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Texas Charter School Association

Two school finance stories

Tough times in the oil patch mean tough times for school districts in the oil patch.

The U.S. shale boom flooded the state’s public schools with a gusher of cash, but that windfall is disappearing nearly as fast as it arrived, making some newly wealthy districts nervous about their financial outlook amid a crude slump that shows no signs of rebounding soon.

The drilling frenzy caused property tax values to skyrocket in recent years. Mineral-related revenue accounted for about $1.5 billion in school district property tax revenue for the 2014 fiscal year that ended Sept. 30, 2014, according to a new analysis by North Texans for Natural Gas, a loose coalition supporting gas development in the Barnett Shale region.

In addition to property taxes, oil and gas production raised about $676 million for the Permanent School Fund, the state’s education endowment for school districts, and boosted the Foundation School Fund, the primary source of state aid for Texas districts, by more than $1 billion in the 2015 fiscal year, the analysis found.

But the collapse in crude prices over the past year has triggered a slowdown in the oil patch, and many of the districts that reaped large financial rewards from the heady days of $100 a barrel oil are bracing for a decline in their tax bases.

“We don’t have the revenue coming in like we did,” said June Russell, business manager at Grady Independent School District, a one-campus school system 30 miles north of Midland.

[…]

For some school districts that struck it rich in the oil boom, the bounty was short-lived. Under the state’s school financing formula, wealthy districts have to send some of their revenue to the state to be distributed among poorer districts in a system commonly called Robin Hood.

That means a year of fiscal prosperity in a district can trigger a transfer to other districts in a subsequent year.

“The way our equalized funding works, you may get a really good bump one year and you do get some benefit from that, but the following year the state catches up and the excess gets reined in,” said Daniel Casey, partner at Moak, Casey & Associates, a consulting firm that specializes in school finance. “Typically it’s great on the way up, but it’s more challenging on the way down.”

That’s because it’s possible to pay more under recapture than the district had raked in during the fat times. Be that as it may, this is a prime exhibit of why Texas’ school finance system, which relies so heavily on local property taxes. Some school districts wind up way better off than others, and some have incredibly varying finances based on the price of a global commodity. One lawsuit after another has failed to generate a workable solution – “recapture” refers to the so-called “Robin Hood” system of reallocating funds from property-rich districts to property-poor ones, which dates back to the 80s – mostly because the Legislature has never been able to come up with a system that is more dependent on state funds rather than local ones and which treats districts more by need than by whatever it is the current system does. Maybe this latest lawsuit will finally allow for a more substantive fix, because Lord knows this Lege ain’t coming up with one on its own.

Story #2 has more fodder for the charter school debate.

But a new report from one of the state’s leading school finance experts shows that many charters — particularly the state’s largest charter networks — get more state funding, not less, than traditional schools. The report, from education consulting firm Moak, Casey and Associates, says Texas generally sends more money to large charter schools — those with more than 1,000 students — than to similarly sized traditional public schools. If school districts “were funded like charters,” the report says, public schools would cost the state more than $4.7 billion a year extra.

Charter schools have experienced explosive growth over the last decade. There are more than 600 in Texas today, including some of the nation’s best-known charter networks: KIPP, Uplift, IDEA, Harmony, and Yes Prep. Charter proponents often argue that the schools are models of efficiency, achieving better academic results — higher test scores and graduation rates — than traditional public schools while costing the state less money.

But the Moak report concludes that state funding for large charters is inflated because of what Texas calls the “adjusted allotment.” School districts receive state funding based on a $5,140 per student allotment each school year. That allotment is then adjusted based on certain characteristics, including district size and differences in teacher salaries across the state. Smaller districts have a higher per-student allotment than larger districts.

Charter schools get a per-student allotment based on the average of what traditional public schools receive. The higher allotment for small traditional schools inflates the average, and as a result, large charter schools get more per student than traditional schools of the same size.

School finance expert and former University of Houston economist Larry Toenjes told the Observer he thinks the report’s findings are solid. “Charters argue that they receive $1,000 less per student than public schools. You hear it all the time,” Toenjes said. “But when it comes to Texas’ largest charter schools, they’re wrong.”

