Broken charter school funding system must be fixed

From the Beacon, May 2017
 
Cities and towns are struggling under an unfair and unworkable system to fund charter schools, and the problem is growing deeper with each passing day.
 
The major problem is with the entire funding structure itself. Charter schools are guaranteed full funding without any real accountability to state or local government or the public. Their budgets are not subject to appropriation. There is no public hearing. There is no vote by a school committee, a Town Meeting or a city council. Local taxpayers have no say at all. In effect, charter schools operate off-budget.
 
This off-budget structure is not the norm in Massachusetts. In fact, it is exceedingly rare, and taxpayers should be concerned about the lack of transparency, because charter schools receive nearly $600 million in public funds – mostly from local taxpayers.
 
The funding model is much different for the traditional public schools that educate more than 95 percent of the schoolchildren in Massachusetts. On average, local taxpayers fund about 62 percent of the cost of education, and Chapter 70 makes up the remaining 38 percent. In order to fund their school budgets, cities and towns make difficult choices, often cutting municipal services and raising additional property taxes, and there is a lot of public debate about these painful choices.
 
But charter schools automatically receive equal amounts of funding, without having to explain how they plan to spend the money or even worry about where the money will come from.
 
It is commonly understood that the K-12 foundation budget framework is too low, as evidenced by the fact that cities and towns (and local taxpayers) are appropriating $2 billion more to their schools than is required under state law. Thus, if a community decides to spend 10 percent more than the foundation budget by cutting its public safety budget or library hours, or by passing a Proposition 2½ override, the charter school automatically receives 10 percent more than the foundation budget, too, without having to make any difficult decisions on its part. That’s because state law creates a pass-through, and charter schools are funded through a diversion of Chapter 70 aid that should be going directly to cities and towns. Next year, this diversion will reach a stunning $600 million.
 
This diversion of Chapter 70 causes major budget problems because communities run large school districts, and very few students attend charter schools. That means it is virtually impossible to offset the loss of funding without cutting back on the quality of education. If 5 percent of a district’s students attend a charter school, the community can’t reduce the heat or electricity by 5 percent. It can’t pay the classroom teacher 5 percent less, or reduce health insurance by 5 percent. The school library can’t be open 5 percent less. Instead, communities are forced to make out-of-scale reductions, and class sizes go up because teachers and education professionals are cut from the budget, or after-school programs are reduced, or electives are cut back, and so on.
 
The rapidly growing deduction of Chapter 70 school aid away from local public schools to support charter schools has become a major financial drain on cities and towns, a problem made more acute as the state grants more charters and existing charter schools expand. The state is supposed to provide transitional assistance to soften the harsh financial blow caused by charter schools. Currently, the law requires the Commonwealth to reimburse a portion of the lost school aid, following a six-year schedule (100 percent in the first year, and 25 percent in each of the following five years). But the state is not coming close to meeting its statutory obligation, and will soon cover only half of its commitment. This is making the charter school funding problem much worse.
 
For fiscal 2018, it is estimated that cities and towns will be assessed $598 million in local school revenues to fund charter schools, an increase of $65 million (12 percent) of the estimated level in this fiscal year. With assessments at over half a billion dollars and growing, it is critical that the state fund its financial commitment under the state statute.
 
The budgets filed by the governor and passed by the House, however, would only level-fund charter school reimbursements at $80.5 million. Full funding of the statutory formula would require $157 million. If this holds, cities and towns will face another round of lost school aid next year, resulting in fewer programs for the vast majority of students who remain in the local public school setting.
 
When charter school reimbursements fall short, communities are forced to cut other programs and services to make up the difference. Of the cities and towns with the largest shortfalls, most have been deemed by the state to have underperforming schools. These include some the state’s poorest and most financially distressed cities and towns. Thus, underfunding the charter school reimbursement formula is harming the most vulnerable and challenged school districts, communities and students. This makes no sense.
 
In the short term, it is imperative for the state to meet its obligation to fund the statutory reimbursement formula. Without this aid, the impacted communities will continue to face serious financial hardship, and this will undermine their efforts to enhance student performance and deliver high-quality school and municipal programs and services.
 
In the long term, the entire charter school funding system needs to be fixed. A potential solution is direct state funding to charter schools, instead of this local pass-through system that spends local tax dollars without appropriation. Perhaps then the charter school lobby would be interested in advocating for more Chapter 70 funding, or implementation of the Foundation Budget Review Commission recommendations, or higher per-student aid, or special education funding. Right now, their lobby simply sits on the sidelines on school funding issues, except to protect the current structure, which guarantees them funding with no effort.
 
Overall, charter school finance is not simply a budget or appropriation issue – this is an education reform issue. Massachusetts will never reach its full potential to provide a world-class education if traditional public schools and the 95 percent of children they educate are anchored down by an unaccountable and flawed charter school finance structure.