Innovations In Education: Supporting Charter School Excellence Through Quality Authorizing
June 2007
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Level and Type of Funding

Funding levels vary greatly among these authorizers, depending on how the state law structures authorizer funding and depending on the availability of financial support from external organizations or the organization in which an authorizer office is located. While several have shown success with very lean operating budgets, others are limited in their ability to authorize additional schools or to implement particular initiatives because of funding constraints. The form and amount of financial support provided to authorizers is a key consideration for policymakers to ensure that authorizers are able to perform responsibly and effectively.

In some states, authorizer funding is tied to a per-pupil administrative fee. In Michigan, a state with a generous funding structure, authorizers are allowed to retain up to 3 percent of a school's per-pupil revenue. CMU retains the full 3 percent, which adds up to an overall budget of around $5 million to oversee approximately 70 schools, a budget that far exceeds the budget of most authorizers in other states. FSU also retains a 3 percent fee but is able to return almost a third of these fees to its schools in the form of incentives, grants, technology (such as software), and cash rewards for compliance. The remaining 2 percent is sufficient to allow the office to maintain a full-time staff of five to oversee 16 schools with 20 campuses.

Minnesota law allows authorizers to collect a per-pupil allotment as well, but at a much less generous level. Authorizers get $30 per student in the first three years of the school's existence (capped at $10,000 per school) and $10 per student after that (capped at $3,500 per school).

This level of funding makes it very difficult for authorizers to implement high-quality authorizing practices without external support. In the case of VOA of MN, the charter office receives roughly $40,000 in per-pupil funding. The larger VOA of MN organization subsidizes the office's operations by providing approximately $80,000 in additional funds to support its work. At this funding level, as VOA of MN charter office staff members look toward the future, they will be unable to authorize many more schools unless they attract additional resources.

Funding constraints also affect the operation of the Massachusetts department of Education Charter School office. Current funding, from a variety of courses, is almost completely targeted, offering very little room for discretionary spending. For example, the department's state administrative budget line item provides funding for salaries, as does the Individuals with Disabilities Education Act (IDEA) funding, which provides for two staff positions dedicated exclusively to monitoring and supporting charter schools for IDEA compliance. Funding for non-salary-related expenses, such as outside consultants and research, is very limited.

California's Charter Schools division faces a similar fiscal dilemma. Although it receives funding through the California State department of Education as a budget line item, the money is reserved for salaries and basic division needs, such as travel to schools for site visits. In addition, as the oversight agent for charter schools approved by the State Board of Education (SBE), the division collects a statutorily authorized oversight fee (reflecting actual oversight costs up to 1 percent of each charter's general revenues). But the budgeted dollars limit the division's ability to invest in professional development, research, and other additional activities. The director of the California division has been successful in attracting external money to cover the cost of some of these services, but the overall budget situation remains challenging.

While it is difficult to determine in a categorical way what level of funding is appropriate given the differences between authorizing offices, these authorizers' experiences suggest that there is wide variation in both the type and level of funding available to support high-quality practices. Although some of these authorizers have been adept at securing additional resources, more supportive funding structures could prove a critical lever in improving authorizing practices across the country. Policymakers should consider the advantages and disadvantages of their own funding systems and then work to design policies that ensure that all of the authorizers in their state have sufficient resources to support high-quality authorizing practices.

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Last Modified: 05/26/2009