The Texas Charter School Association disputes that assertion, and it should be noted that Moak, Casey is on the side of the public schools in the ongoing litigation. I haven’t had a chance to read the report myself, so I can’t say more about it than this. The point is that arguments about charters and public schools aren’t binary. They’re comparing ranges, and some parts of each range don’t match up with the rest of it. Just something to keep in mind.

Why do we think more charters would help?

Patricia Kilday Hart discusses the political battle over charter schools, but in doing so reminds me that there’s a fundamental question that seems to be going largely unasked.

Now, a sweeping bill filed by Sen. Dan Patrick, R-Houston, could lead to an explosion in Texas charter operations. Patrick, chairman of the Senate Education Committee, would require school districts to lease their under-used facilities to charter schools.

The first draft of his bill would have required the lease for $1 a year; he amended it to require schools be leased or sold at fair market value.

The proposal creates a new state agency with ability to approve an unlimited number of new charter schools, now capped by state law at 215. It also would allow traditional school districts to convert to charter operations. For the first time, charter schools – public schools freed from state regulations regarding such issues as teacher contracts and the school calendar – would be eligible for state funding for leasing or purchasing their own campuses.

Requiring school districts to lease or sell properties to charters, however, would be financially ruinous to many, local school officials say. For instance, when the Houston Independent School District asked voters to approve a record $1.9 billion bond package in November, its long-term school construction scheme hinged on the sale of some $100 million in real estate – under-populated campuses the cash value of which would help pay for modernized schools in high-demand neighborhoods.

To supporters of traditional public schools, Patrick’s bill rubs salt in the wound left by the $5.4 billion in cuts made by the Legislature last session. They also are livid that lawmakers would consider funneling precious education dollars to charter operations just as a state judge found that Texas has failed to meet its constitutional requirement to adequately fund its public schools.

[…]

Patrick’s ground-shaking proposal comes as the charter movement in Texas may have reached a tipping point. In the last two years, says David Dunn, executive director of the Texas Charter School Association, the waiting list for students seeking admission to charter schools has skyrocketed from 50,000 to some 100,000 children.

Meanwhile, politically knowledgeable groups are joining hands with philanthropic foundations committed to education reform. Houston’s Laura and John Arnold Foundation and the Greater Houston Community Foundation are backing a new pro-charter group: Texans Deserve Great Schools.

They have been joined by key leaders in the state’s premier political juggernaut, Texans for Lawsuit Reform, who formed Texans for Education Reform to work on behalf of the same goals. The group is led by former Sen. Florence Shapiro, R-Dallas, Patrick’s predecessor as education chair until her retirement last year. Influential lobbyist Mike Toomey, a former top assistant to Gov. Rick Perry who fought for tort reform, has signed on as a lobbyist.

[…]

At a committee hearing Thursday, Patrick set an emotional tone for the debate. Critics of his proposal, he said, would be testifying, not just against his bill, but “against the 100,000 students who are on the wait list” for charter schools.

Sen. Royce West, D-Dallas, quickly countered: “A lot of schools were mothballed because of the cuts we made to public education.” Lawmakers should restore that funding before creating a new call on taxpayer money, he argued.

I’ve already noted Patrick’s concern of convenience for Teh Childrenz, and needless to say anytime an army of lobbyists and other rent-seekers like those noted above get involved in the process one is well advised to keep both hands on one’s wallet. Be that as it may, I’m still wondering why there isn’t more discussion of the question I’ve raised in the title of this post. Why do we think that having more charter schools would necessarily lead to better educational outcomes in Texas? To be sure, having more charters would mean more choices, and that would likely be beneficial for the students who have the wherewithal to take advantage of those choices. But that assumes that charters are overall at least as good as the traditional public schools. Is that a fair assumption? Let’s take a look at the 2011 accountability rankings and see for ourselves:

Campus Ratings by Rating Category
(excluding Charter Campuses)

