Nine years ago, as part of a broader education funding reform package, state lawmakers boosted the amount of money and the period of time that school districts are reimbursed for charter school tuition payments, citing the need to cover fixed costs.
That 2010 law revamped a formula that reimbursed districts 200 percent of their costs over three years, bumping it up 225 percent over six years.
Since the longer formula was put into place, the state has never been able to fully fund the amount it calls for, according to Education Secretary James Peyser. Peyser said Gov. Charlie Baker’s proposal to return to a three-year formula would allow for full funding.
“I don’t think there’s anyone who doesn’t feel this issue pretty strongly, that we ought to be fully funding the formula,” Peyser said. “There may be some who say, ‘Well, why change it? Let’s just fully fund what we currently have,’ which is fine, and that’s a conversation they’re going to have, but one way or another, I do think if there’s going to be a big increase in the long-term commitment to public education, they’re going to want to deal with this, too.”
Peyser, in a recent interview, laid out the details of Baker’s recommended changes to the charter formula and the reasons behind them.
Along with his fiscal 2020 budget, Baker last month filed a school finance reform bill (H 70) that would overhaul the state’s school funding formula to better account for costs associated with special education, teaching low-income students and English language learners, and employee health care expenses.
The bill would also implement a more compressed charter reimbursement process, with districts reimbursed for 100 percent of their costs the first year, 60 percent the second year, and 40 percent the third year.
The current formula calls for 100 percent reimbursement the first year, and 25 percent in each of the next five years.
“It’s a slightly smaller number, but it’s over a shorter period of time,” Peyser said. “The theory behind charter reimbursement to begin with is that it’s transitional aid to help a district accommodate its budget for the loss of the students and that tuition revenue, so the idea being within three years you can sort of right-size a district or reallocate capacity in such a way that you’ll be able to get back to a steady state — that is, from an expenditure point of view — that’s basically where you were to begin with.”
Peyser said the formula’s current structure means the reimbursement payments “have been seen as essentially ongoing and permanent rather than transitional,” in part because of “the long tail on the reimbursement plan,” and in part because districts are reimbursed when tuition payments go up for any reason, including inflationary increases.
Baker’s plan would also make districts ineligible for reimbursement if their charter school enrollment in a particular year is not above the “high-water mark of the previous five years,” Peyser said.
“A combination of those two things gets us to a point where we think we can actually fully fund this formula so that districts can count on the money coming in, as opposed to now, where they really have no idea how much they’re going to get, year in and year out,” Peyser said. “One issue here is just being a more reliable, predictable partner on charter reimbursements. The second, which is related to it, is getting it to a point where it’s funded at a level we think we can actually deliver on.”
Charter schools are not eligible to participate in the Massachusetts School Building Authority’s funding process, so they receive a facilities stipend from the state to help cover expenses like debt service or lease payments. Baker is proposing to raise the current stipend of $893 per pupil, which Peyser said has not been changed for 10 years, 5 percent to $938 per pupil in fiscal 2020, then index it to inflation in subsequent years.
Under Baker’s plan, school districts that receive a relatively low amount of state education aid per pupil under the Chapter 70 funding formula but have relatively high charter tuition costs — more than 9 percent of their total school spending — would receive new supplemental aid.
Peyser said Boston “would probably get 90 to 95 percent of the money from this supplemental aid for now.”
Funding was a central issue in a heated 2016 ballot fight over lifting the cap on charter school enrollment, a question that failed with 62 percent of voters opposed. While backers argued charter schools provide more opportunities for students and can help close achievement gaps, opponents said they drain funds from districts that are already grappling with tight budgets.
Lawmakers brought up the same issues during deliberations on the 2010 education reform bill, and charter funding remains a pressure point in 2019.
At a recent Board of Elementary and Secondary Education meeting, Vice Chair James Morton said the board is faced with a “dilemma” every time it votes on adding or expanding a charter school.
He said the board is in “position of diverting resources from one opportunity to another without ever really addressing the underlying issue, which is finding some other source of funding for charter schools so that we can have both our public school children getting what they need and our charter school children having an opportunity to attend charter schools that might be a Montessori school that addresses the way they particularly might learn.”
The Pioneer Institute on Wednesday released a study of the charter funding system in Massachusetts, which said charter schools here “enjoy operational funding that is close to parity with districts, and this makes them an exception nationally.” The study said Massachusetts is also the only state to reimburse districts when students leave for charters, providing some level of financial security.
Pioneer’s report said charter tuition payments affect districts differently based on the amount of aid they receive from the state, and the payments “in the majority of cases” are made with state, rather than local, dollars.
Peyser said he doesn’t think changing the reimbursement formula will make the big-picture charter debate “go away.”
“I would hope that it would modulate the tone a little bit,” he said. “But I think at the end of the day, this isn’t so much about trying to solve that problem as it is trying to make sure we’re keeping our promises, because right now this just feels to everyone, I think with some justification, like it’s a broken promise.”