School Finance: Charter Schools

Managing Charter School Enrollment and the Net School Spending Cap

The charter school statute, Mass. Gen. Laws, c. 71, § 89(i), states that no school district's total charter school tuition payments shall exceed 9% of the district's net school spending (the "NSS cap"). The purpose of this update is to provide charter schools with information on how to manage their enrollment to stay within these NSS caps.

The Charter School Regulations allow schools to "skip over" non-sibling students that may cause a district to exceed its NSS cap.

In cases where the enrollment of a student, who is not a sibling of another previously enrolled student, from the waiting list would exceed the district charter tuition cap, the student should be skipped over but kept on the waiting list. In cases where the enrollment of a student who is a sibling of a student already attending a charter school would exceed the district charter school tuition cap, the sibling may be enrolled with the Commonwealth of Massachusetts providing tuition for said sibling, subject to appropriation.

603 CMR 1.06(4)(d).

As a practical matter, it has been challenging for schools to determine when a student should be "skipped over" because the determination as to whether a district will actually exceed its NSS cap is not made until the end of the fiscal year for which enrollment is being conducted. In addition, multiple charter schools may draw from the same sending districts. In an effort to assist schools in managing their enrollment processes, the Department will provide additional enrollment information and guidance to schools.

• The Charter School Regulations, at 603 CMR 1.06(c), require that "the Department of Elementary and Secondary Education shall notify each Commonwealth charter school no later than February 15 of any limitation on the number of students from a district that may be enrolled in charter schools for the upcoming year." In the past few years, the Department has released this information in the form of a district-by-district spreadsheet, posted at www.doe.mass.edu/charter, which provides the projected FTE remaining under the NSS cap in each district using the best information available at that time for the upcoming fiscal year. The most recent data for FY06 can be found at http://finance1.doe.mass.edu/charter/projection06_capping.xls . Along with this spreadsheet, beginning with FY07 projections, the Department also will post an explicit list of sending districts considered to be "near-cap" districts. For these districts-and only these districts-charter schools may exercise the option to skip over students who apply for enrollment in accordance with 603 CMR 1.06(4). We strongly suggest that this possibility be explicitly described in enrollment information provided to parents or contained within the school's enrollment policy.(If a school wishes to make changes to its enrollment policy, it must seek an amendment under 6093 CMR 1.11(2)(c). See Charter School Technical Advisory 05-2.)

• The Department releases a tuition projection in the late spring after charters have submitted their pre-enrollment data for the upcoming fiscal year. An updated projection of FTE remaining under the NSS cap in each district is also included. At this time, the Department also will update the "near-cap" district list. As seats become available, charter schools should enroll students from its wait list, some of whom may have been previously skipped, if a particular sending district is no longer on this "near cap" list.

The available FTEs reported in these analyses are not hard and fast numbers, but are estimates based on anticipated enrollment growth and projected financial data. The actual cap is not known until the fiscal year in question is completed.

Please remember that your school will only receive prorated tuition for any student from a district that has exceeded the 9% NSS cap. An example of how the Department prorates the tuition assessment for districts over the cap follows.

Example of Prorated Tuition:

The FY06 net school spending for Sending School District X is $1,000,000. According to the charter school statute, 9% of District X's net school spending ($90,000) can be transferred to Commonwealth charter schools. The Department has calculated that the charter school tuition rate for District X is $9,000 per student. Charter School A enrolls 11 students from District X. District X's unadjusted charter school tuition assessment is $99,000 (11 students at $9,000 per student). Because the unadjusted tuition assessment exceeds the net school spending cap by $9,000 ($99,000-$90,000.), the Department must prorate the charter school tuition rate received by charter schools enrolling students from District X to keep the district at its 9% NSS cap. Thus, Charter School A will receive $8,181 per student from District X for a total payment of $89,999 (11 students at $8,181 per student). This decreases District X's total assessment to its NSS cap.

Please feel free to contact Cliff Chuang at 781-338-3228 or cchuang@doe.mass.edu or me at 781-338-3200 or mstreet@doe.mass.edu with any questions or concerns regarding the information in this memorandum.