Venturesome Capital- State Charter School Finance Systems

The massachusetts report raised several issues

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Unformatted text preview: ts reduced their usefulness as a monitoring tool. More than half of the charter schools lacked written procurement procedures, and only two required advertised competitive bids, a practice described as inconsistent with the intent of the charter school movement to promote competition. The Massachusetts report raised several issues regarding management contractors. Some contracts had unclear management fees, and other privately managed schools paid contractors more than called for in the contract. Four of 11 management contracts contained no performance provisions regarding student academic achievement. Five contracts restricted public use of educational curricula. The report found that loan agreements between charter schools and their management contractors could render the schools excessively dependent on their management contractors while reducing schools’ contracting leverage. The inspector general noted that both charter schools and the state board of education were undertaking corrective actions to address many of the report’s concerns. A field study of the impact of charter schools on school districts by Eric Rofes (1998) used an interview methodology to examine perceptions of the financial impact of charter schools in 25 districts. Rofes found that 14 of the districts did not feel a noticeable financial loss as the result of charter schools. Eleven districts reported financial impacts, and five of these said the impact was substantial. The impact of displaced funds may be ameliorated by a rising tide of students; districts with enrollment growth appear to be less likely to feel they were affected. Rofes also found that small districts were more likely to feel affected than larger ones. Another important finding from the interviews was that many school leaders had insufficient understanding of the school finance system to determine the impact charter schools had on their budgets. In Minnesota, the Center for Applied Research and Educational Improvement (CAREI, 1996) also found that large districts felt a minimal impact as a result of charter schools. In a study of impediments facing Illinois charter schools, Beckwith, Bradley and Price (1998) found that 72 percent of the applications denied by local school boards were at least partially based on financial grounds. This includes 9 of the 11 proposals appealed to the state board of education. Facilities were less of a problem, being a factor in only 40 percent of the denials, ranking behind education program and governance issues. Problems centered on budgets submitted with the application, not school district financial issues. The study also indicated that charter schools are dependent on private sector contributions. For charter schools operating in 1997-98, grants, fees, fundraising and donations accounted for 19 percent to 60 percent of operating budgets. In a similar study of early implementation in Massachusetts, Millot and Lake (1997) found that next to facilities, finances were the biggest obstacle reported by charter schools. University- and business-run charter schools had resources to deal with the up-front costs of opening a charter school, but charter schools operated by community service organizations and grassroots groups had to seek outside sources. The authors attributed the failure of the legislature to provide start-up funding to several different views on 17 Venturesome Capital: How States Pay for Charter Schools chartering: (1) some advocates inte...
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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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