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funding decisions. Funding in these states, which include Connecticut, Georgia, and Wisconsin, is therefore the product of negotiations between the district and individual charter schools. In many cases, however, state statute guarantees charter schools the same funding provided to regular school districts.204

The use of weights in state funding formulas to reflect the different costs of educating different student populations is an important funding issue for charter schools. For example, it is more costly to educate high school students than elementary school students. As indicated above, several states adjust funding to reflect these higher costs. These adjustments are either made by negotiation or specified by statute. If differential funding is not built into the charter school funding schedule and all students receive equal funding regardless of needs or costs, elementary charter schools will likely be overfunded and charter high schools will likely be underfunded.205 Similarly, state laws usually provide for additional funding for students with disabilities. States use three different models for funding the special education students that are enrolled in charter schools. States either base funding on the type of disability that a charter school student has, determine funding through negotiation, or match a school district’s special education spending or revenue.206

204 _{Howard F. Nelson, Edward Muir and Rachel Drown, Venturesome Capital: State Charter School Finance} Systems (U.S. Department of Education: December 2000), http://www.ed.gov/rschstat/eval/choice/charterfin.pdf, pp. 30-32.

205 _{Howard F. Nelson, Edward Muir and Rachel Drown, Venturesome Capital: State Charter School Finance} Systems (U.S. Department of Education: December 2000), http://www.ed.gov/rschstat/eval/choice/charterfin.pdf, pp. 37-38.

206_{Howard F. Nelson, Edward Muir and Rachel Drown, Venturesome Capital: State Charter School Finance} Systems (U.S. Department of Education: December 2000), http://www.ed.gov/rschstat/eval/choice/charterfin.pdf , p. 39.

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In many states charter schools tend to be funded at a lower level than traditional public schools – per pupil funding sometimes falls as low as 75% of the per pupil funding provided to traditional public schools, and few states guarantee full public funding for charter schools. Individual charter schools often have to pay for facilities out of instructional revenue because most states do not provide funds to cover cost of capital infrastructure needs.207 Charter schools typically augment per pupil revenues by obtaining grants and charitable contributions in the form of land and buildings, as well as donations from foundations, individuals, and corporations.208

Charter School Funding in Illinois

The Illinois charter school law requires that charter schools receive between 75% and 125% of district per capita tuition. Per capita tuition is computed in each school district’s Annual Financial Report to the Illinois State Board of Education according to the following general equation:209

Charter school students are included in the districts’ Average Daily Attendance, which is the same figure used to calculate the districts’ General State Aid claims. Illinois’s per capita tuition calculation is not weighted for different grade levels, despite the fact that the General State Aid formula is weighted differently for elementary school, high school, and unit (K-12) districts.210 The precise percentage of per capita tuition received by charter schools is negotiated between the charter and the local school board.211

207

Carol Ascher et al., The Finance Gap: Charter Schools and their Facilities (New York: Institute for Education and Social Policy, Steinhardt School of Education at New York University, 2004), http://www.liscnet.org/resources

and the Center for Education Reform, http://www.edreform.com/index.cfm?fuseAction=cLaw.

208 _{Moody’s Investors Services. “Growth in Charter Schools Begins to Reveal Likely Impact on Traditional Public} School Systems.” May 2001, p. 4.

209 _{Annual Financial Reports are available from ISBE’s website, http://www.isbe.state.il.us/sfms/afr/afr.htm.} 210

The Illinois General State Aid formula multiplies a district’s aggregate taxable property values by 2.30% for elementary school districts, 1.05% for high school districts, and 3.00% for unit schools districts, as a way to estimate the local property taxes available to the districts. This amount, plus the Corporate Personal Property Replacement Tax, is considered to be the total Available Local Resources. For details on the General State Aid calculation, see ISBE’s website, http://www.isbe.state.il.us/funding/pdf/gsa_overview.pdf.

211 _{If the charter school is authorized directly by ISBE, ISBE is responsible for negotiating the percentage of district} per pupil tuition that the charter school will receive.

Total Expenditures Revenues and Expenditures not

– Applicable to Regular K-12 Programs Operating Expense Regular K-12 Offsetting Revenues

– (e.g., categorical grants, fees)

+ Annual Asset Depreciation

Subtotal

÷ Average Daily Attendance

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In many states, including Illinois, charter schools negotiate with school districts for the provision of services such as transportation and special education. For example, an Illinois school district may transfer only 90% of its per pupil tuition to a charter school, but provide that charter school with transportation services at no charge. Charter schools also receive the proportionate amount of state and federal categorical funds for their particular student population (e.g., special needs grants and low-income grants). This funding is received by the district and passed through to the charter school.

State and federal start-up grants are available to Illinois charter schools. Illinois also has a Charter School Revolving Loan Fund that offers interest-free loans to charter schools for the purpose of acquiring and remodeling a facility or for other start-up costs, including the

acquisition of supplies, textbooks, furniture, and other equipment. Charter schools are eligible for these loans during their first term of operation, and must repay the loans by the end of that term.212

There are no provisions in Illinois law that require school districts to provide charter schools either with capital funds or facilities for the school’s use.

212

Illinois State Board of Education, Illinois State Board of Education FY2010 Proposed Budget,

http://www.isbe.net/budget/FY10_budget_book, p. 40. This fund has not been used very frequently by Illinois charter schools, according to ISBE’s FY2010 Proposed Budget. In FY2009, of the 17 charter schools that were eligible, one of the schools applied for a loan.

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Chapter Five