The charter funding debate

IN THE HIGH-STAKES battle over charter school expansion, the impact of charters on school finances has come front and center. Supporters of Question 2, which would allow up to 12 new charter schools or expansion of 12 existing schools per year, argue that the funding formula for charter schools holds districts harmless when students move from district schools to charter schools. Opponents say the shift of funds to charters is wreaking havoc on district systems and their budgets.

The truth lies somewhere in between.

The principle undergirding charter school funding in the state is that public funds for schools follow the students. When a charter school enrolls a student from a community, it receives the same per-pupil funding that district schools get, which is a combination of state aid and local dollars generated from property taxes.

A recent report from the Massachusetts Taxpayers Foundation examined the charter funding issue and concluded that the system has worked remarkably well and largely as envisioned. Last year, according to the report, 3.9 percent of all public school students in the state attended charter schools and charters received 3.9 percent of all public education spending.

“Examination of school funding trends in districts affected by charter school enrollments does not suggest that charter schools are over-funded, that students in district schools are suffering a loss of support, or that the per-student funding of districts is trending negatively,” the report concluded.

Both the Boston Globe and Boston Herald have had editorials in recent days citing the report as clear evidence that charters are not harming district budgets.

While charter funding is, in total, proportionate to the size of the charter sector statewide, the movement of students from district schools to charters can create budget challenges not captured by that macro view. When two or three students in each grade, for example, leave a district school for a charter school, the district loses the per-pupil funding for each, but it won’t be able to immediately eliminate a teaching position — the single biggest cost item for schools.

Call it the devil-is-in-the-details argument.

It is those details that spurred a Somerville couple to develop a web-based tool that they say assesses the impact of charter growth on individual district systems. Stephanie Hirsch, a performance management and municipal operations consultant, and her husband, Joe Calzaretta, a mathematician and software engineer, developed a website, www.costofquestion2.com, that lets users look at any district in the state and make adjustments for class sizes, number of students exiting for charters, and other variables.

When enough students leave for charters, their model shows the number of teachers that a district could cut, but they say there will remain a big gap between the savings those reductions bring and the amount of money districts must send to charter schools. Using Lowell as an example, assuming a migration of 150 student each year from the district schools to charters, their model says that after nine years there would be a $8.8 million gap between the $5.5 million in savings that could be realized by reducing the number of classrooms and the $14.3 million in tuition payments the district would be responsible for to educate the 1,350 additional students attending charter schools.

Not enough classrooms can be closed, their web tool says, because “too few students leave from any one grade/school to close sections.”

Districts could eventually adjust to the lower enrollment. It’s getting from here to there that is the problem, says Calzaretta.

“Maybe when the dust completely settles it’s fine,” he says. “But there’s a period of time when you have to adjust to changes. Since you can’t get immediately to equilibrium and there are certain economies of scales, what do you do?”

Calzaretta concedes that in building assumptions into the complicated model, “some of these things are guesses.”

The model does not include any reductions in fixed costs in a district, such as administrative staff, that don’t necessarily change when students leave. And it doesn’t account for savings from closure of entire schools, a necessary and logical step to take when district enrollment falls, but something that the web tool says would be “very disruptive and politically difficult.”

Although the Mass. Taxpayers’ report concludes that the charter funding system is working fairly, it makes a similar point in its conclusion, saying consolidation or school closure decisions made necessary by charter growth “are likely to be politically fraught.” It also acknowledges the difficulty of paring back district employees that fill specialized roles.

That “politically fraught” landscape has held Boston back from making tough decisions in the wake of rapid growth in charter schools in the city. Boston students accounted for more than one-third of the 11,000 new charter school students in the state since a 2010 law raising the cap on the independently run, but publicly funded, schools.

“Boston has 10,000 students going to charter schools, but we still have excess capacity [in the district system] because they haven’t meaningfully adjusted to it because it’s such a tough issue,” says Sam Tyler, president of the Boston Municipal Research Bureau.

In April, the business-funded watchdog group issued its own report on charter funding in Boston.

The report said the Boston has largely held its schools harmless from the effect of charter expansion, with the city continuing to spend 35 percent of the municipal budget on schools. The school department budget has grown by 24.9 percent since 2011, a much higher rate of growth than the rest of the city budget.

On a per pupil basis, Boston spends slightly more than the city’s charter schools, though the report says that should be expected given the higher number of special needs students and English language learners in the district system.

“The true cost of charter expansion has not been a matter of revenue, but rather the struggle of eliminating excess capacity and rightsizing an urban school district,” the report concluded.

Further complicating the discussion of districts “rightsizing” their operations is the ballot question’s open-ended allowance of up to 12 new charters per year. It means, “there is no finish line” for charter expansion that districts can plan around, says Hirsch, who served as the first director of Somerville’s data-based SomerStat program tracking city services.

In weighing the charter school issue, says Eileen McAnneny, president of the Mass. Taxpayers Foundation, it’s important to bear in mind that the funding system – with the money following the student – is essentially the same model used to fund regional vocational technical high schools and slots in the state’s school choice program that allows students to enroll in a neighboring district.

The effects of charters “aren’t any different,” she says. McAnneny says the charter funding system is actually “more advantageous” to districts because of the state’s charter reimbursement system.

That system, which was intended to cushion the transition effects that Hirsch and Calzaretta focus on, is supposed to make up some of the revenue loss to school districts for the first six years after a student leaves for a charter. It has only been funded at about two-thirds the designated level over the past two years, however, further fueling some of the district budget concerns about charter growth should the ballot question pass.