ISSUE

The Educational Conference Board (ECB) strongly believes that public educational opportunities for every child must be preserved and strengthened. Consistent with this belief, the ECB supports innovation in public education.

The core assumptions that inform the charter school concept - innovation, autonomy, and accountability - suggest that charter schools have the potential to facilitate such reforms and be positive agents for change by developing new and creative methods of teaching and learning that can be replicated in the traditional public schools. Whether charter schools will fulfill this potential, or instead simply divert the pressure for genuine reform and provide a gateway for privatization, depends on how the charter schools are designed and implemented.

More than five years into New York's charter schools experiment, how successfully charter schools have improved educational opportunities for all children, improved academic performance, and served as laboratories for educational innovation is, at best, uncertain. Indeed, there are clear indications that many charters schools have performed no better, and in many cases worse, than their traditional public school counterparts. At the same time, it is undeniable that the fiscal impact of charter schools on local school districts - often those which face the greatest financial difficulties - has been significant.

To date, no comprehensive and credible analysis of the academic performance and fiscal impact of charter schools in New York has been done. With the number of charters already granted now exceeding 70 and charter school proponents calling for removing the cap on the issuance of charters, ECB believes it is time for a careful and thorough evaluation of the charter school experiment in New York.

POSITION STATEMENT

A. Funding Issues and Recommendations

1. The Educational Conference Board urges the Legislature to change the current charter school funding mechanism which unfairly weakens existing school districts.

The ECB offers the following specific recommendations to improve the charter school funding mechanism in New York:

Phase in local funding of charter schools over a multi-year period.

• Provide transitional funding to school districts where students elect to attend charter schools to reduce the impact of charter schools overestimating their projected first-year enrollment.

Put a cap on the percentage of AOE that is transferred to the charter school to reflect a more appropriate measure of per pupil savings.

• Hold school districts harmless for certain costs that do not decrease as students leave to attend charter schools. These would include, but not be limited to, operational, utility and maintenance expenses, interscholastic athletic expenses, vocational education expenses, borrowing expenses, legal expenses, and special education expenses.
• Allow school districts to immediately recover funds for students who return to district schools from charter schools during the school year.
• Differentiate the amount of aid paid to charter schools for K-8 students and high school students based on average per-pupil costs of serving each group of students.

2. The ECB urges the Legislature to impose a 5% cap on the fiscal impact on local school districts of charter schools created by authorities other than the local school districts themselves.

3. The ECB urges the Legislature to exclude charter school costs when determining the total spending cap for a school district operating under a contingency budget.

4. The ECB urges the Legislature to provide specific procedures for dealing with the disposition of a charter school's assets upon the school's closure or dissolution.

5. The ECB urges the Legislature to require chartering entities to act on charter school applications on or before February 1 in order to allow affected school districts adequate planning time to address financial, staffing, and scheduling needs.

B. Accountability and Process Recommendations

The ECB's concern with the charter school issue extends beyond the question of funding. The quality of the education provided to children attending charter schools, the impact of charter schools on the ability of local school districts to provide the best possible education to their students, as well as broad questions of standards, public accountability, and equality of access are equally of concern to our members. The following recommendations are offered to correct some of the problems that exist in the current charter school law.

1. The ECB urges the Legislature to require charter schools, which use public funds, to be subject to more rigorous standards of public disclosure and accountability.

2. The ECB urges the Legislature to commission an independent, comprehensive, thorough, data-driven analysis and assessment of

• the educational and financial performance of existing charter schools and their financial impact on school districts,
• the innovative teaching and learning techniques, if any, that have been developed by charter schools in New York and the extent to which those innovations have been or could be replicated in the traditional public schools, and
• the kinds of student populations served by charter schools in New York, including an analysis of retention rates and the nature of special education services provided.

3. The ECB urges the Legislature to impose a moratorium on the issuance of further charters by any chartering entities other than local school districts until such time as a reliable, independent assessment of charter school performance has been completed and its results have been thoroughly evaluated.

4. The ECB urges the Legislature to grant to the Board of Regents, as the body having the ultimate authority for the quality of public education in New York, the final say on charter school accountability and the granting and renewal of charter applications.

5. The ECB urges the Legislature to continue the existing prohibition on the creation of "virtual charter schools" which promote home schooling.

TALKING POINTS

A. Funding Recommendations

1. Change the current charter school funding mechanism.

The current charter school statute requires school districts to advance to the charter school an amount equal to 100% of the approved operating expense (AOE) per pupil for each student attending a charter school. However, AOE is an estimate of the per pupil cost for the entire district, including costs for utilities, insurance, and school facility maintenance. Since these costs are unaffected by the number of students served, districts do not experience a proportionate reduction in operating expenses as a result of some students electing to attend a charter school. Moreover, unless many students from the same grade and from the same school elect to attend the charter school, a district cannot even reduce its classroom staffing needs.

