Education Funding

Calif. Charter-Funding Fight Hits Home

By Caroline Hendrie — January 15, 2003 12 min read
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There’s no place that Melissa A. Hoffman would rather be than at home, coaxing her children through a curriculum provided by an unorthodox charter school near their quiet subdivision in central California. But when a new set of state rules kicked in that jeopardized the school’s funding, the mother of three set aside her homebody ways and repeatedly hauled off to the state capital last spring to beg for fiscal mercy.

In the end, policymakers here were unpersuaded, and the school’s funding for “nonclassroom-based” children like hers—along with those at more than 50 other California charter schools—was cut by 5 percent. This school year, the stakes are higher: Schools are facing cuts of 20 percent for students defined as nonclassroom-based, to be followed by reductions of 30 percent for the school year starting next fall.

“We’re furious,” said Ms. Hoffman, the president of the parent advisory council at the Elise P. Buckingham Charter School in Vacaville, Calif., which blends supervised home schooling with various on-site programs.

Ms. Hoffman’s sentiments are shared by other parents and educators being affected by a year-old California law known as Senate Bill 740, which takes budgetary aim at charter schools with a sizable share of students schooled outside the classroom. Now, as state officials enter the crunch time for making their second round of annual funding determinations under the law, they are hearing from plenty of people every bit as angry as Ms. Hoffman.

The specifics of those proceedings—like the law that engendered them—are both complex and unique to California. Yet as charter schools catering to home-based learners proliferate around the country, education policymakers elsewhere have become entangled in similar skirmishes over money.

During the past year, the convergence of three trends—the soaring popularity of home schooling, the strong growth of the charter sector, and the explosion of online learning—have spawned funding fights in courts and legislatures in Ohio, Pennsylvania, and Wisconsin. With advances in computer technology making novel education arrangements more attractive all the time, and with state budget troubles showing no signs of abating, more such conflicts appear inevitable.

As a result, California’s SB 740 has turned out to be the first in a series of attempts by state policymakers to cut their way through a thicket of questions: How much does it cost to run a school that relies on parents as the primary educators? How much money should schools get if they depend on the Internet for delivering instruction? Should schools with less need for classrooms get as much funding as their strictly bricks-and-mortar brethren? And if they do, will unscrupulous charter operators seize the chance to rip off the public?

In California’s case, answering those questions has proved a lot more complicated than even the state’s top policymakers expected. More than a year after SB 740 took effect, it’s clear that the search for solutions is a long way from over.

‘Knee-Jerk Reaction’

From its inception, SB 740 was billed as a way to protect the public pocketbook against profiteering and other abuses. The assumption was that students should be cheaper to educate if they don’t spend all day in physical schools filled with full-time educators.

“The urgent issue was that we were having significant cases of a few—a minority of— charter operators that were running very minimalist programs where the parents did all of the educational work and the charter operators collected all of the state money,” recalled Reed Hastings, the president of the California state board of education and a driving force behind SB 740.

But whether the law is achieving its goal of stamping out such abuse has become a matter of bitter debate.

“It was a knee-jerk reaction,” said Marta Reyes, who is both the president of the California Network of Educational Charters and a member of a new state advisory panel that reviews charter schools’ funding requests. “It responded to a few rogue charters, but it affected all charters that were nonclassroom-based as a result.”

In the 2001-02 school year, the first under the new law, a third of the state’s charter schools were affected. They ranged from cyber schools run by online-learning chains to those offering an eclectic blend of on-site and home-based programs.

Despite the criticism, neither Mr. Hastings nor the bill’s other architect, state Superintendent of Public Instruction Jack O’Connell, is giving any ground.

“We have a fiduciary responsibility, and our primary responsibility is to the students,” Mr. O’Connell, a former state lawmaker who was sworn in as schools chief last week, said in a recent interview. “This bill is a good blueprint for accountability for these types of schools. I make no apologies for the bill.”

Clearly, many members of the California education community—charter friends and foes alike—have long worried that people with more concern for earning than learning were mining the Golden State’s charter law for cash. Reports of charter operators who pocketed fortunes by skimping on services to former home schooling families have been arising for years.

“With home-based education, the parent is often not expecting anything from the state,” said Mr. Hastings, who himself is a co-founder of a growing network of classroom-based charter schools. “That’s what creates the opportunity for profit.”

Yet critics contend that the law does little to place limits on such profits. Not only is the bill failing to weed out abuse, they say, but it is also squelching innovation.

“The charter law was intended to allow people to try something different,” said Randy Gaschler, the president of Innovative Education Management, a nonprofit organization based in Placerville, Calif., that runs three charter schools offering various home-based options, including online learning. “All this legislation has done is say, in order to be a legitimate public school, that we have to spend money the same way as regular public schools do.”

Among critics’ chief complaints is that the law is causing bureaucratic nightmares and jeopardizing funding for some of the state’s most successful charter schools. The Natomas Charter School, for example, a highly rated school here in the state capital that offers a smorgasbord of on-site and home-based programs, is currently negotiating with state officials to avoid losing 30 percent of its funding for nonclassroom-based students next school year.

“When the state puts out laws and regulations, they’re not doing it with a scalpel, they’re doing it with a sledgehammer,” said Ting Sun, a co-founder of the 1,065-student school, which earns top scores under California’s school accountability program. “Sometimes they end up pulling really good charter schools into a real mess.”

Policing Themselves?

On paper, SB 740 requires that affected charter schools apply to the state board of education to receive any money for nonclassroom-based students, who are defined as those allowed to spend 20 percent or more of their school time outside of class.

In practice, the work of making those funding determinations has fallen to state education department staff members and the Advisory Commission on Charter Schools, whose members are appointed by the board.

