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Unformatted text preview: ve if charter schools are congregated in betterfinanced school districts. 44 Overview of Charter School Funding Wealth and Tax Effort
Some school districts are wealthier than others, which usually translates into higher
spending. State equalization formulas attempt to level the playing field among school
districts, but some wealth advantage almost always remains. In addition to variations in
levels of wealth, some school districts devote more of the community’s resources to
education through higher local taxes. Increased tax effort could increase the funding of a
poorer school district relative to more affluent districts. State funding formulas often
encourage local tax effort by supplying incentives and matches geared to reward high tax
effort. The states where charter school funding is linked to school district wealth and tax
effort are highlighted in Table 8.
TABLE 8 Charter School Funding Based on Host School District Wealth or Tax Effort
Yes No Alaska, Delaware, Florida, Georgia, Illinois, Kansas,
Louisiana, Massachusetts, Michigan,3 Milwaukee,
New Jersey, North Carolina, Pennsylvania, Rhode
Island, South Carolina, Texas, Wisconsin Arizona, California,1 Colorado,2
Connecticut,4 District of
Columbia,5 Hawaii,5 Minnesota,
New Mexico 1 School district funding in California is not based on wealth or a tax effort. 2 Some charter schools may get levy override funds if agreed to in the charter. 3 Per-pupil funding capped at about $6,000. 4 State-authorized schools only. 5 Not applicable because only one school district exists. The District of Columbia and Hawaii, as single school districts, naturally do not have
geographic variation in local wealth and tax effort. Minnesota gives all charter schools the
same base aid per pupil, but total funding varies considerably due to a weighting system
based on student characteristics. In Connecticut, state-authorized charter schools receive a
flat $6,500, approximately equal to the state average. For Connecticut and Minnesota this
centralized state funding raises an incentive issue. Charter schools in the two states are
better funded than local school districts when the schools are located in low-spending
districts. This situation may create incentives for charter school operators to locate in
school districts that receive less funding to obtain a competitive advantage. In Connecticut,
Michigan and Minnesota, charter schools located in high-spending school districts suffer a
resource deficit compared to the local school districts.
In the other states, the incentive system is reversed. Charter schools located in, or enrolling
students from, poorer school districts with lower tax effort receive fewer dollars. Charter
schools have an incentive to shop from district to district, looking for those with the
highest revenue or spending levels. On the other hand, the impact of the location incentive
is mitigated if families in high-spending school districts are satisfied with their public
education and therefore less likely to seek charter school alternatives...
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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