Data Shows Charters Do Not Hurt School District Finances
by John M.W. Moorlach
California charter schools took a beating in the state Capitol this year. Charters are cost-effective alternatives created by parents, cities, universities and foundations. The parents want their children to receive an education that exceeds that provided by the host districts. For the most part, charters are succeeding, so strong forces in Sacramento want them to disappear.
The worst misnomer was the contention, put into legislation, that charters hurt school district finances. My analysis of California’s 283 school districts with independently run public charter schools shows this is not the case.
Of Orange County’s 29 school districts, seven include charter schools. Data are for 2019 and come from the state Department of Education.
The vast majority of charter schools are non-unionized. This allows charters to avoid many of the burdensome costs unions impose on school districts.
Public charter schools have close to no fiscal effect on their respective school districts. Yet in May, California Teachers Association President Eric Heins claimed they drain funds from public schools “working on starvation wages since the 1970s.” For the record, charter schools did not come into existence in California until 1992. And total teacher compensation, which includes a retirement plan, is a “steak dinner,” thank you.
Of many charter bills passed this year, the main one was Assembly Bill 1505, by Assembly member Patrick O’Donnell, D-Long Beach. It mandated of charter proposals, “Analysis of this finding shall include consideration of the fiscal impact of the proposed charter school. A written factual finding under this paragraph shall detail specific facts and circumstances that analyze and consider the following factors:… (8) The school district is not positioned to absorb the fiscal impact of the proposed charter school.”
Charter schools and parents should rest assured the schools are not causing financial strain. The proliferation of charter schools since 1992 has not hurt district finances.
What has hurt school districts? Granting overly generous salaries, pension formulas and lifetime medical benefits to teachers’ union members.
The key thing to analyze is the positive or negative per capita Unrestricted Net Position (UNP). It’s located on each district’s audited annual basic financial statements for the fiscal year ending June 30, 2018.
For the 283 districts with charters, I paired the per capita UNP with the percentage of charter students in a district. The chart nearby shows the correlation with school finances as the percentage of charters rises, from 1 percent in some districts to 100 percent in others, with most districts being somewhere in-between.
The trendline inclines upward to the right with a correlation of 0.141. That is, in general those school districts with more charter schools have healthier balance sheets. Although I’d like to claim charters improve a district’s finances, that isn’t the case because standard statistical practice is the correlation must be 0.3 or above to have “a moderate positive linear relationship,”
The point is charter schools do not appear to hurt district finances.
Specifically, let’s look at the Oakland Unified School District, which is in severe fiscal distress. In June, the school board cut $20 million in spending to balance the district’s budget for fiscal 2019-20.
As early as 1999, when it had just 2 percent of students in charters, the state warned Oakland Unified its fiscal meltdown “was looming,” reported the Sacramento Bee.
In 2003, the state took over the school district to straighten out its failing finances. At that time, it had 13 charters, compared to 45 today. Student enrollment in charters was just 4 percent in 2003, but 43 percent in 2018.
This was a policy direction strongly encouraged by former Gov. Jerry Brown when he was Oakland’s mayor from 1999 to 2007. So, why would a 20-fold increase in charter students over 16 years now be the main scapegoat? Can you say, “Shiny object”? “Jealousy”? “Misdiagnosis”? “Balderdash”?
Historically, according to a report by the Legislative Analyst’s Office, of nine school districts receiving state loans to fix their finances since 1991, seven were granted in 2004 or before – that is, before charters began to become popular in California. Three even occurred between 1991 and 1993. Again, charters had close to no effect on those schools’ finances.
The financial problems of most public school districts in California are caused by their own fiscal mismanagement and kowtowing to teachers’ union demands. For these unions, if you can’t beat them, destroy them.
Don’t blame charters, which remain a bright spot of choice for fiscally distressed school districts. Charter schools are the model for opportunity and achievement in the state’s otherwise dismal education picture.
John M. W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate