by Howard Stephenson

Good news: charter school efficiency improves

In the April edition of the Utah Taxpayers Association’s newsletter they compared charter school spending to that of traditional district schools. Below is the full article.

Utah charter schools spent $1,312 less ongoing per student in FY2005 compared to district schools, according to your Taxpayers Association’s annual analysis of public education spending in Utah. On a percent basis, charter schools spent 21.8% less per student than charter schools. This comparison excludes non-K-12 programs and food service since most charter schools do not offer these programs. In order to demonstrate the long-term structural differences between district schools and charter schools, this comparison also excludes one-time federal start-up money that charter schools receive. In FY2005, this amount was $5,316,979.

The purpose of this analysis is to highlight the structural expenditure differences between charter schools and district schools, not to show that charter schools are more efficient than district schools.

The disparity in spending highlights the challenge that the Legislature has in making sure charter schools, which do not have authority to impose property taxes, are funded equitably compared to district schools. The structural imbalance is readily apparent when one-time federal start-up funds are excluded from charter schools. Once a charter school has been operating for three years, charters schools are no longer eligible for start-up funds.

The disparity is largely due to charter schools using a large portion of their WPU/enrollment-based state funds for facility leases. Charters spend about $453 per student on facility leases. District schools, on the other hand, own their own buildings (although districts spend a small portion of their budget on leasing portables) and use property taxes for this purpose instead of WPU/enrollment-based state funding.

FY2005 Total Operations Spending Per Student

Category District Charters Charters as % of Districts
Instruction $3,394 $3,423 0.8% higher
Other operations 1 $1,585 $1,674 5.6% higher
Total operations 1 $4,979 $5,097 2.3% higher
Facility construction and debt service $1,047 $469 55.2% lower
Less one-time revenues from federal start-up grants $0 $852


Total 2 excluding federal start-up funds $6,026 $4,714 21.8% lower

Calculations by Utah Taxpayers Association based on USOE data
1. Excludes facility lease expenditures which are counted under facility/debt services
2. Excludes food service and non K-12 programs which most charter schools do not offer
3. Except for federal startup grants, charter spending per student excludes Dream Foundation which did not submit data.

Revenue Perspective: Difference is smaller but still significant

The difference between charters and districts narrows when revenues are compared instead of expenditures. After deducting one-time federal start-up funds for charter schools, charter schools receive $610, or 10.2% less, than district schools.

Legislative appropriations for charter schools have been uncertain and generally require mid-year one-time appropriations. As a result, charter schools have an incentive to hold revenues in reserve which reduces expenditures for operations and capital. The following chart shows charter and district revenue by source.

District and Charter Revenues by Source




Charter vs District



Property $1,889 $0 -100.0% -$1,889
Other local $189 $591 212.7% $402
State $3,436 $4,267 24.2% $831
Federal $439 $1,337 204.6% $898
Less one-time federal start-up $0 $852 N/A -$858
Total $5,953 $5,343 -10.2% -$610

Calculations by Utah Taxpayers Association based on USOE data. Revenues exclude non K-12 and food service.

Expenditures: Comparing Apples to Apples

Comparing charter school spending to district school spending requires some adjustments, just as comparing urban district spending with rural district spending requires consideration of various factors.

The biggest issue, as mentioned previously, is charter schools’ use of WPU/enrollment-based state funding to cover needs that local school districts cover with property taxes, which allows district schools to use enrollment-based state funding for operations. (Some school districts receive state funding for capital needs, but these funds are in addition to, not in lieu of, enrollment-driven operations funding).

Other adjustments include non K-12 programs (recreation and adult education) and food service, which charter schools generally do not offer.

Charter school opponents often argue that transportation costs should be excluded from charter-district comparisons since charters are not obligated to provide transportation. Charter schools do not receive transportation funding from the state, although some charter schools have transportation expenditures When transportation is excluded, charter schools spend 20.8% less per student than district schools.

However, while charter school opponents may argue that “efficiency” comparisons between charter schools and districts school should exclude transportation (along with non K-12 and food service) because charters are not required to provide these services (although some do), comparisons from a taxpayer perspective should include these costs since parents who send their children to charter schools without expecting taxpayers to pick up food and transportation costs are saving tax dollars.

Enrollment Distribution by Grade

Spending differences between charters and districts cannot be attributed to differences in enrollment distribution by grade. Students are weighted based on grade, with students in higher grades receiving higher weighting and therefore more funding. Interestingly, the distribution of students by grade in charter schools is very similar to the distribution in district schools. Excluding self-contained (special education) students, district schools have a WPU weighting of 0.973 while charters have a WPU weighting of 0.967, a difference of less than 1%. Special education enrollment is also similar, with 2.5% of district enrollment consisting of special education students and 2.4% of charter enrollment consisting of special education students.

Charter School Operations Expenditures, FY2004 and FY2005

Expenditure FY2004 FY2005 % Change
Instruction $3,117 $3,423 9.8%
Student services $158 $148 – 6.3%
Media $154 $109 -29.2%
Administration $1,053 $1,035 -1.7%
Facility operation 1 $420 $297 -29.3%
Transportation $80 $86 7.5%
Total Operations 1 $4,983 $5,097 2.3%
Instruction as percent of total operations 62.6% 67.2% 7.3%

Source: Utah Taxpayers Association based on USOE data 1. Excludes rental/lease expenditures from fund 10 function 2600 object 400 (purchased property) which are included under facility construction

Charter School Efficiency Improves

Charter school efficiency, when measured as instruction dollars as percent of total operations, improved from 62.6% in FY2004 to 67.2% in FY2005. Improvements in charter school efficiency are probably attributable to newer schools having higher enrollments than older schools, existing schools increasing enrollments, and existing schools becoming more efficient after going through a steep learning curve on managing budgets. The above chart demonstrates the improvements in charter school efficiency from FY2004 to FY2005.Charter school efficiency is now just slightly lower than the statewide district average of 67.7%.

Wrong Reaction by Legislature

Despite the good news about charter schools – improved efficiency, high parental demand as evidenced by long waiting lists, etc. – the Legislature decided at the last minute during the recent general session to restrict the number of new charter schools for FY2008 to five schools.