Charter Schools: Issues Affecting Access to Federal Funds (Testimony,
09/16/97, GAO/T-HEHS-97-216).
GAO discussed charter schools' ability to access categorical education
grant funds, focusing on: (1) how federal title I of the Elementary and
Secondary Education Act and the Individuals With Disabilities Education
(IDEA) funds are distributed to charter schools, and the opinions of
charter school operators on whether the distribution is equitable; and
(2) what factors appear to be facilitating and impeding charter schools
in accessing these funds.
GAO noted that: (1) title I and IDEA funds are allocated to schools that
meet established federal, state, and local demographic criteria; (2)
these criteria relate to the number of enrolled children from low-income
families and the number of enrolled children with disabilities that
require special education services; (3) although most public schools
receive funding under these programs, some public schools, including
some charter schools, do not meet eligibility criteria and, as a result,
do not receive funding; (4) GAO's preliminary work suggests that states
are allocating federal funds to charter schools in much the same manner
as they allocate funds to traditional public schools; (5) in general,
states either treat charter schools as individual school districts or as
components of existing districts; (6) although charter schools treated
as school districts avoid having to meet additional criteria used to
distribute funds beyond the district level, GAO's survey results thus
far indicate that these schools were no more likely to have received
title I and IDEA funds for the 1996-97 school year than were charter
schools treated as components of existing school districts; (7) most
charter school operators surveyed who expressed an opinion told GAO that
they believe they received an equitable share of federal title I and
IDEA funds; (8) while charter schools do not appear to be at a
disadvantage in terms of how federal funds are allocated, GAO's survey
has revealed a variety of barriers that have made it difficult for
charter schools to access title I and IDEA funds; (9) these factors
include a lack of enrollment and student eligibility data to submit to
states before funding allocation decisions are made and the time
required and the costs involved in applying for such funds, given the
amount of funds available; (10) in addition, some charter schools have
failed to meet statutory eligibility requirements for receiving federal
funds; (11) charter school operators most often cited training and
technical assistance as factors that facilitated their accessing title I
and IDEA funds; (12) on the basis of survey responses, some states
appear to be making a comprehensive effort to inform charter schools of
the availability of federal funds and how to apply for them; and (13)
charter school operators in other states told GAO that they received
technical assistance from local school districts, while other charter
school operators employed consultants to assist them.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-HEHS-97-216
TITLE: Charter Schools: Issues Affecting Access to Federal Funds
DATE: 09/16/97
SUBJECT: Charter schools
Educational grants
Eligibility criteria
Technical assistance
Children with disabilities
Elementary education
Special education
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Cover
================================================================ COVER
Before the Subcommittee on Early Childhood, Youth and Families,
Committee on Education and the Workforce, House of Representatives
For Release on Delivery
Expected at 10:00 a.m.
Tuesday, September 16, 1997
CHARTER SCHOOLS - ISSUES AFFECTING
ACCESS TO FEDERAL FUNDS
Statement of Cornelia M. Blanchette, Associate Director
Education and Employment Issues
Health, Education, and Human Services Division
GAO/T-HEHS-97-216
GAO/hehs-97-216T
(104903)
Abbreviations
=============================================================== ABBREV
IDEA - Individuals With Disabilities Education Act
IEP - individualized education programs
LEA - local education agencies
SEA - state education agencies
CHARTER SCHOOLS: ISSUES AFFECTING
ACCESS TO FEDERAL FUNDS
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss charter schools' ability
to access federal funding--specifically, categorical education grant
funds.
Charter schools are a rapidly growing phenomenon, offering a new
model for public schools. This model is intended to address a
variety of concerns about our educational system, including
unresponsive school district bureaucracies, restrictive rules,
limited choices among types of public schools, and a lack of
accountability for student performance. Charter schools are
generally designed to operate with more autonomy than are public
schools. In exchange for varying degrees of autonomy from state and
local rules and regulations, charter schools are held accountable for
meeting the terms of their charters, which include achieving
stipulated academic outcomes. Schools that do not meet the terms of
their charters face having their charters revoked.
While public schools are primarily financed with state and local
revenues, the federal government provides several billion dollars
annually to assist public schools in educating our children. For
example, during fiscal year 1997, the federal government will provide
over $7 billion under title I of the Elementary and Secondary
Education Act to help schools provide additional services to
disadvantaged children to help close the achievement gap that exists
between them and their wealthier peers. In addition, under the
Individuals With Disabilities Education Act (IDEA), the federal
government helps schools pay for the additional costs incurred in
providing a free, appropriate public education to disabled children.
This year, the federal government is making $3.5 billion available
for this program. While all public schools could be eligible for
funds under these programs, concerns have been raised at recent
congressional hearings about whether charter schools, as public
academic institutions, are receiving an equitable share of these
federal funds.
Today, I would like to discuss (1) how federal title I and IDEA funds
are distributed to charter schools, and the opinions of charter
school operators on whether the distribution is equitable, and (2)
what factors appear to be facilitating and impeding charter schools
in accessing these funds. My discussion today is based on
preliminary results of the ongoing study of these issues that we are
conducting at your request. We are conducting case studies in seven
states\1 and a telephone survey of a representative sample of charter
schools located in these states. These states accounted for 91
percent of the charter schools operating during the 1996-97 school
year. To date, we have completed about 30 of 50 planned telephone
surveys of charter schools. Because of the sampling methodology
used, our results cannot be applied to the 9 percent of charter
schools that operate outside our sample states.\2
In summary, title I and IDEA funds are allocated to schools that meet
established federal, state, and local demographic criteria. These
criteria relate to the number of enrolled children from low-income
families and the number of enrolled children with disabilities that
require special education services. Although most public schools
receive funding under these programs, some public schools--including
some charter schools--do not meet eligibility criteria and, as a
result, do not receive funding. Our preliminary work suggests that
states are allocating federal funds to charter schools in much the
same manner as they allocate funds to traditional public schools. In
general, states either treat charter schools as individual school
districts or as components of existing districts. Although charter
schools treated as school districts avoid having to meet additional
criteria used to distribute funds beyond the district level, our
survey results thus far indicate that these schools were no more
likely to have received title I and IDEA funds for the 1996-97 school
year than were charter schools treated as components of existing
school districts. Most charter school operators we surveyed who
expressed an opinion told us that they believe they received an
equitable share of federal title I and IDEA funds.
While charter schools do not appear to be at a disadvantage in terms
of how federal funds are allocated, our survey has revealed a variety
of barriers that have made it difficult for charter schools to access
title I and IDEA funds. These factors include, for example, a lack
of enrollment and student eligibility data to submit to states before
funding allocation decisions are made and the time required and the
costs involved in applying for such funds, given the amount of funds
available. In addition, some charter schools have failed to meet
statutory eligibility requirements for receiving federal funds.
Charter school operators most often cited training and technical
assistance as factors that facilitated their accessing title I and
IDEA funds. On the basis of survey responses, some states appear to
be making a comprehensive effort to inform charter schools of the
availability of federal funds and how to apply for them. For
example, charter school operators in Arizona told us that their state
department of education notifies them of funding opportunities and
application requirements. Charter school operators in other states
told us that they received technical assistance from local school
districts, while other charter school operators employed consultants
to assist them.
--------------------
\1 The states are Arizona, California, Colorado, Massachusetts,
Michigan, Minnesota, and Texas.
\2 App. I shows the number of schools (1) operating in each of the
selected states, (2) included in our sample, and (3) responding to
our survey.
BACKGROUND
---------------------------------------------------------- Chapter 0:1
Charter schools are public schools that operate under a state charter
(or contract) specifying the terms under which the schools may
operate. They are established under state law, do not charge
tuition, and are nonsectarian. State charter school laws and
policies vary widely with respect to the degree of autonomy provided
to the schools, the number of charter schools that may be
established, the qualifications required for charter school
applicants and teachers, and the accountability criteria that charter
schools must meet.
