Charter school leaders generally pleased with Gov. Brown’s new funding system

Students at Rocketship Mosaic charter in San Jose discuss a book they’ve been reading. Credit: John Fensterwald, EdSource TodayCalifornia Charter Schools Association chief executive Jed Wallace turned rhapsodic in a message last month to charter school operators summarizing the impact of the new school funding system on their campuses. The Local Control Funding Formula represents a landmark victory, he said, a sort of Brown v. Board of Education moment for the charter school movement.
Jed Wallace, CEO of the California Charter Schools Association“Instead of being seen and treated as second-class citizens with separate funding streams constantly at risk of reduction or elimination, charter schools will now be funded in the same way that traditional public schools are funded,” he wrote. “As such, we think it legitimate to claim that, for the first time since the inception of our movement more than 20 years ago, charter schools have become fully vested members of the public education community.”
Some charter school leaders won’t go that far. They are irked by one restriction in the formula in particular. It prevents a significant number of charter schools serving primarily low-income students and English learners from getting the maximum dollars that traditional districts serving similar students will receive.
But that factor aside, leaders of two of the largest, high-performing charter organizations agree with Wallace.
“The LCFF accomplished so much that flaws need to be put in perspective,” said Kay McElrath, chief financial officer at High Tech High, a group of a dozen charters with a focus on project-based learning based in San Diego. “The old system had winners and losers, but it was done randomly, not logically. We prefer a system where we can rely on calculations whose results makes sense.”
“What the governor achieved is great for California and great for our future,” said James Willcox, chief executive officer of Aspire Public Schools, the state’s largest charter provider, with 34 schools serving 12,000 students, nearly all low-income children and English learners. Two years ago, Aspire decided to hold off expanding further in California because of dismal funding levels and to open its next schools in Memphis, Tenn. It’s premature to say whether Aspire, based in Oakland, will look again at California; funding is still far below what it was in 2007, Willcox said. But initially it would consider adding feeder schools to its middle and high schools.
Under the funding formula, traditional school districts will gain the flexibility and control over spending that charter schools have had for decades, while charters will be funded like traditional school districts. Just as with school districts serving few disadvantaged students, charters with few high-needs students will get less in per-student funding than charters and school districts with many high-needs students. Charters overall reflect the same demographics as traditional schools, with low-income students and English learners comprising about 60 percent of the students, Wallace said. There are more than 1,000 charter schools in California, serving 8 percent of the state’s 6.2 million K-12 students.
State Board of Education President Michael Kirst said that the weighted student funding formula that he co-authored five years ago, on which the LCFF was based, also had districts and charters funded alike.
“An objective of the original proposal was to bring charters into the regular funding structure and formula and not have them hanging out there with their own set of formulas,” Kirst said.
Historic underfunding
A  2012 study by the Legislative Analyst’s Office found that charter school students on average received 7 percent less in general purpose funding ($395) than their peers in traditional public schools. However, that gap increased by an additional $721 per student for the 51 percent of K-3 charter schools that have been denied extra dollars under the state’s class size reduction program. Starting with 2008-09, the state froze funding for class-size reduction and other categorical programs, disproportionately hurting hundreds of charter schools that have added grades or started since then. Only the first of Rocketship Education’s seven schools in San Jose, for example, has gotten class-size reduction subsidies.
Under the Local Control Funding Formula, the funding gap disappears. Charters will receive the base level funding during the eight-year implementation period of the districts in which the charters are located.
Most categorical programs will end, replaced by extra funding targeted to high-needs students. One of the few exceptions is class-size reduction. That extra funding – a bonus 10.4 percent (growing to $712 per student) – tied to reducing K-3 class sizes over the next eight years to 24 students per class, now will apply equally to charters and traditional districts.
New charter schools serving high-needs students and, in the transition, charter schools that have opened since the funding freeze will do comparatively better. Wallace estimates that between 100 and 105 new charters will start up in September; these schools had been planning to do so under the old funding model.
A comparison of funding of two of High Tech High’s five high schools shows that the funding formula will work as it should, said High Tech High’s McElrath.
Gary and Jerri-Ann Jacobs High Tech High, the flagship school in San Diego with low-income students and English learners comprising 36 percent of students: It received $7,264 per student last year and will get $9,269 per student at full funding. This year, the first year in the transition, it will receive $240 per student or 3.3 percent in new money.
High Tech High Chula Vista, a newer school affected by funding cuts: Last year, $6,805 per student; with 51 percent high-needs students, it will get $9,511 at full funding. Starting from a lower base than High Tech High, it will get $325 – 4.8 percent – more per student this year, $85 per student more than High Tech High.
During the recession, with funding cuts, High Tech High raised its class sizes by three to four students. With extra money, it will reverse that, starting this year, with two fewer students per class, McElrath said.
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High Schools Run By High Tech High
High Tech High  schools
FRL/EL%
Per Student Funding 2012-13
Per Student Funding 2013-14
Per Student Change from 2012-13
% Change from 2012-13
Per Student Funding 2020-21
Chula Vista
50.56%
$6,805
$7,130
$325
4.8%
$9,511
Media Arts
42.89%
$6,869
$7,171
$302
4.4%
$9,379
International
42.36%
$6,890
$7,188
$298
4.3%
$9,370
Gary & Jerri-Ann Jacobs HTH
36.55%
$7,264
$7,504
$240
3.3%
$9,269
North County
24.35%
$6,719
$6,998
$279
4.2%
$9,059
Funding projections for the five high schools operated by San Diego-based High Tech High show how the Local Control Funding Formula will eliminate disparities in base funding while steering more money toward schools with the highest percentage of English learners and low-income students qualifying for free and reduced-price lunches (FRL/EL% in 2nd column), which is High Tech High Chula Vista. Of the five schools, it had the next to the lowest per student funding last year but will receive the most funding at full implementation in 2020-21.
 