The charter school funding mechanism must be changed to address the fact that costs to school districts greatly exceed any savings realized by the transfer of students to a charter school. School districts have been forced to finance the costs of charter schools by either cutting services to students who remain in the districts, raising local taxes, or a combination of both. To the extent that school districts have more time to plan for the loss of students or revenue, the impact on programs and taxes can be lessened.

• Phase in local funding of charter schools over a multi-year period. Charter schools should be 100% financed in the first year by state funds. Local funding would gradually replace the state funding in each subsequent year, by an amount not to exceed 20% percent of the total cost, until the maximum per pupil amount is reached. In this way, the fiscal shock experienced by local school districts when charter schools open would be mitigated.
• Provide transitional funding to school districts. Payments to a charter school in its first year of operation are based initially on its enrollment projections. Disparities between projected and actual enrollment are not fully reconciled until the end of the school's first year and final adjustment in aid is made in the second year of operation. School districts have no protection against overly optimistic enrollment projections by charter schools or the number of students transferring from private or parochial schools. There is also no mechanism to provide for the return of charter school aid payments to compensate school districts for mid-year enrollment changes resulting from the return of students from a charter school that has closed.
• Cap the percentage of AOE that is transferred to charter schools. AOE, as currently calculated, disadvantages school districts in several ways. No adjustment is made for costs that do not decrease when students transfer to charter schools such as operational, utility and maintenance expenses. No mechanism exists to allow districts to immediately recover funds when students transfer back from charter schools. The AOE calculation makes no distinction between the amount of per pupil aid paid to charter schools for K-8 students, who are generally less expensive to educate, and high school students.

2. Cap the fiscal impact of charter schools on local school districts.

Regardless of how the charter school issue is ultimately resolved, the vast majority of students in New York will continue to be educated in traditional public schools. Our ability to provide the highest quality educational services to these children must be protected at all costs. For this reason, strict limits must be placed on the financial impact of charter schools. This restriction would not apply to the costs of district-sponsored charter schools.

3. Exclude charter school costs when determining the total spending cap for a school district operating under a contingency budget.

Contingency budget provisions should be amended to exclude charter school costs in determining the spending cap for school districts operating under contingency budgets. Otherwise, charter school expenses may force districts operating under a contingency budget to make further reductions in programs and services for their own students to keep spending within allowable limits.

4. Provide specific procedures for dealing with the disposition of a charter school's assets.

Specific procedures should be developed to dispose of a charter school's assets upon its closure, including state technical assistance when needed. The current statute provides little in the way of guidance in determining the appropriate disposition of a charter school's assts upon closure.

5. Require chartering entities to act on charter school applications on or before February 1.

Actions by state agencies should not force school districts to break faith with the public. Legislation should be enacted to prevent the untimely issuance of charters by chartering entities from disrupting and confounding the efforts of school districts to effectively plan for the upcoming year. Sufficient time is required to enable districts to budget for anticipated charter school costs.

B. Accountability and Process Recommendations

1. Require charter schools to be subject to more rigorous standards of public disclosure and accountability.

Charter schools use public money but are not required to meet the same standards of public accountability and disclosure as traditional public schools. Without the imposition of such standards the public cannot be assured that charter schools are meeting the highest standards of fiscal integrity and instructional excellence.

2. Commission an independent, comprehensive, thorough, data-driven analysis and assessment of charter school performance.

3. Impose a moratorium on the issuance of further charters by any chartering entities other than local school districts.

The recent report on charter school performance issued by SED was a seriously flawed, inadequate and disappointing effort. Any meaningful discussion of the future of charter schools in New York will require an assessment of charter school performance that is credible and reliable. Such an assessment would necessarily evaluate the educational and financial performance of existing charter schools, their financial impact on local school districts, the extent to which charter schools have been a source of innovative teaching and learning strategies, the kinds of student populations served by charter schools, retention rates, and the kinds of special education services provided. In the absence of such an assessment, it is impossible to make a reliable determination about the desirability of continuing existing charter schools, not to mention lifting the current cap on the number of charter schools.

4. Grant to the Board of Regents the final say on charter school accountability and the granting and renewal of charter applications.

The Board of Regents has the ultimate responsibility for public education in New York, but the existing charter school law divides authority over charter school creation, renewal and accountability between the Regents and other entities. Until final responsibility and authority are both vested in the Regents, inconsistencies in charter school performance and accountability will continue.

5. Continue the existing prohibition on the creation of "virtual charter schools."

The problem of insufficient public accountability and disclosure, while a concern with charter schools generally, is insurmountable where "virtual charter schools" are concerned. The potential of "virtual charter schools" to cause to a proliferation of home schooling is equally problematic.

December 2004