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Finance reform task force talks charter funding

The balance between flexibility and accountability is part of a statewide debate around funding, oversight, and autonomy for charter and traditional public schools. A legislative task force studying the funding structure for the entire public school system continued that conversation Thursday. 

“When I talk to charter people, they say that funding is not equal,” said Sen. Jerry Tillman, R-Moore, Randolph, to the Joint Legislative Task Force on Education Finance Reform. “When I talk to the public schools, they say we’re being killed because our money is going to the charter schools. Who’s right?”

The task force, which is considering a different state funding distribution method, looked at how the state’s charter schools are currently funded and where charter school advocates would like to see change. 

The network of charter schools throughout the state is rapidly growing, said Alexis Schauss, the Department of Public Instruction’s director of school businesses. Since 2010, there has been an increase in charter schools from 98 schools with about 38,000 students to 173 charter schools serving more than 100,600 students today.

These schools are mostly funded in the same way as traditional public schools: through an allotment system. School districts and charter schools also receive state funding based on certain characteristics of their student populations, like if students have special needs or limited English proficiency. By law, counties must give charter schools the same per-pupil local funding they give traditional public schools. 

The following is an example of how state funds are calculated for each charter school, using a charter school in Johnston County as an example. Go here for Schauss’s full presentation

Source: Department of Public Instruction presentation

Charter schools do not, however, receive local or state funding for capital expenses. Schauss said the state allocates around $100 million to traditional public schools each year for that purpose. That is about $64 per student, Schauss said, that charter schools do not receive. 

“If you’re doing it for a public school, that includes charter and traditional, and they ought to have access to that funding,” said Gregg Sinders, the North Carolina director of Team CFA, a charter operator that runs 13 charter schools in the state. He said up to 20 percent of those schools’ budgets is used for building leases. “Those are dollars that don’t go to the scholars,” Sinders said. 

Sinders said he would like to see county commissioners have the ability to fund capital expenses for charters, as is the case in other states like Florida and Michigan. 

About 93 percent of the state funds schools receive are distributed through allotments calculated using the district or charter school’s average daily membership. For traditional public schools, Schauss said, her DPI team has developed the ability to predict the number based on the school’s history and other demographic trends. For charter schools, however, she said that number is harder to guess. 

“With the charter schools, the challenge is that we have 173 independent schools of choice that are all at different maturity,” Schauss said. “Some are brand new and growing rapidly. Some are brand new and start with 700 students in that first year. We have some that are capped, some that have been the same size for a number of years and now have decided to go into high school grades, or go down into elementary school grades. So the history of a charter school in projecting them, does not necessarily determine what their next year student counts will be.”

State budgeting relies on charter school’s self-reporting, which Schauss said is sometimes overly optimistic. In order to not overestimate and budget too much money, Schauss’s team caps the estimate at 20 percent growth from the previous year. They ask charter schools for an estimate in January, again in June to get a more accurate student count, and again after the first month of school. If more students are at the charter school than expected at that point, Shauss said the money is transferred from the local school district to the charter school.

Charter schools predicting more than 20 percent growth in student enrollment have to receive approval by the Charter School Advisory Board and the State Board of Education. That threshold was once 10 percent, and, starting in 2019, will be 30 percent. Those limits are different if the charter school is low-performing.

There is no separate line item for charter school funding in the state budget. Both Sinders and Steven Walker, policy advisor for Lieutenant Governor Dan Forest and CSAB member, said they wanted to keep it that way. 

“You’re going to have 173 charter schools coming to you during the budget process and fighting for money,” Walker said. “But if we do it where it’s tied in with the overall K-12 education budget, then you’re not going to have that … it’ll be easier for you and it will also provide some permanence for charter schools and allow them to be able to adequately budget.” 

There are flexibilities given to charter schools in who they hire, what they teach, and how their calendars are structured. The original intent of this additional flexibility was to breed innovation that could be scaled to traditional public schools. Sinders said that line of communication is not as open as he would like for it to be. 

“I think we’ve got a big challenge in breaking down the ‘us versus them’ mentality and sharing innovation in curriculum models,” he said.

Similar flexibility is given to continually low-performing schools who receive a “restart” status from the state board. More than 100 schools have been approved so far, which Sinders said shows a thirst for more control at the school level. 

“Hey, at the end of the day, I think every public school should receive charter-like flexibility,” he said. “We’re not special. It’s what the law says, it’s how it was created.”

Sinders also suggested state appropriations for opening new charter schools — $50,000 after the state board approves the charter and another $50,000 when the school’s facilities are secured. He said the intense demand he has seen on school waiting lists means charters need assistance with opening.

“It’s quite a hurdle to get the doors open,” Sinders said. He said opening a new charter school costs his organization around $900,000 in short-term loans.

Starting this year, the state is reimbursing charter schools for transportation costs, though charter schools are not required to provide transportation. Those new funds are given through a grant reserved only for charter schools.

There are some exceptions to the rules around charter school funding, Schauss said. There are two virtual charter schools, for example, who receive funds through a different structure. 

“As different variations on these kinds of schools of choice come out … we’re kind of managing the different funding calculations,” she said.

Liz Bell

Liz Bell is the early childhood reporter for EducationNC.