by Howard Stephenson

Charter Schools Are Reinventing Utah Public Education

Utah charter schools are producing great results in more ways than just student performance. With approximately 20,000 students enrolled in Utah charter schools this fall, there is much that has been discovered about better, cheaper ways of educating K-12 students, including how to save money on buildings without putting taxpayers in hock for 15 to 20 years, how to achieve smaller classes with less money, and how to reduce the $20,000 per student spent in Utah’s smallest districts.

Charter schools began with eight schools in Utah in 1999 and have grown to more than 50 schools beginning fall 2006. Enrollments have climbed to over 20,000, which amounts to approximately 4% of Utah’s public school population.

Perhaps the most significant difference between district public schools and charter public schools is the method of financing school buildings.
It turns out that charter schools are saving taxpayers significant amounts of money by avoiding public debt. Because Utah’s charter school law provides no mechanism for issuing bonds backed by the full faith and credit of the property of the local school district, charter organizers had to find investors willing to assume the risk of financing buildings for unproven school organizers.

In other words, developers willing to finance the risky future of new charter school buildings invest their own capital in hopes of making a profit over fifteen or twenty years of the lease of the school building.
If the charter organizers do not succeed in attracting sufficient numbers of students to pay the rent, the building owners may be left holding the bag. Charter organizers carry absolutely no personal financial risk – they can walk away and leave the building owners to find a way to make money by leasing out an empty school building.

Charter School Investors Are Taxpayer Heroes

These building owners have been the subject of severe, unfair criticism in the media and from the mainstream education establishment who see charter school competition as a threat. Some investors have been criticized for “making a profit” on school buildings. There have also been complaints that three legislators are among those managing investments in the risky ventures of charter school building ownership.

What the critics don’t complain about is the traditional district building program which leaves taxpayers with up to 20 years of bonded indebtedness. They have not complained about construction companies which walk away with all of their profits when the building is complete and they turn the keys over to the district. I have never heard anyone criticize those legislators whose employment has been involved with construction of district owned school buildings or legislators involved in banks and bonding agencies which provide the long-term financing of the buildings. Yet those involved with charter school buildings have seen no end of criticism. These critics are best described as economic pigmies whose opinions are based on utter financial ignorance. (But their real motivation in criticizing charter school investors seems to come from an envy about the academic success of charter schools or a fear of the competition provided by charter schools.)

Charter school investors ought to be praised as heroes for providing school buildings for 20,000 Utah public school students with no public debt and no risk to taxpayers. Instead of criticizing these risk-takers, the media ought to ask why local school boards don’t utilize these types of debt-free school building financing methods.

If these 20,000 students had been housed through traditional methods, Utah taxpayers would be saddled with bond payments plus interest of between $300 million and $500 million, depending on the district and whether the buildings are elementary, jr. high, or high school buildings.

Charter Schools Educate for Less

Utah charter schools spent $1,312 less in ongoing funds per student in
FY2005 compared to district schools, according to the 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.

Even though charter schools typically have much smaller student bodies than typical district schools, they still have smaller class sizes and don’t have the high overhead costs associated with small class sizes of small Utah school Districts. For example, Utah’s smallest school district, Daggett has only 136 students but spends nearly $20,000 per student including capital outlay and debt service. By contrast, charter schools much smaller than Daggett spent less than $6,000 per student for all purposes. The disparity raises the question of whether Utah small districts can justify their high costs.