National Charter School Finance Study: Findings from State Case Studies

School Improvement
American Federation of Teachers
PSA Director
Michael Rubenstein

State policies on the funding of charter schools differ across the country. But one thing is clear: Whatever policies states choose to adopt have tremendous implications for these schools' long-term viability. PSA case studies of six state charter school finance policies highlight the complexity and controversy that surrounds charter school finance.

These case studies reveal:

  • Charter schools do not necessarily receive all of the operating revenue that they would receive if they were traditional public schools. A state may cap its charter school per-pupil foundation grant or pay charter schools only a portion of what it pays other public schools. But in rare cases, the opposite can also be true. Charter schools may actually receive more operating revenue than traditional public schools in the same district. This can happen in some instances when a public school converts to charter status, or when a charter school enrolls students from neighboring districts that spend more per pupil than the host district.
  • None of the states in the study give charter schools full access to the array of sources available to traditional school districts for capital construction. Some states have, however, created alternative sources of capital funding for charter schools. Other states are beginning to allow charter schools to issue tax-exempt securities for capital expenses. The frequent lack or inferior quality of common amenities such as cafeterias, athletic fields, and libraries in charter schools raises serious equity and financial implications for schools that, for example, cannot take advantage of the National School Lunch Program or, as in Texas, become ineligible for compensatory education funding.
  • Some states have designed charter school finance systems that impose significant financial costs on the state. One state reimburses school districts that lose per-pupil revenue when their students enroll in charter schools. Other states may pay more because of private school students transferring to charter schools. While some states allow authorizing agencies to withhold some per-pupil revenue for administrative expenses, some agencies have chosen not to do so, often for political reasons.
  • Most states studied had no uniform systems for collecting and reporting charter schools' financial data. Similarly, oversight of charter school finances was inconsistent, both across states and within states with more than one authorizing agency.
  • No clear patterns emerged for class size, proportions of certified and non-certified teachers, ratio of administrative to teaching staff, and competitiveness of compensation packages. However, staffing decisions seemed to be driven by a combination of legislative mandates, student needs, instructional philosophy, and available resources.
  • States in the study made transportation funding available to charter schools, but many charter schools did not provide transportation for their students. As a result, charter schools in some states were able to apply transportation funding to other operating expenses; other states prohibited them from doing so. Charter schools also often contracted with the local school district or outside contractors to provide special education instructional staff and services.
  • Charter schools did not appear to have any special advantages in raising money from non-public sources, although a few were remarkably successful at doing so.

The six case studies were conducted in Arizona, Colorado, Florida, Massachusetts, Michigan, and Texas. Conclusions are based on interviews with state, local, and school officials, and reviews of supporting documentation supplied by interviewees.

Case studies available.

Also see State Charter School Finance Systems' Study