Governor's proposal for charter-school funding a head scratcher

Much has been much written about the challenges of understanding Gov. Strickland's school-funding plan. For example, the Akron Beacon Journal asked, why some "wealthy districts receive more state money than much poorer ones? How were the costs calculated for components of the key funding factor, the Instructional Quality Index?" (see here and here). If, however, the numbers are a mystery for traditional school district officials they are, stealing a line from Winston Churchill, "a riddle, wrapped in a mystery, inside an enigma" for charter schools.

The accompanying graph shows a sample of charter schools in Dayton and how their funding would improve, or suffer, in 2010 under the governor's Evidence-Based Model of school funding. The numbers were shared in mid-March through a simulation provided by the Ohio Department of Education. The X axis shows student enrollment in each school while the Y axis shows the revenue gain/loss in thousands of dollars for each school in the scatter plot.

Scatter Plot of Charter School Funding in Dayton

What one sees here is that there are some serious charter school winners in the governor's plan, and some big-time losers. For example, the 48-student Summit Academy in Dayton would see its revenues jump from $663,993 to $1,174,334 (an increase of 76.9 percent), while the 657-student Dayton Academy would see its revenues decline 20.5 percent from $4,920,719 to $3,914,014 (Dayton Academy is authorized by our sister organization, the Thomas B. Fordham Foundation).

Why are there such extreme differences in funding? There is no clear answer. In looking at the data it seems, at first blush, that the fewer children a school serves the more it gains under the governor's plan. The small Dayton sample in the graph trends in this direction, and this also seems to be the trend for charters across the state. The reason small charter schools benefit under the governor's funding model may be because the model is based on a series of "organizational units." Funding for nonteaching staff is determined by the number of "organizational units" in a building. For a district school, the number of organizational units is relative to the building's total enrollment. But a charter school is assigned one "organizational unit" whether the school serves 40 kids, 100 kids, or 1,000 kids. Thus, smaller charters gain and larger charters lose because the funding for nonteaching staff is static regardless of how many students a school serves. It is a classic one-size-fits-all budgeting model that assumes a school serving 48 students needs as many administrators, nurses, and teacher aides as one serving 657 students.

But, when one looks deeper this explanation doesn't fully satisfy. Even within the small Dayton sample, the Trotwood Fitness and Prep Academy (TFPA) is an outlier. It serves 286 students while the Dayton Early College Academy (DECA) serves 285 students, yet TFPA would receive a net gain of $333,000 in 2010 under the governor's plan while DECA would see a hit of $536,000.

Other possibilities for such strange and extreme funding differences could relate to things like the number of students with special needs, children in poverty, and the like, but those differences exist in the state's current school-funding formula. Yet, there aren't nearly the extremes in the current formula that one sees in the governor's plan.

Again, using DECA and TFPA as examples, in 2009 DECA received $1.9 million in state funding while the TFPA received about $2.2 million. This was a funding difference of about $300,000 which could be attributable to things like differences in the number of special education students and students in poverty. But, under the governor's funding formula, which must assume the schools are serving the same basic types of students in 2010 as they served in 2009, the difference between funding for DECA and TFPA jumps to a whopping $1.12 million.

The final riddle here relates to academic achievement. The governor's plan as written would punish the charter schools that are most successful while rewarding those that are mediocre or downright terrible. City Day, a school that has been open since 1998 and has perennially been rated by the state as Academic Emergency or Academic Watch, would see a funding windfall of $178,000 next year. Meanwhile, the city's only K-8 school rated Effective or higher by the state-the Pathway School of Discovery-would see its revenues decline by $490,000.

One final explanation is that the numbers shared in the simulation are simply inaccurate and reflect neither the current numbers for charter schools or the proposed numbers under the governor's plan. If this is indeed the case, it helps explain why the governor has outsourced the rewrite of his plan to "fix" school funding to consultants at Driscoll and Fleeter in Columbus (see here). But if true, then such incompetence raises real concerns about other parts of the governor's education plan that would increase the responsibilities and authority of ODE significantly in coming years. This includes rewriting the state's academic standards every five years, providing performance audits of all schools across the state, and holding all charter school sponsors accountable for the results of their schools.

It is good to know that the governor, the House, and the Senate are all working hard to revise version 1.0 of the governor's school reform plan as it is indefensible in its current manifestation. Hopefully, for the children and taxpayers of Ohio, version 2.0 will be debugged and much improved.

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