Friday, November 13, 2015

New Report Clears Up Some Myths About Charter School Funding

I try to avoid charter school battles on this blog, but this report by Dr. Julia Sass Rubin of Rutgers University and Save Our Schools NJ is informative and non-polemical.

The report is a response to several claims made by the charter school sector that charter schools, as a rule, are underfunded and should receive more money.

In particular, Dr. Rubin's report is a response to this piece by an organization called NJCan that claimed charters are legally entitled to 90% of per pupil district funding and claims that the violation of this alleged 90% rule means that charters are being underaided and generally treated unfairly.

A funding gap for charter schools
By law, New Jersey charter schools are entitled to 90 percent of the per-pupil funding that traditional public schools receive.1 In reality, however, charter schools receive much less than this. This is because charter schools in New Jersey are excluded from several types of funding sources, including adjustment, educational adequacy, school choice and transportation aid. Charter schools also do not qualify for capital and debt service to make repairs to their buildings and open new schools. Exclusion from these funding sources results in a funding equity gap between district and charters that ranges from 20 percent to 29.9 percent.

Dr. Rubin's report is important because it clearly and thorough explains that it is simply not true that they are automatically supposed to get 90% of district funding.

In reality, charters are only supposed to get 90% of a district's local tax levy per student, not 90% of its per pupil spending.  The rest of charter school funding is pass-through state aid essentially and this aid is supposed to be distributed to charter schools based on a needs-sensitive formula akin to SFRA.

Indeed, as NJCan states charters do receive less than 90% of district funding, but that is because they tend to educate fewer at-risk students.

Dr. Rubin's report is also very informative on the Adjustment Aid and charters.  This is important because Adjustment Aid has become increasingly contentious recently due to the fact that charter schools (usually) do not receive it.

This is the charter school claim:
Local districts count all children, whether they attend charters or regular public schools for their funding count. However, in New Jersey, most urban districts keep what is known at “adjusted aid,” thus creating a funding inequity that is unjust and in contradiction with the intent of the charter schools law.... 
The 2008 School Funding Reform Act in New Jersey eliminated Abbott aid to school districts in low-income communities, the original source of the inequity in funding. However, the elimination of Abbott aid led to the start of adjustment aid (and its variations), which simply perpetuated the practice of charter school students receiving considerably less than students in their sending districts.
Dr. Rubin's report points out that most charter schools are in districts that don't receive any (or very much) Adjustment Aid anyway and that charter schools that existed before 2008 (i.e., pre-SFRA) actually do receive Adjustment Aid.  The Adjustment Aid issue is not a factor in for Newark, Plainfield, or Paterson and only a factor in a few charter-heavy districts, like Camden, Hoboken, and especially Jersey City.

Due to the complexities of Adjustment Aid, it is possible for a charter school to have higher per pupil spending than its host districts.

The Red Bank Charter School is an example of a charter that violates the usual rule that charters have less money than their host districts.  In this case, the Red Bank Charter School spends $1700 more per student than the Red Bank Boro schools, even though the Red Bank Boro schools educate many more at-risk students.  (see Taxpayers' Guide to Education Spending for pension-inclusive figures)

The Red Bank Charter School was founded pre-2008 and since then has been "held harmless" from cuts Red Bank Boro has experienced.  Since Red Bank Boro has had exceptional population growth (growing from 1,000 students to 1,496 students) since 2008 its state aid and spending have fallen in per pupil terms.  In 2008-09, Red Bank Boro spent $14,328 per student, but for 2015-16 it will only spend $12,979.

The Administration’s failure to fund or follow SFRA in allocating Aid has increased funding inequality between charter schools and school districts.20 For example, the Red Bank Charter School receives substantial Adjustment Aid payments from the State, to ensure its total funding is at least at 2008 levels. In contrast, the Red Bank Borough School District receives no Adjustment Aid and is generally underfunded by the Christie Administration. As a result of the Adjustment Aid, The Red Bank Charter School is being funded at higher levels than its student population would warrant under New Jersey’s school funding formula and (as the case study presented in the next section of this report highlights) at substantially higher levels than the Red Bank Borough School District. 
Indeed, the Red Bank Boro Public Schools are underaided by $4665 per student, putting it among the 10% of most underaided districts in New Jersey.

Of course, post-2008 charter schools in Adjustment Aid districts have a right to complain, which Dr. Rubin could be more sensitive to.  Post-2008 charter schools in Adjustment Aid districts, especially Jersey City, are very badly funded relative to the district schools.  Counting pension costs, the Jersey City Public Schools spend $23,435 per student while most of Jersey City's charter schools spend $13,000-$14,000 a student.  The amount for Jersey City's charter schools is significantly below what even East Newark spends, one of New Jersey's worst-funded public school districts.  The METS charter school only spent $12,366 per student  in 2013-14 (counting pensions).  Since METS is 73% FRL-eligible, this is serious underfunding.

The solution to the Adjustment Aid problem needs to be more comprehensive than just transferring Adjustment Aid to charters; the solution should be to gradually eliminate Adjustment Aid, redistribute that money to needier districts and let former-Adjustment Aid districts replace that money with local tax dollars, 90% of which would then be transferred to charters on a per pupil basis.

I only have one major additional critique of Dr. Rubin's report:

3) Charter and district school funding is negatively impacted by the Christie Administration’s underfunding of New Jersey’s school funding formula and failure to follow the formula in allocating state aid to school districts....
However, the Christie Administration underfunded the amount of state aid that the formula indicates New Jersey districts require by more than $7 billion between the 2009-10 and 2015-16 academic years. The Administration also has not followed the school funding law’s formula in how it has allocated state aid. Instead, the Administration has used the primacy of the annual State Budget to distribute aid to schools in ways that do not conform to the school funding law. This has increased inequality of school funding among districts, among charter schools, and between districts and charter schools. 

The above about underfunding SFRA is true, but due to the extremely uneven distribution of state aid in New Jersey, not all districts are equally underaided and in fact 220 districts are overaided.

This is an essential nuance in the discussion of state aid and charter schools because several districts in the "Big Nine" that are the hosts of most of NJ's charters are actually overaided and none is severely underaided except Plainfield.

Big Nine Charter DistrictsCapped Aid Deficit/SurplusUncapped Aid Deficit/SurplusLocal Taxes Deficit/Surplus
Jersey City$19$3,551-$6,462
East Orange-$146$1,346-$2,566

If SFRA were fully funded East Orange, Irvington, and even Camden would gain relatively little.  Hoboken and Jersey City would be among a handful of districts that would lose aid even if SFRA were fully funded.  (See Additional School Funding Scenarios)

Although I'm sensitive to the financial problems that some NJ charters have, Dr. Rubin's report is informative on an area of NJ school finance on which much inaccurate information has been allowed to gain currency.

No comments:

Post a Comment