Role of Charter Schools in Education

Testimony of Nathan Benefield

Vice President of Policy
Commonwealth Foundation for Public Policy Alternatives
SENATE DEMOCRATIC POLICY COMMITTEE HEARING
October 13, 2016
Good morning, my name is Nathan Benefield; I am the vice president of policy analysis for the
Commonwealth Foundation. I wish to thank Senator Boscola as well as the members of this
committee for the opportunity to testify.
Charter schools play a critical role in Pennsylvanias public education system, and I appreciate
that the Committee is holding a hearing on the subject. In my remarks, I will discuss charter
school enrollment, academic performance, and funding.
Enrollment
Since charter schools were established in Pennsylvania in 1997, their enrollments have
skyrocketed, demonstrating popularity among families. Parents value the ability to choose
where to educate their children. In the current school year, there are 162 traditional brick and
mortar charter schools (including 10 regional charter schools) and 14 cyber charter schools.
Together, these 176 charters enroll 132,860 students.

PA Charter School Enrollment

140,000
120,000
100,000
80,000
60,000
40,000
20,000
0

1997-98 1999-00 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16
Brick and Mortar Charter

Still, charter schools accounts for a relatively small slice of the states public school system.
Charter students comprise roughly 7.5% of total public school enrollment.
2

Total PA Public School Enrollment

Millions

1.5

0.5

Traditional Public

Brick and Mortar Charter

Cyber Charter

Despite growing enrollment, thousands of families remain stuck on waiting lists and unable to
enroll in a charter school of their choice. According to state law, every charter school that does
not have enough seats for all applicants must maintain a waiting list to draw from when
openings occur. When a charter receives more applicants than it has room available, a lottery is
held to determine which students are admitted and which students are denied.
Last winter, MaST Community Charter Schoolwhich boasts the highest test scores for a nonmagnet school in Philadelphiareceived more than 8,000 applications for 99 seats. The Russell
Byers Charter School, also in Philadelphia, held a lottery with 23 seats available for 1,445
families. According to The Notebook, eleven charters in Philadelphia have more than 1,000
students on waiting lists. Overall, there are waiting lists for 74 of Philadelphias 93 charter
schools.
Pittsburghs Environmental Charter School recently saw 473 children apply for admission, but
only 31 openings were available. The Pittsburgh Tribune Review reports 2,000 applicants for
800 spots in various Propel Schools, as well as 300 applicants for 20 spots in Manchester
Academic Charter School.

Why are so many students dependent on a lottery to determine whether they get into a charter
school?
Currently, charters must apply to a local school district for approval to operate. Because many
school districts view charters as unwanted competition, this can be a difficult process. Indeed, it
is akin to requiring McDonald's to approve any new Wendy's in the same area.
Importantly, school districts are not permitted to impose enrollment caps on charter schools.
This issue was recently litigated at the state Supreme Court.
A better option would be to allow alternative authorizers, either independent organizations or a
statewide entity, to alleviate this logjam. Universities, for example, could be given the ability to
authorize new charter schools.
At least 16 states allow multiple authorizers, including 13 states that empower universities to
approve charter schools applications.
By ending the conflict between school districts and charter schools, we would enable more
families to select the best school for their children, while allowing successful schools to expand
and grow. We shouldnt limit childrens opportunities to attend a top-notch school based on the
bounce of lottery ping pong ball.
Academic Performance
Do charter schools perform better than traditional public schools? The question is complicated
to answer. It is challenging to create an apples-to-apples comparison of student growth in both
academic settings.
Stanfords Center for Research on Education Outcomes (CREDO) attempted to solve this
problem by comparing the performance of urban charter schools to traditional public schools in
the same neighborhood. The authors match charter students with a virtual twin and track
academic achievement over time. Each set of twins have the same (or similar) grade, race,
gender, socio-economic status, special education status, and English language learner status.
After analyzing 41 urban areas in 22 states over a five-year period, CREDO found charter
students receive 40 additional learning days per year in math and 28 additional learning
days per year in reading.
The results are more impressive in Philadelphia, where charter students receive the equivalent
of an additional 40 days of reading and math compared to district students. Strong charter
school performance is mainly attributable to high achievement among low-income students,
Black and Hispanic students, and English language learners. Across the countryand
particularly in Philadelphiacharter schools are excelling at educating students who typically
lag behind their peers.
Further, there have been multiple randomized controlled trialsin which students are assigned
by lottery to either charter or traditional public schoolwhich demonstrate students in urban
areas perform significantly better in charter schools compared to district schools. Certainly,
these gold-standard studies indicate charters should be permitted to grow to serve more urban
families.