Since 1991, 29 states and the District of Columbia have enacted laws
authorizing charter schools. In school year 1996-97, over 100,000
students were enrolled in nearly 500 charter schools in sixteen
states and the District of Columbia. Most charter schools are newly
created. According to the Department of Education, of the charter
schools operating as of January 1996, about 56 percent were newly
created, while about 33 percent were converted from preexisting
public schools and about 11 percent were converted from preexisting
private schools.\3 Appendix II shows the states that have enacted
charter laws, and the number of charter schools in operation during
the 1996-97 school year, by state.
Both the Congress and the administration have shown support for
charter schools. For example, in amending the Elementary and
Secondary Education Act in 1994, the Congress established a grant
program to support the design and implementation of charter schools.
In addition, under the Goals 2000: Educate America Act, states are
allowed to use federal funds to promote charter schools. The
administration proposed doubling the roughly $50 million made
available under the new charter school grant program in fiscal year
1997 to $100 million for fiscal year 1998. Finally, in his 1997
State of the Union Address, the President called for the
establishment of 3,000 charter schools nationwide by the next
century.
In January 1997, the Congress began holding a series of hearings in
Washington, D.C., and around the country to explore the effects of
various education reform efforts. Among other reform efforts, the
Congress has focused on the recent development of charter schools in
various states. Concerns were raised during the hearings by charter
school operators and others about whether charter schools were
receiving equitable allocations of federal categorical grant funds.
Recent research conducted by the Department of Education\4 and by the
Hudson Institute,\5 a private, not-for-profit public policy research
organization, raised similar concerns. Although dozens of financial
aid programs exist for public elementary and secondary schools, two
programs--title I and IDEA--are by far the largest federal programs.
--------------------
\3 Not all states allow private schools to convert to charter status.
\4 U.S. Department of Education, Office of Educational Research and
Improvement, "A Study of Charter Schools, First Year Report"
(Washington, D.C.: Department of Education, May 1997).
\5 Hudson Institute, "Charter Schools in Action," final report
(Washington, D.C.: Hudson Institute, July 1997).
TITLE I PROGRAM
-------------------------------------------------------- Chapter 0:1.1
Title I is the largest federal elementary and secondary education aid
program. The Department of Education administers title I, which
received over $7 billion in federal funding in fiscal year 1997.
Under the program, grants are provided to school districts--or local
education agencies\6 (LEA), as defined in federal statute and
regulations--to assist them in educating disadvantaged
children--those with low academic achievement attending schools
serving relatively low-income areas. The program is designed to
provide increasing levels of assistance to schools that have higher
numbers of poor children. Nationwide, the Department of Education
makes available to LEAs an annual average of about $800 for each
child counted in the title I allocation formula.
Under title I, the federal government awards grants to LEAs through
state education agencies (SEA). SEAs are responsible for
administering the grants and distributing the funds to LEAs. About
90 percent of the funds the Congress appropriates is distributed in
the form of basic grants, while about 10 percent is distributed as
concentration grants, which are awarded to LEAs serving relatively
higher numbers of children from low-income families. Roughly 90
percent of LEAs nationwide receive basic grants.
Federal statutory and regulatory guidelines require LEAs to meet
minimum thresholds in order to be eligible for title I funds. To be
eligible for basic grants, LEAs generally must have enrolled at least
10 children who are from low-income families, and these 10 children
must constitute more than 2 percent of their school-aged population.
To be eligible for concentration grants, LEAs generally must have
enrolled more than 6,500 children from low-income families, or more
than 15 percent of their students must be from low-income families.\7
An LEA that receives title I funds and has more than one school
within its district has some discretion in allocating these funds to
individual schools. The LEA must rank its schools\8 according to the
proportion of children that come from low-income families enrolled in
each school. LEAs must use the same measure of poverty in ranking
all their schools, but LEAs have some discretion in choosing a
particular measure. LEAs must allocate title I funds or provide
title I services first to schools that have more than 75 percent of
their students coming from low-income families. After providing
funds or services to these schools, LEAs have the option of serving
schools that do not meet the 75-percent criterion with remaining
funds. Although a LEA is not required to allocate the same per-child
amount to each school in its district, it may not allocate a higher
amount per child to schools with lower poverty rates than to schools
with higher poverty rates.
