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Educational policy analysis archives
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University of South Florida
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University of South Florida.
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Educational policy analysis archives.
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Charter school funding issues / Stephen D. Sugarman.
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1 of 16 Education Policy Analysis Archives Volume 10 Number 34August 9, 2002ISSN 1068-2341 A peer-reviewed scholarly journal Editor: Gene V Glass College of Education Arizona State University Copyright 2002, the EDUCATION POLICY ANALYSIS ARCHIVES .Permission is hereby granted to copy any article if EPAA is credited and copies are not sold. EPAA is a project of the Education Policy Studies Laboratory. Articles appearing in EPAA are abstracted in the Current Index to Journals in Education by the ERIC Clearinghouse on Assessment and Evaluation and are permanently archived in Resources in Education .Charter School Funding Issues Stephen D. Sugarman University of California, BerkeleyCitation: Sugarman, Stephen D. (2002, August 9). Ch arter school funding issues. Education Policy Analysis Archives 10 (34). Retrieved [date] from http://epaa.asu.edu/epa a/v10n34.html.AbstractAlthough a great deal has been written about charte r schools, rather little attention has been given to their funding. The fir st part of this article raises four current issues in the funding of regula r public schools across the U.S. and shows how these issues carry over to t he funding of charter schools. The second part explores four additional issues that have arisen in the funding of charter schools that go to the co re identity of charter schools and the nature of the students they enroll. In both parts, extra attention is paid to developments in California, on e of the most active charter school states. In just over a decade, charter schools have grown f rom an idea to something of a movement,

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2 of 16as more than 2000 charter schools now serve more th an 250,000 in 34 states and the District of Columbia—although this remains but a tiny fracti on of American school children. Observers disagree whether charter schools have so far turned out to be a positive development, although the Consortium for Policy Res earch in Education (CPRE) has recently released a fairly upbeat review of the lit erature concerning several key policy issues relating to charter schools. 1 Nevertheless, it should be emphasized that this a rticle is not meant as a brief in support of (or against) charter schools. Rather, the central point of this article is that if charter schools are to become a regular part of th e public school system in at least a number of states, then the charter school f unding issues discussed here need further attention by both policy analysts in the political arena and school finance scholars. It is also perhaps worth emphasizing at the outset that this a rticle does not purport to provide solutions to all of the problems examined, although several of California's solutions are presented. Instead, it offers something of an agen da of charter school funding topics in need of further policy discussion.Part I: Four Public School Finance Issues and Their Connection to Charter School FundingOne: Inter-district inequalities A. The issue generally The funding of American public schools is historica lly based on local property taxes. Notwithstanding subventions from the state to local school districts, spending per pupil has long varied from district to district. 2 More specifically, ever since the 19th century, spending on public education has importantly been a function of the per pupil wealth of the local district, with low wealth districts most disa dvantaged. Because of more than thirty years of litigation tha t began in the late 1960s, this problem has now been substantially ameliorated in some states 3 —states like Kentucky, New Jersey, Texas, Wyoming and California 4 —although, even today in California, for example, s ome wealthy communities like Beverly Hills continue to outspend most other districts. Overall, however, inter-district spending inequalities remai n significant in most states and very large in some states. 5 (Of course, some people consider wealthier distr icts entitled to spend more and see "the problem" as the interference with that advantage by courts and state legislatures.) B. Carry-over to charter school funding Inter-district spending inequalities al so create a dilemma for charter school funding. 6 Either, charter schools will be funded (typically b y their local sponsoring districts) at a level that relates to the spending level per pupil in the districts that charter them—this is the most typical solution around the country.7 Or, they will be funded (perhaps directly by the state) at some state average level of funding per pupil—th is, for example, is increasingly the California solution. 8 Both solutions are problematic. If charter funding is tied to district spending per pupil, then charter schools may be very differently funded based on who they can get to cha rter them. This sort of inequality among

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3 of 16charter schools surely must seem unfair to many cha rter school operators, and especially so as charter schools begin to lose their connection t o families living in a particular district and begin to serve children from a metropolitan area. Moreover, this arrangement gives those seeking charters special incentives to seek charter s from some, but not other, districts. The disincentive applies most strongly with respect to low wealth/low spending districts, and these are the very districts that charter school su pports typically argue have the most to gain from charter schools. On the other hand, if charter school funding is pro vided based on the state average per pupil spending level in public schools, then this discour ages the conversion of existing public schools to charter schools in high spending distric ts, and it also makes it hard for new charter schools to compete in districts that have high spen ding. State average spending also artificially encourages conversions to charter scho ols in low spending districts. At the same time, regular public schools in those low spending districts would understandably feel unfairly disadvantaged as compared with charter sch ools with which they compete. Because California has substantially eliminated int er-district inequalities in the core funding for public education, these inter-district problems for charter schools are far less there than in most other states. What this also shows is that if more states were to reduce their inter-district inequalities, this would arguably be good both for public schools generally and for charter school funding. Indeed, it is plausibl e that the reform of the funding of regular public schools could actually be effectuated throug h the spread of charter schools because of the tensions and inconsistencies that are so clearl y exposed by the finance of charter schools. Two: Intra-district inequalities A. The issue generally In many school districts, teachers (and other emplo yee positions) are funded in this way. The school district awards each local school one te acher slot for every X number of pupils it has. Then, whatever that teacher's salary, it is f ully paid for centrally. 9 This means that schools with higher paid (in general, more experien ced) teachers get more money spent per pupil on their core teaching staff than do those sc hools with lower paid teachers. Because of teacher seniority rights and other facto rs, this often means that schools serving the lowest income pupils have the lowest spending p er pupil on their core faculty. 10 This is vividly apparent in a community such as Oakland, Ca lifornia, where the higher achieving schools in the Oakland hills generally have much be tter paid and more experienced teachers, and the lower achieving schools serving low income children who live in the Oakland flats tend to have large concentrations of lower paid tea chers (many of whom are new to the job and working with only temporary teaching credential s). This issue of intra-district inequalities arising f rom the way teacher slots are funded was supposed to have been changed in Los Angeles in res ponse to litigation. And indeed, it appears that the Los Angeles Unified School Distric t has now infused schools that previously spent less than the district average on core teacher salaries with substantial new money, although those schools have not generally be en able to attract their share of more senior teachers and have instead used the funds for other core instructional purposes. 11 Despite this improvement in intra-district equity, this litigation does not appear to have been copied elsewhere, and, in any event, intra-district inequalities are widespread throughout the

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4 of 16nation. (Again, some people don't see this as a "p roblem," because they favor higher per pupil funding on core teachers in neighborhoods whe re wealthier families live, perhaps to offset the funding advantages that other neighborho ods have because of categorical programs aimed at children from low-income households.) B. Carry-over to charter school funding Charter schools, as already noted, are generally fu nded on a per pupil basis, at least for the core of their resources. 12 When this method is used, it eliminates the issue of intra-district spending inequalities just described—at least among charter schools. But it also creates some thorny incentives for existing public schools. For example, per pupil funding at the school level will probably make it financially quit e unwise for local public schools to convert to charter schools if their teachers curren tly are more experienced and higher paid. By contrast, schools with low teacher salaries on a verage have a special, perhaps artificial, incentive to convert.Funding charter schools on a per pupil basis but re gular public schools on a teacher position basis also means that, to survive financially, char ter schools will probably have to rely upon a large cadre of mainly newer and lower paid teache rs as compared with the more attractive schools in the district that chartered them. This understandably seems unfair to the charter schools.It should be clear, then, that were regular public schools (like charter schools) financed on a per pupil basis for their core funding, those schoo ls with concentrations of higher paid teachers would probably have to make do with fewer of them (which would imply a larger average class size than today for regular public sc hools stocked with senior teachers). But at the same time, regular public schools with lower pa id teachers would probably be able to hire more teachers and reduce class size. Such a c hange would both be better for the neediest schools and would mesh regular school fund ing with charter school funding. Hence, just as noted earlier with respect to interdistrict spending inequalities, it is also plausible that financial the inconsistencies laid b are by the spread of charter schools will actually stimulate the reform of public school fund ing within districts. Three: Inadequate spending A. The issue generally Despite its wealth and previously high level of spe nding on public education, California currently spends much less per pupil than do compar ably wealthy states, and overall spends less than many school finance experts believe is ne cessary to facilitate high quality outcomes for most students. 13 Although state-to-state comparisons are difficult (because of different accounting measures and different costs from place to place), roughly speaking California schools today tend to spend around $6000 per pupil annually for current expenditure items, whereas the figures in places like New Jersey and C onnecticut are nearly twice that number. 14 Some blame this low level of spending on public s chools in California on the adoption in the 1970s of Proposition 13, which both sharply reduced local property tax collections and restricted future increases; 15 at least one scholar has blamed this decline in relative spending in California directly on the sch ool finance litigation that reduced inter-district inequalities; 16 still another scholar blames California's relative ly low spending

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5 of 16on the unwillingness of state politicians to invest in education as substantial a share of the personal incomes of the people of California as are political leaders in many other states.17Although California, given the overall wealth of it s population, may be seen by some as especially miserly towards its schools, it is hardl y at the bottom in terms of public school spending. Indeed, there are many much poorer state s around the country—like Louisiana, Alabama and Mississippi—that also spend quite modes tly on their public school pupils, even taking their relatively lower labor and other costs into account.18 (Once more, of course, some believe that too much money is already spent o n public education in America and would see "the problem" more in terms of "excessive spending in states like Connecticut and New Jersey.) B. Carry-over to charter school funding Given that public school budgets are seen as tigh t in many states, this means that many states and local school districts do not feel thems elves able to provide generous funding of charter schools. This shows up in a variety of for ms. Start-up costs are often lacking or inadequate. 19 These are the funds needed to launch the school, to hire staff, and to outfit the school with furnishings and curriculum materials in preparation for its initial enrollment of what is often an uncertain number of pupils. In some communities this issue has been reasonably well addressed because charter schools are able to tap into special fundin g available from the federal government, special state programs, and private fou ndation grants. 20 Nevertheless, start-up costs often remain a serious problem, espe cially for newly formed community groups that seek to create charter schools. 1. In some communities, the fees charged for "oversi ght" and for "services" provided to charter schools by their sponsoring districts have been set at quite high levels, and some charter school supporters charge that this is likely to be especially true in districts that are not all that keen to sponsor cha rter schools in the first place. 21 Although this issue remains quite troubling in some states, it has been at least partly addressed in recent California statutory provisions which now both cap the oversight fee and clearly give charter schools the ability to go to outside providers for the business and other services they need. 22 2. Apart from schools that convert from existing publi c schools, charter schools often obtain little or no extra money to pay for their sc hool buildings (whether those buildings are leased or bought and paid for with mo rtgage funding). 23 When this happens, it means that charter schools often have t o redirect perhaps 20% or more of their core funding to pay for space, leaving them w ith what they believe to be too little to pay for the ongoing educational program. 24 Indeed, an inadequate supply of school facilities may be the single largest stumbling bloc k to the growth of charter schools.25 In California, however, the recently adopted Propos ition 39 promises to resolve this issue starting in 2003. This initiative propositio n insists that bodies approving charter schools provide those schools either with adequate school buildings or the money to rent or buy them. 26 Yet, it remains to be seen how charter school rig hts under this 3.

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6 of 16new law will play out. Indeed, this new requiremen t might cause many districts to decide to call a halt to chartering, even though Ca lifornia law is supposed to make it difficult for districts to refuse a charter sought by any applicant with reasonably sensible plans for its school.27 In any event, this problem remains a difficult on e for charter schools in other statesDespite the points just noted, it should also be ap preciated that sometimes charter schools have certain financial advantages. For exa mple, in states that provide uniform per pupil funding for charter schools at all grade levels, charter schools have tended to be created to serve elementary, not high school, pu pils because younger children are traditionally cheaper to educate. 28 (California's program resists this trend by offeri ng charter schools more money per pupil for education at the higher grades. 29 ) A second advantage in some places is that the calculation of the per pupil allocation to charter schools includes sums that regular public schools s pend on services, like transportation, that charter schools might not prov ide. Both of these points illustrate the importance of determining the proper spending b enchmark to which charter school funding is to be tied.Yet, as a general matter, until regular public scho ols are reasonably well funded, it is probably unrealistic to expect generous funding for charter schools (although some people don't consider this to be a "problem," belie ving that a system of charter schools is only worth the governmental effort if those scho ols are as good or better than regular public schools at a much lower cost to the taxpayers.) 4. Four: Special needs funding A. The issue generally Federal funding programs for educationally disadvan taged children (through the federal Title I program) and for children with disabilities (thro ugh the federal special education law—IDEA) implicitly assume that, if left to their own discretion, all too many local public schools, districts and states would choose to treat these groups of children badly. This explains why Congress decided that civil rights sor ts of protections are necessary for these special needs children. One consequence, however, i s that the federal restrictions attached to the distribution of these "categorical" funds burde n local schools in various ways. First, in order to make sure that schools actually spend federal funds on educationally disadvantaged children, federal regulations impose substantial reporting and accounting burdens on schools. These, in turn, have caused so me schools to use the money in ways other than they believe would be best for those chi ldren (although recent federal changes have sought to reduce this problem).30 Second, even though the federal government has recognized the special needs of disabled children, Congress has failed even to provide adequate extra funds to deal with those extra needs 31 Yet, Congress has mandated that those needs be met. As a result, there is considera ble pressure on local school districts to shift money otherwise earmarked for the rest of the ir children to these especially needy pupils. This shift is called "encroachment" by exp erts and is now thought to be quite substantial in the special education area, with som e observers claiming that as much as 25% of the funds intended to regular education must be siphoned off to pay for the extras needed by special education pupils—that is, required extra s that are not paid for by federal and state

