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Unformatted text preview: resulting reduction in contributions to a retirement system is not necessarily more efficient
for employees, the larger community or the state. While some may argue that retirement
benefits are peripheral to the question of educational costs, reductions in retirement
benefits may impede the ability of charter schools to attract a stable teaching staff over
time. Private Funding
The primary goal of our report is to investigate state charter school funding laws and
practices. Yet private funding plays an integral role in the charter school concept.
Beckwith, et al., (1998) found that fundraising was essential in Illinois. The UCLA study
of charter schools in California (Wells, 1999) found that not only was fundraising essential
in California but that some charter schools had clear advantages over others in their ability
to generate private funds.
Some research shows a growing trend toward private contributions to traditional public
schools. Although foundations created specifically to support school district activities are
becoming more common, the average amount raised by school district foundations is only
0.3 percent of the school district’s total budget according to Merz and Frankel (1997). In
Michigan, Adonizio (1999) found that the number of public school district foundations
grew from five to 153 between 1981 and 1997. In 1995, the average amount raised by a 79 Venturesome Capital: State Charter School Finance Systems district foundation was $17,024. Private foundations also provide funding directly to
school districts with first being channeled through a school district foundation.36
Analysis of the extent to which charter schools and school districts rely on private
fundraising may be impeded by limited reporting requirements for private contributions.
Massachusetts and Minnesota require that financial statements include information on
private contributions in the annual report. In other states, gift giving reported in financial
statements may underestimate the amount of private fundraising both for school districts
and for charter schools. In school districts, donations to school foundations, which are
incorporated as nonprofit foundations and booster clubs, generally do not have to be
included in school district financial reporting. Since nonprofit boards generally govern
charter schools, private fundraising of the board may not be accounted for in the charter
school’s financial statements. Many charter schools have their own nonprofit foundations
created to raise funds.
In order to help readers evaluate the role that private funding plays in charter school
financing, a review of the 1996-97 annual reports of 10 Massachusetts charter schools was
conducted.37 The reports indicate major differences in fundraising but that overall, the
reliance of charter schools on private funding may be overstated. One of the schools
aggregated private giving with restricted federal funds, making analysis impossible. One
charter school raised revenues from private funds equal to 25 percent of the...
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- Spring '09