Moody’s warns of charter financial threat to school districts
Advocates of charter schools argue that taking students and tax dollars from traditional public schools and turning the revenue over to corporate-style charters doesn’t hurt neighborhood schools. Public school supporters who already knew that argument was wrong have now been joined by no less a financial authority than Moody’s Investors Service.
In a new report, Moody’s warns that growing charter enrollment is threatening school districts in economically weak urban areas. The implications are particularly troubling for Texas, which is under still another court order to fix an inadequate and inequitable school finance system. If poor, struggling school districts are going to suffer additional financial setbacks because of charter schools, as Moody’s suggests, an inequitable school finance system will become even more unfair to Texas students and taxpayers alike.
Remember, the Legislature, while in session last spring, restored part of the $5.4 billion in school funding cut two years ago. It did little, though, to improve an outdated, inequitable and still-underfunded school finance system, while the legislative majority was enacting a new law to raise the limit on charter operators in Texas from 215 to 305 over the next several years.
Although they technically are public schools and receive tax dollars, many of these charters are not operated by school districts. Some are organized by outside interests as “non-profits” but are managed by for-profit operators eager to rake in public money.
Some advocates argue that charter schools don’t undermine traditional public schools because the tax dollars the charters receive is based on the number of students they enroll. Charter boosters claim the public schools don’t “need” that money anymore because their enrollment has dropped. But that argument misses the point that school districts can’t simply reduce their costs based on the number of students they lose to charters. The districts lose revenue, but they have fixed costs that remain unchanged, including building maintenance, bus routes and other expenses that can’t be reduced proportionately.
As Tiphany Lee-Allen, one of the Moody’s authors noted, “Shifts in student enrollment from district schools to charters, while resulting in a transfer of a portion of district revenue to charter schools, do not typically result in a full shift of operating costs away from district public schools.”
The Moody’s report also noted that a school district that already is under financial pressure is particularly vulnerable to charter school growth. It cites examples of public schools in Cleveland, Detroit, Kansas City, St. Louis and Washington, D.C., where charters have made big inroads.
Now, with the change in state law, more corporate-style charter operators will attempt to move into Texas.
Last month, state Education Commissioner Michael Williams approved four new charter applications. At least two – Carpe Diem Schools, seeking a campus in San Antonio, and Great Hearts Academies, planning a campus in the Dallas area – bring with them a history in Arizona and other states of cherry-picking the best and/or more affluent students while taking tax dollars from thousands of other children in traditional neighborhood schools. Williams’ decision will be reviewed by the State Board of Education next month.