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7 of 16categorical special education funds. 32 Most people would surely agree that it is good th at these needy children get extra money, but it must b e appreciated that, as a result, even less money is left for other children, and that is gener ating some backlash among parents of non-disabled pupils. B. Carry-over to charter school funding Many charter schools have had great difficulty gett ing their legally entitled share of state and federal categorical funds from the appropriate stat e or local funding authority through which federal and state categorical funds flow. In California now, this issue may have been fairly well resolved with respect to most of the smaller state-funded categorical aid programs. Thi s is because charter schools are supposed to obtain their share of those funds on a per capit a basis—i.e., they receive so many extra dollars for every pupil in the charter school witho ut having to show that they actually have enrolled pupils eligible for those extra categorica l funds, without having to fill out all the otherwise required forms, and without having to sho w how they have spent those extra funds. 33 This is very desirable for charter schools, both because the cash is much more likely to be received in a timely matter and becaus e the charter school can avoid the red tape tied up in claiming and receiving funds from a larg e number of small categorical programs. But the receipt by charter schools of their share o f federal Title I funds and funds for special education pupils remain substantial issues. One ke y factor to appreciate here is that some charter schools either avoid enrolling, or don't re ally know much about teaching, special education pupils with anything more than very modes t disabilities. Those schools are viewed in some quarters as shirking their fair shar e of these pupils. At the other extreme, it must also be understood that other charter schools deliberately specialize in, or simply wind up as magnets for, children with disabilities. 34 The upshot is that there tends to be a very uneven distribution of special education children i n individual charter schools as compared with the state average. 35 As a result, especially for high cost special educa tion children, it is essential that extra funding is provided to charter schools on an indivi dual pupil basis. That is, simply increasing the charter school's per capita allocati on based on the total number of children in the school—as has been done in California for small categorical programs—would clearly give too little money to some charter schools and t oo much to others. Moreover, many advocates on behalf of children with special needs remain skeptical about the good faith of many charter schools in enrolling and fairly treati ng such children. Hence, they are no more willing to surrender regulatory controls over categ orical funding for charter schools than they are for regular public schools, even though such ch ildren only enroll in charter schools "by choice."36But actually arranging for the receipt by charter s chools of extra funding for those needy pupils has been difficult in many places and has te nded to immerse charter schools in bureaucratic controls from which they are, as a gen eral matter, supposed to be free. Moreover, charter schools are new in many places an d the necessary bureaucratic linkages are just getting formed. Furthermore, charter scho ol operators are often unsophisticated in timely completing forms and carrying out procedural activities that it has taken local public schools years to master. In addition, one suspects that some local districts are not all that

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8 of 16eager to spread categorical funds to charter school s (just as they have been slow to pay over federal categorical funds to eligible private schoo ls), especially at a time when, as noted, they receive inadequate amounts of these funds to s erve the pupils enrolled in their own regular public schools. Indeed, the encroachment p roblem has caused some districts to want to cut the basic funds they provide to charter scho ols (before adding back categorical funds) on the ground that the district's own regular publi c schools are suffering from this problem. Needless to say, many charter school operators find this cutback in the funds they think they should receive hard to accept, or even understand. Until these matters are better resolved, some charter schools will view themselves as mistre ated whereas others will continue to shun the neediest children.Part II. Four Special Issues of Charter School Fun dingOne: How to Count Charter School PupilsAs already explained, chartering bodies generally f und charter schools on a per pupil basis. This makes it essential for there to be a fair, and fairly run, system for counting how many pupils the charter school actually serves. But sev eral issues have arisen, both because of fraud committed by some charter schools and, arguab ly, unduly harsh counting mechanisms imposed by some chartering bodies. Conceptually, the first decision is whether to coun t pupils on the basis of ADA (average daily attendance), or ADM/ADE (average daily member ship or enrollment), or yet some other pupil-counting measure. 37 This, of course, is an issue for regular public s chools as well as for charter schools. The difference is impo rtant. For example, a school will have more pupils enrolled than attend on any given day, and hence ADM/ADE counts, other things equal, will bring in more money. But in add ition, notice that if ADM/ADE is used, schools with high absentee rates, in effect, get ex tra funds that can be used to help them track down pupils who are not attending regularly and to support efforts designed to coax those pupils back into school full time. For charter schools, an ADM/ADE pupil count may cre ate an incentive both to manufacture enrollment numbers on the days ADM/ADE is counted a nd to treat as enrolled, but then later ignore, regular truants. On the other hand, if ADA is used, then charter schools have an incentive to discourage the enrollment in the first place of those students who are likely to have high absentee rates. 38 This problem of perverse incentives is likely to be especially troublesome for charter schools, as compared with r egular public schools, because the former inevitably will have more control over who t heir pupils are. One possible solution to this problem is to use an ADM/ADE count in the funding of charter schools, but then to make sure that all enrollees a re counted when assessing student achievement at the school, thereby making it undesi rable for charter schools to ignore enrollees who become truant. The bottom line is th at, absent a well-crafted solution to this issue, the charter school funding mechanism can win d up having an unintentionally large impact on which pupils charter schools seek to attr act. Two: Schools that seek to enroll distance learners/ home schoolers Nationwide it is now estimated that perhaps as many as 2% of children are home schooled

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9 of 16by their parents. 39 Should those parents who home school their childr en be able to group together as a charter school in order to obtain fin ancial support from the government? This is not really an issue for regular public schools, because these children conventionally are simply not enrolled in "school" (although some ente rprising public school officials, as a way of garnering more state funding for the district, h ave figured out how to enroll in their "independent study" programs some children who are, in effect, home schooled). If home schoolers are permitted to join charter sch ools, this will increase the cost of public education. This new cost alone will make some stat e officials want to resist funding charter schools established to serve these sorts of childre n. Nonetheless, in some states, including California, home-schooled children may be served by charter schools. This has created several problems however. Part of the problem stems from the fact that many have come to the conclusion that these children can be served at a public cost level much below that of other children and, in turn, below the per pupil allocation normally made for children enrolled in c harter schools (assuming that the teacher/parents will not be paid for their work).Consider this example. Suppose that the state is p repared to provide $5,000 annually for each pupil enrolled in a charter school, whether ho me schooled or not. But suppose that reasonably good educational support for the home sc hooling family can be provided at a cost of, say, $3000 per pupil per year. That leaves $20 00 left over, and some have seized upon this difference, concluding that there is money to be made. That "profit" might be skimmed off by the chartering school district, at least if it can get its hands on the $5000 per pupil from the state and then provide only $3000 per pupi l to the charter school serving home schoolers. Alternatively, the $2000 profit might b e skimmed off by the charter school operator (which itself might be a "for-profit" educ ational management organization). In this scenario, the charter school gets the full $5000, b ut only spends $3000 on the pupil. Beyond the matter of educating home schoolers "on t he cheap," it has turned out, in California at least, that some districts have chart ered schools to serve home schoolers who live at a great distance from the charter school, a nd furthermore, in several instances, the distance-learning-based charter school's center of operations itself has been located far from the sponsoring district. 40 This scenario causes at least two worries. One i s that pupils will be claimed as enrolled in a charter school when the y in fact are not in any way connected with the charter school. In California recently, a variation on this theme apparently happened, when the same children were claimed as en rollees of two different charter schools, both of whom claimed to manage their educa tion from afar. 41 A second problem is that the sponsoring district's oversight of the cha rter school may be minimal. These various concerns, fueled in part by scandals linked to home-schooling-based charter schools, have caused some in California to want to eliminate the participation of home schoolers in charter schools and others to favor pr oviding a lower per pupil payment to charter schools serving such pupils. 42 And yet, the argument on the other side is that t hese children, like all other children, are supposed to be entitled to free public education. Moreover, many home-schooled children seem to be le arning reasonably well, and hence it seems unfair to some to target them for worse treat ment, especially when lots of those children who are home-schooled might actually benef it substantially from public spending on their behalf. This spending could, for example, be for curriculum development and

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10 of 16curriculum materials, training and supervision of t heir parents, computer technology, and the like. Yet, even some strong charter school support ers who abstractly identify with families who home-school their children are conflicted, fear ing that scandals involving these schools put the charter school movement at risk. As a resu lt, the place of these children in the charter school system remains a difficult issue.Three: Monitoring charter school spending, budgetin g, auditing, etc. The basic idea behind charter schools is that they are supposed to be autonomous. That is, it is broadly agreed that the core principle defining charter schools is that they are generally to be free from regulation in order to be able to expe riment, to be flexible in the way they manage their operations, to respond quickly to thei r customers, and so on. 43 In return for this autonomy, charter schools usually are asked to demonstrate academic outcome results for their children, but that too is supposed to be measured without too much interference with the school's independence. 44 And yet, there is at the same time understandable concern that some charter schools will be financial rip-off s. They might not properly spend on their pupils the public money they get; they may go broke in the middle of the term and leave children and families in the lurch; and so on. Th ese fears have led to auditing, monitoring, reporting, and other requirements. Principals and teachers in regular public schools, of course, may also complain about these same controls. But, in contrast to charter schools freedom from regulation is not traditionally so centrally part of their school's i dentity (although school site control, of course, has long been a goal of some reformers of r egular public schools). In any event, some charter school advocates believe that excessiv e financial controls are becoming the back door way that the charter school movement is u ndermined. 45 Indeed, the history of public school funding may provide a revealing lesso n here, since increased state funding has generally brought with it more regulation of local school district operations. Four: Supplemental funding of charter schoolsSome charter schools are required to live off the b asic funding they get from their chartering body. As noted already, many have to devote too mu ch of that to pay for their building. Other charter schools, as noted, have the advantage of operating in a building that has been given to them, or loaned to them, for free. This c reates "haves" and "have-nots" among charter schools. But this general problem of finan cially better and worse off charter schools is not limited to buildings. For both start-up costs (mentioned earlier) and for ongoing operations, some charter schools have substantial supplemental funding and others do not. To the extent that this extra funding comes from government grants, one can at le ast hope that the funds will be fairly awarded to the most deserving charter schools. But much of this supplemental funding comes from private donors. Perhaps one should not begrudge a charter school that is able to obtain this extra funding. And the availability of this supplemental funding may provide charter schools with a healthy incentive to convinc e private donors that they have a high quality program deserving of their support. Yet, the uneven distribution of outside funding cre ates inequalities of the sort that are also created among regular public schools when, for exam ple, some obtain extra funding from

