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Unformatted text preview: to charter schools based on the types of students enrolled and on the financial
characteristics of host school districts and other factors that influence charter school
funding levels in most states. Appearing in the appendix, these state-by-state analyses
constitute the backbone of our study. In order to provide context, and to address issues in
state policy regarding flexibility and accountability, our report also examines a number of
other special topics related to charter school finance on a state-by-state basis. Issues such
as oversight, financial reporting, asset ownership and debt are pertinent to understanding
the fiscal environment in which charter schools operate.
Companies are less likely than independent charter schools to enter the charter school
business for altruistic reasons. Management fees are linked to revenue and usually to the
surplus (the difference between revenues and expenditures) so, companies have an
incentive to maximize revenues and reduce costs. 9 Research on Charter School Finance CHAPTER 2 Research on Charter School Finance
No rigorous analysis of state charter school funding systems currently exists. As one study
notes, “the disparate formulas utilized state by state in financing public schools make
studying the finances surrounding charter school initiatives extremely challenging” (Rofes,
1998, p. 4). Existing research can be classified into three broad categories: (1) actual data
analysis; (2) reviews of laws and policies; and, (3) general research on charter schools that
touches on finance questions as a collateral issue.
Together these studies reviewed in this chapter paint a confusing picture. Charter holders
report having trouble with financial matters or underfunding compared to other public
schools, but the studies that examine comparable data reveal a more complex picture. The
literature highlights more questions about finance than it answers. In addition, charter
school finance legislation is a moving target; by now, state and federal legislation already
may have addressed some of the concerns unearthed by early charter school finance
research. Financial Data Analysis
The most comprehensive of the few existing statewide studies of charter school finance
have been conducted in Michigan (Arsen, 1999; Prince, 1997, 1999a, 1999b;
PSC/MAXIMUS, 1999; Horn and Miron, 1999). Other statewide research has been
completed in Massachusetts (KPMG-Peat Marwick, 1998) and Colorado (Berk,
Augenblick and Myers, 1998). These studies compared charter schools to public school
districts. WestEd’s (1998) evaluation of charter schools in Los Angeles focused primarily
on comparing three independent charter schools to 10 dependent charter schools.
Prince (1997, 1999a) examined operating fund spending patterns in Michigan’s charter
schools and compared the patterns to public school districts using data from the state
uniform financial reporting forms.2 When a subset of local districts with similar enrollment
2 Michigan officially refers to its charter schools as “public school academies.” For consistency, the generic
term “charter school” is used througho...
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- Spring '09