Charter school funding has no easy answers

Comparison with traditional school districts difficult thanks to patchwork finance rules

With the Supreme Court close to a decision on Texas’ method of funding public schools, the question of how charter schools fit in to the mix has arisen again.

AUSTIN — With the Supreme Court close to deciding whether Texas’ method of funding public schools is constitutional, a recurrent talking point again has pervaded the conversation: Charter schools are disadvantaged when compared with traditional school districts because they get less money on average from the state.

That narrative is incomplete at best, experts said.

Lawmakers and lobbyists often say that only about five people in the state of Texas really understand how school finance works. Weighted average daily attendance, the cost of education index, “golden pennies” — the way state and local tax dollars fund public schools is a complex set of concepts that takes time and effort to understand.

In addition, as a result of seven lawsuits challenging the system’s constitutionality since 1984, Texas has ended up with a patchwork set of formulas, weights and measures that is updated in some areas and outmoded in others.

Add charter schools to the mix, and things get more complicated, according to Lisa Dawn-Fisher. As associate commissioner at the Texas Education Agency in charge of school finance, Dawn-Fisher is the top expert on public school funding in the state.

“I don’t think there’s anything about school finance that is as simple as people want it to be,” Dawn-Fisher said recently. “I think it’s hard to wrap your mind around all these esoteric concepts.”

State lawmakers first approved charters 20 years ago. Texas now boasts 195 charter providers, which operate hundreds of individual campuses, most clustered in large urban

areas. Charters are public schools funded by taxpayer money, just like traditional public school districts.

There are some differences, however.

Every traditional public school district has access to two pots of money from the state: one to cover daily operations costs, called “maintenance and operations,” and one for capital development, known as “facilities funding.”

‘Up to the reader’

Charters do not get facilities funding from the state, nor do they have the option of asking voters for additional money through the issuance of bonds. Instead, they often cover new building costs out of operations money or through private donations.

That facilities funding gap is the basis for the narrative that charter schools generally are disadvantaged compared to public school districts. Dawn-Fisher points out, however, that on the operations side of the equation, charters get benefits “that school districts just can’t achieve, by and large.”

Small- and mediumsized districts each get extra money from the state, depending on their enrollment numbers. Charters, however, get both size adjustments, a perk that ripples through the rest of the formulas to the charters’ advantage. In addition, while charters do not have the ability to hold a bond election, they benefit every time local taxes are raised because they receive socalled “enrichment” money based on the average of all school districts.

“Charters get about $1,000 more per (average daily attendance) than a school district for their maintenance and operations funding. And on average, school districts get about $1,000 per ADA in state aid and local taxes for facilities, and so it’s kind of up to the reader to decide whether or not those things wash out,” Dawn-Fisher said.

The Texas Charter School Association takes issue with Dawn-Fisher’s numbers, saying they “cannot include all state and local components of the funding mechanism.”

At a December meeting of the Senate Committee on Education, TCSA Executive Director David Dunn told lawmakers that charters, on average, get $1,000 less than districts when looking at a number called “weighted average daily attendance.” The figure is a district or charter’s average daily attendance, with additional money for students that are more expensive to educate, such as English language learners.

Dunn and other charter representatives included the “$1,000 less” talking point in arguments before the Texas Supreme Court.

“The State provides charter schools not only significantly less funding than necessary to achieve a general diffusion of knowledge, but also significantly less funding than it provides to school districts. In fact, it is undisputed that this discrimination costs charter schools $1,000 per weighted student,” the TCSA wrote in a brief to the high court last August.

‘Misleading’ numbers

That assertion is far from undisputed.

Scott Hochberg and Lynn Moak both have spent decades working on school finance, the former as a long-time legislator and consultant and the latter as a top researcher on the issue. Both said the problem with the charters’ narrative is that they rely on averages that do not provide a complete picture.

“Averages are misleading,” said Hochberg, who was involved with the creation of the charter system in Texas in 1995. “You might not drown in the average water level in Sims Bayou, but I wouldn’t go stand there in a rainstorm.”

Moak agreed. A study he recently co-authored found charters with an average daily attendance of more than 1,000 kids received more operations funding per child from the state than similarly-sized districts, while smaller charters were disadvantaged in that same funding when compared with smaller-sized districts. The study did not look at facilities funding because the different ways charters and districts calculate their weighted average daily attendance means it is not an apples-to-apples comparison.

“One of the things we discovered in our report, mentioned in our report, is that school districts and charters operate under different accounting systems and include different things,” Moak said. “You can’t make a generic statement.”

Comprehensive solution

Dunn said his group has joined in on the school finance lawsuit precisely to address how to fix the way Texas funds public schools, including charters. He said they draw attention to the facilities funding gap because it is the most negative, impactful problem arising from the current system for charters.

“Ultimately, all of us in the public education system are after the same thing, and that is better educational outcomes for kids,” Dunn said. “The more that we can find ways to work together to achieve better education outcomes for kids, the whole state of Texas wins.”

Hochberg said the solution is not simply to issue a blank check to charters to make up for the facilities funding gap — something they’ve asked for in the past — but a more comprehensive answer that could involve allowing charters to issue bonds.

“No one denies there’s an issue with charter schools’ facilities funding,” Hochberg said. “I think the problem is the lack of a creative solution to provide both the funding they need and the accountability that the taxpayers deserve.”