Saturday, August 20, 2016

PA: Charters Spend Less on Teaching

This week the Pennsylvania School Boards Association released a report looking at what charter schools are doing with all that taxpayer money. Short answer-- spending a whole lot of it on administration, and not quite so much on actual instruction of students. But when have I ever settled for a short answer. Let's stroll through this report and check out the many highlights.

Piercing the Charter Cone of Silence

As it turns out, the first finding of the report is about how hard it is to find findings for the report.

In Pennsylvania, local school districts are mostly the authorizers of charter schools (unless the state has engineered some sort of takeover of the district a la Philadelphia). So you would think that rounding up the information about charter schools and their budgets would be easy enough for the school board association to round up.

But before data could even be crunched, PSBA got a taste of charter attitude. In May of 2015, PSBA filed Right-To-Know requests for charter info. Then this:

Shortly after the requests were sent, a spokesperson for the Pennsylvania Coalition of Public Charter Schools was quoted as saying, “[t]he Pennsylvania Coalition of Public Charter Schools has no problem with either transparency or full responsiveness to legitimate RTK requests, but when the law is being used to harass, rather than inform, then the requests should be denied.” Most charter schools ignored this unlawful advice and complied with the law by providing PSBA with access to public records.

And by most, PSBA means a little over 50%. PSBA then filed appeals for the records of the rest. 15% complied once the appeal was filed, another 17% complied once PSBA won the appeal, and 11% still didn't comply even after PSBA won the appeal (another 3% didn't comply for "other reasons"). That accounts for 173 charter schools in PA. And it also accounts for the perception that charters are not exactly transparent and forthcoming about what they do with taxpayer dollars.

All of this comes before we even get to the findings. Once the PSBA had their hands on charter records from both RTK requests and other sources like IRS 990 forms, what sorts of things did they discover?

Income Sources

PA charters get 83.3% of their income from the tuition payments made by the sending district. Because of our set-up, that tuition payment can vary wildly because it's based on the per-pupil costs of the sending district. So while we often cite around $10K as the average, that ranges from a low of $6,865 to a high of $18,750 (that's for "regular" students-- students with special needs carry a higher tuition).

PSBA doesn't get into the implications of that disparity, but I will. First, it means that not all customers are created equal for charter schools, and the worst charter business model would be to try to latch onto students from the poorest districts, who would bring little money with them. Second, it means that students and parents from very poor districts should be shopping for charters with students from rich districts, because that will effectively increase the amount of money being spent on that students-- but conversely, charter parents from wealthy districts may want to watch out that their charter is not bringing in too many poor students, thereby dragging average student spending at the school down.

PA's charter system essentially creates a voucher system where poor students are given tiny vouchers and rich students are given big ones.

This may all be related to another finding of the report. Since 2007-08, the enrollment numbers in charter schools have risen almost 100%. The revenues for charters have, however, increased by 139%. This may suggest that while PA's charter choice system is allegedly aimed at students "trapped" in poor districts, that's not where the charter influx is coming from.

Meanwhile, charter tuition payments make up 5.4% of all school expenditures in the state. That's an average, however, which hides spectacular cases like Philadelphia (26.1%) or Chester Uplands, a district that currently spends a whopping 46.1% of all its expenditures on charter tuition.

$pecial Education

This is pretty simple, so I won't embellish.

In 2014-2015, school districts paid out $294.8 million in special ed supplement money to charter schools.

In 2014-2015, charter schools spent $193.1 million on special ed services.

Charter schools make a hefty profit on special ed students. And that is without even digging down to see how much charter enrollment is tilted away from students with large, difficult special needs and towards students whose special needs are considerably milder. There's a formula in PA that divides students with special needs into three tiers for purposes of state funding. It seems like it wouldn't be such a stretch to apply that formula to charters, too.

What Do Charters Spend Money On?

When it comes to instruction, charters spend a greater proportion of taxpayer money on regular instruction, with very little (or none) going to vocational, special ed, or other special instructional programs. However, as part of the overall budget, charter schools spend less on instruction than public schools do.

