October 20 — 12:36 pm, 2014

So the charter funding formula is unfair – but to whom?

Many observers agree that the overall pot of Pa. education aid is too small. But debate over fixing the rules fairly is fierce.

With education funds scarce in the commonwealth, the debate over how charter schools get their money has never been more polarized.

The stakes are huge: Last school year, 176 charter schools educated 129,000 students statewide, at a cost to Pennsylvania school districts of more than $1.2 billion. About half those schools and students are located in Philadelphia; they consume 30 percent of the District’s operating budget.

Charter schools are independently run public schools paid for by tax dollars, authorized and primarily funded by the school districts from which their students come. Districts send charters a per-student payment, based on a state-established formula.

Since Pennsylvania’s charter school law passed in 1997, there has been little change to the funding mechanism. There is widespread agreement that the formula is out of date and needs to be revamped, but no consensus on how to do that. Lawmakers in Harrisburg have repeatedly failed to come to an agreement about what changes are needed.

Charters contend they do not get their fair share compared to districts. Districts question some of the payouts going to charters – particularly for special education and cybers – and say that the drain of charter funding is wreaking havoc on their finances.

How the formula works

The formula that allocates money to charters is based on each school district’s per-student expenses for the prior year. So payments vary widely depending on where a student lives.

Each district has a rate for regular education students and one for special education students.

Statewide, for non-special education students, payments range from $6,600 to more than $17,000 per student. Special education amounts are much greater, from $13,000 per child to more than $43,000.

In the state’s formula setting charter funding, certain district expenditures are left out, on the theory that charters don’t incur those costs. These include adult education, mandated district services for nonpublic schools, transportation (districts handle transportation for all students), and facilities construction, including debt service.

Federal aid, which accounts for 13 percent of Philadelphia’s budget, is also excluded, because charters can apply for it in most categories if their students qualify. However, some charter operators say this and some other exclusions are unfair.

The exclusions form the basis of charter school supporters’ contention that charters only get about 70 percent of what traditional schools get. As a result, this argument goes, they are underfunded while also saving taxpayer dollars.

The districts’ position

District supporters contend that the exclusions reflect the real difference between school district expenses and those for which charters are responsible. Former Philadelphia District Chief Financial Officer Michael Masch has calculated, for example, that in Philadelphia, average charter per-student expenditures and District per-student expenditures are almost identical, if only operating costs are counted. Some charter supporters dispute his figures.

Masch said in a September interview that the state charter funding formula is relatively accurate in reflecting district per-student operating expenses. The exceptions, he said, are payments to cyber charters and for special education students. The formula, he said, “is actually written pretty well” and “better than in a lot of other states.”

Charter schools are underfunded, Masch said, because state funding for both charters and school districts is inadequate – not because of the charter funding formula. He called it a “tragedy” that districts and charters are squabbling instead of joining forces to get more state dollars.

Even if charter funding, with some exceptions, accurately reflects school district expenditures, Masch said, it still presents districts with a huge financial drain. Each time a student leaves, the district cannot cut its expenses by the amount it must send to the charter; it takes longer to adjust building and personnel expenses to reflect the lower enrollment. Moreover, about 30 percent of charter students in Philadelphia were never in the District – they were home-schooled or went to a non-public school. Their cost is an added burden to District finances.

The charters’ position

Many charter supporters say the funding formula shortchanges them. They say that even when some parts of the formula, like special education, favor charters, it just makes up for their being underfunded elsewhere.

David Hardy, founder and head of Boys’ Latin of Philadelphia Charter School, said in an interview that charter funding is “not enough. … Why is a charter school kid worth 30 percent less in the state of Pennsylvania? The District says it can’t get by on what it gets, and we receive only 70 to 75 percent of that.”

Hardy is among those who object to excluding school districts’ construction and debt service when calculating charter payments. He said that charters are not included in state reimbursement programs for school construction, and loans they take out are not guaranteed by the state, unlike public school bonds.

“That’s a huge difference between charter school and district funding,” Hardy said. He and other charter advocates say there should be some provision to help charters with construction funding. (Charters are reimbursed for some facility rental costs, if they rent. Some charter construction projects have been financed by county industrial development authority bonds.)

Hardy and Masch agree on one thing: “There needs to be a bigger pot,” Hardy said. “We should be advocating for more money for all of us.”

But they fundamentally disagree on who is to blame.

Hardy said that school districts undermine prospects for a united front by advocating cuts to charter funding. “Taking money away from us to make their programs work – that’s not acceptable,” he said. Masch said that charters are not seeking a fair solution. Instead, he said, their attitude is “‘We just want to change the rules so that we get more.’”


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