A Call for Equity in Charter School Funding

EdCircuit Staff wrote this in 2024 to describe funding gaps between charter schools and traditional public schools and to propose strategies for equity. A new section below adds a 2023 university study of per-pupil gaps in 18 cities, an analysis of costs districts report when students leave, and examples of state responses.

Charter schools, independent public schools operating outside the traditional public school system, have gained substantial traction in the American education landscape. These schools often offer unique curricula, specialized programs, and flexible scheduling, providing parents with a wider range of educational options for their children. By fostering innovation and competition, charter schools aim to improve student outcomes and raise educational standards overall.

However, the funding mechanisms for charter schools have become a subject of intense debate. While charter schools receive public funds, the distribution of these funds can vary significantly from state to state. Some charter schools may receive less funding per student than traditional public schools, leading to concerns about equitable resource allocation. Additionally, charter schools may have limited access to certain funding streams, such as property taxes, which can further exacerbate funding disparities. These disparities can impact a charter school’s ability to provide quality education, hire qualified teachers, and offer essential support services to students.

The Funding Disparity Problem: A Closer Look

Charter schools often face significant funding challenges compared to traditional public schools, limiting their ability to provide high-quality education for all students. These disparities can arise from various factors:

• Per-Pupil Funding: In many states, charter schools receive less per-pupil funding than traditional public schools. This shortfall can limit their ability to hire qualified teachers, provide adequate resources, and offer specialized programs. For example, a charter school may struggle to afford science lab equipment or art supplies, while a nearby traditional public school may have ample resources.
• Capital Funding: Charter schools often struggle to secure funding for building maintenance, repairs, and new construction. This can lead to subpar learning environments, such as outdated classrooms or inadequate facilities for extracurricular activities.
• Administrative Costs: Charter schools may incur higher administrative costs due to their independent status. This can include expenses for legal services, accounting, and human resources. As a result, charter schools may have fewer resources to allocate directly to classroom instruction.

The Impact of Funding Disparities on Student Outcomes

The funding gap between charter and traditional public schools can have far-reaching consequences for student outcomes:

• Limited Educational Opportunities: Insufficient funding can hinder charter schools’ ability to offer a wide range of courses, extracurricular activities, and specialized programs. This can limit students’ exposure to different subjects and interests, hindering their overall development.
• Teacher Quality: Lower salaries and fewer resources can make it difficult for charter schools to attract and retain high-quality teachers. This can negatively impact student learning and achievement.
• Student Achievement: Inadequate funding can negatively impact student achievement, particularly for disadvantaged students who rely on schools to provide essential support services. For instance, a charter school may struggle to offer tutoring or after-school programs that can help students succeed academically.

The Path Forward: Strategies for Achieving Equity

To level the playing field for charter schools, policymakers and education leaders should consider the following strategies:

• Equitable Per-Pupil Funding: Ensure that charter schools receive the same per-pupil funding as traditional public schools. This would provide charter schools with the resources they need to offer high-quality education to all students.
• Fair Capital Funding: Provide adequate funding for capital projects, such as building construction and maintenance. This would ensure that charter schools have safe and functional facilities that support student learning.
• Flexible Funding Models: Implement funding models that allow charter schools to allocate resources effectively, such as performance-based funding and block grants. This would give charter schools more autonomy to make decisions about how to best use their funds to meet the needs of their students.
• Transparent Accountability: Hold charter schools accountable for student outcomes while ensuring that they have the resources to succeed. This would help to ensure that charter schools are providing a high-quality education for all students.

By addressing these funding disparities, policymakers can create a more equitable education system where all students, regardless of their school type, have the opportunity to thrive.

Charter school funding equity: what recent research shows and how states have responded

Charter school funding equity is a question with two sides, because the money that follows a student to a charter school is also money a district school does not receive. The article above sets out the case that charter schools receive less than other public schools. This section adds the largest recent study of that gap, a study that examines the costs districts say they carry, and examples of how some states have changed their funding rules.

The 2023 study of 18 cities

The University of Arkansas’s School Choice Demonstration Project published Charter School Funding: Little Progress Towards Equity in the City in August 2023, updated in December 2023 (the figures below come from the full report PDF). Authors Alison Heape Johnson, Josh B. McGee, Patrick J. Wolf, Jay F. May and Larry D. Maloney used 2019-20 budget documents for 18 cities in 16 states, counting every dollar flowing to schools, including in-kind services. They found that charter schools received about 30 percent, or $7,147 in 2020 dollars, less per pupil than traditional public schools. The gap had narrowed by just over three percentage points since 2017-18 but had stayed remarkably stable over the project’s seven reports.

Local revenue accounted for most of the difference: about $8,100 per pupil, or roughly 67 percent, and in 11 of the 18 cities charter schools received no local funds. State funding favored traditional schools by about $360 per pupil. The size of the gap varied widely. Atlanta’s was about 53 percent, Camden’s was the largest in dollars at $19,711, and Houston’s, at 3 percent, was the smallest. Denver cut its gap from 36 percent to 8 percent between 2017-18 and 2019-20. The authors found that differences in special education enrollment partly explain the gap, but not differences in poverty or English learners, and that a sizable gap remains after controlling for student need.

The study has limits. It covers 18 cities chosen because they have large charter sectors or room for growth, so it does not describe every state. It uses 2019-20 data, the most recent available when the authors wrote. Its acknowledgements state that The City Fund and the Walton Family Foundation supported the work and that the content is the authors’ responsibility. Readers should treat it as one research center’s measurement and compare it with analyses that ask other questions.

The other side of the ledger

District leaders raise a different concern about the same dollars. Research for Action, a Philadelphia nonprofit, modeled six Pennsylvania districts in a 2017 study covered by Chalkbeat. It estimated that when students leave for charter schools, the district keeps costs it cannot cut at the same pace, which the study calls stranded costs. In the first year after charter expansion those costs ranged from about $8,000 to $17,000 per pupil, depending on district size and growth rate. In the fastest-growth scenario, districts recouped only 44 to 68 percent of the tuition cost for each departing student by year five. The model projected hypothetically forward from 2015-16 budgets and covers Pennsylvania, so its dollar figures do not transfer to other states.

Both findings can be accurate at once. A charter school can receive less per pupil than the district average while the district’s per-student cost rises when enrollment falls. A funding formula that serves both has to answer how quickly district costs can fall and what share of local revenue should follow a student.

How some states have changed their rules

ExcelinEd in Action, an advocacy organization that supports charter schools, summarized six states’ 2023 actions in an article by Tom Greene published in January 2024. According to that account, Florida passed a law requiring districts to share local revenue with charters, moving toward full sharing by the fifth year. Idaho created a $50 million revolving loan fund for charter facilities and let the state back charter bonds. Ohio budgeted $175 million for charter facilities and doubled per-pupil facilities aid to $1,000. North Carolina let counties use property taxes for charter capital after lawmakers overrode a veto. Indiana’s Senate Bill 391 shares local referendum funds with charters in four counties. These are a supporter’s description of the changes, so readers can check each law’s text.

Questions for local leaders

1. Which revenue streams are in question? The Arkansas study points to local revenue, so a district or board can ask first whether local funds are shared and how.
2. What are the fixed costs? A district can document which expenses fall when enrollment drops and which do not.
3. What do facilities cost? Charter leaders can show what they pay for buildings and whether any state or county aid applies.
4. Who counts the dollars? Ask for the same method on both sides, including in-kind services and nonpublic funds.

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