Charter Schools Drain Tax Resources and Are Overfunded

MYTH:

Tom Wolf on his website believes charter schools are a drain on tax resources and are unfairly over funded.

He states that, if elected, he will:

“Convene a commission to develop funding formulas that are fair to school districts, brick-and-mortar charter schools, cyber charter schools, and taxpayers. Currently, charter school funding is based on a school district’s per student costs, which includes funds associated with services not provided by charter schools. These all-in costs are starving our local districts of desperately needed resources and helping charter school fund balances grow. The Pennsylvania Auditor General’s Office estimates that accurate brick-and-mortar and cyber charter funding formulas could save taxpayers and local districts as much as $365 million each year.”  http://wolfforpa.com/sections/page/charter-school-reform


TRUTH:

Charter Schools save tax dollars and are underfunded.

Tom Wolf’s statement presupposes that charter schools are second class public schools and should be provided fewer resources than the traditional district schools that parents and students are leaving to attend charter schools.

Wolf states that the state sends tax dollars to charter schools that include “funds associated with services not provided by charter schools.”  In fact, just the opposite is true!  A student’s home school district gets to keep tax dollars for services the home school does not provide once the student enrolls in a PA Charter School.  Home public school districts, utilizing a funding formula developed by the PA Department of Education (form 363*) may deduct 23 categories of expenditures from their budget that are not passed on to charter schools.  These include: facilities acquisition, construction and improvement costs that charter schools also incur.  They may also deduct 15 categories of federal funds that charter schools often are not eligible to obtain.  In addition, home public school districts may deduct for services “not provided by charter schools” such as Nonpublic School Programs, Adult Education Programs, Community / Junior College Programs, and Student Transportation Services.  When these exclusions are all totaled, charter schools receive approximately 70-80 cents on the dollar for every dollar spent on the same student in their home school district.

It may be true that home school districts spend money on some items that charter schools do not provide – such as expensive football stadiums.  Charter schools will often instead spend this same money on computers for every child, smaller class sizes and tutoring for students who are struggling.  Should charter schools be penalized for making these kinds of choices?

Wolf states that, “These all-in costs are starving our local districts of desperately needed resources and helping charter school fund balances grow.”  As demonstrated above, the “all-in costs” are a myth, but the “fund balance” argument is also a myth.

According to the PA Department of Education’s website, fund balances for PA Charter Schools charter schools combined at the end of the 2013 school year were $238,368,303.*  This was an average of $1,261,207 for each charter school.  In contrast, the combined fund balances for PA Non-charter Public Schools was $3,983,887,256 ($3.9 billion dollars!).  Only 14 of 500 School Districts had negative fund balances.  (More recent estimates now place district surpluses at more than $4.2 billion!)  PA school districts had positive fund balances of:

  • $163,629,535 – Pittsburgh School District (Allegheny County)
  • $55,925,688 – Lower Merion School District (Montgomery County)
  • $50,347,483 – Altoona Area School District (Blair County)
  • $47,597,561 – Abington School District (Montgomery County)
  • $30,037,906 – North Penn School District (Montgomery County)
  • $29,518,034 – Tredyffrin-Easttown School District (Chester County)
  • $29,076,347 – Bensalem School District (Bucks County)
  • $27,719,745 – Parkland School District (Lehigh)
  • $25,730,925 – Berwick Area School District (Columbia County)
  • $17,244,252 – Ephrata Area School District (Lancaster)
  • $15,553,539 – Penn Manor School District (Lancaster)

 

By comparison, Pittsburgh School District has 24,525 students (fall of 2013).  Their fund balance would equal $6,671.95 per student.  This compares to an average fund balance of $1,986.40 per student for charter schools.

Add to this dynamic that a traditional school district has its entire school budget in the bank before school begins in the fall.  Charter Schools begin with a negative balance.  Charter Schools must wait for the student to enroll to bill the home school district and wait a month (or more) to receive the monthly payment for that student.  Fund balances are imperative for charter schools to survive from year to year.  In addition, school districts have the power to raise real estate tax rates to close funding gaps, while charter schools have no taxing authority.

Wolf states “The Pennsylvania Auditor General’s Office estimates that accurate brick-and-mortar and cyber charter funding formulas could save taxpayers and local districts as much as $365 million each year.”  Wolf knows that the Auditor General’s Report – in concert with Governor Rendell’s eight year effort to cut funding for charter schools – was a politically motivated report.  In order to save $365 million per year, the formula would have to be changed to cut funding to charter schools by ($365,000,000 / 119,465 students) or $3,055 per student.  If the Auditor General’s report were accepted, charter school students would then receive only 50% of the tax dollars to attend their school of choice as they would to attend their assigned home school.  Yet these same students would be subject to the same testing standards they would be held to in their home school district school.

The most inaccurate part of Wolf’s analysis of charter school funding is his statement that – “accurate brick-and-mortar and cyber charter funding formulas could save taxpayers… as much as $365 million each year.”  Actually, cutting funding for charter schools would cost taxpayers more money.  If every student were to choose a charter school, because charter schools run on less money, school taxes could be cut 20-30%.  So, cutting funding to charter schools actually makes it harder for charter schools to compete and ultimately increases taxes.

The PA Charter School Community also supports an effort to “convene a commission to develop funding formulas that are fair to school districts, brick-and-mortar charter schools, cyber charter schools, and taxpayers.”  If, however, the “commission” is chosen by politicians who carry the anti-charter school biases that Tom Wolf projects, “fair results” would be highly unlikely.

 

MYTH / TRUTH prepared by:

Dr. James Hanak, CEO, PA Leadership (Cyber) Charter School