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11 of 16local privately-financed public school foundations and others do not. At least for regular public schools, however, those foundations currentl y make a relatively small difference for a relatively few school districts.But for charter schools, there is a much greater co ncern that no charter school will have much of a chance to succeed unless it has substanti al extra outside funding, at least in its early years. This, in turn, means that certain sor t of charter school initiators are far more likely to survive than others, with local grass roo ts groups most likely to be in the worse off category. For many who envisioned that charter sc hools would be a kind of democratic, local community response to regular public schools, this is likely to be disheartening.ConclusionSeveral of the funding issues facing charter school s stem from broader issues underlying the funding of public schools generally. Oddly enough, if the charter school system grows and legislatures struggle to rationalize the charter sc hool funding mechanism, there is at some chance that these changes will, in turn, force atte ntion to, and changes in, the funding of regular public schools. Other charter school fundi ng issues that go to the heart of what autonomy charter schools will truly have and what s orts of pupils charter schools will serve. This overview shows that charter school funding is far too important a topic to leave to technical experts and deserves the careful attentio n of the wider school reform community.NotesKaris Chi (Boalt Hall 2002) provided invaluable res earch assistance in the preparation of this article.1 Katrina Bulkley and Jennifer Fisler, A Decade of Charter Schools: From Theory to Practice CPRE Policy Briefs (April 2002) RB-35. 2 See generally Making Money Matter: Financing America's Schools (National Academy Press, 1999). For a more historical perspective, see John E. Coons, William H. Clune and Stephen D. Sugarman, Private Wealth and Public Educ ation (Harvard University Press, 1970). 3 See Paul Minorini and Stephen D. Sugarman, School Finance Litigation in the Name of Educational Equity and Educational Adequacy and the Courts: The Promise an d Problems of Moving to a New Paradigm in Equity and Adequacy in Education Finance (National Academy Press, 1999). 4 Id. See, e.g. Serrano v. Priest ("Serrano II"), 557 P.2d 929 (C al. 1976); Serrano v. Priest ("Serrano I"), 487 P.2d 1241 (Cal. 1971); Abbott v. Burke ("Abbott II"), 575 A.D.2d 359 (N.J. 1990); Abbott v. Burke ("Abbott I"), 495 A.D. 2d 396 (N.J. 1990); Edgewood Indep. Sch. Dist. v. Kirby ("Edgewood "III"), 826 S.W.2d 4 89 (Tex. 1992); Edgewood Indep. Sch. Dist. v. Kirby ("Edgewood "II"), 804 S.W.2d 491 (Te x. 1991); Edgewood Indep. Sch. Dist. v. Kirby ("Edgewood "I"), 777 S.W.2d 391 (Tex. 1989 ); Lincoln County Sch. Dist. No. 1 v. State, 985 P.2d 964 (Wyo. 1999); Campbell County Sc h. Dist. v. State, 907 P.2d 1238 (Wyo. 1995); Washakie County Sch. Dist. No. 1 v. Herchler 606 P.2d 310 (Wyo. 1980). For a list of state cases addressing school funding in general see Kelly Thompson Cochran, Comment,

