Colorado to give charter schools ‘equal’ share of local public education funds

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Lance Cpl Scott Whiting/Wikimedia Commons

In a move with little national precedent, the Colorado legislature approved a bill this month that requires school districts to share money raised from local tax increases with charter schools.

By the 2019-20 school year, school districts will be required to distribute 95 percent of those tax dollars — called mill levy overrides, which amount to about $34 million annually — equitably among the district’s public schools, including charter and innovation schools. Or, districts may devise a plan that adequately demonstrates they’re benefitting all district students with the funds.

It is the first bill in the U.S. that equalizes mill levy funding between traditional and charter public schools, according to the Colorado League of Charter Schools. The bill received bipartisan support and was hailed by school reform advocates as a long-overdue step in the direction toward equitable funding.

But critics, including some legislators, teachers’ unions and educators, say the bill carries a host of problems — that it’s unconstitutional because it subverts local control of school funding; that it will reduce public school programs; and that charter schools won’t have to spend the funds on the projects stipulated by the tax.

The bill’s passage coincides with a national debate over school choice and vouchers, which new Education Secretary Betsy DeVos recently said was a tenet in the plan to overhaul public education. The most recent prospective federal budget lessens public education spending by close to $9 billion, while nearly $500 million is slated for charter school and voucher programs.

“That is the movement,” says State Sen. Nancy Todd (D-Aurora), who voted against the bill. “And what we ended up doing in Colorado was similar to that. We said, ‘Let’s take away from K-12 and give it to charter schools without any understanding of what the present agreements are.”

     

In Colorado, anyone can create a charter school. Parents, teachers or community groups can enter into a “charter” contract with a local district or the Colorado Charter School Institute, an independent state agency.

“School-centered governance, autonomy and a clear design for how and what students will learn are the essential characteristics of a charter school,” according to the state Department of Education. Teachers at charter schools need not be accredited, and charters can be managed by for-profit companies. Charters also automatically receive a number of waivers that allow them to circumvent state education mandates regarding competitive bidding for services; textbook and education programming choices; and accepting gifts and donations.

According to the state, that flexibility allows charter schools to develop curriculum outside of normal district templates, in the pursuit of “new, innovative” ways to educate students.

Charter schools, as public schools, receive 100 percent of the funding that is allocated every year by the state legislature for things like operating expenses and capital reserves. They also often receive start-up grants from state and federal agencies and are eligible to receive state funds for capital improvements like building and construction costs.

One major source of school funding comes from mill levies, which tax $1 per every $1,000 of a person’s assessed property value. These funds are distributed equally to both traditional and charter public schools.

But what charter schools don’t get (yet) is money raised at the school district level through bonds and mill levy overrides (taxes additional to the mill levy). Bonds cover capital improvements, and mill levy overrides cover operational expenses like teacher salaries, textbook purchasing, computer equipment and more. Either way, voters must approve both bonds and overrides.

That’s where critics of sharing mill levy overrides with charter schools take issue. If mill levy overrides pay for teacher salaries and textbooks, but charter schools aren’t required to have accredited teachers or standardized education programming, how does a district ensure that those funds are not just being spent on unaccredited teachers who happen to be the charter principal’s buddy or textbooks being sold by the board president’s company? But safeguards exist, proponents of the bill say, and so there’s no reason to withhold funds from public charter schools.

Despite such risks, other lawmakers saw this mill-levy-override scenario as an unequal gap in funding for charter schools, and two bills were presented in the last legislative cycle to dispense that override money to charters. One, Senate Bill 61, was defeated because it didn’t require any improvements to the way charter schools report their finances.

The other, House Bill 1375, passed the day after SB 61 was defeated, with only four state senators voting no. It included a stipulation that requires charter schools to publish key financial documents such as their annual budget, audited financial statements, salary schedules, check registers, tax documents and more. 

The bill, which Gov. John Hickenlooper is expected to sign, will now require districts to distribute 95 percent of mill levy override funds equally between traditional public schools and charters, or come up with an equivalent spending plan. (Bonds, by the way, for capital improvements are still not required to be distributed to charter schools.)

