How are Charter Schools Funded?

October 23rd, 2008

With Congress's approval of a $700 billion bailout package for crumbling Wall Street firms, the foreclosure crisis firmly gripping the nation and energy prices sucking the funds out of people's bank accounts, money is perhaps the hottest topic around the watercooler these days.

Local officials are in the midst of budget planning, trying to find dollars to cut and programs that can squeeze by on less, while property owners are surely bracing themselves for tax increases.

One of the largest tax burdens comes from schools, and with the recent creation of a new school - the New Roots Charter School - one has to wonder what that will mean for Ithaca property owners.

The financial impact to the Ithaca City School District is unknown, because New Roots hasn't started up yet, and since it will accept students from throughout Tompkins County, it may not just be ICSD that will be impacted.

How are charter schools funded in New York?

The bulk of the funding comes from the home school district of students who are attending the charter school, according to Dr. Sandra Vergari, an associate professor of education administration and policy studies at SUNY Albany. She said the home districts must pay a portion of the per pupil aid allocation set by the state.

"It's a percentage; there are certain exclusions from that funding," Vergari said. "It's about two-thirds to 70 percent of the funding (per pupil allocation."

Peter Murphy, New York Charter School Association director of development and policy, said it's important to differentiate between the financial impact and the educational one.

"You have to make the case, as New Roots did, that the school is educationally worthwhile, but will attract sufficient enrollment," he said, adding people should realize that those attending charter schools go for specific reasons. "People don't go there automatically, they go there because they choose to.

"Districts often harp on the fiscal issues, but the school wouldn't exist if the residents didn't want it to," Murphy added.

Some of the exclusions include facilities costs, which she said are not provided by the home district, as well as cafeteria spending. The per pupil allocation funds are comprised of state funding and local taxes.

"Think of a kid with a backpack; he has a per pupil allocation from the district," Vergari said. "When he goes, that money goes with him. Districts like to think, 'That's our money,' but a different philosophy is that it's the taxpayers' money, and the parents get to decide where it's spent."

"Funding exists for public education to serve children," Murphy added. "Where the families decide to send them, the funding flows with them."

Each student that attends New Roots from other school districts in Tompkins County would reduce the financial impact to the Ithaca City School District.

"The impact on any one district would be lessened if students are coming from various school districts," Vergari said. "If there are 125 students coming from five different districts, that would have a much different impact than if they were coming from just one."

David Albert, New York State School Boards Association director of communications and research, said the impact will depend on the sizes of both the charter school and the home district, as well as how many different schools see students leaving for the new educational program.

"Typically, they come from different schools, and the districts find ways to consolidate or absorb that loss without much of an impact," Albert said.

He said the impact also should be lessened by New Roots's plan of having ninth and 10th grades in the first year of existence, and adding a ninth grade each subsequent year.

"Obviously, that's a better planning scenario for the public school district," Albert said.

The reason the home districts have to pay out the money for the students attending a charter school is that charter schools cannot levy taxes. Home districts also are required to provide transportation for the student to attend the charter school - if the district provides transportation for private schools.

Murphy said home districts may be required to send a portion of per pupil aid to charter schools servicing students in their jurisdiction, those students are still counted in the home district's school aid calculations.

"They are still counted as district pupils for the purposes of state aid, but they are now charter students," Murphy added. "The district is the mechanism by which the funds flow to the charter school."

One issue home districts can see, Albert said, is with fixed costs, such as utility expenses, facility maintenance, and buildings and grounds needs.

"One of the problems with the current mechanisms is it doesn't take into account fixed costs," he said. "When the money follows the pupil, the schools still have fixed costs and their options are not as extensive for cutting costs."

According to the state Education Department, the per pupil allocation for the 2008-09 school year for the Ithaca City School District is $12,113. Other Tompkins County school districts - with their per pupil allocations in parentheses - include Dryden ($10,200), Groton ($9,486), Lansing ($12,850), Newfield ($8,923) and Trumansburg ($10,114).