Position Paper on Education Finance and Reform
For Utah Foundation Forum on September 7, 2006

Submitted by the Utah Association of Public Charter Schools

Prepared by Lincoln Fillmore, Business Manager, Navigator Pointe Academy and Kim Frank, Executive Director, Utah Association of Public Charter Schools

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FINDING A NEW MODEL FOR EDUCATION FUNDING IN UTAH

Utah’s public charter schools are vital members of Utah’s public education system.  Since the legislature authorized charters in 1998, a previously pent up demand for educational options was unleashed in Utah.  Since 2001, charter school enrollment has nearly doubled every year.  There is obviously a large demand in the state for an alternative to the traditional public school system.  It is important that, moving forward, education policy and funding reflect this reality.  Policy makers should be prepared to change Utah’s model of funding education if Utah’s children are to be prepared to compete in a global economy.

The most important reform the legislature can make to improve the quality of public education is to tie funding directly to children.  Former Secretary of Education Rod Paige called this a “backpack of financing” that a child would take with him to the school of his family’s choice.  Children with economic, social, or other disadvantages would carry a bigger backpack.

Money following the child to the school of his family’s choice is only part of Paige’s solution.  Another important part of improving education is freeing schools to spend those dollars as they determine for their specific schools.  Paige writes, “When that money arrives at a school, principals have freedom to spend them as they see fit. Does the school need to pay more to snag a top-notch math teacher? Are extra hours needed to allow for intensive tutoring? Principals would be able to allocate resources accordingly.”

Centralized bureaucratic direction of local schools leads to homogeny and stifles innovation, in practice if not in law.  Charter schools are free to develop their own curriculum and use innovative teaching methods within an overall framework of principles and standards set by the state.  Actually, any public school could do the same, but because they are overly centralized and bureaucratic, and have historically had a clientele of parents with no real option, traditional schools historically haven’t taken advantage of their ability to innovate. 

Local schools and principals should therefore have the freedom to implement programs and allocate dollars at the school level.  This wouldn’t need a change in law to happen, but it would take a new way of thinking and new incentives and accountability measures from the legislature.

One such incentive would be to reward schools with financial bonuses for high or improved academic achievement among students.  Schools, when they have the authority and ability to innovate and design programs to improve, should be rewarded when they achieve positive results.  Such bonuses could be used to increase teacher pay, to improve facilities, to enhance already successful programs, or to implement new innovations.

Under this new education model, where dollars are tied to children and flow to chosen schools, children that attend charter schools should be funded equally with all other children in the state.  A significant portion of student funding in traditional public schools comes from local property taxes collected by each district.  Charter schools lack taxing authority, and so get no local revenue, putting charter school students at a tremendous funding disadvantage.  The state has ameliorated that disparity to some degree through the “Charter School Local Replacement” line item in the Minimum School Program. 

This has brought charter school students closer to parity with other children, but is not a viable long term solution.  Instead, this formula creates the ironic solution of charter school students receiving less total funding than other children, but costing the state more than other children, because the state has stepped in to fill the gap in local tax revenue.  As charter school enrollment grows, this funding formula is not sustainable, and a new model for education funding must be implemented and other measures taken to stabilize charter schools.

Facility financing is an obvious area that can be improved to create a more equitable situation for public charter schools.  Currently, students attending any public school qualify for the same Weighted Pupil Unit funding from the state.  While school districts can raise property taxes to build new schools, charter schools must pay for their buildings out of minimum school program dollars. 

A better mechanism must be found so public charter schools can purchase their buildings and spend more of their dollars in classrooms.  There are several promising options, including a state guarantee of facility loans to public charter schools, or a public/private partnership for issuing bonds.  All options should be evaluated to see which holds the most promise.

Utah is at an important crossroads in its education policy.  Currently the state funds a dual system of public schools, one of which has an education and governance model that shows considerable promise, but which is at a significant financial disadvantage.  This dual system is not sustainable over the long term, and a new statewide shift in funding and regulatory policy is required to ensure that all Utah schools are viable for the long-term and are providing our children with the skills and knowledge they need.

This new model of may be a significant departure from how Utah has funded education for many decades.  But, demographics, student population, and worldwide competition have changed in the meantime, and Utah must adapt to keep pace.  We do not present specifics here, but introduce principles into the debate.  To restate, those principles are:

• State education funding should be generated by and tied to each child, and then follow that child to the school of his family’s choice.  Funding should be weighted according to a child’s educational disadvantage (economics, disability, etc.). 
   
• Students should be fully funded no matter which model of public school they attend, and facilities acquisition must be improved for public charter schools so more student funding can be spent on students.
   
• All public schools should be free from over-centralization and bureaucracy that stifle innovation.  Budgets should be locally controlled so money can be spent on areas of a school’s needs as determined by that school.
   
• Individual schools should receive financial rewards when their students meet standards for academic growth or excellence.

During the debate that implements this new model over the next several years, the legislature should take short-term steps to equalize funding between students attending public charter schools and public district schools.  This includes annual funding of Charter School Parity, and a refund of property tax that charter schools pay on their school buildings.  We hope such measures will not be needed long, and that Utah can make a smooth transition to a new model for funding education and preparing our children for future success in a global economy. 

Utah’s current education model has resulted in declining investment in education as a percentage of overall state budgets in recent years.  The state’s resources will be stretched even more thinly as schools experience substantial enrollment growth over the next decade. To have a long-term impact on the quality of Utah’s education, policy makers must move toward a new model of education that places children as the top priority, gives families choice in how and where their children are educated, and funds students in all models of public schools equally.