NYC IBO Revises and Updates Charter Funding Comparison

Publication Date: 
Tuesday, February 15, 2011

When the NYC Independent Budget Office issued a Fiscal Brief on charter vs. district school funding last year, I called it a landmark study that shows a serious fiscal inequity. It still is, and it still does, even after today’s release of a revision and update to that study.*

Today’s release shows a revised set of estimates for academic year 2008-09, and a new set of estimates for 2009-10. Both show a change in direction when district schools are compared to charters in public space:

Public Resources Per Pupil at NYC Public Schools (NYC IBO, 2010 and 2011)

2008-2009 original 2008-2009 revised 2009-2010
District Schools $16,678.00 $15,672.00 $16,011.00
Charter DOE space ($305.00) $701.00 $649.00
Charter non-DOE space ($3,017.00) ($2,011.00) ($2,358.00)
(All estimates are per pupil.)

Continuing Disparities

As its original study did, the IBO’s work verifies two long-established facts. First, on average across the city, charter schools have received fewer public resources per pupil than district schools.

Secondly, there are wide resource disparities between charter schools, depending on whether or not they are housed in public facilities (with the in-kind services that come along with that, such as security and custodians). Until there is an equitable plan for funding public school facilities for all public school students, we can expect this divide—not to mention the conflict it creates—to persist. Currently about 60% of charter schools are in public space.

Selective Revision

The IBO analysts made three adjustments to its previously-issued estimates for school year 2008-09: one error correction, and two “refinements.” While we’re still reviewing the study, there’s every reason to think the adjusted line items are more accurate.

It’s unfortunate, though, that increased precision is only applied to reduce the district advantage. In a letter to the IBO about last year’s report, then-Chancellor Joel Klein suggested other refinements that would have the opposite effect, such as:

  • Not including one-time charter start-up funds alongside ongoing funds
  • Distinguishing between the oversight and support costs of the DOE’s charter office
  • Not excluding special education services below 20% [updated for clarification 2/18/11]

One could add other possible refinements to this list, such as not attributing the cost of in-kind services to charter schools that elect not to use them. Yet none of these possibilities were included in the IBO’s new analyses.

(Not wanting to appear argumentative, I wrote last year that “(t)here is good reason to think the IBO study actually understates the funding disparities that charter schools face, but we can take that up later.” I guess later is now.)

The Bigger Picture

No study covers everything, and as the charter school funding debates continue there are big pieces of the puzzle still missing. As the IBO’s Ray Domanico mentions, the impact of the 2010-11 increase in per-pupil charter funding will be significant. Another unexplored area is special education funding, which is funded and provided differently in charter and district schools.

An enormous issue, untouched by the IBO study, is the fact that the DOE’s pension contributions—which the IBO treats as simple costs—do not come close to representing the true present-value cost of its pension promises. That’s because the City’s contribution levels are based on unrealistically rosy assumptions of market returns (averaging 8%, forever, risk-free!), which are compounded by the practice of “smoothing” returns (so that 2008 market losses won’t be fully factored into contribution levels until 2014).

As Mayor Bloomberg put it, “It’s overstating it a little bit to say the only one who’s done that well is Bernie Madoff, but 8 percent for a long period of time is not something that very many pension funds have ever achieved.”

The pensions that DOE promises its employees today are fixed benefits. Taxpayers are on the hook, no matter how little the City may have put away. Calculating the contributions that would be required by realistic accounting standards would almost certainly show charter schools facing a wider disparity. If we’re going to refine our comparisons of charter and district funding—and we should—let’s start there.

* You may recall the method of the IBO comparison: district per-pupil expenditures are compared to charter per-pupil revenues, with the district’s spending on services to charter schools added in. The comparison excludes resources that follow student characteristics, most notably special education.