Charter Schools’ Administrative Costs At $128 Million

Arizona Governor Doug Ducey is pushing hard to dismantle traditional public education as fast as possible, and a report released on Tuesday by Arizonans for Charter School Accountability and the Grand Canyon Institute explains why. According to the report, the corporations running charter schools “have excessive administrative costs that never reach the classroom,” but that taxpayer money is going somewhere.

In the first ever of its kind, the report: “Higher Administration Charges of Arizona Charter Schools Cost Taxpayers $128 Million a Year,” calculates on a per pupil basis that Arizona’s charter schools spent $128 million more on administrative costs during the 2014-2015 school year than traditional public schools.”

Despite the efforts of some conservatives and liberals to equalize the reporting demands on publically funded charters and traditional public schools, only traditional schools are held accountable in any meaningful way for use of state funds. Charter schools “are largely exempt” according to the report.

“While Arizona’s public schools are required to justify every penny, charter schools are allowed to spend taxpayer dollars with insufficient accountability. This imbalance is unacceptable and harmful to Arizona’s teachers, students and parents. It’s time we demand that charter schools operate on the same level playing field as public schools,” stated Jim Hall, founder of Arizonans for Charter School Accountability.

Hall’s group argues that “Arizona‘s lax laws on charter school accountability combined with these schools being privately owned makes it impossible to see how excessive administrative funds are being spent. Money that should be invested into the classroom instead is redirected to administrative costs. These recommendations would do much to put public schools and charter schools on an even playing field and make sure Arizona’s taxpayer dollars are used responsibly.”

Key findings include:

1. Public districts spent an average of $628 per pupil for all administrative services. Charter schools averaged $1,403 per pupil, more than twice as much. If charter schools had the same administrative efficiency as traditional public schools, the state would save $128 million a year in administrative costs

2. The $775 per student administrative cost gap partially results from the smaller size of charters. Larger charter holders should be more administratively efficient. Instead the largest charter companies are among the most expensively managed agencies in Arizona. Their administrative costs are substantially higher, not lower, than the typical charter operation. If the seven largest charter holders spent the same on administration as traditional public districts, the state would save $54 million annually.

3. One of the largest charter companies, BASIS, Inc. (8,730 students) spends more on general administration than any charter or public district in the entire state, nearly $12 million. BASIS spent 30 times more per pupil on general administration than the six largest public districts combined (225,000 students).

Arizona State Rep. Mark Finchem stated, “When it comes to public funding of education there should be no area that isn’t open to transparency, disclosure and accountability. The dollars that pay for education aren’t government dollars -which of course don’t exist- they are in fact taxpayer dollars that are the given to government agencies, who must act as careful stewards. ‘Of he who is given much, much is expected;’ transparency is not too much to expect. in order for Legislators to know how our public education system is functioning, we have to be able to gage performance relative to spending. If there isn’t full disclosure on spending, we see a skewed picture, which ultimately leads to poor decision making. It is very much like making decisions on environmental controls when doctored data is presented as gospel fact regarding climate “change” data. I want to see normalized data from every area where taxpayer dollars are spent for public education.”

TUSD Governing Board member, and University of Arizona Economics professor, Dr. Mark Stegeman stated, “There is no justification for charter schools who survive on public funds to be so much less accountable for the use of those funds than the traditional public districts. Such a relentless commitment to hiding information usually indicates that there is much to hide.”

Public school advocate, and TUSD Governing Board candidate Betts Putnam-Hidalgo stated, “Now we know that trying to correct a lack of school district transparency is only part of the story. While the state makes every effort to send more money outside of the traditional public school sphere, there is even LESS tax accountability and MORE corruption there. Between the JTED debacle, the Proposition 123 proposal and the results of this report, Ducey’s desperate desire to be known as “the education governor” is misrepresentative at best, maliciously against young people at worst. Like the emperor, when it comes to education, Ducey has no clothes. These continued actions of educational malpractice are shortsighted and ill-informed: as he guts his public schools and hails charters, he makes a mockery of the kind of transparency and accountability that we must demand from all taxpayer funded educational venues.”

Retired public school teacher and advocate, Rich Kronberg stated, “The people who run most charter schools are the “owners” of the schools and run them on a for-profit basis. There would be nothing inherently wrong with that if charter schools were private schools, but they are publicly funded and should be held accountable for at least following state and federal laws related to public schools. Sadly for Arizona’s children, they have been allowed…by both state and federal officials… to ignore federal laws and exclude students for a variety of reasons that violate laws related to the obligations public schools have to admit and teach any student who wishes to attend…not just those who come from wealthy families or are motivated to achieve at the highest levels. If neighborhood public schools did what charter schools do and regularly exclude or expel students with learning or behavior problems the Arizona Department of Education and the Office of Civil Rights within the federal Department of Education would come down on them like a ton of bricks. In fact, if neighborhood schools were able to drop the bottom quartile of their students so they were teaching the same sort of students charter schools were teaching, they would outperform charter schools by wide margins. That was the finding of studies that equalized charter schools and neighborhood schools along demographic lines. But if charter schools were required to accept all students and follow the same rules every public school is theoretically required to follow, they would not do as well as neighborhood schools and the entire charter school industry would evaporate and blow away in the desert like so much dust.”

The report notes that the “largest corporate charter holders are among the worst offenders, while other charters do much better.”

Grand Canyon Institute Research Director, Dave Wells, noted, “The results of this study are very similar to one done in Michigan in 2012. Although we should see economies of scale with school operations. Both studies found that larger corporate charters that contract out to related for-profit management companies have higher, not lower, per pupil administrative costs. The seven largest companies spend $19 million more in administrative costs than if their spending matched the $1,403 per pupil average of charter schools—and it’s about 3 times what public school districts would spend for the same number of students.”

Arizonans for Charter School Accountability and the Grand Canyon Institute have three solutions to make corporate-owned charter schools more accountable to Arizona taxpayers:

1. Require charter school financial data to be collected and monitored by the Auditor General’s Office (just as they are for traditional public districts). The Arizona Board for Charter Schools should be required to use this data to investigate and sanction charter schools that misuse taxpayer dollars.

2. Charter management companies need to be transparent in reporting salaries and other financial information related to administration expenses.

3. Implement a public database that shows public districts and charter schools expenditures on administration and the classroom, so parents can make more informed choices when looking for the right school.

On Tuesday, the Arizona Senate Republicans and Democrats approved a bill pushed by Ducey to gut the office of Superintendent of Public Instruction and shift significant duties to the charter controlled State Board of Education.

Senators, who own interests in charter schools, did not recuse themselves from the vote.