--------------------
\6 Under federal law, the term "local educational agency" means a
public board of education or other public authority legally
constituted within a state that administratively controls, directs,
or performs a service function for public elementary or secondary
schools in a city, county, township, school district, or other
political subdivision of a state, or for a combination of school
districts or counties recognized by a state as an administrative
agency for its public elementary or secondary schools.
\7 In 1994, the Congress amended title I to provide LEAs a third
grant type--"targeted assistance" grants. Should the Congress
appropriate funds for these grants in the future, funds will be
provided to LEAs that serve at least 10 eligible children
constituting at least 5 percent of the children served by an LEA.
\8 We use the term "school" to include school attendance areas.
School attendance areas may be designated by an LEA for the purpose
of ranking schools in allocating title I funds.
IDEA PROGRAM
-------------------------------------------------------- Chapter 0:1.2
IDEA, part B, is a federal grant program administered by the
Department of Education that is designed to assist states in paying
the costs of providing an education to children aged 3 to 21 with
disabilities. The act requires, among other things, states to
provide a free appropriate public education to all children with
disabilities and requires that they be served in the least
restrictive environment possible. The Congress appropriated $3.5
billion for the program in fiscal year 1997. These funds were
expected to provide, on average, about $625 of services for each of
577,000 eligible preschool children, and $536 of services for each of
5.8 million eligible elementary and secondary school students.
Federal statutory and regulatory allocation guidelines are less
complex under the IDEA program than under title I. Annually, the
Department of Education allocates funds to eligible states on the
basis of their reported numbers of children receiving special
education and related services during the preceding fiscal year,\9
the national average per-pupil expenditure, and the amount
appropriated by the Congress for the program. The per-disabled-pupil
amount that can be allocated for IDEA services is capped at 40
percent of the national average per-pupil expenditure.\10 \11
States use their own formulas to allocate funds. States must provide
at least 75 percent of the IDEA funds they receive to eligible LEAs
or other public authorities, and they may reserve the rest for
statewide programs. Before the 1997 IDEA reauthorization, an LEA
entitled to an allotment of less than $7,500 could not receive
funding directly, according to federal statutory provisions.
Instead, the LEA had to either rely on the state for services or join
with other LEAs to collectively meet the $7,500 threshold and receive
funds to serve eligible students. In reauthorizing IDEA, the
Congress removed the $7,500 threshold. As a result, LEAs, including
charter schools that are treated as LEAs, are no longer required to
join with other LEAs in order to meet that threshold.
Each state has different procedures for allocating special education
aid to LEAs. Some states use census information to allocate a fixed
amount per eligible student. Other states allocate funds on the
basis of reimbursement rates for allowable expenses. Still other
states allocate funding to LEAs on the basis of the severity and
types of students' disabilities.
--------------------
\9 The reported number of children that received special education
services during the previous year may not exceed 12 percent of the
total number of all school-aged children in the state during the same
period.
\10 This cap has not yet been applied, since the amount appropriated
has so far been less than the cap.
\11 The 1997 reauthorization provides that when the Congress
appropriates more than $4.9 billion for IDEA, part B, the states will
receive their prior fiscal year allocation. Eighty-five percent of
the remaining appropriation will be distributed to states on the
basis of census counts of school-aged children, and 15 percent will
be distributed on the basis of school-aged children in poverty.
CHARTER SCHOOLS' FEDERAL
FUNDING ARRANGEMENTS VARY
---------------------------------------------------------- Chapter 0:2
States use several arrangements to provide funds to charter schools.
