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As students choose CMS or charters, does money follow them?

People picture students moving from school to school with backpacks full of money, and that’s a mistake, a North Carolina finance official says.
People picture students moving from school to school with backpacks full of money, and that’s a mistake, a North Carolina finance official says.

School finance isn’t the sexiest of subjects. But this time of year I get peppered with reader questions about how state and local money is divvied up among district and charter schools.

It’s important to thousands of families who are making decisions for August – and to taxpayers who pay the tab for the ever-expanding menu of public school choice.

Behind most of the queries is a suspicion that someone is getting the gristly end of the steak.

Charter school advocates point out that even when the independently run schools get their slice of the budget, they have to make it go further. That’s because local districts get additional county money to build and maintain schools, while charter schools get nothing.

Meanwhile, Superintendent Ann Clark talks about the local pass-along for students in charter schools as a drain on the district’s ability to meet needs. With charter growth expected to outstrip that of Charlotte-Mecklenburg Schools next year, she’s looking at an additional $8.5 million in Mecklenburg County money that she won’t get to hold onto – no small thing when she’s hoping for a $23 million bump and commissioners are talking about $10 million to $11 million.

$37.7 million Mecklenburg County money budgeted for charter schools this year

$46.2 million projected for 2016-17

The basic idea sounds simple: Take the pile of state and local money going to public education, divide it by the number of public school students in a county and dole it out on a per-pupil basis.

This year, for instance, Mecklenburg County has 161,675 students, with about 1 in 10 going to charter schools. So those schools (which include charters across county lines) get about one-tenth of the money.

146,140 students in CMS this year

15,535 Mecklenburg students in charter schools

290 Mecklenburg students getting private school vouchers

Check the crystal ball

In reality it’s not that simple.

The state and CMS both make projections for the coming year, taking into account development, population trends and such. That’s not always easy. The recession, for instance, threw a kink into years of rapid growth.

Hispanic students are the fastest growing part of the young population, and Alexis Schauss, the state’s director of school business, says officials have learned that those families are more likely to move as the economy ebbs and flows.

Meanwhile, the charter factor has become a significant unknown: Some are growing steadily and adding grade levels, while others have opened well below projections. A few have even been forced to close soon after startup.

Many rosters being developed now for 2016-’17 contain phantom students – kids who applied at several schools and got into more than one. Because there’s no down payment required at tuition-free public schools (whether charters or CMS magnets), there’s no real incentive for a family not to keep options open through the summer.

So schools sometimes get August surprises, and enrollment continues to shift throughout the year. The official snapshot is taken in September – but schools can’t open without money. Charter schools get their first check from the state in July, enough to cover one-third of the school year based on enrollment projections.

That state money, incidentally, is based on a per-pupil average for the county, not the whole state. That’s not a great deal for charter schools serving Mecklenburg students: When the state last tallied its allocations on a per-pupil basis, CMS came out dead last. Small, impoverished counties that have less of a tax base to tap for local help get extra money from the state.

Reality checks

When enrollment forecasts are wrong – and they have been, for CMS and many other districts, in the last couple of years – questions arise about whether charters or districts can game the system by padding projections.

The state has two more opportunities to make things right with charter schools, with payments in October and February. If the first check was too big, the second one will be a lot smaller. And CMS sends out county money on a monthly basis, adjusted to match the actual number of Mecklenburg students at each charter school.

In other words, charter schools don’t reap a benefit from big projections. They can find themselves struggling to cover the basics if enrollment is too low, which can be a hurdle for startups.

For school districts it’s more complicated. Talk about per-pupil spending tends to create a mental image of students moving from school to school with their allotment stuffed into their backpack, says Schauss.

“That’s kind of a dangerous thing to go down that road,” she cautions.

The state doesn’t write checks to school districts using the per-pupil formula. Instead, it has more than a dozen programs that pump money into school districts using various calculations.

The biggest expense is hiring teachers, and while the number of teachers is based on enrollment, the dollars depend on whom the district hires. If a charter school hires a highly paid veteran, that school has to make a tradeoff somewhere. If CMS hires someone at the top of the scale, the state simply pays for it.

Windfall for CMS?

If the September tally shows CMS (or any other district) has more students than expected, the state pays for more teachers. If it falls short, the district may lose some teacher allotments, but the state doesn’t try to take back the full amount, Schauss said.

“It’s really to try and not harm the school district,” she said, adding that the goal is creating stable schools, not tying dollars to students.

Likewise, Mecklenburg County commissioners approve a lump sum for CMS that isn’t directly tied to enrollment. But growth projections and per-pupil spending are always part of the district’s pitch to the county. For instance, the 2016-’17 forecast calls CMS to grow by 500 students, the smallest increase in years. Clark says CMS needs almost $450,000 to cover the cost of that growth.

Last fall, some county commissioners squawked when it turned out CMS had overestimated growth in its 2015 pitch, raising the question of whether CMS should return money. CMS leaders countered that the county didn’t give CMS any extra money in 2014, when enrollment topped projections.

About the vouchers

Now there’s a new variable: state-funded Opportunity Scholarships that provide up to $4,200 a year for low-income families to move their children from public to private schools. The program is small – currently serving 290 Mecklenburg students and 3,460 statewide – but slated to grow in coming years.

Unlike money for charter and district schools, money for the scholarships – budgeted for $17.6 million this year and almost $25 million next year – doesn’t go through the Department of Public Instruction.

Students who get a scholarship, often known as a voucher, aren’t part of the public-school tally for that year. If the private school doesn’t work out and they return to public school during that year, no money comes with them.

Schauss says the real problem is that the state has yet to catch up with pre-recession spending levels for any form of public education. Arguing over small amounts of money following students to and from schools is misguided, in her view.

“It’s a gift to the legislators,” she said, “because you keep pointing fingers at each other and not at them.”

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