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challenges such as urban density, rural sparsity, size, or cost of living.
§ Categorical Funding and Mandated and In-Kind Services. States supply some
funding to school districts with the expectation that it will be used for specific purposes. In
addition to funds based on student characteristics such as special education and lowincome students, such categorical programs typically include transportation, textbooks,
libraries, professional development, technology programs and a variety of competitive
grants. States provide this categorical funding for charter schools in various ways. Many
states treat charter schools as if they were school districts, while a few states automatically
include some categorical funding in the base per-pupil allocation. State law or the charter
agreement may also require school districts to provide specific services (e.g.,
transportation) to charter schools. State mandates for charter schools range from requiring
charter schools to serve a particular type of student (e.g., at-risk students) to requiring
participation in public retirement systems. In states where school districts negotiate
funding with charter schools, the provision of school district services varies charter by
After outlining the basics of charter school financing, the remainder of this overview
describes each of these issues in detail, starting with funding based on student
characteristics. Charter School Funding Structure
One of the basic precepts of charter school finance is that resources should follow children
from school districts to charter schools. But understanding how students generate funds,
how resources are expended on students, how resources are defined and even how students
are counted is essential in order to evaluate how money follows children to charter schools.
If states fund charter schools in more than one way, it is important to know some of the
details of each system. Should we care whether school districts or the state pays for charter
schools? Our study suggests that this question is not very important despite all of the
attention paid to it. Funding flows from school districts to charter schools in different
ways, but the effect on district and charter school finances varies little across the different
methods. Funding issues surrounding the movement of private school students into
publicly funded charter schools raise similar issues that are equally misunderstood.
Basis of Per-Pupil Funding
A majority of states provide funding to charter schools either by calculating revenue
according to the same formula as school districts, or by calculating a school district perpupil expenditure, which is then shifted to the charter school. Under both the revenue- and
expenditure-based approaches, charter schools inherit funding generated by the wealth, tax
effort and geographic characteristics of the school districts in which the charter school is
located or in which its students reside. Under the revenue-based funding approach,
however, charter schools get some funding based on the grade level, special needs or lowincome characteristics of students actually enrolled in the school. Under the expenditure
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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