Much attention has been paid to the impact of charter school caps on state competition for federal Race-to-the-Top funds, but it is not the only charter school issue on which states will be judged, according to the program's regulations released yesterday by the U.S. Department of Education.

Charter school funding equity and facilities funding--or lack thereof--also matters. Here again, New York State is derelict in this category.

Charter schools in New York are funded by a formula that calculates the "approved operating expenses" for each "total aidable pupil unit" in the resident district(s) of their students. This per-pupil calculation is from prior-year data and is inflated by the growth in statewide approved operating expenses to arrive at a reasonable current-year payment for charters for operating costs.

School district building expenses are not included in this calculation. That means all the money spent on debt service and other capital costs that benefits every district student does not accrue to a charter student living in the same school district.

The result is that charter schools are short-changed by this formula by approximately one-third the true cost of educating a student, every one of whom needs a roof over their head.

Charter schools in turn must use operating funds to pay lease costs or debt service for buildings, which has been an acute challenge particularly in New York City with its expensive real estate market. Mayor Bloomberg and Schools Chancellor Joel Klein have stepped in to provide some charter schools access to district capital funds and most NYC charters are housed in district space to alleviate this challenge. But those arrangements are not permanent and could unravel. About one-third of the City's charter schools have their own space, and pay dearly.

Other Charter States Provide Facilities Funding
Nearly a dozen other states provide facilities funding for charter schools, including Florida and Utah. Many more states allow charter schools to access credit enhancement or loan guarantee programs.

New York has none of these opportunities. The only source of state capital funds for New York charters has been piecemeal grants from the competitive state Charter School Stimulus Fund to assist charter schools to pay for build-out or rehab projects. But this fund has never exceeded $4 million in any year, and is used for other purposes besides capital. Moreover, this fund has been steadily cut back in recent years to cope with the state's fiscal crisis, even as the number of charter schools has proliferated.

Funding Inequity Exacerbated in 2009-10
Last April, when the state legislature enacted the current state budget, charter funding was frozen, costing charter schools $50 million that was due to them based on higher school district operations spending fueled by prior-year CFE-induced state school aid increases. Again, district students benefited from higher district spending that was due to charter students but denied this year by Gov. Paterson and the legislature -- making the funding gap worse between district and charter public schools.

School districts still got a modest state aid increase thanks to federal Stimulus funds, and also can raise funds locally if they choose. By contrast, charters got their funding frozen, and there is no sign of building aid any time soon.

This funding injustice should not bode well for New York's prospects for Race-to-the-Top, perhaps more than being capped out. Nor would an "aggressively bold application" by the state fix this shortcoming since addressing the funding gap requires legislative action.

Peter Murphy
for The Chalkboard