Charter School Finance 101: Comparing Charter Schools to Their Host District

by Mark ‘Jay’ Williams, Economics Fellow

When New Jersey first authorized charter public schools in the 1990’s, the public was told the charters would operate at 90% of the cost of the host district, saving taxpayer dollars with each family that freely chose this newly-available public education option. Nearly 20 years into this grand experiment, it is clear that the advertised figure is bogus, but not in a way charter critics can use.

In 2010, there were 66 charter schools operating in New Jersey, with many of them operating more than three years. Although the press has covered various aspects of charter school facts, the research comparing charter-per-pupil-expenditure in relation to their host district(s) is lacking.

By statute, charter schools receive funding at 90% of the foundation aid of their host district(s), a percent level that has long been disputed by charter school operators as insufficient and unfair. Recently, the New Jersey Department of Education has been including charter school expenditures in their Taxpayer Guide to Education Spending (formerly Comparative Spending Guide), which forms the financial basis for this simple analysis.

Below is a simple analysis of charter school ‘Total Spending’ and comparative ‘Budget Cost’ data. The ‘Total Spending’ variable, as computed by the New Jersey Department of Education, for the first time includes all expenditures paid by both the school district and the state, including costly pension and health care contributions. Meanwhile, the Budget Cost’ variable includes only those expenditures common to all districts, excluding items such as debt, transportation and other non-comparative expenditures.

At question is whether the charter schools ‘Total Spending’ is much less than their host regular public school districts? Taxpayers and policy makers should consider this analysis as the charter experiment expands. The program is expected to add an additional 15+ schools already approved but not opened, and many more in the review pipeline.

From the 2011Taxpayers Guide to Education Spending, utilizing the 2010 actual numbers for Total Spending and Budgetary Cost, the chart below compares individual charter schools spending levels to their host district. Some charter schools receive a majority of their funding from multiple districts, making a direct comparison impossible.

Key Findings

This analysis is not intended to be comprehensive, but it raises serious questions regarding the range of charter school spending, and the reasons they almost universally receive less than the statute-guaranteed funding levels. The key findings of the analysis are:

• For the former Abbott districts, charter schools receive approximately 65% ‘Total Spending’ funding level compared to their host district, much less than the 90% ‘foundation aid’ level;

• For non-Abbott districts, the funding level range is 56% to 89%, a significant difference in funding level, which reflects large expenditure differences due to student weighting factors and local contribution variation;

• The range of charter per-pupil expenditures for the former Abbott districts range from $10.244 (Camden Institute of Excellence) to $22,222(Camden Promise), requiring further investigation into reasons for large variation across former-Abbott districts;

• The variation of charter school funding within a host district can be significant, requiring further investigation into reasons for large variation;

The analysis for the selected districts is intended to identify basic funding levels, and does not identify productivity, performance or even reasons for funding variation in- and between- districts.

Camden

Camden had eight charter schools in 2010, with Total Spending ranging from $10,244 to $22,222, a difference of $11,978 per pupil. In comparison, the Camden Public School District had a Total Spending of $23,770, with a charter school funding level range of 43% to 93%. The large variation in Camden’s charter school spending is significant, and requires further investigation.

Jersey City

Jersey City identified nine charter schools in operation in 2010, with a Total Spending range of $11,525 to $18,818, a difference of $7,293 per pupil. In comparison, the Jersey City School District had a Total Spending of $21,824, with a charter school funding level range of 53% to 86%. The large variation in Jersey City’s charter school spending is significant, and requires further investigation

Newark

Newark had 13 charter schools operating in 2010,with a Total Spending range of $12,423 to $17,915, a difference of $5,492 per pupil. In comparison, the Newark Public Schools had a Total Spending of $22,992, with a charter school funding level range of 54%to 78%. Although Newark’s variation was less than other former-Abbott districts, it still is significant to require further investigation.

Paterson

Paterson’s two charter schools in 2010 had a Total Spending range of $12,606 to $13,031, a difference of only $425 per pupil. In comparison, the Paterson School District had a Total Spending of $20,229, with a charter school funding level range of 62% to 64%. Paterson funds their charter schools at similar levels.

Plainfield

Plainfield’s three charter schools in 2010 had a Total Spending range of $13,039 to $13,620, a difference of only $581 per pupil. In comparison, the Plainfield School District had a Total Spending of $19,572, with a charter school funding level range of 67% to70%. Plainfield funds their charter schools at similar levels.

Trenton

There were six charter schools operating in Trenton in 2010, which had a Total Spending range of $13,559 to $18,674, a difference of $5,115 per pupil. In comparison, the Trenton Public School District had a Total Spending of $21,038, with a charter school funding level range of 64% to 89%. The large variation in Trenton’s charter school spending is significant, and requires further investigation

Conclusion

There is still much more we need to learn about charter schools, and this quick analysis highlights the large range of funding levels between charter schools and their host districts. Although all charter schools have a Total Spending less than their host districts, there are still many questions on whether this constitutes actual taxpayer savings (since former-Abbott districts receive a SFRA-language 2% annual increase in funding) and whether the addition of 100 new charter schools on an already large fragmented system will have long term consequences.

But on the surface, many charter schools spend only 65% of what it costs for the public schools, making this education option taxpayer-friendly.

Comparing Charter Schools Per-Pupil Costs

This article was first published by InTheLobby.net. To download a copy, click here.