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Question of the Month

November 2008

How does the funding of charter schools differ among the 11 Midwestern states?

Charter schools are an alternative to conventional public schools and are viewed as a middle ground between public and private schools. The level at which states fund these schools can vary, depending in large part on differences in state laws or funding mechanisms.

In 1991, Minnesota became the first state to pass charter-school legislation. Since then, 39 states (including eight in the Midwest; see table) have enacted their own laws. Under these laws, for example, a private group or entity can seek a waiver from a local school district to self-govern a school in exchange for the promise of delivering better academic results. A charter school is typically given several years to produce the promised results.

States differ in how they regulate the types of schools that can be opened, how they are managed and how many are allowed. Public funding varies as well. According to the Center for Education Reform, charter schools, on average, receive 40 percent less in per-pupil funding than traditional public schools.

The center cites several reasons for the funding disparity between charter and conventional public schools — most of which are rooted in the charter- school laws themselves or other statutes that govern K-12 financing.

Most charter-school laws, for instance, specify a level of funding for operations, and many enumerate expenses that are to be paid directly by the charter school, such as transportation and facilities. However, some state laws fail to stipulate that the local school district provide funds to the charters for these expenses.

Other factors that impact funding levels include the discretion given to local school districts in distributing dollars to charter schools, the inability of charters to obtain access to public debt financing and local bonding measures, and "hold harmless" clauses that keep funds from following a student who moves from a conventional school to a charter.

Typically, the center says, charter schools authorized by agencies other than local districts, or that are their own "local education agency," receive funding more on par with conventional schools than charter schools that fall under the authority of local districts.

Per-pupil funding levels for traditional and charter public schools in the Midwest (2005-'06)*
State Traditional Charter
Illinois $10,506 $6,602
Indiana $11,028 $6,400
Iowa $9,771 $7,529
Kansas $9,973 $5,601
Michigan $10,900 $7,128
Minnesota $11,010 $10,302
Ohio $11,606 $6,098
Wisconsin $11,160 $7,996

* States vary in their number of charter schools and students enrolled in them. Here are figures for the current school year: Illinois (63 schools; 27,683 students); Indiana (41; 12,631); Iowa (10; 1,462); Kansas (33; 3,361); Michigan (243; 93,892); Minnesota (145; 28,371); Ohio (285; 94,171); and Wisconsin (246; 41,799).

Source: Center for Education Reform

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