Venturesome Capital- State Charter School Finance Systems

A similar accounting issue arises in some states over

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Unformatted text preview: nteed by the state that is comprised of a combination of local and state revenues. 4 Some analysts argue that the administrative fees of state chartering authorities should not be accounted for as administration costs of charter schools. A similar accounting issue arises in some states over administrative fees assessed by school districts that authorize charter schools. 5 Nonprofit charter school boards often contract with private management firms. Researchers use a wide variety of terms to describe these schools, e.g., firm-run schools, business-run schools, education management organizations (EMOs), and chain schools. 12 Research on Charter School Finance other charter schools and 54 percent in surrounding public school districts.6 Administration consumed 32 percent of the chain school budget compared to 11 percent in surrounding public schools. Michigan provides no facilities assistance, and 89 percent of charter schools said they leased their facilities. Charter schools averaged only $34 in federal aid per pupil compared to $661 in surrounding districts. While the authors attributed this gap to lack of administrative staff and experience, other data in the report show that charter schools provided almost no targeted federal programs for special education and at-risk students. Another factor contributing to the gap may be a reluctance to participate in the bureaucratic and oversight processes entailed in federal programs. In addition to the lack of facilities funding, charter schools received a maximum of $5,962 per pupil in operating funds, which is less than most Detroit-area school districts spent. However, PSC/MAXIMUS identified several cost advantages enjoyed by charter schools, including the ability to control enrollment in order to optimize staffing and facilities usage, the lower costs inherent in operation of elementary charter schools; the money saved by not providing transportation; the use of inexperienced teachers (85 percent with no more than three years of experience) and almost no special education programs. The WMU study identified similar cost advantages. Although the WMU study provided less information than the PSC/MAXIMUS on charter school finance, it focused on the importance of loans. Because the state’s fiscal year starts on Oct.1, almost all charter schools need loans to finance the first month of the school year. Management companies are in a stronger position to survive the annual cash crunch. WMU concluded that operating income from the state seemed to be sufficient, and some charter school directors reported that schools could be operated with a $1,000 per student profit. Most charter schools were low-cost elementary schools, and teacher salaries averaged less than starting salaries in surrounding school districts. In a report reacting primarily to the WMU and PSC/MAXIMUS studies, Wolfram (1999) argued that Michigan charter schools have similar expenditure patterns to equally situated regular public schools. Further, Wolfram pointed out that Michigan charter schools served more minority and at-ris...
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