Do charter schools deserve more state funding?

Educating Indiana's poorest students at a lower cost than traditional public schools was a selling point of charter schools when they first opened 13 years ago.

This spring, charter schools are clamoring for more funding from the General Assembly while facing criticism they have not succeeded at the job they set out to do.

A Star analysis found that the failure rate of charter schools more than doubled in the past five years — 53 percent received a D or an F rating from the state last year compared to 23 percent in 2010.

"There are charter schools that are doing a wonderful job, but they are just not the panacea that people think they are," said Dennis Costerison, executive director of the Indiana Association of School Business Officials, which represents public schools. "You have to look at these things … and the bottom line is: Are they functioning properly?"

Charter schools received an average of $665 more per student in state tuition support than traditional public schools last year.

Statewide, charter schools received an average of $7,080 per student, while public school corporations received an average of $6,415 per student.

One of the reasons charter schools reaped more money from the state, which largely pays for classroom instruction, is because they serve needier students than many public school districts. Most charter schools are located in urban centers, and the bulk of them are in Marion County.

Those factors contributed to charter schools failing an average of 17 times more often than public school corporations last year. Failed charter schools, however, are on par with the performance and state funding of Indianapolis Public Schools, which serves a similar student population.

"If you look across the state at charter school performance, it is for sure mixed," said Brandon Brown, director of charter schools for the Indianapolis mayor. "You have some high-performing charter schools and you have some that need to improve."

However, Brown notes charter schools sponsored by the mayor often outperform public school districts on ISTEP, Indiana's statewide proficiency exam.

Charter schools say they're financially disadvantaged because they're barred by state law from paying for building projects and busing with local property taxes, a staple of traditional public school funding. Typically, charter schools lease their buildings and do not provide buses.

Proposals from Gov. Mike Pence and Indiana House Republicans would fund charter schools with an additional $1,500 per student to help make up for that shortfall. The proposed increase heeds the cries of charter schools but has drawn the ire of public school districts, who say they're being cast aside.

"Funding equity is necessary and this proposal would help us move in that direction," said Leslie Draper, school leader of Inspire Academy, a Muncie charter school. "We don't currently receive a number of funding sources that other districts receive."

What are charters?

Charter schools are public institutions that are not under the jurisdiction of a public school corporation. They are run by managers who are chosen by a governing board, which reports to an authorizing organization. The state appointed universities and the Indianapolis mayor as Indiana's authorizers.

Although charter schools were designed to be a cost-effective wunderkind to improve education in Indiana, The Star found that charter schools not only fail more often than public school districts, but they also cost the state more per pupil when they do not perform.

Failed charter schools were $1,623 more expensive per student last year than traditional public schools that also failed.

The cost of failed charter schools is contentious to charter school advocates, who note that charter schools receive less overall funding than traditional public schools.

"When you add in federal funding and especially when you add in property-tax funding, which is generated locally, that's where we saw the big discrepancy in per-pupil funding between charter schools and traditional public schools," said Chris Atkins, director of the state Office of Management and Budget, who added that it's not surprising the state spends more on charter schools.

When local, state and federal money is averaged, charter schools received $747 less per student than traditional public schools. Charter schools, however, make up 70 percent of the 50 top funded school corporations in the state when the actual money spent from local, state and federal sources is reviewed.

The top-funded charter schools have a failure rate of 66 percent.

Brown said that although the failure rate is high, there are many successes across the state, and several in Indianapolis. Schools sponsored by the mayor's office are doing about 11 percent better on the ISTEP exam than IPS, he noted.

Should funding be tied to performance?

Still, charter school performance is an issue when it comes to determining school funding, said Sen. Luke Kenley, R-Noblesville, who chairs the Senate Appropriations Committee.

"There are a couple complicating factors, and that is about 60 percent of the charter schools either are not being graded or they got a D or an F," he said.

Legislators must exercise caution when deciding if charters should receive more per-pupil funding, said Rep. Sheila Klinker, D- Lafayette.

"I don't think their funding should be more than the average public school," Klinker said. "I do think, particularly, we need to look at them carefully if they are consistently making Fs."

Funding equity ensures charter schools can stay on pace with traditional public schools, especially for things such as building costs, said Rep. Tim Brown, R-Crawfordsville, who added that charters benefit Indiana.

If charter schools are allowed to use state funding for building expenses, there must be measures in place to ensure those tax dollars aren't lost if a charter sells its facility, Kenley said.

Charters vs. public school districts

Given their short history and high failure rate, charter schools haven't proven they're superior to public school corporations, said Dr. Youssef Yomtoob, superintendent of School City of East Chicago, a district located in northern Indiana that borders Illinois.

School City of East Chicago is the sixth best-funded district with state tuition support per pupil, receiving $8,415 per student. It has received failing marks from the state since 2006, but improved its grade from an F to a D last year. It was among the 3 percent of failing public school districts in 2014.

Yomtoob said cash-strapped public school corporations – not charter schools – deserve more financial support from the state. School City of East Chicago, like many urban districts, was forced to cut up to $800,000 in personnel costs.

"There is not any scientific statistical information that indicates charter schools are superior to public schools," he said.

Schools like Damar Charter Academy — whose student population was more than 90 percent special education in 2013-2014 — probably will not improve their state letter grade because of the students they serve, said Rich Harcourt, senior vice president and chief financial officer of the school.

The school specializes in educating children with developmental disabilities and autism. It is subjected to the same measures as traditional public schools but has a special set of benchmarks set by the Indianapolis mayor's office, which authorized the school.

Damar received the most per-pupil tuition support from the state in fiscal year 2014, taking in $12,992 per student. That number is substantial because of the school's sizable population of special-education students, Harcourt said.

Damar is far from the norm, though.

Although charters served more poor students than traditional public schools, they educated less than 1 percent more special education students than public school corporations last year.

Time will tell

Proposed changes to the state's school-funding formula would take money away from both charter and traditional public schools that serve needy students and redirect it to wealthier schools.

Even with an additional $1,500 per student, charter schools still would receive less total funding on average than traditional public schools, Atkins said.

Part of the push for more charter funding is about attracting more charter schools to Indiana, he added. Charter schools and advocates bemoaned their funding levels at a Senate Appropriations Committee meeting earlier this year.

"We were looking at trying to attract more charter schools to Indiana, especially some we have heard anecdotally that are dissuaded from investing in Indiana because of our charter financing structure," Atkins said.

In the end, time is what will decide the fiscal fate of charter schools in Indiana, Kenley said.

"I'm not sure if we can resolve this issue this year or not," he said.

Call Star reporter Kris Turner at (317) 444-6047. Follow him on Twitter: @krisnturner.