Source: High Tech High.

Complaint over concentration dollars
Charter schools’ biggest complaint with the funding formula involves the cap on extra money for high-needs students, mentioned earlier. By the state Charter Schools Association’s estimates, that restriction will short 300 charter schools about $72 million when LCFF is fully implemented.
Under the formula, each school district or charter school will get 20 percent more funding per low-income student, foster youth or English learner. There will be bonus money when high-needs students comprise at least 55 percent of students in a district or charter school.
Here’s the rub: A charter school’s entitlement for the concentration bonus will be capped at the percentage of high-needs students in the district in which the charter school is located. One reason that stipulation adopted, Kirst said, was not to create a financial incentive for the creation of or the conversions to charters based on demographics.
For charters with 100 percent disadvantaged students located in districts like Los Angeles (86 percent high-needs students) and Oakland (80 percent), the concentration cap could result in a cut in potential funding of 5 percent to 10 percent. But for a Rocketship school located in San Jose Unified, with only 49 percent high-needs students, it’s big money: as much as 25 percent in lost dollars. If it moved a school next door to Alum Rock Union Elementary School District, where all students are high-needs, Rocketship would get as much as an additional $1,900 per student.
Rocketship chief executive officer Preston Smith says that the concentration cap will pose a “challenge” but won’t factor in to their decisions to open new schools. Rocketship, based in Palo Alto, will locate in districts where needs of English learners and low-income students aren’t being met, not in districts serving students well, he said.
But for other charter organizations, a home district’s demographics could become the driving factor.
McElrath said the concentration restriction for charters is “a thorn in everyone’s side.”
“I’ve never understood the logic,” she said, since the intent of the funding formula is to provide extra dollars for students who need them. Charter management organizations like Aspire and Rocketship argue they should be treated as school districts, using their average percentage of high needs students, for determining funding concentration dollars.
Charters aren’t alone in complaining. Large, diverse districts with a below average proportion of high-needs students overall but with large concentrations in some schools, such as San Jose Unified, won’t get extra dollars for those sites either.
In an opinion piece in EdSource Today, Eric Premack, executive director of the Charter Schools Development Center in Sacramento, sharply criticized the concentration cap, accountability requirements of LCFF and political compromises behind its passage. He called the funding formula “a bungled pseudo-reform” that will “lend the false impression of a significant improvement.”
McElrath disagrees and says she was “relieved and a little shocked” that Brown got the funding plan through the Legislature, knowing “the political forces that would have derailed it at every turn.”
Had Gov. Jerry Brown gone for perfection, LCFF would never have become law, she said, “for everyone has a different version of perfection.”

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