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12 of 16Beyond School Financing: Defining the Constitutiona l Right to an Adequate Education 78 N.C. L. Rev. 399, 400 n.22 (2000). 5 See, Making Money Matter, supra note 2 at 65-100. 6 See generally Stephen D. Sugarman, School Choice and Public Funding in School Choice and Social Controversy (Sugarman, S. and Kemerer, F eds., Brookings Institution Press, 1999) at 121-123. 7 F. Howard Nelson, et. al., Venturesome Capital: State Charter School Finance S ystems (December 2000)(National Charter School Finance Stu dy), at 30-31. 8 Eric Premack, California Charter School Finance: A Guide for Char ter Schools and Charter-Granting Agencies (2000-01 Edition), at 26. 9 Sugarman, supra note 6 at 116. 10 Id 11 The Los Angeles case, titled Rodriguez v. LAUSD, wa s filed in 1986 and settled in 1992, and the consent decree is still being monitored ann ually. Information provided here is based on the author's interview of co-lead counsel Lew Ho llman of CLIPI (Center for Law in the Public Interest) on April 16, 2002. 12 Premack, supra note 8 at 26. 13 See W. Lance Conn, Funding Fundamentals: The Cost/Quality Debate in Sc hool Finance Reform 94 Ed. Law Rep. 9, 17-18 (1994) (describing Calif ornia's low-level spending relative to other states, observing "one of the wea lthiest states in the country now ranks 25th in per pupil expenditures"). 14 See United States Department of Education, Digest of Education Statistics, 2000 Table 168, available at http://nces.ed.gov/pubs2001/digest/dt168.html (sho wing California's per-pupil spending level at $5,795, New Jersey's at $10,233, and Connecticut's at $9,221). 15 Proposition 13 was passed in California in 1978. Th is measure "rolled back" most real property assessments to their 1975-76 levels and li mited the property tax rate to one percent of full cash value. It also required a two-thirds v ote of the state legislature to enact any new state taxes and a two-thirds vote of the electorate of a locality for any new local taxes. See Richard J. Stark, Education Reform: Judicial Interpretation of State Constitutions' Education Finance Provisions—Adequacy vs. Equality 1991 Ann. Surv. Am. L. 609, 621, nt 27. 16 William A. Fischel, How Serrano Caused Proposition 13 12 J. of Law & Politics, 607-645 (1996). 17 D. Roderick Kiewiet, Californians Can't Blame Everything on Proposition 13 40:6

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13 of 16Public Affairs Report (Nov. 1999), available at http://www.igs.berkeley.edu/publications/par/Nov199 9/Kiewiet.html. 18 See United States Department of Education, Digest of Education Statistics, 2000 Table 168, available at http://nces.ed.gov/pubs2001/digest/dt168.html (sho wing Alabama's per-pupil spending level at $5,166, Louisiana's at $5,645, and Mississippi's at $4,575). 19 Budget, Finance, and Fundraising available at www.uscharterschools.org/lpt/uscs_docs/23 (describi ng funding sources available to charter schools)(last visited 9/11/2001). 20 Id See also, Stephen D. Sugarman and Emlei M. Kobu yama, Approving Charter Schools: The Gate-Keeper Function 53 Administrative Law Review 870, 907-09 (2001). 21 Premack, supra note 8 at 21-22. 22 Cal. Educ. Code section 47613. 23 Premack, supra note 8, at 33. See generally United States General Accounting Office, Charter Schools: Limited Access to Facility Financi ng (September 2000)(describing the inadequacy of funding available for charter school facility financing). 24 Premack, supra note 8, at 69, 77. 25 Paul T. Hill The Supply Side of School Choice in School Choice and Social Controversy, supra note 6 at 140-73. 26 Premack, supra note 8 at 33. 27 Sugarman, supra note 20 at 893-907. 28 Nelson, supra note 7, at 36. 29 Premack, supra note 8 at 27. 30 Stephen D. Sugarman, Two School-Finance Roles for the Federal Government : Promoting Equity and Choice 17 St. Louis U. Public L. Rev. 79, 80-81 (1997). 31 Bridget A. Flanagan and Chad J. Graff, Federal Mandate to Educate Disabled Students Doesn't Cover Costs 47-SEP Fed. Law. 22 (2000). See also Jane K. Babin, Comment: Adequate Special Education: Do California Schools M eet the Test?, 37 San Diego L. Rev. 211 (2000 ). 32 See generally, Robert W. Adler, Unfunded Mandates and Fiscal Federalism: A Critique 50 Vand. L. Rev. 1137 (1997).

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14 of 16 33 Premack, supra note 8, at 43. 34 Nelson, et al., supra note 7 at 40. 35 Id ., at 40, nt 24. 36 See generally, Laura F. Rothstein, School Choice and Students with Disabilities in School Choice and Social Controversy, supra note6 at 332-64. 37 See Nelson, et al., supra note 7 at 36. 38 Id ., at 37. 39 Jeffrey R. Henig and Stephen D. Sugarman, The Nature and Extent of School Choice in School Choice and Social Controversy, supra note 6 at 29. 40 See generally, K. Lloyd Billingsley & Pamela A. Ril ey, Expanding the Chartering Idea (Pacific Research Institute 1999). 41 Meredith May, "Fake enrollment at charter school," San Francisco Chronicle (January 24, 2002), at A19; Meredith May, "State investigating c harter school system; Recent fraud probe sparks scrutiny," San Francisco Chronicle (Feb. 27, 2002), at A13. 42 Senate Bill 740, 2001-2002 Reg. Sess. (Cal. 2001)(O ct. 14, 2001 Version), available at http://www.leginfo.ca.gov/pub/bill/sen/sb_0701-0750 /sb_740_bill_20011014_chaptered.pdf. 43 See generally Joe Nathan, Charter Schools: Creating Hope and Op portunity for American Education (Jossey-Bass 1996). 44 See generally, Frank R. Kemerer, School Choice Accountability, in School Choice and Social Controversy, supra note 6 at 174-211. 45 Hill, supra note 25 at 156-159 .About the AuthorStephen Sugarman Agnes Roddy Robb Professor of LawUC BerkeleySchool of LawEmail: sugarman@law.berkeley.eduCopyright 2002 by the Education Policy Analysis Archives