Only a fraction of districts in Colorado currently have both charter schools and mill levy overrides. About one-third of those districts currently distribute these funds to charter schools, including St. Vrain Valley School District. Boulder Valley School District (BVSD), however, says it will “review the details and options available” before the law takes effect in 2019-20.

“I think that the impact on us is about a half-million dollars, which is a huge amount of money, and we will have to find that [somewhere else],” says Tina Meuh, Boulder Valley Education Association (BVEA) president.

In a district with a nine-figure annual operating budget, and where voters approved a $576 million bond in 2015, a half-million dollars reallocated within BVSD may not seem like a lot. But critics of the bill say districts across the state —  including BVSD — need every penny they can get, and just because some can weather it better than others, doesn’t make it a good fit.

Kerrie Dallman, president of the Colorado Education Association (CEA), the state teachers’ union, which took a “neutral” stance on this bill, says the impact might be smaller than anticipated.

“A lot of our largest districts in the Denver metro area already share (mill levy overrides), and a lot of our districts don’t have charter schools or mill levies. The vast majority of our districts are not going to see a change,” Dallman says.

Sen. Todd agrees, but also suggests that’s not the point.

“Cherry Creek will not feel the pain nearly as much as Aurora will,” Todd says, adding that the 38 rural districts in Colorado (out of 178) were never consulted on this bill. These districts, with shoestring education budgets, will feel the greatest effect, she says.

Todd, who was a teacher for 25 years, is one of the four senators to vote against the bill. The other three all have public education backgrounds as well: Michael Merrifield (D-Colorado Springs) was a music teacher for 30 years; Andy Kerr (D-Lakewood) was an educator for 15 years; and Matt Jones (D-Longmont) is the son of educators.

Meuh says to just look at the impact on individual districts belies the widespread implications of the bill.

“When we talk about ‘equalizing’ (funding), we’re robbing Peter to pay Paul, because we’re taking from one district to pay another,” Meuh says. “Sometimes people talk about at the state level that Boulder has so much and their community is so generous, why don’t we take some of that money and give it elsewhere in the state? … When we have money the state owes to its public schools and then that goes to the Charter School Institute and then it goes out to for-profit charter schools, that’s an example of money now being funneled by the state.”

Hustvedt/Wikimedia Commons
Boulder Valley School District would see about half-million dollar impact from the reallocation, says BVEA President Tina Meuh

Todd says HB 1375 “wasn’t about charter schools, it was about local control.” If you limit local control of school funding, she says, you violate the Colorado Constitution.

Nevertheless, there is disagreement on the constitutionality of the bill. And there’s reason to believe both sides as the Colorado Constitution includes vague wording about funding.

The Constitution requires the state legislature to create a “thorough and uniform” system of public education, and mandates that voter-approved boards of directors “shall have control of instruction in the public schools of their respective districts.”

That doesn’t sound like it has an impact on mill levy overrides, but in 2013, the Colorado State Supreme Court ruled in State v. Lobato, one of the highest profile education cases in the Court’s history, that the current “thorough and uniform” system of public education “also affords local school districts control over locally-raised funds and therefore over instruction in the public schools.”

That link between locally raised funds and instruction in public schools is why Todd calls the bill unconstitutional — and there are more legal precedents that strongly support her position. Dan Schaller, director of governmental affairs at the Colorado League of Charter Schools, a nonprofit advocacy group for charters in the state, says the bill is constitutional and does not subvert local control — it simply levels the playing field.

“It ensures that parents of charter public school students — parents who are also taxpayers — are not left wondering why their children are not receiving the same funding for their public education as their neighbor’s children simply because their neighbor chose a traditional public school,” Schaller wrote in an email.

Dallman says the CEA believes allowing districts to develop a “plan” for allocating this money will retain some measure of local control. Still, “I imagine that there will likely be a lawsuit filed by someone out there who feels like 1375 interferes with their right to local control,” she says.

Losing some local control of mill levy override spending, Todd says, also indicates lawmakers don’t trust school districts to effectively allocate money and negotiate contracts.

“If it is an authorized charter school in their district, they of course want their kids to be successful, they of course want the same benefits to be given to those children,” Todd says. “If the bill was under the assumption [that districts] don’t know how to work with charter schools, that was a real slap in the face to the administrators and schools boards.”

