January 17, 2017
How Charter Schools Are Funded: Accomplishing More With Less
Because they are public schools, charter schools should be afforded the same funding as public schools within a school district.
For the most part, California recognizes the need to fund education innovation. Nationwide funding for charter schools, however, remains unfavorable toward charter schools, especially in regards to facility management.
How Charter Schools Are Funded
Charter schools are public schools that function outside of school districts. Because they are public schools, money for charter schools come primarily from public funds. How much public funds a school receives is based on average daily attendance.
The methods and the amount of funding charter schools receive, in comparison to traditional public schools, depends on the state and, in some cases, depends on the region within the state.
According to the Center for Education Reform (CER), few states fund charter schools on an equal basis with traditional public schools, even those with strong charter school laws. Nationwide, charter schools receive approximately 64% per pupil compared to non-charter public schools.
How Charter Schools Are Funded in California
California funds charter schools using one of two methods.
- Locally Funded. Locally funded schools receive funding through their authorizing district or county office. Districts sometimes refer to these schools as dependent charter schools.
- Direct Funded. Directly funded schools receive funding directly from the state. Districts sometimes refer to these schools as independent charter schools. Method Schools is a direct-funded network of charter schools.
(The term dependent and independent are not official terms and the California Department of Education discourages their use.)
The method of funding dictates how schools report data. Directly funded schools, for example, are sometimes treated differently from that of locally funded charters in regards to reporting graduation rates and other educational data.
The state considers directly funded charter schools local educational agencies. Unlike school districts, they do not have to report all the financial data required by the state’s standard accounting practices for school districts. Charter schools in California report their data in a different format.
California's Local Control Funding Formula equalizes funding for charter schools and school districts. Here's a simplified breakdown of charter school funding.
- Schools receive a base grant for each student enrolled.
- Schools receive a supplemental grant for students who qualify for free and reduced-price meals or are English learners, homeless, or in foster care.
- Schools receive an additional bonus if the percentage of supplemental grant students exceeds 55%. Charter schools, however, only receive the additional bonus if both the school and the local school district exceeds the 55% threshold.
Charter School Facilities
Providing ideal or even adequate physical facilities for public schools remains a challenge throughout the nation. Charter schools find this aspect of school funding particularly challenging.
Unlike district schools, most charter schools do not receive funding to cover the cost of securing a facility. According to the CER, "Charter school operators are forced to improvise and be creative when it comes to finding an inexpensive location for their school." Only about 30% of charter schools own their building.
Method Schools operates two full service satellite learning centers, and one home school support center. All Method sites are leased. One reason for this is due to the fact school districts are constantly contesting and suing charter schools, and being stuck with an owned building is a risk we aren't willing to take.
Commercial resources make up the most common type of rental for charter schools, followed by school districts, other non-profit organizations, and churches. In rare occasions, schools use residential property, local government buildings, and universities.
About 18% of charter schools rent buildings on short-term leases, adding instability to an already unstable facility financing issue. Operational and financial challenges relating to facilities are a significant factor causing many charter schools to close.
Funding Charter School Facilities in California
In 2000, the California Legislature passed Proposition 39. The law "requires school districts to provide charter schools that serve 80 or more in-district students with “sufficient” facilities that are “furnished and equipped” and reasonably close to where the charter school wishes to locate."
In addition, state bond funds can be used to help with charter school construction. In November 2016, the state allocated $500 million for charter schools. For charter schools located in areas with a high percentage of low-income individuals, the Charter School Facility Grant Program provides reimbursement for a percentage of rent and leasing costs.
While the state requires school districts to provide equivalent facilities to eligible charter school, not all districts completely comply with the requirements.
Charter schools often secure their own facilities, using public and private financing, or donations.
According to the Center for Educational Reform, charter schools spend more money per pupil than they receive. These additional funds come primarily from fund-raising and donations.
Fund-raising, however, does not make a significant dent in the operational deficit most charter schools face in relation to their school district counterparts. As one might expect from an entity that preaches innovation in education, charter schools have innovated in regards to doing more with less.
Many charter schools convert spaces--rented retail facilities, former churches, and warehouse--into classrooms, cafeterias, and gym space. Once a charter school establishes itself, it can acquire loans and move to a more suitable or permanent facility.
State legislation and loan agencies are beginning to provide funding and information to help charter schools obtain favorable loans. As charter schools have become successful, banks and corporations have begun to provide favorable financing as well.
Federal education grant funds distributed directly by the U.S. Department of Education or channeled through state education agencies have also helped fund charter schools.
In addition, the enthusiasm of parent volunteers cannot be overlooked when it comes to doing more with less.
The Future of Funding
Charter schools provide a space for innovation, educational opportunity, and unique learning options.
Based on growth in charter school enrollment, waiting list numbers, and polling data, public support for charter schools continues to increase.
As long as this trend continues, state legislatures will have no choice but to fund charter schools on an equal basis with their school district contemporaries.