What’s Wrong with Texas Charter School Funding?

Everything is bigger in Texas, and the state’s education system is no exception. From the perspective of school choice, there are over 154,000 students in over 500 Texas charter schools, and another 101,000 on waiting lists. Houston and Dallas alone possess about 300 charter schools between them, and both of those districts have public school enrollments of over a million.

Texas has seen a rapid expansion of its school choice program over the past few years, and signs point to it getting even more attention in future. Michael Williams, the recently appointed education chief, is in staunch support of charter schools.  Journalists are jumping on board. Charter discussion has even given way to a lot of voucher talk recently by the state’s legislative bosses. Governor Perry is vocally supportive of expanded school choice as well.

“Not every student thrives in the same setting in schools. Texas’ academic future must be built on the flexibility necessary to serve those different students,” Perry said. “That future will, by necessity, involve more public charter schools, which offer parents a tuition-free alternative to their neighborhood schools…It’s also time to introduce scholarship programs that give students a choice, especially those who are locked in to low-performing schools.”

Texas is talking the talk in our school choice revolution. Unfortunately, there are some problems in Texas that are as big as everything else.

You see, Texas legislatures wrote their charter laws with only inner-city kids in mind. The state’s weighted averages for ADA counts are favorable for those schools that enroll high percentages of FRL, LEP/ELL, and SPED kids, which forces charters with good business sense inside the beltway, so to speak. The state charter allotment of $6,329 per student (based on no weights at all) simply isn’t enough to make charter school models work where FRL/LEP/SPED rates are lower. This marginalizes suburbanites seeking school choice, and many of these families are forced to seek private alternatives (and pay for them) when their local public schools are underperforming.

Additionally, the state provides no facilities funding to charter schools, which essentially denies charters over $800 per pupil, an amount that traditional schools do receive. This practice has been so controversial that it has led the state’s charter organization, TCSA, to spearhead a lawsuit (one of six related to school financing) to overturn it. Optimism surrounds the suit, but we cannot expect a decision/implementation until next year. Moreover, even with facilities funding there are other, deeper problems with running charter schools in Texas.

For instance, Texas state law requires charter schools to participate in the relevant retirement plan for teachers. The system in this case happens to be the Teacher Retirement System of Texas (TRS), a public pension plan with about 835,000 members. Founded in 1937, its annual budget is over $4.8 billion and utilizes portfolio management to leverage its investments. It paid over $7 billion in retirement benefits in 2011. The employer contribution rate is 6%, the member contribution rate is 6.4%, and the state contribution rate is 6.58%. These contribution rates are in the Top Ten nationally, although still substantially lower than Ohio Teachers Retirement (13%), California Teachers (10.79%), and New York Teachers (8.26%).

As in all budgets, it’s the little things that can make or break your bottom-line. Take into account that teacher salaries in places like Houston run as high as $52,000 (KIPP paid theirs $50,000, an astounding salary for a charter school) and Race to the Top funding is sketchy at best because of the state’s reluctance to accept Common Core standards, and the Texas school choice landscape actually appears less bright than the state’s advocates would have you believe.

Funding problems could be at the heart of many other accountability issues in Texas. Between 1998 and 2011, the TEA closed down 52 charters schools for reasons ranging from lack of operational competency, to money woes, to mismanagement, to academic deficiencies. In the summer of 2011, the TEA closed down Arlington’s Metro Academy of Math and Science due to accountability problems and financial losses ($1 million in operating debt). If a school’s leadership is concerned about even staying open, how can we expect it to perform well? Metro Academy was in the middle of the Dallas-Fort Worth metro area, which means it was pulling the type of kids that bring in the most FTE money but still bottomed out financially. Partial blame can be laid on gross mismanagement (some people start schools with no idea how to run one), but the state’s funding model is also at fault for not providing the charter with the same resources as other Arlington public schools (which are also abysmally low).

This is a nationwide problem, and inequitable funding is completely illogical considering that these schools are held to the exact same standards as traditional public schools. When traditional public schools fail they get injections of money, but when charter schools fail they get shut down. We here at American School Choice agree that failing schools should be shut down, but it’s time that the double standard for operational and facilities funding in education ceased.

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