Charter Schools, Explained (Part 2)

Charter schools are public schools.  They are not private schools, or privatized schools, and they do not charge tuition.  Charters are funded by taxpayer dollars.  The funding they receive is, like neighborhood schools, based on an October count of pupils.  Charters receive 100% of per pupil revenue (PPR) for each student enrolled.  The district can charge central administrative costs for services provided to the charter, but the costs cannot exceed 5% of PPR in a district of over 500 students, like DCSD.  Charters might serve students eligible to receive federally funded student aid programs.  Charters are responsible for reporting to the federal government in accordance with any reporting requirements.  The charter will retain any fees charged to students.

A 2010 study found that Colorado charter schools on average receive 15% less funding per student than traditional public schools.  Although charters receive 100% of PPR for their enrollment, they do not receive much money for capital and facility needs.  Unlike neighborhood schools, which are built with district money on a site specified solely by the district, charters are responsible for procuring their own buildings, including the location and the financing.  They may work with the district to do so but they are not required to.

The U.S. Department of Education has awarded the Colorado Department of Education (CDE) a five-year grant from 2010-2015.  The CDE Schools of Choice office administers Start-up and Implementation grants to various charter school applicants approved by CDE.  Many new charters apply successfully for grants for start-up funds in the first year.  In subsequent years, the grants may be used for expenditures on items such as curriculum, technology, and training for teachers and charter boards. 

Charter schools are public entities under state law and as such, they carry all the powers of a public nonprofit entity.  They are protected from capricious decisions by an authorizer who might take an action such as arbitrarily refusing to renew a charter.  By retaining public entity status and therefore having the right to sue an authorizer, charter school financing is more attractive to lenders.

In Colorado, the 2012 legislative session saw the signing of Senate Bill 12-067 into law, which requires all charter school boards to be non-profit entities.  No for-profit charter school operators will be permitted to charter with school districts.  This prevents not only a for-profit entity from holding a charter, but also prevents them from establishing “captive” boards.  Non-profit charter boards can still contract with for-profits to run the schools, but the board retains control.  This legislation helps keep charters in the hands of parents and the community.

Charter school finance can be difficult to understand and navigate.  However, it is worthwhile to understand the funding challenges at hand for all public school options, including charters.  As a community, educating ourselves about these important issues can lead us to ideas and solutions.