by Howard Stephenson
Despite significant start up costs, Utah charter schools are educating students at a total cost per student that is less than the total cost per student for Utah’s forty school districts, according to an analysis conducted by the Utah Taxpayers Association. Since Utah school districts collectively spend less per student than any other state and since Utah charter school demographics are similar to Utah district demographics, Utah’s forty school districts serve as a good benchmark for evaluating charter school expenditures.
Expenditures per Student for Fiscal Year 2004
The Association’s analysis uses raw data from the Utah State Office of Education (USOE) to calculate costs per student for charter schools and school districts. Most media reports of state-by state spending per student include only operation costs, but the Association’s analysis includes both operation and total costs.
Of the four major categories of expenditures per student, charter schools spend less per student than district schools by three of these measures and spend slightly more by one measure as shown in the accompanying chart.
Instruction Costs as Percent of Operation and Total Costs
Utah charter schools spent 57% of total expenditures on classroom instruction, compared to 52% for district schools. When only operation expenditures are considered, district schools spend a higher percentage on instruction, 68%, compared to charter schools, 63%
An Apples-to-Apples Comparison?
Charter schools and district schools are not identical, but they are similar enough to allow meaningful comparisons. Policy makers regularly compare Utah’s per student spending with national per student spending even though the demographic and economic differences between Utah and the U.S. are very significant, certainly much more significant than the differences between Utah charter schools and Utah district schools.
According to USOE data for FY2004(October 2003 enrollment), the percent of charter school enrollment that is white (84.4%) is nearly identical to district enrollment that is white (83.3%).
Compared to district schools, charter school enrollment is slightly weighted toward lower grades (1 – 6) where costs per student are lower. In charter schools, 50.9% of enrollment occours in grades 1- 6 compared to 40.3% of district school enrollments. Special education (self-contained) as a percent of total enrollment is slightly higher in charter schools (2.8%) than in district schools (2.4%). Special education students in charter schools tend to be concentrated in a handful of schools whereas special education students in district schools are dispersed throughout the district.
When these factors are considered, charter school operating costs would be expected to be 9.7% lower than district school operating costs. If district school operation expenditures were adjusted downward by 9.7% to account for this difference, total charter school costs per student would be 8.8% less than total school district costs per student instead of 13.4% less, but charter school operating costs would be 15.6% higher instead of 4.4% higher. Much of this difference can be attributed to significant charter school start up costs.
Start-up Costs
FY2004 charter school expenditures reflect start up costs that on a per-student basis will decrease over time as charter school enrollment growth levels off. FY2004 charter school costs per student include charter schools that had zero enrollment in FY2004 but had start-up expenditures.
These expenditures account for 3.2% of total costs per charter student and 3.5% of operation costs per charter student. Charter school expenditures also include one-time federal start-up dollars that are phased out after the first few years.
Administrative costs per student in charter schools are higher ($1,053 vs. $472) than district schools. Administrative costs include district, school, and business administration. Charter school administrative costs are higher because charter schools are smaller than district schools. Similarly, smaller school districts like Daggett, Tintic and Garfield have higher administrative costs per student at $2,528, $1,860, and $1,325 per student respectively.
Contract salaries and benefits for charter school teachers are 29.0% lower than for district schools.However, some charter schools offer bonuses to teachers as part of their compensation.
Do Charter Schools Hurt Existing Public Schools?
Opponents of parental choice in education argue that charter schools (and tuition tax credits and vouchers) hurt existing district schools because charter schools supposedly “drain” funding from existing district schools and district schools supposedly cannot reduce expenditures because their expenditures are “fixed”. In a September 2003 study critical of charter schools, Utah Foundation stated “Districts experience a revenue loss of at least $2,874 in state funds per student who leaves for charter schools without commensurate cost reduction.” The Foundation report questioned whether “harming traditional schools” is “worth the innovation in curriculum and school governance” provided by charter schools.
The Taxpayers Association has evaluated this claim by analyzing the ongoing impact of shifting enrollment and funding from declining enrollment districts like Salt Lake, Provo, and Granite to growing enrollment districts such as Alpine, Nebo, and Tooele. The dynamics of shifting enrollment and state funding from one school district to another is similar to the dynamics of shifting enrollment and funding from school districts to charter schools. The evidence is very clear that urban districts with declining enrollment have not been financially harmed in recent years when enrollment and funding have shifted to growing districts which means that school districts will not be harmed by charter school enrollment growth. The Association’s analysis can be found in a special report title “Vouchers Won’t Drain Funding” found at www.utahtaxpayers.org under the heading “special reports”. A follow-up analysis “Instructional Costs per Student Are not Adversely Im- pacted by Declining Enrollment in Urban Districts” can be found in the association’s July 2004 newsletter.
Going Forward
Charter school enrollment continues to grow rapidly. In FY2004, charter school enrollment was 3,253. FY2005 charter school enrollment was 6,237, a 92% increase. State officials expect charter school enrollment to exceed 10,000 students in FY2006, which would be at least a 60% increase.
The Taxpayers Association will continue to monitor charter schools as more and more Utah families choose to send their children to these parent-run schools. The Association expects to issue an updated charter school report in February 2006.
Methodology
In this analysis, adjustments were made to school costs. Charter schools, in nearly every case, lease or rent their facilities using state funds whereas district schools build and own their schools using mostly local property taxes. USOE categorizes charter school rental costs as operational costs and categorizes district facility costs as capital and debt service costs. To fairly compare charter school and district school operating costs, property rental and lease costs were deducted from operation costs for both charter and district schools (but are included in total costs).
To avoid double counting, district expenditures include facility construction costs and interest payments but do not include bond principal payment. Operation expenditures from Fund 32 (capital projects) were treated as operation expenditures while debt service expenditures in Fund 10 (operations) were treated as capital costs.
Enrollment is based on October 1, 2003 data.