How does the new school funding bill affect dollars for CPS charters?

Due to changes in the new school funding bill, WBEZ reports Chicago Public Schools may need to spend millions of additional dollars on its current charter schools. These additional dollars would be on top of the increases already included in the current 2018 budget, result in additional cuts to traditional district schools, and compound the hole already in the CPS budget from $269M in unexplained local funding.

We’ve attempted to estimate the additional dollars to charter schools and provide the details below. CPS and the charter groups have expressed different views on what charters are owed but haven’t shared how they’ve come to those numbers. In the absence of that detail we estimated these numbers for 2018 based on calculations from a 2014 charter funding report and find that CPS could owe at least $88 million in additional dollars to existing charters.

Moreover, it appears that the specter of CPS’ use of borrowing and the fact that CPS shoulders the vast majority of its pension cost inflates the benchmark used to calculate the amount owed charters. Rather than providing reasonable funding, we believe this creates a situation where district students pay twice for CPS’ sins: once in dollars unavailable for classrooms due to pension and debt obligations and again when these funds are included in the base amount used to set charter funding. These are sizable amounts, at least $1.1 billion in FY18. Even with the state now paying CPS’ normal pension cost (as the state has done for all other districts for decades), CPS still must pay a further $551 million in FY18 to reduce its unfunded pension liability. This will increase each year, reaching over $600 million in FY20. In FY18, a further $670 million of CPS revenue must be set aside in debt service funds while $594 million will be spent from those funds.

In discussing the negotiated amount to be paid for charters within a school district, SB1947 (pg.488 line 26 to 489 line 3) defines local funding as being no less than 97% and no greater than 103% of the per capita school tuition of the supporting district. Previously the band was 75% to 125%, giving districts wide leeway in funding. To determine the requirements under the new standard then, we’ll need three numbers: 1. The per capita student tuition for the district, 2. The number of students enrolled in charters, and 3. The amount of local funding provided to charters.

ISBE calculates the per capita student tuition for each district and publishes it annually. The most recent rate was $12,544.38 in 2016. While the 2017 number will likely be higher this would be the rate used for 2018 according to the 2014 charter funding report. This would mean that under the new standard CPS would need to provide at least $12,168.05 but no more than $12,920.71 per charter student. So how much was CPS planning to pay charters in 2018? It’s complicated.

The previously mentioned report includes an appendix (M and N) which shows results of two calculations for getting to these numbers. The first from CPS and the second from INCS (Illinois Network of Charter Schools). They both include SBB (student based budgeting) and non-SBB dollars, as well as SGSA (Supplementary General State Aid), but CPS also includes a facilities fee and special education dollars which INCS does not. We tried to replicate those numbers using the detail provided in CPS’ program spreadsheets and come up with a minimum of $87.8 million dollars under the CPS calculation, and $197 million under the INCS one. It’s possible that there are additional dollars in the CPS budget we’re unable to ascribe to charters, or that CPS would have some leeway in the facility or other charges to charter schools which would reduce the prescribed cost. Notably, neither CPS’ nor INCS’ calculation is determined to be correct or validated by ISBE in the report, leaving the proper calculation itself in question.

It appears that the implications of this provision of the new funding law for CPS were, at best, not well understood by many members of the General Assembly. It is also clear that this is not a new issue. The standard of 97% and 103% appears several times in the report from 2014, and they appear to have been a part of SB1 in some of its earliest amendments. It’s deeply problematic that no real public discussion of this issue occurred in debate. This is especially true since CPS’ debt and pension obligations appear to be included in ISBE’s benchmark yet these are dollars unavailable to district schools.

Resolving this question is likely to require a new negotiated rate for CPS charters and the outcome could have disastrous implications for district schools. Given the difficulty in determining these numbers, how will we know the rate settled on meets state law and, even if it does, how can we possibly believe that this is a just end if it draws so many new dollars to charters and away from district schools? 

[Image via Creative Commons]

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