Meuh from BVEA agrees, saying BVSD has cultivated unique relationships with its charter schools and will now have to absorb a one-size-fits-all approach to funding.

“All charter schools are not the same,” Mueh says. “We have unique relationships in terms of services like special ed that we share, and we’ve worked hard to negotiate those charters.”

Schaller, however, says the principle of distributing mill levy override funds to charter schools is above the nuance involved in school funding negotiations.

“Ensuring that all of Colorado’s public school children receive equal funding for their public education really shouldn’t be up for negotiation,” he says.

     

The bill increases transparency for charter schools in two regards: financial disclosures and waivers.

Though many charter schools already voluntarily make their financial documents — from budgets to salary schedules to check registers — available to the public online, the bill now requires it.

“Charter schools have made it really difficult to determine how much money they get in terms of gifts, grants and donations, and those will now be published,” CEA’s Dallman says. “The premise of a charter school is, ‘We can educate students better for less money,’ (but) you have schools like Denver School of Science and Technology that got $14 million since 2011 in gifts.”

HB 1375 also requires charter schools to list the waivers of state education standards they invoke. The state, the Charter School Institute and a statewide association of charter schools will now create a standardized description of the waivers they automatically receive — choice of textbooks, hiring non-accredited teachers, relaxing competitive bidding processes for goods and services, etc. — and rationales for why charter schools should get these waivers. These will be posted on each charter’s website.

That is, charter schools still get the waivers of certain education mandates, they just have to put it on their website if it’s not already there.

Dallman calls the waiver requirement a “huge benefit” because it’s been “a big mystery when a charter school gets a waiver and … how they intended to meet the intended requirements of the law.”

But Todd says it comes back to allowing charter schools to operate outside of what is required of traditional public schools while receiving an equal share of money.

“We can look at that and say charter schools opt out and have waivers for various things, whether it’s teacher evaluation or whatever the case may be,” she says. “But if you’re going to say, ‘Let’s play even [with funding]’, then let’s do that [with waivers].”

Though the bill does increase transparency rules for charter schools, they will not be required to spend override money on the programs it was approved for — they’ll only need to use that money on the students that would have used the program.

For instance, if a mill levy override raises money for fifth grade science classes, a charter school can choose to not participate in the district’s fifth grade science program, but still receive the money as long as it uses it for fifth grade students who might take a science class. In Colorado, that could mean the difference between learning about the melting Antarctic ice sheet from a NOAA scientist or learning about why America should be increasing its exploration for oil and gas from an Anadarko Petroleum employee, depending on where you go to school.

But Schaller says this stipulation in the bill does not defeat the purpose of mill levy overrides, which exist to raise funds for specific programs.

“Those funds would still need to be used for the student population for which it was intended,” Schaller wrote. “This ensures that charters can fund programming that best fits their unique mission and model while still serving the students for whom the money was received.”

The bill, lastly, sets up an “equalization fund” for public charter schools that are not certified by districts, but by the state’s Charter School Institute. The general assembly will appropriate money to it as they see fit in a process to be determined later, and Schaller says it would take about $15 million to equally fund these schools.

Meuh says the bill may change how motivated charter schools are to help pass mills and bonds in the future.

“Our charters are partners with mills and bonds,” Mueh says. “But who knows when a state mandates your relationship? Now we’re half a million dollars in the hole, and [only] parts of the relationship are required by the state, so how will that change how we work together with our charters, and how will that change how they support passing bonds?”

Repercussions the bill may have on public education financing are at best no concern to school reform advocates, Todd says, and at worst, are part of the design.

“There’s no question that there is a motivation by certain groups that want to see public education fail and want to see that charter schools are reigning supreme,” she says. “Some people say charter schools do so much better, but statistically that’s not true. And there are some that do a great job.”

But the debate about school reform has never been about the quality of charter schools, rather it’s always been about equality — equal access, equal funding, equal standards. Whether HB 1375 is a step toward accomplishing that, and if it will receive any legal challenge, is to be determined. But as education offerings grow to include charter, innovation, for-profit and online schools, and as state and federal budgets drastically change school funding, what constitutes the “thorough and uniform” public education required by the Colorado Constitution is changing by the school year.