Important New Study Shows How Charter School Expansion Ruins School District Budgets

Across West Virginia, Oklahoma, Kentucky, Arizona and Colorado, school teachers have been striking all spring to call attention to their miserably low salaries and consequent teacher shortages in their states. Teachers have also been showing us the deplorable conditions in their schools—elimination of librarians and nurses—swelling class sizes and outrageous caseloads for school counselors.

The teachers’ mass walkouts have alerted us to the impact of the great recession on states’ revenues and especially to the all-Red states that have continued to cut taxes even as their state education budgets collapsed.

But there are other contributing factors to the crisis to which teachers have been calling our attention. This morning, In the Public Interest (ITPI) released Breaking Point: The Cost of Charter Schools for Public School Districts, an important and very readable report on another primary contributor to school districts’ financial woes: the massive growth of charter schools in the past two decades.  The report’s author, political economist Gordon Lafer is familiar with attacks on public education and the promotion of privatization across many of the all-Red states.  He authored the notable 2017 book: The One Percent Solution: How Corporations Are Remaking America One State at a Time.

Here is the pithy summary blurb by which ITPI introduces its new report, which explores charter school growth in three California school districts as examples of a much wider problem for school districts across the country: “In a first-of-its-kind analysis, this report reveals that neighborhood public school students in three California school districts are bearing the cost of the unchecked expansion of privately managed charter schools. In 2016-17, charter schools cost the Oakland Unified School District $57.3 million, the San Diego Unified School District $65.9 million, and Santa Clara County’s East Side Union High School District $19.3 million. The California Charter School Act currently doesn’t allow school boards to consider how a proposed charter school may impact a district’s educational programs or fiscal health when weighing new charter applications. However, when a student leaves a neighborhood school for a charter school, all the funding for that student leaves with them, while all the costs do not.”

What stand out in this report is the perfectly lucid explanation about exactly how charter school funding depletes the budgets of local school districts and what it means for the students left in the traditional public schools when some students carry their per-pupil funding away to a charter school: “To the casual observer, it may not be obvious why charter schools should create any net costs at all for their home districts. To grasp why they do, it is necessary to understand the structural differences between the challenge of operating a single school—or even a local chain of schools—and that of a district-wide system operating tens or hundreds of schools and charged with the legal responsibility to serve all students in the community.  When a new charter school opens, it typically fills its classrooms by drawing students away from existing schools in the district. By California state law, school funding is based on student attendance; when a student moves from a traditional public school to a charter school, her pro-rated share of school funding follows her to the new school. Thus, the expansion of charter schools necessarily entails lost funding for traditional public schools and school districts. If schools and district offices could simply reduce their own expenses in proportion to the lost revenue, there would be no fiscal shortfall. Unfortunately this is not the case.”

The report continues: “If, for instance, a given school loses five percent of its student body—and that loss is spread across multiple grade levels, the school may be unable to lay off even a single teacher… Plus, the costs of maintaining school buildings cannot be reduced…. Unless the enrollment falloff is so steep as to force school closures, the expense of heating and cooling schools, running cafeterias, maintaining digital and wireless technologies, and paving parking lots—all of this is unchanged by modest declines in enrollment. In addition, both individual schools and school districts bear significant administrative responsibilities that cannot be cut in response to falling enrollment. These include planning bus routes and operating transportation systems; developing and auditing budgets; managing teacher training and employee benefits; applying for grants and certifying compliance with federal and state regulations; and the everyday work of principals, librarians and guidance counselors.” As other studies have shown, the greatest fiscal burden for local school districts is for special education, because traditional public schools continue to serve the children with the most serious disabilities, the children who require expensive services most charters elect not to provide.

What about the problems in school districts where the school population is already shrinking?  In recent years charters have somehow been prescribed in places like Chicago and Detroit and Cleveland as a way to attract families to the district. But ITPI’s report explains why such thinking is flawed: “It is true that shrinking student populations cause a fiscal crisis for school districts. However, charter schools exacerbate this problem in unique ways. First, charter schools make it extremely difficult for districts to consolidate schools in the face of falling enrollment… When the creation of new schools is no longer tied to student population growth but rather is open to any number of entrepreneurs aimed at competing for market share, the inevitable result is an increased number of schools for the same population of students. In Albany, New York, over the course of a decade the district went from serving 10,380 students in 17 schools to serving just slightly more students—10,568—but in 24 schools…. And the New York Times reported that in the city of Detroit, ‘the unchecked growth of charters has created a glut of schools competing for some of the nation’s poorest students, enticing them to enroll with cash bonuses, laptops, raffle tickets for iPads and bicycles…’  The problem is particularly destructive in communities whose total school population is already shrinking…. In such districts school systems already struggling to meet student needs with diminishing resources are faced with additional dramatic cuts in funding.”

In California, ITPI estimates, “the net impact of each student who transfers from a traditional public school to a charter school to be approximately $5,000 in San Diego, $5,700 in Oakland, and $6,600 in the East Side (Santa Clara) district.”

In addition to reporting on this study’s investigation of three California school districts, ITPI reviews studies of charter growth across the country: “Because school funding formulas differ from state to state, and because the studies were conducted at different points over the past decade, the results vary significantly. Yet in every case, studies found that charter growth has caused school districts to suffer much more in lost revenue than they are able to make up in reduced expenses—resulting in large net shortfalls for district students.  In the smaller cities of Buffalo, New York and Durham, North Carolina, the net impact of charter schools was estimated at a loss of $25 million per year to each school district.  In Nashville, Tennessee, the loss is approaching $50 million per year.  And in Los Angeles—the nation’s second-largest school district—the net loss is estimated at over $500 million per year… While the magnitude of charter schools’ impact obviously varies by size of district, we can control for district size by converting the findings into impacts per charter students.  In that case, all of the studies described above found the net loss to school districts for each student who moves from a district to charter school to be somewhere between $3,100 and $6,700.”

Lafer, the report’s author, painstakingly explains his methodology for determining the financial losses to the school districts in Oakland, San Diego, and Santa Clara County, and the effects of California state law to deny local school districts the capacity to control their budgets even as more and more charters are approved. But for the purposes of this blog, what is most significant is the warning about the very idea of creating charters to introduce marketplace school choice even while causing fiscal distress for already underfunded school districts: “If a school district anywhere in the country—in the absence of charter schools—announced that it wanted to create a second system-within-a-system, with a new set of schools whose number, size, specialization, budget, and geographic locations would not be coordinated with the existing school system, we would regard this as the poster child of government inefficiency and a waste of tax dollars. But this is indeed how the charter school system functions.”

Please read this fine report from In the Public Interest: Breaking Point: The Cost of Charter Schools for Public School Districts.

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