5/11/2018: School District Funding & Charter Schools

In states across the country, over the last several years, a common theme pushed by those in opposition to school choice in general, and public charter schools specifically, is that with each student whose parents exercise school choice, the district loses money.

It doesn’t take long for this narrative to get to hyperbolic levels — especially when news media gets involved. The lede to an East Bay Times article a few days ago was:

Two Bay Area school districts lost a total of $76.6 million to public charter schools during the 2016–17 school year, a new report concludes.

Robin Lake of the Center for Reinventing Public Education (CRPE) rightly made her ire known:

As she pointed out further in that conversation, the worst offender was “research” conducted by In the Public Interest (ITPI). Although the East Bay Times article mentioned some of the ties that the lead researcher (Gordon Lafer) had which could levy some concern as to his impartiality, they still chose to run with a factually inaccurate headline and bury Lafer’s associations at paragraph 15 of the article.

While it is true that expansion of the public charter sector has had negative impacts upon district budgets, declining enrollment revenue and other financial strains on districts cannot be solely attributed to charter school enrollment increases.

As this research from CRPE pointed out, some urban districts have been experiencing a decline in enrollment for quite some time — since before public charter schools existed, but it has not always been a straight transfer from a district school to a charter school.

In Detroit, total public school enrollment (district plus charter schools) fell by 120,000 from 168,000, to 48,000 between 2010 and 2015, while charter school enrollment grew by 14,000 during that time. Of the enrollees in charter schools, 10,000 had transferred from private schools or from outside the district rather than from district-operated schools.

In Washington, D.C., where the first charter schools emerged in 1997, enrollment in district-run schools fell by 31,000 from 79,000 that year, to 48,000 in 2015. During the same period, charter school enrollment grew to 38,000. As in Detroit, charter school enrollment grew more than district enrollment fell, implying that a significant minority (11,000) of charter students had come from private schools or outside the district.

Consistently, some of the greatest fiscal challenges for school districts have revolved around improper forecasting/planning or adding multi-year budgetary liabilities with little or no thought to the potential ramifications that can come from declining enrollment revenue or other interruptions/modifications to their budgets. An excellent (well, horrid might be a better choice of words) example of this is the situation that the Los Angeles Unified School District finds itself within.

LAUSD is facing a $5.1 billion hole when comparing liabilities to assets — the largest factor being post-employment benefits that have not been fully funded. Of course, if LAUSD continues to lose 12,000 students per year to surrounding districts, charter schools, et cetera, the financial situation shall merely get more difficult.

Yes, continued charter school expansion does impact district budgets — especially in those regions where expansion is highest, but the true root of the problem frequently has been in poor planning (exempli gratia LAUSD’s continual reluctance to fully fund long-term liabilities, whilst increasing those liabilities through vehicles such as collective bargaining) or, as Lake pointed out poor management of the budgets in place in Oakland Unified.

In the aforementioned report from CRPE, those who took part in examining these issues were quite clear that charter operators and districts need to work closer — not only in best practices and lessons learned (pardon the pun) in pedagogy, but also in fiscal matters and effectively turning around failing neighborhood schools.

To date, district-charter collaborations have largely focused on instructional programs or issues of limited scope. Some promising examples do exist — participants singled out Texas districts that have worked hand in hand with charter operators to open new schools — but the challenge is moving these collaborations to a more strategic footing when it comes to financial sustainability. For example, charter operators that innovate on the portability of retirement plans might find ways to encourage districts to create similar plans for new teachers. In Philadelphia, district and charter leaders co-develop plans to replace failing neighborhood schools and lobby state officials to amend the state funding formula to incentivize these kinds of partnerships.

Lake mentioned in a tweet that a “more comprehensive breakdown [is] coming”, but in a series of tweets, she relayed some quick items that pushed back on the research from ITPI. Those tweets (starting with this one) are not in a thread so I am listing those items here for easy sequential readability. (Slight edits made to fix an enumeration issue and for formatting herein.)

1. “cost” should never be confused with “loss of revenue”
2. charter enrollment trends should never be considered in isolation of other causes of enrollment shifts
3. district enrollment historically ebbs and flows.
4. There are reasons that districts have trouble reducing costs in proportion to loss of enrollment, but many they bring on themselves and many are dictated by state law. The blame does not lie with families choosing to go elsewhere for quality public schools.
5. As @Dyrnwyn has pointed out, to pin district enrollment loss on charters is essentially saying that white flight is OK but black flight is not
6. Cherry picking evidence and quotes is not OK, especially not with an issue this important and nuanced.
7. Some district costs are truly fixed (eg pension obligations), but most are just sticky, meaning they take time to reduce in proportion to revenue losses. Labor is NOT a fixed cost. Under-enrolled schools are NOT fixed costs.
8. Oakland’s financial woes can by no stretch be blamed on charters. OUSD student enrollment has been stable over the last several years despite charter growth & past central office budget mismanagement is well-documented.

(Important note: Pay particular attention to point 5. In large urban districts, a significant portion of the students attending charters are not white. White families frequently move to other districts or go to private school.)

The fiscal challenges to districts are not insignificant, and the expansion of charter schools has exacerbated those challenges, but as Lake put it in this tweet

Basically the new ITPI report’s argument goes: If I own a rental property and people are going to my neighbor’s property, the foregone rent is fiscal impact to me. So no other rentals should be allowed, even if I’ve been mismanaging my properties.

It is not only acceptable, but also important, to note and highlight all the factors that are causing school districts to experience financial stress. But, when journalists get played by “researchers”, it becomes more difficult to appropriately and fully attack the core problems.