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share many of the same components. At the heart of these is the base amount of funding
for each student enrolled. In some cases, amounts are based on a state average per-pupil
expenditure (e.g., Minnesota), in others a district average (e.g., Massachusetts); and in still
others the amount is negotiated between charter schools and the authorizing school district
(e.g., Colorado). Many states also provide charter schools with additional funding for
special education and low-income or at-risk students on the same basis as other public
schools. Charter schools are eligible for federal and state categorical program funding to
help meet the needs of high-cost students (e.g., students eligible for services under Title I
or special education laws) or to promote specific educational programs (e.g., technology
literacy or Goals 2000). Finally, the amount and type of fiscal autonomy and financial
reporting given to charter schools vary from state to state, as do procedures to monitor
financial management and stability.
Our report identifies potential financial incentives in state charter school finance systems.
Subsequent reports of the National Charter School Finance Study will examine the impact
of these incentives. An assessment of the impact of financial incentives on the adequacy 8 Introduction and distribution of resources—as well as educational programs—constitutes an important
component of any school finance study. Federal start-up grants, for example, encourage the
development of charter schools by providing additional resources. Program requirements
attached to federal funding also advance the goals of federal legislation by mandating
procedures such as admission to charter schools only by lottery. One could argue that
financial incentives would have more impact on market-oriented charter schools than on
other public schools. Prospective charter schools are free to develop unique missions and
specialized curricula in response to financial incentives. The growing influence of forprofit management companies magnifies the need to pay close attention to financial
incentives because that is what market forces are all about. However, the importance of
financial incentives should not be overstated. Parents, teachers and community groups
create charter schools for specific educational purposes—not to maximize funding.
Chartering authorities in many states also give preference to charter schools serving at-risk
children, even when no financial incentive exists to serve high-cost children.
Chapter 2 of our report reviews previous research on charter school finance. Chapter 3
describes methodology, including the procedures used to create the hypothetical charter
schools that provide the basis for funding comparisons in our report. The overview of
charter school funding in Chapter 4 includes sections on base per-pupil funding and
funding linked to student characteristics or geographic location. Other chapters address
start-up funding, facilities funding and transportation funding. Finally, Chapter 9 briefly
examines the comparability of charter school and school district funding.
Our report also includes a breakdown of the actual dollar amounts that states could provide...
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- Spring '09