PRESS RELEASE
October 13, 2005

Contact: Stephen Kroes, Executive Director
(801) 355-1400, ext. 5
(801) 573-8824 (mobile)
steve@utahfoundation.org

UTAH CHARTER SCHOOLS FACE FUNDING DISPARITY, OTHER CHALLENGES

Utah Foundation today released an evaluation of the challenges facing Utah charter schools. The report should be attached to this release; it is also available at www.utahfoundation.org.

Charter schools are public schools, but they operate independent of school districts and serve as “magnet” schools, drawing students from a wide area. Utah Foundation’s report concludes that Utah charter schools face significant financial challenges, chiefly a gap in funding that leaves charter schools with about $800 less per pupil than other Utah public schools. This gap is the result of three factors:

1. Differences in student populations: Charter schools do not educate as many economically disadvantaged students; therefore, they receive less federal funds targeted for those students.
    
2. Ineligibility for funds: Charter schools are ineligible for state transportation funding, but some charter schools do provide transit passes or arrange for charter buses for their students. These costs could be paid for with state transportation funding if it were available.
    
3. Funding formula shortfalls: The formula that compensates charter schools for not receiving local property taxes excludes some of those taxes and does not include state funds that match portions of the local property taxes, leaving charter schools with $552 per pupil less than district schools.

About one-third of the gap in funding is the natural result of differences in student populations; therefore, no solution is needed for that portion. However, two-thirds of this disparity in funding is caused by state law that makes charter schools ineligible for funds or creates shortfalls in funding formulas. These portions of the funding gap could be addressed by legislation.

Utah Foundation Executive Director Stephen Kroes said, “Utah struggles with the lowest per-pupil funding in the nation, but charter schools receive even less than other public schools, creating greater challenges for them. Nevertheless, charter schools are attracting an ever-growing student population, showing that many parents must be satisfied with their performance.”

Charter schools also face some funding risks, because a large proportion of their funding is derived from federal grants that are competitively offered to the states. If Utah does not win renewal of these grants in the future, either the state will face millions of dollars in costs to compensate for the lost funds or charter schools will fall further behind in funding.

Charter schools also experience difficulties in financing school facilities, forcing most of them to lease buildings from private-sector owners. In addition, charter school leaders cite challenges in providing adequate salaries and benefits for teachers and covering administrative costs that are relatively high because each charter school is required to act as its own “district.”

Kroes said, “Some of the problems with charter school funding stem from funds provided as a lump sum to be divided among all charter schools or funds provided only to help new start-up schools. Charter schools are experiencing extremely fast growth rates, making such funding provide a smaller amount per pupil over time.”

He added, “If policymakers want to fix the funding disparities between charter schools and district schools, they should focus on funding sources that provide ongoing, per-pupil revenues to all charter schools, rather than one-time or lump-sum aid to a limited number of schools.”

This research report is available to the public on our website at www.utahfoundation.org.

Utah Foundation is a nonprofit research organization. Our mission is to encourage informed public policy making and to serve as Utah’s trusted source for independent, objective research on crucial public policy issues.