The commission has eight members, with a ninth seat that is vacant, and is chaired by Mark Kushner, the founder of a San Francisco charter school who now runs a nonprofit organization to open similar schools around the state. Three other members, including Ms. Reyes, are involved in charter schools. Representatives of the state’s largest teachers’ union, district superintendents, local school board members, and the education department hold remaining seats.

Mr. Hastings, the president of the state board, argues that the number of commission members from the charter trenches means that schools are essentially appearing before “a jury of their peers.” For that reason, he says, SB 740 “allows the charter community to police themselves.”

Some charter operators complain, though, that commission members other than Ms. Reyes have scant experience with nonclassroom-based schooling. Mr. Kushner acknowledged that, but stressed that he works “very hard as a chair to implement this fairly.”

Part of that work, he said, has been discovering just how complex the nonclassroom-based world is becoming in California. In Ms. Reyes’ view, illuminating the diversity among such schools has been an inadvertent benefit of the law.

“They aren’t just an Internet connection,” Ms. Reyes said. “They can be a home school. They can be blended programs. It has expanded for everybody’s view that nonclassroom-based schools really offer a variety of things.”

Guiding the commission as it ponders that variety are regulations that require schools to spend at least half their budgets on state- certified staff members and 80 percent or more on “instructional” expenses—a category that excludes facilities—to receive full funding.

Supporters say the rules help ensure money is genuinely going toward instruction. But critics say they deprive schools of needed flexibility.

“It’s a little like telling, ‘You have to spend a certain portion of your budget on storefronts and salespeople,’ ” said Eric Premack, a co-director of the Charter Schools Development Center at California State University-Sacramento.

‘Yelling Bloody Murder’

At a meeting of the advisory commission here last month, Mr. Kushner reminded schools seeking approval that the panel considers the spending limits “bright lines” rather than ballpark figures. If schools run afoul of the formula, they should expect to lose funding, he warned.

Yet much of the meeting was consumed by discussion of a potential “mitigating factor": facilities costs. Although SB 740 was ostensibly designed for schools with little in the way of classroom space, it has ended up applying to many that offer a blend of on-site and home-based programs and therefore have facilities expenses that make it hard to meet the budget limits.

“They are yelling bloody murder on this whole thing,” Mr. Kushner said of such schools. In response, he is working with other panel members to devise a systematic means of taking legitimate facilities costs into account.

Among the hybrids is Buckingham Charter School, where Melissa Hoffman’s three children are enrolled. The 1,000-student K-12 school, which is considered part of the 16,000-student Vacaville district, is housed in several low-slung, stucco buildings in a commercial development that includes a carpet outlet, an electrical-equipment retailer, and a bingo parlor.

Buckingham has 15 classrooms, science and computer labs, a multipurpose room, and a film studio, among other facilities. Students can mix and match classes through three main programs: one in which children are schooled mainly at home, another that focuses on various kinds of white-collar vocational training, and a third offering academic classes on a college-style schedule.

"[Students] blend those three components to create their own educational platform,” explained Robert J. Hampton, the school’s principal and a former president of the California Network of Educational Charters, which represents about 70 percent of the state’s more than 425 charter schools.

Ms. Hoffman’s 10th grade daughter takes all her classes on campus, for example, while her 5th grade son gets all his lessons at home with his mother. Her 8th grade boy takes English and mathematics on campus, and learns social studies and science at home.

Mr. Hampton said he is expecting to have his nonclassroom-based funding cut by 20 percent this year, largely because of facilities spending made possible by a staff that is heavy on part-timers. Last school year, he cut mainly from group activities for home-schooled students, such as dance, bowling, golf, and ice skating, but this year he expects the reductions to go deeper. And he blames that on a law and regulations that he believes were “hastily drafted.”

“They just threw it together, and boom, schools like us get hammered,” he asserted.

Mr. Kushner, for one, disagrees. With the SB 740 process clearly a work in progress, the advisory- commission chairman believes his panel will work through the kinks to craft an effective means of ensuring that good charter schools don’t get hurt.

Based on the commission’s recommendations, the state school board pared $8.2 million in 2001-02 funding from 55 of 118 affected charter schools. The remaining schools got waivers allowing them to get full funding; California charter schools receive between $4,600 and $5,600 per pupil, depending on grade level.

Applications for the current school year are due Feb. 1, and while the commission has already acted on a few applications, it expects most to come in close to the deadline.

Mr. Kushner believes few schools will come forward this year with budgets that involve whopping overhead fees, either to management companies or the districts that chartered them. And he predicts that most schools will be able to adjust their budgets to meet the criteria.

“That’s very gratifying for those of us who support charters and don’t want to hurt charters,” he said during last month’s commission meeting. “The law seems to be working, at least from my perspective.”

The day after that December meeting, Mr. Kushner received a visit from Bernie Hanlon, the head of schools for California Virtual Academies. CAVA opened its first six charter schools this past September, offering a partially computer-based curriculum developed by K12 Inc., a company launched by former U.S. Secretary of Education William J. Bennett, to a total of about 900 home-based students in kindergarten through 5th grade.

Mr. Hanlon, a veteran public school educator who now works for the McLean, Va.-based company, was scrambling to meet the state guidelines and hoped a meeting with Mr. Kushner might help. Aside from asserting that the law should apply to regular schools offering independent study, and not just charters, Mr. Hanlon voiced few complaints about SB 740.

“There have been a lot of abuses in California,” Mr. Hanlon said during an interview in his sparsely furnished suite of offices in downtown Oakland. “Any law that strengthens accountability in California is good. We’re just going to dance with it.”

Coverage of technology is supported in part by the William and Flora Hewlett Foundation.

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