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Charter Schools: Following the Money

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Reporters should pay attention not just to the amount of money charter schools receive but how they are spending it, reporter and moderator Sarah Carr said as she kicked off a session on charter school finance at the Education Writers Association’s recent National Seminar in Chicago.

And perhaps more importantly, Carr said, pay attention to whether schools are spending money responsibly and growing into sustainable entities, as financial problems can lead to the closure of charters. Carr, who wrote a book about charter schools in New Orleans, leads The Teacher Project at the Columbia Graduate School of Journalism.

To get a sense of how charter schools are funded, Todd Ziebarth, the senior vice president for state advocacy and support at the National Alliance for Public Charter Schools, recommends starting with a report from the University of Arkansas. That report tracks per pupil funding and finds that charters generally receive less funding per student than traditional schools. At the EWA event, panelists did not debate that report, but critics have argued that the analysis fails to give a full picture of charter and district finances and is misleading.

Kathy Hamel, a partner at the Charter School Growth Fund, reminded reporters to consider how much charter schools spend on facilities. Facility accommodations vary state-by-state: Some states don’t allow charter schools to own facilities, in other states, a charter may be able to purchase a building but unable to secure financing itself to renovate it.

“In the great majority of the country, [charter schools] have to find their own facility,” Hamel said. The Charter School Growth Fund is a nonprofit philanthropic organization that provides millions of dollars in grants and low-interest loans to charter school networks.

Some districts provide public facilities to charters, others offer lease-aid to schools not in public facilities and some charters operators are solely responsible for rent. Look into the amount charters in your area are spending on rent, Hamel suggested.

As an alternative story, or a better way to learn about a specific school, David Welker, a senior campaign specialist at the National Education Association, suggested that reporters dig into the roots of a charter school. Every charter has a founder, he said: listen to their story.

“Anyone can call up the school founder and ask them, ‘Why are you doing what you’re doing?’  ” Welker said.

This can also help reporters learn about not only the charter leader’s understanding of finances, but why the leader is choosing to spend money on certain programs.

Hamel said that as charter networks grow, the fees charged by the charter management organizations usually drop over time. The fee is generally between 8 and 10 percent of a school’s operating budget, and drops to about 8 percent after the initial years the charter is in operation, she said. The fees generally support central office support at the CMO and may also fund activities such as marketing for the entire network.

Traditional school districts may also take a portion of public funding for administrative oversight.

“We support growth, but we insist on sustainability,” Hamel said.

Hamel says that more than 75 percent of fully-enrolled schools in charter networks that her organization has supported reached school-level fiscal sustainability in the last year.

The panel also discussed the somewhat divergent origins of charter schools.

Panel members generally agreed that charters cannot provide education for “less” (dollars per student). If school budgets are smaller, it’s likely due to reduced extracurricular activities or other “extras”.

The types of programming schools focus on and amenities they offer are another area reporters can focus on when reporting on charter school financing.

Some schools focus on arts-integrated education, foreign languages, or intensive English and math curriculum. Others offer sports, tutoring or after-school care as a way to attract families.

One reporter asked, “If you work in a state where charter schools are just beginning to open, what can you expect?”

Welker of the NEA said reporters should pay attention to the charter approval process. This process generally includes an application and plan, which are a good starting point. In some states, the group seeking a charter will have to go before a public body, in others a third-party evaluates and recommends the groups for a charter. Reporters should examine charter applications as well as monitor the public steps that go into creating new charter schools, Welker said.

Zieberth of the charter alliance, an advocacy group, added that 40 organizations filed letters of intent in Mississippi in 2014 to open charter schools, following the enactment of a new charter law, and only two were approved. That’s a sign, he said, that the state is erring on the cautious side and taking things slow.

A reporter from Florida asked about laws that allow nonprofit organizations that operate charter schools to retain assets purchased with public money after the campus closes.

In some states, the organizations retain items, in others they become property of the state when a school closes. That’s a good policy/regulation to know upfront, members of the panel said. For example, in Louisiana, if a charter school ceases operation, any assets purchased with public money revert to the state.

During the discussion, a few ideas emerged from charter-rich New Orleans. For one, comparing budgets between charter schools can reveal big differences in specific areas of spending. In 2013, The Lens took a look at transportation budgets across New Orleans and found the amount charters spent on transportation varied between $29 and $1,600 per student per year.

Digging through annual audits and 990 tax forms can help to uncover average teacher salaries, CEO salaries, and a school or charter network’s largest vendors. Compare how much charter leaders are earning or the amount the schools are spending on particular vendors to the rest of the district. New Orleans City Business, a newspaper, gathered that information for CEOs across the city. CEO salaries ranged from $84,000 to $245,000 (though it’s important to keep in mind the size of the school or network).