Venturesome Capital- State Charter School Finance Systems

State equalization formulas attempt to level the

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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.

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