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Unformatted text preview: d separately from state-authorized charter schools. 32 Overview of Charter School Funding Path of Funding
Whether a charter school receives its funding from school districts or from the state has
been the focus of much of the research on charter school finance. The second report of the
National Charter School Study (RPP, 1998), for example, contains only one table (Exhibit
2-10) on charter school finance. This table differentiates funding “directly from the state
treasury” from funding that is first directed to school districts and then to charter schools.
The table only describes which government(s) sends the check to charter schools. For
example, Massachusetts is described as a state-funded system. However, school districts in
Massachusetts include charter school students in the district pupil count, and pay charter
schools “tuition”—an amount approximately equal to the district’s per-pupil expenditure.
The school district payment flows to charter schools through the state deduction of the full
tuition—not just the average state aid per pupil—from its state aid payment to the school
The Massachusetts example illustrates that whether funds flow directly from school
districts or indirectly through a system of state aid additions and subtractions has no effect
on charter school revenue or school district loss of revenue. The path of funding is an
important issue primarily as a result of misunderstandings that in turn lead to misleading
The most common misunderstanding about the flow of funds is that when the state pays
charter schools directly the funding comes from “new money,” not from revenue following
students as they transfer from school districts to charter schools. A related
misunderstanding is that school districts lose only the average state aid per pupil when the
state pays charter schools directly, and not any local property tax revenue. The district is
mistakenly viewed as better off in a “state-funded” system because it loses no local
revenue. This misconception implies that direct payments from school districts to charter
schools are composed of both general state aid and local property tax revenue. In most
states, however, funding moves with students in the same amount from school district to
charter school whether or not the state directly pays charter schools.14
Another common mistake is the belief that school districts pay charter schools for students
who had never been enrolled in a district school—i.e., those students transferring from
private and home schools. This misconception is common in states where charter school
students are included in the school district pupil count such as Massachusetts or in states
like California, Colorado and Florida where school districts authorize charter schools. In
fact, new public school students generate new state aid for school districts, equivalent to
the entire foundation level, which is then paid to charter schools, leaving host school
districts financially unaffected. Presuming a fixed amount of K-12 education...
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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