Venturesome Capital- State Charter School Finance Systems

16 under method 2 school districts surrender only the

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Unformatted text preview: e aid payments from the state (representing average state aid per pupil) and states without foundation funding formulas. In North Carolina, school districts pay charter schools the average local revenue while states pay the average state aid for the school district in which the charter school is located. 16 Under Method 2, school districts surrender only the foundation allowance. Local revenues in excess of those included in the foundation allowance, such as local option taxes and most debt retirement levies, remain with the school district. Very wealthy districts that receive no state aid do not lose any revenue to charter schools. 34 Overview of Charter School Funding school districts (representing average local revenue per pupil). In all of these states, private school and home school children choosing to attend charter schools are first counted as school district students. New state aid pays 100 percent of the foundation allowance for these new students. This new revenue helps pay for funding transfers to charter schools.17 In states like Arizona, Michigan, Minnesota and Texas, students moving to charter schools are no longer counted in school districts for state aid purposes (Method 2). As a result, the district loses state aid equal to the foundation level, which is approximately the full amount of state and local per-pupil funding An understanding of foundation funding formulas is the key to comprehending both why states recapture from school districts all or most of the funds paid to charter schools under Method 2, and why charter school students coming from private schools do not impose significant new costs on school districts in states employing Method 1. Under foundation funding programs, the state guarantees a foundation amount for each student. The amount is composed of local tax revenue and state aid, with the relative proportions of each varying according to the per-pupil tax base. Local property tax revenue is first determined by applying a required tax rate to the tax base. Student enrollment is not a factor in local revenue calculation. Local revenue does not vary with enrollment. The state then provides enough aid to ensure that each student generates funding equal to the foundation level or allowance. Because the local tax contribution does not depend on enrollment, new students are always 100 percent state funded, and enrollment decreases always result in 100 percent state savings.18 An equivalent, alternative explanation may help some readers. The addition of a child to the district membership roll means that the district has less wealth per student. Because state equalization formulas give more funding to school districts with less wealth per pupil (in order to bring them up to the foundation amount), there will be a slight increase in state aid for all students in the district. To the extent that the state has a fixed amount of foundation funding for all students and schools districts, however, additional students could lead to a lowering of the state foundation level for all students i...
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This note was uploaded on 02/11/2013 for the course ECON 101 taught by Professor Smith during the Spring '09 term at Harvard.

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