Charter School Funding

 

October 7, 2004

 

After what seems like months and months and months, the funding of New Hampshire charter schools is starting to seem clear(er). Good thing! Three schools are open; 3 more plan to open before February; and 3 more are on the road to approval.  It is our first year of charter schools actually open and this most important detail (money to pay school teachers) will be resolved.

 

It’s quite clear how school district-authorized charter schools receive funding. There is a contract between the charter school and the local district, and each year the charter school receives no less than 80% of the average per pupil cost (of the sending district) for each student. The law is flexible, allowing a contract for “less” than the 80% or “more.” This is the funding model on record from 1995 through 2004 for district-authorized charter schools. Our temporary confusion is how the charter school’s state funds for state-authorized charter schools reach the charter school—through the district or directly from the state?

 

Different states handle the path of funding in different ways. In addition to New Hampshire, the district-to-charter school cash flow scheme is used in many states, including New Jersey, New Mexico, and New York. Best practice is not routing money through the local school district. States having all charter school funds flow directly from state coffers include Minnesota, Massachusetts, Delaware, Ohio, Nevada, Indiana, Hawaii, Washington, and District of Columbia.

 

Finally, several states have a logical system: money flow from districts to the charter school IF the authorizer is the district, and money flows from the state to the charter school IF the authorizer is the state (or if the charter school is open enrollment, taking students from more than one district). This logical model is found in Texas, Michigan, Connecticut, Arkansas, Arizona, and Louisiana

 

When the legislature drafted the 2003 revision allowing state-authorized charter schools, the district was no longer the authorizer and overseer of these schools.  Legislators repealed those sections of charter school law pertinent only to district-authorized charter schools:  “the following provisions of law shall not apply” to state-authorized schools: 1) the contract between the charter school and the school district, 2) the application going to and through the school district and the appeal process involving the school district, 3) amendments going to and through the school district, 4) open enrollment provisions involving the school district, and 5) grievances going through the school district. So the legislature’s effort was to disconnect the charter school from the local district IF the state was authorizer.

 

Somehow, the most essential component of the state-authorized charter schools—operational funding—was left in the hands of the local school districts. “For any charter school authorized by the state board of education, the pupil’s resident district shall pay tuition beginning July 1, 2004, and every fiscal year thereafter, in an amount per pupil equal to the amount determined in RSA 198:40. To the extent permitted by law, tuition payments shall coincide with the distribution of adequacy grants under RSA 198:42 or on such other terms as are mutually acceptable.” This 2003 provision for state-authorized charter schools does not mention anticipation notes. It does not mention the state’s per pupil amount flowing directly from the state.

 

An additional statement of the 2003 statute revision allows all other provisions of charter school law to stay in place. And so we turn to another charter school funding provision (RSA 194-B:11) to find 2 more funding concepts: “the pupil’s resident school district or department of education shall pay tuition in cash or may issue reimbursement anticipation notes as set forth in RSA 198:20-d.” Two additional provisions are in this one statement--1) the department may pay the tuition to the charter school directly and 2) the department or the district may seek reimbursement anticipation notes to delay the current-year transfer of their own state funds. Charter schools requesting direct payment from the state are told this provision is not allowable or possible. Charter schools seeking funds in a timely fashion without any holdup around anticipation notes are told this provision is allowable.  Both of these provisions are in the same sentence of law.

 

The good news (for charter schools and school districts) is that the Department of Education now explains that the Department pays the borrowing costs when the municipality issues and keeps an anticipation note. No borrowing cost to the town/city, school district, or charter schools if the municipality obtains the anticipation notes. The situation is confusing and a bit harrowing for charter schools who are not school-district sponsored and are open.

 

According to New Hampshire’s Jose Alfonso, a long-time administrator for the Massachusetts Department of Education and currently an administrator with Sabis International, “No state with a truly strong charter school initiative has funding flow through the local district. That's simply a recipe for problems.”

 

"I can tell you that if there is an option, you should not have charter school funding flow through local districts. And particularly with state-authorized schools, the state should find a way to have funding flow directly from the state to the charter schools with no middle step where the funding could be delayed or challenged or forgotten. It's essential for funding to be transferred to the charter school on time.  Salaries, contracts, lease payments and other expenses must be covered in a timely manner. In my experience, no state with a first-class charter school initiative has funding flow through the local district unless it is a district-authorized school." 

 

States with top-rated charter school laws have money flowing directly from the state to the charter school, especially for state-authorized charter schools:

 

  • ARIZONA—1st –rated charter school law in the country. Money path is through district for district-authorized schools and directly from the state for other schools. 

  • MINNESOTA—2nd highest rated law—money path is from state directly to charter school. 

  • DISTRICT OF COLUMBIA--3rd highest rated law—money flows from state and district to school.

  • DELAWARE—rated 4th highest law—money flows from state and the district to the charter school.

  • MICHIGAN—5th highest rated charter school law—money flows from state to authorizing body acting as fiscal agent to the public school academy.

  • MASSACHUSETTS—6th highest rating for charter school law—money flows from state to school.

 Other models:

  • ARKANSAS—money flows through districts for conversion schools; money directly flows from state to school for open enrollment schools.

  • CONNECTICUT--money path through district for district-authorized schools; directly from state for other schools.

  • TEXAS—through district to school authorized by local school boards; directly from state for open enrollment schools

New Hampshire has the opportunity to correct this funding path issue right from the start of our charter school pilot program. State money should flow from the state directly to charter schools for state-authorized schools. Local funding should flow directly from local school districts to charter schools. All public schools and especially charter schools MUST know the dates they will receive their funding. Public schools must receive their funds in a timely and predictable manner.

 

Charter schools in New Hampshire can have charters revoked if the school become insolvent or financially unstable. Confusion about funding path, inadequate funding, problems receiving allowed funding in a timely manner—these problems only serve to undermine the success of our charter schools and so should be resolved promptly.