Improved test scores and quantifiable academic growth are laudable goals for any school
system. But the case for expanding charter schools extends beyond PSSA results. It is a moral
imperative that parents not be constrained by their place of residence when it comes to selecting
the best school for their children. The ultimate test of accountability for a charter school is
whether or not a parent continues to send her child to that charter school.
Funding
Charter school funding is a hotly debated topic. Unfortunately, much of the controversy is based
on half truths. I want to highlight a few key facts.
First, charter schools receive less funding per student than district schools. Charter schools
only receive funding when students choose to attend them rather than a district-run school. For
each student attending a charter school, school districts send a payment equaling the districts
per-student spending, excluding all expenditures for adult education programs,
community/junior college programs, student transportation, facilities acquisition, construction
and improvement services, other financing uses (i.e., debt payments), and all federal funds
received. School districts calculate these tuition payments using the Department of Educations
Form 363.
As a result of this formula, charter schools received $2,500 less per student than school districts
statewide, as shown in the table below. This differencethe amount school districts keep for
children they are no longer educatingresults in increased district spending per student. In
2014-15, charter school payments allowed district schools to spend roughly $350 more per
student remaining in district schools. Seldom few operations are afforded the privilege of
retaining revenue from customers who seek alternative service providers. Public school systems
are unique in this regard.

Pennsylvania K-12 Spending & Revenue, 2014-15

Total Spending

Enrollment

Spending
per Student

All Public Schools

$27,386,591,258

1,780,602

$15,381

$27,578,286,252

$15,488

School Districts Less

Charter Payments

$25,900,156,487

1,647,832

$15,717

$26,091,851,481

$15,834

$1,735,699,217

132,770

$13,073

$1,719,998,129

$12,954

Charters Schools

Total Revenue

Revenue
Per Student

Source: PA Department of Education, Summaries of Annual Financial Report Data & Public School Enrollment Reports.
Tuition Schedule used to calculate Charter Payments.

Second, while charter schools serve about 7 percent of all public school students, they only
represent 6.3 percent of public school spending. Total spending by charter schools reached $1.7
billion in 2014-15.
This total is less than what school districts spent just on operation and maintenance of plant.
Charter schools total spending is less than half of what school districts spent on construction
and debt.
The financial struggles school districts are facing, in some cases requiring teacher layoffs, are
largely due to increases in spending outside the classroom, not because students are choosing
charter schools.

Pennsylvania Public School Expenditures, 2014-15

Total Spending
Charters

$1,735,699,217

Percent of Total
Public School
Spending
6.34%

School Districts
Construction and Debt

$3,512,428,858

12.83%

Administration

$1,452,260,039

5.30%

$684,219,304

2.50%

Operation and Maintenance of Plant

$2,115,589,296

7.72%

Retirement Contributions (Pensions)

$2,326,278,656

8.49%

Total General Fund Balance

$4,280,395,834

15.63%

Business & Central Support

Source: PA Department of Education, Summaries of Annual Financial Report Data

Further, there has been an argument that charter schools have built up excessive fund balances,
and that these should be capped. But the same could be said of school districts.
In 2014-15, school districts increased their reserve funds by $200 million to $4.3 billion. In fact,
there are 21 school districts with more than 50% of their total expenditures in various reserve
funds. When looking only at unassigned fund balances, 36 districts have over 20% of total
expenditures in reserve. The fund balance issue is not unique to charter schools. Both district
and charter schools have nearly identical percentages of total spending in reserve.
It is reasonable for charter schools and school districts to have some level of reserve funds.
Charters often have to wait for school districts to make payments, forcing them to dip into
reserve funds to pay bills while fighting with districts. Moreover, both charters and districts have
faced a massive increase in annual pension contributions. Reserve funds are often a place to
save money for growing retirement costs.
Finally, some critics of charter schools point out that Pennsylvania charters spend more than
other states. This discrepancy is simply the effect of overall public school funding, not the result
of our charter funding formula.
Overall, Pennsylvania spends $3,500 more per student than the national average, and ranks
among the top spending states.

The reality is the fight over public school funding is not primarily the result of a lack of resources
or charter schools taking more than their fair share, but because of other issues in education
policy. This can be best addressed through other reforms
1. Phase out of hold harmless so that the new basic education and special education
formulas apply to all students in all schools.
2. Pension reform that mitigates the cost of investment losses, plan changes, or
underfunding and makes retirement costs more predictable for school districts and
charter schools.
3. Mandate relief that reduces the cost of state mandates, particularly mandated
construction costs.
Thank you for the opportunity to testify on this issue. I look forward to fielding any questions
and further discussion.