Unformatted text preview: n the state. In effect,
all districts in the state are absorbing the added expense through reduced state aid.19
Under Method 2, private school and home school students choosing to enroll in charter
schools are funded 100 percent by the state because they never generated state aid in a
school district. Assuming a fixed amount of state funding, however, the statewide
foundation level must be reduced, and all students and school districts surrender state aid.
17 State aid is sometimes based on enrollment from the previous year as in Illinois and Massachusetts. Thus,
for one year, there would be no new state aid for students coming from private schools. For this reason,
Massachusetts pays the entire tuition of charter school students coming from private schools for one year. In
Illinois, the school district absorbs the one-year loss of revenue.
Some very wealthy school districts may receive no state foundation aid, so changes in enrollment do not
generate revenue gains or losses. Other conclusions reached in this section may not apply to wealthy school
districts receiving no state foundation aid.
Florida adjusts its foundation level four times a year based on changes in total state enrollment. Rapid
enrollment gains in Miami during the school year, for example, are financed by reducing the foundation level
and state aid for all students in the state. 35 Venturesome Capital: State Charter School Finance Systems Similarly, when a student leaves a district for a charter school in Minnesota or another
state using Method 2, that child no longer counts in the school district’s enrollment.
Because student enrollment does not affect total local revenue, the departure of a child
means that the school district has more wealth per remaining student. Since state
equalization formulas give less funding to school districts with greater wealth per pupil, a
child’s exit to a charter school causes a slight reduction in state aid for all remaining
students. In the end, an amount equal to the foundation level or amount leaves with that
student. Funding Based on Student Characteristics
Taxpayers, educators and legislators all care deeply about disadvantaged and special needs
students. These students cost more to educate. High school students also generally cost
more. In an efficient charter school funding system, the resources needed for high-cost
students should flow with them to charter schools. Simple fairness prescribes that charter
schools with high-cost students should get better funding than charter schools with lowcost students. Simple fairness also dictates that funding for high-cost students in school
districts should not be diverted from them to charter schools through an ill-conceived
funding strategy. Charter schools and school districts are unlikely to compete on a level
playing field unless funding directly or indirectly matches the special needs of individual
Even before looking at how the characteristics of students generate funding, on...
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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.
- Spring '09