University of Arkansas Office for Education Policy

Issues the Ledge Might Tackle — Charter School Facilities

In The View from the OEP on October 22, 2014 at 2:19 pm


capital picOver the next couple of months in the OEP Blog space, we will discuss topics that we think may be the focus of legislative activity in the upcoming 2015 general session.  If there are topics you think we should be considering, please let us know!

In this week’s post, we consider the always-controversial topic of charter schools. And the topic only gets more heated when money is thrown into the mix! We have discussed funding and charters a few times in the OEP cyber space (see our past policy briefs from January 2014 and May 2012).  In short, in each of these analyses, we found that, on average, charter schools in Arkansas have access to lower levels of total revenue per pupil than do traditional public schools; the difference is approximately 20%.  The greatest portion of this gap is due to charter schools’ relative lack of access to facilities funding used to build, acquire, renovate, or maintain buildings and equipment. As charter school leaders continue to seek funds for adequate facilities, this funding disparity is likely to foster some spirited legislative discussion on how the state should support facilities for students in public charter schools in Arkansas.

As a result, the OEP today releases our newest policy brief on the topic of Charter School Facilities Funding.  The purpose of this brief, given that our state’s lawmakers may well be seeking strategies to support charter school facilities, is to describe what sources of facilities funding are currently available to Arkansas’s open-enrollment charter schools (which we will refer to as “charter schools” here), and highlight a few options that other states are using.

Our policy brief goes more into the nitty-gritty specifics, but we wanted to highlight a few of the key issues here. There are two main reasons charter schools are at a disadvantage relative to TPS when it comes to facilities funding: charters are unable to collect funds from local property taxes (because open enrollment charters are attached to no specific locality!), and charters are unable to access the state’s facilities funds. Currently, TPS districts in Arkansas can fund capital projects with assistance from the Arkansas Division of Public School Academic Facilities and Transportation (DPSAFT). Charter schools in Arkansas are currently not eligible for this funding. Through the DPSAFT’s Partnership Program, which funds new construction and major renovations, the state provides funding to TPS districts based on a district’s wealth index: the state pays a larger percentage of poorer districts’ construction costs.

In an attempt to consider strategies that legislators might consider, we looked around a bit at what other states are doing with regard to funding charter school facilities. For the most detail, see our policy brief, but keep reading here for a snapshot of innovative funding opportunities for charter schools.

Credit Enhancement Programs

According to the Local Initiatives Support Corporation (LISC), 9 states have some sort of Credit Enhancement Program. These programs allow charter schools to access higher bond ratings when borrowing funds, and in some cases, this can greatly lower the expense. In some cases, like in Colorado, qualified charter schools are also able to attach the state’s moral obligation pledge to their debt, meaning that the state has a moral obligation (although not technically a legal one) to step in and assist if a charter school defaults. Arkansas does have a credit enhancement program: the Arkansas Development Finance Authority (ADFA) guarantees certain bonds using interest earnings derived from investments of the state.

Right to use TPS buildings

According to LISC, 11 states (California, Indiana, Iowa, Maine, Maryland, Mississippi, New York, North Carolina, South Carolina, Washington, and Wyoming) make district facilities available to charter schools either through requiring published lists of available buildings, offering charter schools the right of first refusal to lease or purchase, or in the case of two areas (California and New York City), requiring school districts provide space.

According to a 2013 report, 63% of open-enrollment charter schools reported that there are empty TPS buildings near their school. Five of these reported asking the district for use of that facility, but none were granted access.

In addition, early this year, New York Governor Andrew Cuomo announced said that charters in New York City will now have access to public school facilities at no charge, or the city will subsidize their school space.

District-Charter Compacts

Some innovative partnerships have recently developed between charter schools and traditional public school districts. These partnerships aim to be mutually-beneficial relationships. In some, charter schools take up residency in empty or underutilized district buildings. Charters benefit from reduced start-up or facilities funding costs, but districts can benefit in several ways as well: collaboration in professional development, spillover of positive charter school culture, and in some cases the ability to “claim” the higher test scores of charter students. Several successful district-charter compacts were highlighted in a recent Education Next article. For example, a YES Prep charter school in Aldine, TX partners with the local school district and the higher-scoring YES Prep students count toward the district average.yes prep logo

 The Gates Foundation provides funding for district-charter “compacts” in 20 cities (usually in the form of $100,000 planning grants). These grants pay for joint professional development, gates logodesigning a universal enrollment system, establishing metrics to be used with all students, and creating more personalized learning environments for students, and implementing common core state standards.

What’s to come in Arkansas?

During the 2015 session, if the legislature takes up the issues of facilities funding for charter schools, there are several models across the country that may serve as a guide. We at the OEP are big fans of ideas that involve partnerships or the use of under-utilized public resources.  Thus, in places where public school facilities are vacant while nearby charter schools are in need of space, we like the idea of a district-charter compact (highlighted above) or “shared-space” solution. For example, the KIPP Delta charter school in Helena is forced to use portable and has taken on several million dollars in debt, all while several elementary school buildings sit unused in the same city.  While there are challenges associated with creating such partnerships, this strategy has been employed in other states; surely educators in Arkansas can also figure out how to collaborate for the sake of our schoolchildren.

A second plausible strategy would involve the state’s public school facilities funds being made all available to all public schools, including open-enrollment charters. Of the 43 states with a charter law, just under one-third allow charters to access per-pupil facilities funding provided by state resources.

Whether Arkansas lawmakers pursue one of the above strategies or an innovation not mentioned here, it is likely that the 2015 session will involve some legislative work aimed at ensuring that students in all Arkansas public schools – charters and TPS – have access to adequate school facilities.

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