ACCOUNTABILITY RATING

2011

Count

Percent

Exemplary

1,176

14.6%

Recognized

2,739

34.1%

Academically Acceptable

3,052

37.9%

    Standard Procedures

2,797

34.8%

    AEA Procedures

255

3.2%

Academically Unacceptable

476

5.9%

    Standard Procedures

458

5.7%

    AEA Procedures

18

0.2%

Not Rated: Other

601

7.5%

Total

8,044

100%


Charter Campus Ratings by Rating Category

ACCOUNTABILITY RATING

2011

Count

Percent

Exemplary

56

11.6%

Recognized

94

19.5%

Academically Acceptable

235

48.8%

    Standard Procedures

97

20.1%

    AEA Procedures

138

28.6%

Academically Unacceptable

54

11.2%

    Standard Procedures

38

7.9%

    AEA Procedures

16

3.3%

Not Rated: Other

43

8.9%

Total

482

100%


In other words, 48.7% of all public school campuses were Exemplary or Recognized in 2011, compared to 31.1% of all charter campuses. On the other side, 5.9% of all pubic school campuses were Academically Unacceptable, compared to 11.2% of all charter campuses. If you knew nothing of the politics of this situation, would you conclude after looking at these tables that more charters would lead to better outcomes? I wouldn’t. Why isn’t this a bigger part of the discussion? Hell, why isn’t it a part of the discussion at all?

I’ve said repeatedly that I’m not opposed to giving charter schools some more latitude. We’d certainly like to encourage the KIPPs and YESes and Harmonys to grow and do good, and we’d like to not needlessly block the creation of the next KIPP or YES or Harmony if someone has a plan to bring it about. But I do not accept the simple premise that “more charters” is better, because the numbers say otherwise. What is the mechanism by which we expect more charters to make things better? What’s our plan to enforce quality control? What are we doing to ensure that any public funds being diverted to “more charters” will actually wind up being used on education and not for the enrichment of the people currently lobbying for those dollars? Those of you who complain about the number of administrators in the public schools need to take a long look at that list above and ask yourself how much these actors are motivated by the greater good, and how much they’re motivated by their own bottom lines. Finally, what’s our contingency plan in case this doesn’t work out as well as we might hope? We’re jumping straight to a solution without having a serious conversation about the process. In the real world, that’s a recipe for failure. We need to be a lot more concerned about that here. The Statesman has more.

Patrick files his “school choice” bill

From the Trib:

The State Board of Education currently oversees applications for charter school contracts, which state law caps at 215. Patrick’s Senate Bill 2 would create a new state entity to authorize the contracts and lift that cap, allowing for an unlimited number of charter school operators in the state.

“There is no one answer to transforming schools but lifting the cap to add high quality public charters will give Texas parents, including the nearly 100,000 currently on a charter school waiting list, more choices to find the best education for their child,” Patrick said in a statement.

The legislation also includes language that makes it easier for local school boards to vote to become “home rule districts” and convert into charter schools. It follows Gov. Rick Perry’s call for more charter schools in his State of the State address, where the governor praised the innovation they bring to the public education system.

The charter school measure is one of a comprehensive set of proposals expected from Patrick to expand school choice in the state this session. Patrick has said those will also include fostering open enrollment across school districts and creating a private school scholarship fund through offering a state business tax savings credit to corporations.

Here’s SB2. The Observer summarizes what’s in it:

– Scraps the cap on state-approved charters, which currently stands at 215. Charter holders can already open multiple campuses (big chains like Harmony or KIPP), but charter advocates say there’s huge unmet demand, with long waiting lists at many charters across Texas.

– Creates a seven-member “Charter School Authorizing Authority.” Currently, charters are approved by the elected State Board of Education, but Patrick’s bill would put the power in the hands of seven appointees: four picked by the Governor and one each appointed by the lieutenant governor, education commissioner, and the State Board of Education chair. The governor would get to name the board’s presiding member.

– Give charters money for school buildings and other facilities—something charter schools in Texas have always done without.

– Requires school districts to make any empty or “underutilized” facilities available to charter schools that want them for the low, low price of $1.

– Makes it easier to close low-performing charters. Under Patrick’s proposal, the new charter authority must close charter schools that get poor academic or financial ratings from the state in three of the last five years.

– Gives more freedom to “home-rule districts.” Any school district can already become a home-rule district with approval from its local school board and the state, freeing itself of many rules imposed by the state. It’s a favorite cause of free-market groups like the Texas Public Policy Foundation, but in 17 years, no district has even tried to make the switch. Patrick’s bill would give “home-rule” districts almost all the freedom charter schools enjoy, and let districts make the change with a majority vote of the school board, not the two-thirds vote required today.

But the Texas Charter Schools Association is delighted with what’s in here. But there’s plenty here to rile advocates of traditional neighborhood schools—from the extra facilities money in a time when the Legislature is otherwise tight-fisted with money for schools—to the requirement that school districts hand over their empty buildings to charters.