In general, states allocate title I funds, and IDEA funds or
services, to charter schools using one of three approaches. The
seven states in our review used all three.
Under the first approach, states treat charter schools as LEAs. That
is, SEAs directly allocate title I funds and IDEA funds or services
to charter schools. Massachusetts and Minnesota use this approach.
California and Colorado, on the other hand, do not consider charter
schools to be LEAs. These states treat charter schools as members of
an existing school district--that is, charter schools have a "parent"
LEA. Under this second approach, states allocate title I funds and
IDEA funds or services to charter schools' parent LEAs. Charter
schools, along with other public schools in the district, then
receive their share of funds or services from their parent LEAs. The
third approach for allocating funds to charter schools involves a
mixture of the first and second approaches. In general, a charter
school in a state using this approach receives federal funds directly
from the SEA--and thus is treated as an LEA--if the school was
chartered by a state agency, or through a parent LEA, if the school
was chartered by a district or substate agency. States using this
model include Arizona, Michigan, and Texas.\12
Regardless of which of the three approaches states use, individual
charter schools are generally allocated funds on the basis of whether
they are treated as (1) an independent LEA, or school district
(independent model), or as (2) a dependent of an LEA--that is, as a
public school component of a preexisting school district (dependent
model). Throughout my testimony, I refer to these two methods in
allocating funds to charter schools as the (1) independent model and
the (2) dependent model, respectively.
--------------------
\12 In Michigan, the only state-level agencies that grant charters to
schools are state universities. Other chartering authorities include
local school boards, regional intermediate school districts, and
community colleges. In allocating federal funds, the state considers
all charter schools to be LEAs. However, charter schools receive
funds or services through their chartering authority or other
intermediary. We, therefore, consider Michigan as using the third
approach.
CHARTER SCHOOLS' LEA STATUS
DICTATES MINIMUM CRITERIA
USED TO DETERMINE FUNDING
ELIGIBILITY
-------------------------------------------------------- Chapter 0:2.1
Under title I and IDEA, the Department of Education is responsible
for allocating funds to SEAs, which are required to allocate funds to
LEAs. LEAs, in turn, may allocate funds to individual schools in
their districts. While charter schools operating under the
independent model are considered LEAs, charter schools operating
under the dependent model are not. Because LEAs are allowed some
discretion in allocating funds to individual schools within their
districts, whether a charter school is treated as an LEA or as a
dependent of an LEA is important.
Under the title I program, SEAs distribute funds directly to eligible
LEAs. To be eligible for funds, LEAs--including charter schools
operating under the independent model--must meet the minimum
statutory eligibility criteria of having enrolled at least 10
children from low-income families and having their low-income
children constitute more than 2 percent of their school-aged
population. No further distribution of funds needs to occur when an
LEA has only one school, as is the case when an individual charter
school is treated as an LEA under the independent model.
LEAs that have more than one school--including charter schools
operating under the dependent model--are responsible for allocating
title I funds among their several schools. The federal statute and
regulations lay out a complex set of criteria and conditions that
LEAs use in deciding how to allocate funds to their schools. The
intent of the statute is to shift title I funds received by LEAs to
individual schools with relatively higher numbers and percentages of
students from low-income families. Individual schools--including
charter schools--within a multiple-school LEA, therefore, must
potentially meet higher eligibility thresholds than they would if
they were each considered an independent LEA. As a result, some
charter schools that would have received title I funds under the
independent model may not receive such funds because they are
components of LEAs.
Under the IDEA program, states have greater latitude than under title
I to develop systems of their own to distribute program funds or
special education services to schools and school districts. Given
this latitude, the manner in which charter and other public schools
receive these funds varies by state. For example, Arizona is
currently in the process of allocating IDEA funds to charter schools
on a pro-rata (per-eligible-student) basis. In Minnesota, the state
reimburses charter schools for IDEA-eligible expenses. Yet another
state--California--allocates its share of funds to so-called "special
education local plan areas." Special education local plan areas are
typically composed of adjacent school districts that jointly
coordinate special education programs and finances in that state.
