There was an error in this gadget

Wednesday, September 9, 2015

Debate Over. Local Taxpayers Subsidize Charters. Now What?

What a difference a week makes. And what a difference good reporting can make.

Two weeks ago, I joined with Woodridge Local Schools officials to point out (once again) that not only are Ohio's nationally ridiculed charter schools not performing well overall -- a fact agreed to by all major outside examinations of Ohio charter school performance -- and that we should pass House Bill 2 ASAP, but the way they're funded means children in local public schools have fewer resources.

The funding issue is not addressed by House Bill 2.

Over the weekend, Marianne Lombardo of Democrats for Education Reform and Ron Adler of the Ohio Coalition for Quality Education, took me and Woodridge to task for performing a "disservice" by suggesting that charters remove resources from local schools, and that actually local schools benefit from the current system.

Adler completely ignored, by the way, that Woodridge officials independently reached the same conclusions and calculations I did. But, again, he tried to make this a "liberals hate charters" thing, even though charter schools were originally a liberal idea.

Running bad ones that profit from failure, like Ohio's do overall, I agree, is not a liberal idea. But I digress.

Then today's Columbus Dispatch put the issue to bed.

School districts do subsidize our nationally ridiculed charter schools.

When you have Republican education policy leaders in the Ohio Senate, like Peggy Lehner, go on the record with a statement like this:

"It’s kind of a shell game with the money,” she said. “It’s state dollars, but you have to use local dollars to backfill the state dollars. I think it’s pretty clear that these kids are getting local dollars.”
Or when Ohio House Finance Committee Chairman Ryan Smith describes the charter school funding system like this:

“I think we can find a better way, a more transparent way,” he said. “It’s affecting (schools’) bottom line and could somewhat be deceiving in what they’re actually getting.” 
Or when the Ohio Legislative Service Commission determines that 3 out of 4 districts would be in better financial straits if the state funded charters directly, rather than deducting it from districts that sometimes never even had the child walk through their door, then the argument's pretty well over.

I don't know why folks like Lombardo and Adler insist on peddling their snake oil anymore. Now that the Ohio Department of Education keeps better track of charter funding and charter students on their monthly finance reports, anyone can easily see that the current charter system means kids who remain in districts have, in some cases, far fewer state resources than the state claims they need.

Just add up the per pupil funding before charters get their money and kids, then add up the per pupil funding remaining after charters received their funding and kids. It's arithmetic.

Local districts have to make up for that lost state revenue by using local revenue. Lombardo and Adler claim that after charters take their money and kids, the district's overall per pupil funding goes up. But that's deceiving for two reasons:

  1. It only goes up because the reliance on local property taxes goes way up, which is contrary to four Ohio Supreme Court cases that said Ohio had to reduce the reliance on local property taxes to pay for schools.
  2. It's still less overall money.
I'll try to explain this by way of example. 

Say you have District X that the state says needs $10,000 per pupil to educate its 100 kids for a total of $1 million. However, the state says the district can come up with $5,000 per pupil ($500,000 total) through local revenue. So the state will pick up the other $5,000, or $500,000. 

However, if 10 kids decide to go to charters, the state takes $10,000 for each kid and sends it to the charter. So that's $100,000 going to pay for 10 kids in charters. That means instead of the state paying $500,000 to educate the 100 kids in District X, the state is now paying $400,000 to educate the 90 remaining students. That means instead of the state picking up $5,000 of the cost, they're now picking up $4,444, or $556 less per pupil. 

Now the district has to pick up that $556 using local revenue or spend 5.4% less per pupil. If they do pick up the $556, it means that of the $10,000 per pupil cost for the remaining students, $5,556 is coming now from local taxpayers while $4,444 is coming from the state. Instead of the state picking up 50% of the cost, it's now picking up 44.4% of the cost. The local taxpayers just saw their burden jump 12% from 50% to 56%.

Lombardo and Adler both claim that the per pupil funding increases. That is true. But only if the districts decide to spend the same amount of money. So in our example, $1 million spread across 90 students is more per pupil than $1 million spread over 100 students. That can only happen if the district raises more than the state assumes it does. (And that is true in many cases because the state's funding formula is so inadequate that it underestimates each district's need, but that's another post.)

However, in more than 85 school districts, there isn't enough local revenue generated to replace the lost state funding to charters. So in those cases, Lombardo and Adler are simply wrong. And in the other cases, they're deliberately misleading. 

So in my example, the local district raises $500,000 and now the state is only paying $400,000 for the remaining 90 students. So while the per pupil funding is the same $10,000 as before, it's still less funding to pay for the same heating, busing, food, teacher, and administrator costs the district had before the kids left for charters. And instead of a 50-50 local-state cost share, it's a 57-43 local-state share.

There are many districts that have thousands of students, but only lose a few dozen to charters. So there's no real way to adjust staffing or other costs to account for the less state revenue. They have the same number of buildings, the same number of janitors, the same number of bus drivers, the same number of teachers, and the same number of administrators even with lost kids to charters. Only now, they have less state money to help pay for them.

And it means that local districts have to use sometimes significant portions of their locally raised tax dollars to effectively subsidize the charter school losses. In the case of Columbus City Schools, it's 7.6 mills, or about $266 per $100,000 home.

The question now becomes what do we do about this?

The Dispatch story focused heavily on the direct funding issue. Direct funding was suggested by Gov. Ted Strickland in 2009 -- the year I handled the education budget in the Ohio House. At that time, pro-charter forces panicked that it was an effort to allow Strickland to line-item veto the entire program. So I put the current deduction system back into the budget to allay those fears. 

Go figure.

However, this argument is a canard at this point. No governor -- I don't care how radical -- is going to line-item veto a $1 billion program. It would about like line item vetoing school lunches, the library fund and the local government fund combined. So let's stop saying that some crazy governor's going to line-item veto a $1 billion line item.

Direct funding has been unanimously agreed to by the 2010 School Funding Advisory Council's subcommittee that was charged with finding ways to improve charter-traditional school collaboration. That subcommittee was made up of equal parts charter and traditional school advocates.

Charter schools are creatures of state law. They probably should be paid like they are state actors.

There should also be a formula developed that more accurately approximates the cost of educating children in the lower-cost charter school environment. Right now, they are paid based on the cost in the higher-cost traditional school environment -- ostensibly to make up for the lack of direct local revenue going to charters. However, a more accurate funding formula with direct state funding would all but eliminate that issue. I believe there should also be some sort of way to use the funding system to drive out the profiteers and habitual poor performers while rewarding the handful of high-performing charters the state has and build on that foundation.

There are many ways to fairly and equitably fund charters so the few excellent charters we have can thrive and the many poor performers we have can't last.

I'm thrilled we've now moved beyond the basic question of whether charters impact funding for kids in local districts and are now on to the question of how can we make both systems work for schools, teachers and kids. That is the kind of healthy discussion we need.

As for those who want to continue fighting the war that's only garnered us national scorn? 

I hope I speak for the whole quality-focused charter school reform movement when I say, "Ain't nobody got time for that."