students?

            Finally, while not the specific topic of this post, the achievement of students in charter schools should be noted. The CREDO Charter School Study, which looked at charters in 16 states found rather dismal effects overall compared to the promises made by charter proponents.  First, only 17% of the schools in the study showed academic performance in charters to be higher than for similar students in traditional public schools.  For 37% of the schools, educational achievement was significantly lower than for traditional public schools.  For the remainder, the achievement in charters was the same as that of regular public schools.  This does not sound like the vastly superior education claimed by proponents of charter schools. For charters in Chicago, Illinois, for example, the improvement in reading was .02 standard deviations above the performance of similar students in the traditional public schools… and for mathematics achievement there was no difference.  Not exactly setting the world on fire. 

            Also to be noted are the findings of the University of Minnesota Law School's Center for Race and Poverty Study of the New Orleans schools, often cited as a bright and shining star example for charters. In this study the researchers disclosed a variety of methods by which charter operators sought to increase the likelihood of "creaming" the best students. 

            All in all, charters are costly, they are more likely to decrease student achievement than increase it, and they drain resources from public school systems across the country.  They are a way to "select" out of the community challenge of educating all students by focusing on the Balkanization of the public school systems in America. The "savings" proclaimed by charter school advocates are just another piece of "myth-information" designed to promote further privatization of our nation's public schools. 

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