Schools within these areas generally receive special education
services, rather than grant funds.
CHARTER SCHOOLS REPORT MIXED
RESULTS IN RECEIVING FEDERAL
FUNDS
-------------------------------------------------------- Chapter 0:2.2
Overall, slightly more than two-fifths of the charter schools we
surveyed received title I funds. Survey results indicated that
slightly less than one-half of charter schools operating under the
independent model, and one-half of the schools operating under the
dependent model, received title I funds for the 1996-97 school year.
Table 1 shows the number of charter schools surveyed that received
title I funds, by funding model.
Table 1
Numbers of Surveyed Charter Schools That
Received and Those That Did Not Receive
Title I Funds for the 1996-97 School
Year, by Funding Model
Indepe Depend
ndent ent Total
---------------------------------------------- ------ ------ ------
Received title I funds 8 6 14
Did not receive title I funds\a 12 6 18
----------------------------------------------------------------------
\a Eleven of these schools told us they did not apply for title I
funds. We could not determine whether they would have received title
I funds had they applied.
About one-third of the charter schools we surveyed did not apply for
title I funds. Charter school officials who did not apply cited
reasons such as they (1) did not have time to do so, (2) knew they
were ineligible for funds and therefore did not apply, or (3) found
that applying for these funds would cost more than they would
receive. Of those that applied for title I funds, two-thirds, or 14
of 21, reported receiving them. Title I funding for these schools
ranged from $96 to $941 per eligible student; the average was $499
per eligible student, and the median was $435. The difference in
per-student funding is related to the allocation formulas, which take
into account the number and proportion of low-income children in the
school, district, and county. Title I funds received by these
schools represented between 0.5 percent and 10 percent of their total
operating budgets. For all but three schools, funds received
represented 5 percent or less of the schools' total operating
budgets.\13
With regard to the IDEA program, one-half of our survey respondents
received funds or IDEA-funded services. Of all charter schools
surveyed, two-fifths of the schools operating under the independent
model received funds or IDEA-funded services, while two-thirds of
those operating under the dependent model received funds or services.
Table 2 shows the number of charter schools surveyed that received
IDEA funds or IDEA-funded services, by funding model.
Table 2
Numbers of Surveyed Charter Schools That
Received and Those That Did Not Receive
IDEA Funds or IDEA-Funded Services for
the 1996-97 School Year, by Funding
Model
Indepe Depend
ndent ent Total
---------------------------------------------- ------ ------ ------
Received IDEA funds or funded services 8 8 16
Did not receive IDEA funds or funded 12 4 16
services\a
----------------------------------------------------------------------
\a Eleven of these schools told us they did not apply for IDEA funds
or services. We could not determine whether they would have received
funds or services had they applied.
Overall, about a third of the charter schools we surveyed did not
apply for IDEA funds or services. Charter school officials who did
not apply cited reasons such as they (1) did not have time to do so,
(2) were not eligible for funds, (3) were unaware of the availability
of IDEA funds, or (4) found that applying for these funds would cost
more than they would receive. Four-fifths of the charter school
officials who told us that they applied for IDEA funds or services
reported that they received funds or services for the 1996-97 school
year. For schools that obtained IDEA funds, as opposed to services,
amounts received ranged from $30 to $1,208 per eligible student; the
average was $443 per eligible student, and the median was $163. IDEA
funds received by schools represented between 0.08 percent and 2.5
percent of their total operating budgets.\14
--------------------
\13 This applies to the 13 schools reporting a 1996-97 operating
budget.
\14 This applies to the five schools reporting a 1996-97 operating
budget and receiving IDEA funds.
MOST CHARTER SCHOOL
OPERATORS SURVEYED BELIEVED
THEY RECEIVED AN EQUITABLE
SHARE OF TITLE I AND IDEA
FUNDS
-------------------------------------------------------- Chapter 0:2.3
Regardless of funding model, more than two-thirds of charter school
operators expressing an opinion believed that they received an
equitable share of both title I and IDEA funding. About one-fourth
of the charter school operators we surveyed told us that they had no
basis on which to form an opinion or did not answer the question.