Sen. Eddie Lucio Jr. (D-Brownsville) raised some of those concerns Monday afternoon in a Senate Finance Committee working group. ”I don’t want to take away from what has to be done for charter schools, but we don’t want to leave the public school facility needs out at the time,” he told Patrick.

“These are public schools, and we’re not funding them,” Patrick said.

Lot of that going around, isn’t there? I’ve said before, I favor broadening school choice within and across school districts, I’m open to increasing the number of charters, and I absolutely oppose the use of public funds for private school “scholarships”, which is to say vouchers. As I have done before, I will once again point out that the percentage of charter schools rated Academically Unacceptable by the Texas Education Agency is nearly double that of traditional public schools, and it’s currently very difficult to shut down a failing charter school. If SB2 does make it easier to close a failing charter then that’s all to the good, because charter schools are not a panacea. They’re a piece of the puzzle, and a relatively small one at that. Expecting them to be more is asking for trouble.

UPDATE: I received the following in my mailbox this morning from Raise Your Hand Texas:

Texas Needs to Clean Up Existing Charters Before Issuing New Ones

(AUSTIN, TEXAS) Raise Your Hand Texas released the following statement from CEO Dr. David Anthony regarding the introduction of charter schools legislation (SB 2) today by Senate Education Committee Chair Dan Patrick (R-Houston):

On proposal to remove the charter cap:

“Unlimited expansion of charters as proposed in SB 2 will result in more charters, but not necessarily better ones. With 17.9% of charters rated academically unacceptable under the accountability system in 2011, let’s show that we can effectively oversee the charter schools that we have before authorizing the creation of a bunch of new ones.”

On facilities funding for charter schools:

“According to the Texas Sunset Advisory Commission, Texas expended $938 million on charters in 2011-2012 to serve 3% of Texas students. We simply can’t fathom providing facilities funding for charter schools in addition to the funding that they already receive when Texas public schools are still suffering from $5.3 billion in funding cuts.”

I think these are both valid points.

Once again on charter school facilities

David Dunn of the Texas Charter Schools Association writes another op-ed about funding for charter school facilities.

The Texas Charter Schools Association has looked at the needs of public school students whose parents have chosen the option of public charter schools for them, and we know that these Houston students deserve the same consideration as students in HISD. With at least 56,000 students on waiting lists to attend charter schools in Texas, and perhaps as many as a third of those waiting-list students in Houston, this is not a trivial matter. In a state that values local control in school matters, charter school parents and taxpayers have none when it comes to funding for their public charter schools. The Legislature could act to correct this funding inequity, but they haven’t in the past. Charter schools have been part of the public education landscape in Texas for more than 16 years, and it is long past time for the Texas Legislature to address this issue.

So now that HISD trustees have put this proposal for capital improvement bonds before the voters, we ask Houstonians to take a moment and remember the public school students who do not have this option. Houston ISD has funding opportunities for their students that Houston public charter schools do not. This goes to show again the violation of the Constitution for public charter school students because they have the right to the same funding and facilities as other students in Houston, but not the means.

Dunn wrote essentially the same op-ed two years ago. He has the HISD bond referendum as a framing device this time around, and of course now there is the latest school finance lawsuit, to which the TCSA is a party. It’s not clear to me that the charters have the same constitutional rights as the public schools, but it is a good question. I do agree that the Lege should address this in some fashion, but I believe they ought to come up with a funding source rather than tapping the Permanent School Fund. Of course, if the Lege were good at coming up with appropriate funding sources we wouldn’t have a whole host of other problems, so perhaps the courts are the charters’ best hope. We’ll see about that.

How long will those school finance lawsuits take?

That depends in part on whether they all get heard together or not.

The massive lawsuit over the state’s method of financing schools, scheduled for trial beginning Oct. 22, could continue into January if two challenges by charter schools are included in the case, District Judge John Dietz said Wednesday.

First, however, Dietz will hold a July 24 hearing to decide whether one of the charter school challenges should be excluded — or at least limited — in the overall lawsuit, a compilation of five separately filed lawsuits.

MALDEF, the Mexican American Legal Defense and Educational Fund, opposes the inclusion of what it calls “political” portions of a lawsuit filed by a pro-charter-school organization — particularly the group’s attempt to remove a state cap limiting the number of charter schools to 215.