If charters are spending less on instruction, then what are they spending their money on? The answer, by a country mile, is administration. The PSBA report crunches this several ways, but I'll just pick two.

Here's a simple one-- on average, public school districts' per-pupil administrative costs are $914. For charters, that per-pupil administrative cost is $1,742.

Here's a charter from the report that shows how this breaks down in a little more detail.

from PSBA Special Report: Charter School Revenues, Expenditures and Transparency

Charter Management, Structure and Advertising Expenditures

PSBA looked at 2013 990 forms to see what charters spent on various subcontractors.

In terms of hiring management, the charters in all spent 11.7% on management services.That figure is a little misleading because a little over half of the charters actually spent 0% on management services (two charters actually spent more than 25% of their budget on management).

Food services, construction, rent, and educational services were the next top four contracted services behind management, though less money was involved. 

Charters across the state spent 12% of their expenditures on occupancy costs. Again, a very wide range is represented from 15 charters that spent $0.00 on that item, while one charter spent over 30% on those costs (that was over $4,000 per pupil). However, mostly what PSBA concluded from this portion of the study is that computing occupancy costs is "incredibly difficult." 

Advertising costs were also difficult to compute, and PSBA tried it both ways, with the responses from charters that complied with RTK requests, and trying to suss out 990 forms. Working from RTK replies, PSBA figured that charters spent about $42 per student, while the 990s yielded a more conservative $26 per pupil cost for advertising. Once again, that's a gross oversimplification of a wide range. According to the 990-based figuring, there are three charters out there that spent over $500 per pupil in advertising. And it's worth noting that in many cases, the advertising figures from RTK and 990 forms just plain didn't match, suggesting that somebody is not being entirely honest part of the time.

However, having noted that PSBA's numbers on advertising are tricky to parse, let me also note that the appropriate amount of tax dollars to spend on advertising a school is $0.00. 

Conclusions and Recommendations

1) Charters need to be held to the same standards of transparency as public schools. Those are tax dollars. Taxpayers are entitled to know exactly where they went.  PSBA repeats the not-really-true line that charter schools are public schools, but in the context of making the point that charters are public schools because they live on public tax dollars-- therefor they should play by the same rules as all public schools. PSBA says the state should hold charter feet to the fire.

2) The current formula "consistently" results in school districts overpaying charters for special ed students. Since 2009-2010, says PSBA, public schools have paid charters $327 million more than charters reported spending on special ed. That is not cool (and not something a public school would get away with if it were taking extra money from the state). The formula should be fixed.

3) A commission should be formed to take a closer look at charter finances. That charter should make recommendations. Those recommendations will probably not be, "Give charters a medal for financial awesomeness."

Charter Reaction

The Pennsylvania Coalition of Public [sic] Charter Schools has treated the report as an attack and responded accordingly, deflecting any recommendations to change how they're managed as picking on children for making different education choices. "We are totally open and transparent," they said, a statement presumably not written by any of the charters that fought to avoid fulfilling Right-to-Know requests. Charter schools make a lot of money in Pennsylvania, and they would rather not have anyone messing with their golden goose.

However, there is no earthly reason that, if they want to call themselves public schools, they can't live by the same rules of financial behavior and transparency as any other school district in the commonwealth. And it seems likely that until that day comes, the school boards of Pennsylvania, who are all becoming really tired of trying to run a school district with financial parasites attached, are likely to keep trying to shed some light on Pennsylvania's lousy charter funding and oversight rules. 

It's partly self-defense. Many school boards are taking heat from their constituents for financial mismanagement when the actual problem is not that they're screwing up, but that they are being drained by charter leeches even as the state ties their hands. Charter proponents have set up laws in Pennsylvania (as in many states) that insure that charter advances must come at the cost of public schools. If you set up a system in which the two types of schools are pitted against each other, you can't really be surprised when public schools decide they don't just want to sit there and take it. 

If you're in Pennsylvania and your local school board members haven't seen this report from their parent body, make sure you send it along. If you want more specific data about specific charters, you can find all the raw materials here.  The first step in solving your leech problem is to shine some light on the little buggers.


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