(See tables 3 and 4). With regard to IDEA funding or IDEA-funded
services, however, as many survey respondents under the independent
funding model believed that they received an equitable share as
believed that they did not receive an equitable share. For charter
schools under the dependent model, on the other hand, almost five
times as many survey respondents believed that their schools received
an equitable share as believed that they did not receive an equitable
share. (See table 4.)
Table 3
Charter School Operators' Opinions About
Whether They Received an Equitable Share
of Title I Funding, by Funding Model
Indepe Depend
ndent ent Total
---------------------------------------------- ------ ------ ------
Received equitable share 9 8 17
Did not receive equitable share 5 3 8
Had no opinion\a 6 1 7
----------------------------------------------------------------------
\a "Had no opinion" includes nonrespondents and respondents who said
they had no basis on which to form an opinion.
Table 4
Charter School Operators' Opinions About
Whether They Received an Equitable Share
of IDEA Funding or IDEA-Funded Services,
by Funding Model
Indepe Depend
ndent ent Total
---------------------------------------------- ------ ------ ------
Received equitable share 7 9 16
Did not receive equitable share 7 2 9
Had no opinion\a 6 1 7
----------------------------------------------------------------------
\a "Had no opinion" includes nonrespondents and respondents who said
they had no basis on which to form an opinion.
In general, charter school officials who told us they viewed title I
and IDEA funding as equitable said that the use of established
formulas assured them that they received a fair share, and that funds
were not being arbitrarily allocated. One official told us that he
compared the amount of funds that his school received with that of
similar public schools in the area and thought his share was
equitable. Officials who told us that they had no basis on which to
form an opinion said they had little understanding of the allocation
formulas and did not know if funds were equitably allocated. One
official told us that she believed her school did not receive an
equitable share of funds because the school's parent district used
its discretion in allocating higher funding levels to another school
in the district. Another official told us he believed funding
formulas were biased towards larger schools and school districts,
which had the effect of reducing the amount of funds available for
smaller schools like his. Yet another charter school operator told
us that he believed title I funds were not equitably allocated
because funds are not distributed on a per-capita, or
per-eligible-student, basis.
CHARTER SCHOOL OFFICIALS CITED
SEVERAL BARRIERS TO RECEIVING
TITLE I AND IDEA FUNDS
---------------------------------------------------------- Chapter 0:3
On the basis of our preliminary work, charter schools do not appear
to be at a disadvantage in terms of how federal funds are allocated.
However, our survey has identified a variety of barriers that made it
difficult for charter school operators to apply for and receive title
I and IDEA funds. For example, three officials told us that because
they had no prior year's enrollment or student eligibility data, they
were not eligible under state guidelines for federal funds. In its
July 1997 report, the Hudson Institute also found that title I funds
were typically allotted on the basis of the previous year's
population of title I-eligible children, "leaving start-up charters
completely stranded for their first year." Two of our three
respondents for whom lack of prior year's enrollment data was a
problem were newly created schools, while the third was converted
from a formerly private institution.
Start-up eligibility issues are not always limited to a school's
first year of operations. Some officials noted that their schools
are incrementally increasing the number of grades served as the
original student body progresses. For example, one school official
told us that while the school currently serves grades 9 and 10, the
school will eventually serve grades 9 through 12.
Officials we spoke with at other schools during our survey were
implementing a similar growth strategy. In these cases, a 1-year lag
in reported enrollment data--reflecting past rather than current
enrollment--may significantly affect the amount of federal funding to
which a school may be entitled. For example, one charter school
official we spoke with told us that next year she will receive title
I funds on the basis of this year's enrollment of about 100 students.