That matter is a policy question for the Legislature, not the courts, MALDEF contends.

Lawyers for the charter group, Texans for Real Efficiency and Equity in Education, disagree. On Wednesday, they advised Dietz that if he rules against them, they will appeal and seek to delay the trial until their appeals are exhausted, prompting the judge to urge all sides to schedule a hearing as soon as possible to avoid postponing the October trial date.

“I don’t want any delay,” Dietz said during an informal conference in his Austin courtroom.

Great, another hostage situation. The TREE plaintiffs have different objectives than the other plaintiffs, and I think MALDEF’s point about their issues being for the Lege to decide and not a court is a strong one. If they’re going to pitch a fit because the other kids don’t want to play with them, there’s not much that can be done about it. The other charter school lawsuit is a better fit and seems to have drawn no objections from the other plaintiffs. If all goes more or less as expected, Judge Dietz will rule next year while the Lege is in session, and the Supreme Court will have its say before the 2014 election. That ought to liven up that campaign.

A cheat sheet for the school finance lawsuits

The Trib has a useful guide to the six (so far!) lawsuits that have been filed over school finance.

Texas’ latest round of school finance litigation adds some new players to the courtroom, with interests that are more varied than ever before. We’ve created a cheat sheet to help you keep all six lawsuits — and the plaintiffs’ basic arguments — straight.

Charter schools and a newly formed organization pushing for more school choice are both suing the state for the first time. Four different groups of school districts, by now veterans in the school finance wars, are returning once again.

A judge has already consolidated these five lawsuits into one trial, and will likely do the same with the latest claim, filed by the Texas Charter School Association. In many instances, the plaintiffs’ arguments will overlap, but in some, their interests will conflict — that’s why there are so many different parties.

(And note that at least one party doesn’t agree their cases should all be heard at once. MALDEF has filed a petition to dismiss the complaint from Texans For Real Efficiency and Equity in Education, saying that group should be making their argument to the Legislature, not the courts.)

The main thing to know as far as I’m concerned is that the TREE lawsuit is the skunk at the garden party. It’s the one of these things that isn’t like the others. I think MALDEF’s petition has a lot of merit, and I hope the judge looks favorably on it. Anyway, you can see all of the plaintiff’s complaints as well as a chart showing who’s alleging what and a summary of the key issues. Check it out.

School finance lawsuit #6

And then there were six.

The Texas Charter School Association announced Tuesday that it would enter the legal fray, arguing that the state has short-changed charter schools because it does not provide funding for facilities.

“Just because a parent puts his or her students in a charter school doesn’t mean that they deserve that funding any less,” said David Dunn, the association’s executive director. “It’s a pretty simple argument: They get billions, we get zero.”

Along with TCSA, which represents most of the charter schools in the state, there are six parents of children in Dallas, Houston, San Antonio and South Texas charters who are plaintiffs in the suit. Former Texas Solicitor General James Ho is also serving as a legal consultant.

Traditional public school districts primarily pay for facilities through bonds levied with local tax dollars. But they also receive some state assistance in meeting bond payments through two state programs passed in 1997 and 1999. Because charters do not have a local tax base or have access to state aid for facilities funding, they must dip into money allocated for instruction at a rate that Dunn said amounted to about $830 a student.

“That $830 a kid is significant. That is $830 a kid that could go to more teachers, smaller class sizes, higher teacher pay, instructional materials,” he said.

In the court filing, the group argues that a finance system that denies facilities funding to charters is not efficient, and therefore violates the Texas Constitution. The lawsuit also attacks the “arbitrary” limit of 215 charter contracts that the state may grant for the same reason. A spokeswoman said that the Texas Education Agency had not yet received the suit, but that it was not commenting on school finance litigation.

See here and here for some background on the facilities issue. This is different than the TREE lawsuit. It’s not really clear to me that what the charters are litigating over is actually litigation-worthy, but I’m not a lawyer, so don’t take my word for it. For what it’s worth, the public school plaintiffs seem to be okay with the charters’ involvement.

Houston attorney David Thompson said the charters’ lawsuit helps support his case, filed on behalf of the state’s largest school districts.

“If our good charters – which already have fewer mandates than our traditional public schools – are struggling with funding, then we think that supports our case that the public school funding system generally is adequate,” he said.

October is going to be a very busy month.