Archived Information

School Finance: Charter Schools

Memorandum

The revised charter tuition formula implemented last year includes a component for facility costs, based on the average of all district capital facilities expenditures in the prior year. The formula also anticipates 100% reimbursement by the state for this component of districts' tuition costs.

The FY05 facility component was calculated at $748 per pupil, and the first quarter tuition estimates for FY06 were based on a comparable amount. However, actual spending reports from the districts for FY05 have shown a dramatic increase in facility expenditures, due primarily to the large, one-time payments from the School Building Authority. For the second and third quarter tuition estimates, the facilities aid component has been adjusted up to $1031 per pupil. As the remaining district spending reports are processed, this number will continue to increase prior to the final tuition calculations in the fourth quarter.

Absent legislation, the effect of this unanticipated increase in the facility component is two-fold. First, charter schools will receive a larger tuition payment than expected this year and next year, with a corresponding drop in FY08 when the SBA catch-up payments end. Second, sending districts will have to absorb a significant portion of the higher payments this year, as the state appropriation for reimbursement is insufficient to cover the higher amounts.

I am recommending to the Legislature that it allow the Department to use the FY05 per pupil amount adjusted for inflation in the FY06 calculations. This will smooth out the payments to charter schools over time and ensure that we can meet our commitment to the sending districts to reimburse them for this cost. The Governor has made the same recommendation for FY07 in his House 2 budget proposal.

Charter school leaders and superintendents in sending districts need to be aware of the potential for significant adjustments in the fourth quarter as a result of this issue. If you need additional information or assistance, please contact associate commissioner Jeff Wulfson (jwulfson@doe.mass.edu or 781-338-6500) or school finance programs manager Roger Hatch (rhatch@doe.mass.edu or 781-338-6527).