The $1,000 Charter School Funding Gap: Fact or Fiction?
Texas Charter School proponents argue that there is a $1,000 funding gap between charters and Texas independent school districts. A careful look at TEA data for school year 2014-2015 does not support this contention1.
The total of state aid and local tax revenues, including monies for public school district (ISD) facilities, shows that in school year 2014-2015 ISDs had approximately $462 more for each student in average daily attendance than did charter schools, on average.
ISDs $9,039 per ADA
Charters $8,577 per ADA
Numerous charter school systems received more revenue per pupil from the State of Texas than did the public school districts in which they were located. For example, KIPP Inc., located in Houston, received approximately $205 more from the state for school year 2014-2015 than Houston ISD received from the state and from local taxes, including those for facilities.
Houston ISD: $8,593 per ADA (including facilities)
KIPP Inc: $8,798 per ADA
Charter School proponents argue that the reason for the alleged $1,000 gap in funding is because they receive no monies specifically earmarked for facilities. However, charters received over $700 more per pupil for maintenance and operations (M&O) from the State than ISDs received from the State and from local M&O taxes for the same functions.
ISDs $7,876 M&O revenues per ADA
Charters $8,577 M&O revenues per ADA
For Houston ISD and KIPP Inc. M&O revenues for the previous school year were as follows:
Houston ISD $7,645 M&O revenues per ADA
KIPP Inc $8,798 M&O revenues per ADA
While the above figures do show that, inclusive of facilities, ISDs have an edge of approximately $462 per ADA, this is a far cry from the $1,000 gap maintained by charter school proponents. The $701 per ADA advantage of charter schools in M&O funds can clearly pay a majority of their facilities expenses.
The only comparison that comes close to indicating a $1,000 charter school funding gap is when revenues to charters and ISDs are expressed in terms of WADA (weighted average daily attendance).
If you know anything about how the funding formula works, you know that higher Tier 1 entitlements result in higher levels of WADA. The same factor that inflates M&O funding for charters therefore inflates the WADA counts for charters as well. When the higher M&O revenues are divided by the greater WADA amounts, the charter advantage in M&O revenues not only disappears, it reverses:
ISD M&O revenues per WADA: $5,882
Charter M&O revenues per WADA: $5,625
The inflation of charter WADA numbers, as compared to those for ISDs, is clear when you look at the ratio of WADA to ADA for each group:
ISD ratio of WADA/ADA: 1.34
Charter ratio of WADA/ADA: 1.53
Charter proponents argue that the reason for the higher WADA/ADA ratio for charters is because they serve a higher proportion of more costly to educate students, which generate more Tier I funds, and hence greater WADA. This is not correct. Charters have a greater proportion of grants for regular students (79%) than do ISDs (74%).
The real reason why charters receive relatively more M&O funding than do ISDs is due to the use of the statewide adjusted allotment for all charter schools. For example, last year Houston ISD had an adjusted allotment (AA) of $5,460. KIPP Inc, located in Houston and therefore experiencing similar costs of education, and also not eligible for the small or mid-sized district adjustments, had the benefit of the statewide average AA of $6,265. Since the AA multiplies the student counts in each Tier I funding category, KIPP Inc had an $805 advantage for each student, unweighted and weighted. The M&O funding advantage extends to most charters with ADAs of 1,000 or more, which include approximately 70 percent of all charter students.
The statewide average AA is “too high” because of the effects of the small and mid-sized district adjustments. There are over 400 districts with regular ADAs less than 1,000. The scale adjustment received by those districts drastically skews upwards the statewide average AA, even though those districts enroll only about four percent of total ISD students. Each of the small districts with a large AA due to the small district scale adjustment counts the same as the largest districts, such as Houston and Dallas, in determining the statewide adjusted allotment which is assigned to all charter schools.
The relationship between the individual adjusted allotments of ISDs and the average AA that is applied to all charters can best be understood with the aid of the diagram that can be found at www.polinetworks.com/aa .
The overall result of the use of the statewide AA for charter schools is to give them, on average, considerably more M&O revenues per ADA than are received by ISDs. It is also true that, compared to ISDs, small charters, those below approximately 1,000 students, receive less, while the larger ones, such as KIPP Inc, receive substantially more.
A final conclusion is that because of the distortion in calculating WADA for charter schools, comparisons between charters and ISDs should not be made based on WADA.
* Bonnie Lesley, Ed. D., is the co-founder of Texas Kids Can’t Wait.
Larry Toenjes, Ph. D., retired, volunteers with Texas Kids Can’t Wait.
1 Data are taken from TEA’s Summary of Finances reports for school year 2014-2015, compiled Feb. 10, 2015.