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15 of 16The World Wide Web address for the Education Policy Analysis Archives is epaa.asu.edu General questions about appropriateness of topics o r particular articles may be addressed to the Editor, Gene V Glass, glass@asu.edu or reach him at College of Education, Arizona State University, Tempe, AZ 8 5287-2411. The Commentary Editor is Casey D. Cobb: casey.cobb@unh.edu .EPAA Editorial Board Michael W. Apple University of Wisconsin Greg Camilli Rutgers University John Covaleskie Northern Michigan University Alan Davis University of Colorado, Denver Sherman Dorn University of South Florida Mark E. Fetler California Commission on Teacher Credentialing Richard Garlikov hmwkhelp@scott.net Thomas F. Green Syracuse University Alison I. Griffith York University Arlen Gullickson Western Michigan University Ernest R. House University of Colorado Aimee Howley Ohio University Craig B. Howley Appalachia Educational Laboratory William Hunter University of Calgary Daniel Kalls Ume University Benjamin Levin University of Manitoba Thomas Mauhs-Pugh Green Mountain College Dewayne Matthews Education Commission of the States William McInerney Purdue University Mary McKeown-Moak MGT of America (Austin, TX) Les McLean University of Toronto Susan Bobbitt Nolen University of Washington Anne L. Pemberton apembert@pen.k12.va.us Hugh G. Petrie SUNY Buffalo Richard C. Richardson New York University Anthony G. Rud Jr. Purdue University Dennis Sayers California State University—Stanislaus Jay D. Scribner University of Texas at Austin Michael Scriven scriven@aol.com Robert E. Stake University of Illinois—UC Robert Stonehill U.S. Department of Education David D. Williams Brigham Young University EPAA Spanish Language Editorial BoardAssociate Editor for Spanish Language Roberto Rodrguez Gmez

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16 of 16 Universidad Nacional Autnoma de Mxico roberto@servidor.unam.mx Adrin Acosta (Mxico) Universidad de Guadalajaraadrianacosta@compuserve.com J. Flix Angulo Rasco (Spain) Universidad de Cdizfelix.angulo@uca.es Teresa Bracho (Mxico) Centro de Investigacin y DocenciaEconmica-CIDEbracho dis1.cide.mx Alejandro Canales (Mxico) Universidad Nacional Autnoma deMxicocanalesa@servidor.unam.mx Ursula Casanova (U.S.A.) Arizona State Universitycasanova@asu.edu Jos Contreras Domingo Universitat de Barcelona Jose.Contreras@doe.d5.ub.es Erwin Epstein (U.S.A.) Loyola University of ChicagoEepstein@luc.edu Josu Gonzlez (U.S.A.) Arizona State Universityjosue@asu.edu Rollin Kent (Mxico)Departamento de InvestigacinEducativa-DIE/CINVESTAVrkent@gemtel.com.mx kentr@data.net.mx Mara Beatriz Luce (Brazil)Universidad Federal de Rio Grande do Sul-UFRGSlucemb@orion.ufrgs.brJavier Mendoza Rojas (Mxico)Universidad Nacional Autnoma deMxicojaviermr@servidor.unam.mxMarcela Mollis (Argentina)Universidad de Buenos Airesmmollis@filo.uba.ar Humberto Muoz Garca (Mxico) Universidad Nacional Autnoma deMxicohumberto@servidor.unam.mxAngel Ignacio Prez Gmez (Spain)Universidad de Mlagaaiperez@uma.es Daniel Schugurensky (Argentina-Canad)OISE/UT, Canadadschugurensky@oise.utoronto.ca Simon Schwartzman (Brazil)American Institutes for Resesarch–Brazil(AIRBrasil) simon@airbrasil.org.br Jurjo Torres Santom (Spain)Universidad de A Coruajurjo@udc.es Carlos Alberto Torres (U.S.A.)University of California, Los Angelestorres@gseisucla.edu