Ok, this is a long post. Grab a beverage – and maybe some snacks.
Over the past few years while debating charter issues on the Boston Globe’s website I’ve fallen into a series of running debates with other individuals commenting there. All of the discussion threads at BostonGlobe.com hang off a given published story (hey, John Henry says reader involvement is good for business), and often a discussion started weeks earlier beneath one story will resume under another, even if that new story has little bearing on the discussion itself. One such running discussion is over the method by which the state pays for public charter schools (to be fair to the other party, he would claim it’s not the state funding the charter but the local, sending district that lost the student; hence the debate).
In this blog post I will try to summarize that debate in an effort to confirm that a) Massachusetts charter public schools are funded by the state, not the sending district, and that b) the allocation method by which state aid is redirected is, if not perfect, essentially fair.
If I understand the other party’s position correctly, he would say that it’s technically correct to say, as I did in my l last blog post, that the state redirects only state aid to the charter but counters that the redirection is really just an accounting gimmick. He says the money ultimately comes from the coffers of the town or city that loses a student to the charter.
To both bound and ground the discussion we created a hypothetical scenario that was somewhat unrealistic, but it did serve to focus the debate on flow of money, which was (and remains) the bone of contention between us. Our scenario does not account of complexities of variable and fixed costs in a school budget nor does it account for the impact of the Chapter 46 reimbursement program (more on Chapter 46 another day). We decided to keep it simple for the discussion’s sake.
The hypothetical is this: we first imagine a traditional public school with 20 students. We also arbitrarily set the mandatory/desired per student funding level for that school at $5,000/student (we’re in to round, easily divisible numbers). This means the school needs (remember that word) an annual budget of $100,000, and in our example the municipality has only $80,000 in local tax revenue to contribute. The state therefore kicks in $20,000 in Chapter 70 funding so the school may reach the $100,000 threshold and satisfy the $5k/student requirement. One way to look at this funding mix is to see it as a 4:1 ratio of local to state tax dollars ($80k to $20k). Many anti-charter advocates see it this way, but I will demonstrate why this is the wrong way to look at it.
The next event in our scenario is that one student from the hypothetical traditional public school leaves to attend a charter public school somewhere else in the state. What will happen then (again, simplified) is that the state will deduct $5,000 from the sending school’s next state aid payment and send that $5k to the receiving charter school. We imagine all else remains the same, and thus the hypothetical sending school is left with an overall budget of $95,000 the following year. This is where I and the other individual part ways. I think this allocation is completely reasonable, and he thinks it monstrously unfair; he even went so far as to call a deduction of that amount a “theft” of local tax money on the part of both the state and the receiving charter public school.
His argument is that because the state was only kicking in $1,000 of the $5,000 needed to fund that departing child’s education, that only $1,000 should be redirected, and to take the additional $4,000 is “stealing” local money. He (and others) see the ratio of local to state funding as primary and any distortion of that ratio as unfair to one of the two parties. There may be a degree of superficial logic to this perspective, but it’s clearly wrong if you take the time to understand the Chapter 70 law, and consider the problems created by holding a given year’s funding ratio as a constant in later years.
The most important fact to understand is the purpose of the Chapter 70 program. It is a needs based state subsidy given to Massachusetts public schools in order to ensure that each public school attains a minimum per student funding level. The law is extremely clear on this point. Here is the opening passage from the statute’s “Legislative Intent” section (emphasis added):
Section 1. It is the intention of the general court, subject to appropriation, to assure fair and adequate minimum per student funding for public schools in the commonwealth by defining a foundation budget and a standard of local funding effort applicable to every city and town in the commonwealth.
In our example the $5k/student is the “foundation budget.” Now let’s review in more detail this law’s impact on our hypothetical school’s budget with the loss of one student to a charter. In the year after the student leaves, the school has:
- 19 students
- $80,000 in local funding
- $15,000 in Chapter 70 state aid (they had $20k the prior year, but $5k was deducted by the state this year and is given to the receiving charter school).
- A total school budget of $95,000
I claim that this is fair because the $5k/student budget is preserved in the sending school (95k divided by 19 is 5). Additionally, the charter gets sufficient funding to educate the student it receives; i.e. both schools are made financially whole in the transaction. Germain to the debate, the $80,000 in local funding is untouched. Not a dime of local tax money has left the municipality, only state funding has.
Now let’s look at what the other individual deems fair. With his insistence on preserving the 4:1 allocation (even though the law makes no mention of the need to preserve any such a ratio) we would have the following in the sending school:
- 19 students,
- $80,000 in local funding
- $19,000 in state aid funding (the sacred 4:1 ratio dictating that only $1,000 be sent to the charter).
- A total school budget of $99,000.
Look what this approach leaves us with: the sending school, thanks to $19k in state aid, now as a per student spending level of of $5,210 per student (99k divided by 19). From the perspective of a foundation budget, this is more than the school needs. To complicate matters further, the charter has an additional student costing something like $5k to educate and only $1k in additional funding, i.e. they are saddled with a $4k funding gap. This approach doesn’t work as, financially speaking, there’s a winner and a loser. (And to make matters even more muddled, this approach doesn’t even preserve the 4:1 ratio. Some quick math will tell you the new ratio here is 4.2:1)
The core principle here, and the one my debating partner simply does not understand, is that Chapter 70 funding is a needs based program. It’s a commitment from the state to help districts reach a per student spending level in any given year. The ratio of funding in a given year is meaningless in other years as both student enrollment levels and the availability of local tax dollars will vary from year to year. In our example the hypothetical traditional public school lost a student who nominally costs $5,000 per year to educate; they have thus lost the need for $5k of state subsidies thus the state is completely justified in deducting the full $5k.
Not to complicate this scenario even further, but from the perspective of the hypothetical traditional public school, the Chapter 70 funding changes would play out exactly the same way if the student in question graduated or transferred to a school in another state. As I said in my first post on charter funding, gone goes the student, gone goes the need, gone goes the Chapter 70 funding. It does not matter why that need was lost. Though it is curious how the loss of Chapter 70 funding stemming from a drop in enrollment is only seen as a serious problem by some when that lost funding finds its way into a charter public school.
Phew, that was a lot of key strokes. Thanks for hanging in there.
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