Venturesome Capital- State Charter School Finance Systems

3 prince found that charter schools spent more on

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Unformatted text preview: ut this report. 11 Venturesome Capital: How States Pay for Charter Schools and similar foundation allowances was used for purposes of comparison, charter schools spent more money per pupil than comparable districts.3 Prince found that charter schools spent more on administration and less on special needs students. Charter schools with K-12 enrollment, in particular, spent more on basic education than regular school districts, which spent more of their money on special education and transportation. Prince noted that only 40 charter schools were studied and many of these were in their first year of operation, so the results were not definitive. In a more recent paper on Michigan, Prince (1999b) found that while small elementary school districts spent $38 per pupil on business office expenses, charter schools averaged $435 to $628 per pupil. However, much of this difference is explained by the inclusion of facility leases in the business office category. In Michigan, there are a number of entities that can authorize charter schools. These entities collect an administrative fee of up to 3 percent of revenue, which is classified as a school administrative expense for charter schools.4 School districts spent $300 per pupil more on transportation than charter schools. According to Prince, charter school class sizes were about the same as in other Michigan elementary schools. Over time, spending on operations and maintenance in charter schools increased. This finding, Prince noted, is counterintuitive. On the other hand, administration expenses in charter schools declined over time, as did spending on instruction. “Firmmanaged”5 schools do not have to provide contributions to the teacher retirement system, and Prince believes that this accounts for some of the lower spending on instruction. “Mom and pop” charter schools spent less on administration and business office expenses than firm-managed schools, an “efficiency” Prince found surprising. Two comprehensive evaluations of charter schools commissioned by the Michigan Department of Education also contain financial information. The PSC/MAXIMUS (1999) evaluation examined 58 charter schools in the Detroit metropolitan area operating in 199798. A Western Michigan University (WMU) study by Horn and Miron (1999) covered a comparable number of charter schools in the rest of the state. PSC/MAXIMUS found that the proportion of funding for both administration (25 percent of spending compared to 11 percent in surrounding school districts) and operations and maintenance were higher in charter schools compared to traditional public schools. Older charter schools carried larger end-of-year fund balances than new schools. Schools operated by “management chains” also had larger fund balances. Schools open for at least three years averaged a 13 percent fund balance, and the chain schools averaged 17 percent. Chain schools used only 35 percent of the budget for instruction compared to 51 percent in 3 The foundation allowance is the funding guara...
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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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