She anticipates, however, that enrollment will increase almost 50
percent next year, and that the school will be eligible for
additional title I funding for each of about 40 newly enrolled
students. But because of the time lag in reporting data, the school
will have to wait until the following year for the additional funds.
Over time, as enrollment stabilizes, these issues will pose fewer
problems for school officials. Charter schools that were converted
from traditional public schools generally do not have this problem
when current enrollment is at or near full capacity and title I
eligibility has previously been established.
Moreover, some school officials reported difficulty obtaining the
student eligibility data required to receive title I funds. In some
states, school officials themselves must collect data on students'
family incomes in order to establish eligibility for federal funds.
Some officials told us that because of privacy concerns, some
families are reluctant to return surveys sent home with students that
ask for the income levels of students' households. An official told
us that he believed parents may not understand that such data are
used to qualify children for free and reduced-price lunches for
schools that operate such programs, as well as for establishing the
schools' eligibility for federal grant funds.
In other cases, charter school officials must take additional steps
to establish their eligibility for title I funds over and above those
faced by their traditional public school counterparts. For example,
in one state, charter school officials must manually match their
student enrollment records against state and local Aid to Families
With Dependent Children records to verify student eligibility. The
business administrator for a charter school with an enrollment of
about 1,000 students told us that it takes him and another staff
person approximately 2 full days to complete this process. He said
that while this procedure is accomplished electronically for
traditional public schools, city officials told him that he had no
such option.
Another charter school official told us that timing issues prevented
her from being able to access federal funds. For example, she said
that her school's charter was approved after the deadline had passed
for the state allocation of title I funds to public schools. The
same school official said that her lack of awareness of what was
required to obtain IDEA funds led her to underestimate the time
required to prepare and submit applications, and she was thus unable
to submit them on time.
In addition, because charter schools are a recent phenomenon, some
officials said that it took time to develop funding allocation
policies and procedures with state, district, or local officials for
charter schools to access these funds. For example, the business
administrator at a charter school we visited told us that it took
numerous visits and phone calls to district officials to understand
the allocation processes and procedures, as well as to negotiate what
he thought was an equitable share of federal funding for his school.
District officials we spoke with noted that because their school
district had approved and issued several charters to individual
schools with varying degrees of fiscal autonomy, working out
allocation issues has taken some time. District officials noted that
they have limited time and resources to use in developing new
policies and procedures for charter schools, especially because the
number of charter schools and their student populations constitute a
very small portion of their overall operations.
In some cases, charter school officials noted that they did not
receive funds because they failed to meet federal or district
qualifying requirements. For example, current federal requirements
mandate that LEAs--charter schools operating under the independent
model--have at least 10 children from low-income families enrolled
and that such children constitute more than 2 percent of their
school-aged population. Of 32 schools responding to our survey, 9
had fewer than 10 students who were eligible for title I funds.
Schools operating under the dependent funding model may face more
barriers than do schools operating under the independent funding
model because dependent-model schools must go through an
intermediary--or school district--in accessing federal funds, rather
than receiving funds directly from the state. One charter school
operator told us that she believed that her school's parent LEA
unfairly used its discretion in allocating funds to schools within
its district. She said that other schools in the district received
higher funding levels than did her school. Even though state
officials told her that it was within the LEA's discretion to
allocate funds the way it did, she believes that district officials
were singling her school out for disparate treatment because it is a
charter school. Another charter school operator told us that
uncooperative district officials were an obstacle in accessing
federal funds because they were unwilling to provide assistance in
obtaining funding for her school.
Charter school officials reported encountering barriers in accessing
IDEA funds as well. Until June 1997, federal statutory provisions
prohibited states from allocating IDEA funding to a school district
that would be entitled to less than $7,500. In order to receive
funds, such school districts were required to join consortiums with
other districts to surpass the $7,500 threshold and collectively file
a joint application. Given recent federal IDEA appropriations, a
school district, or group of districts, is required, in effect, to
have enrolled approximately 20 to 25 eligible students to meet the
$7,500 threshold. Of the charter schools responding to our survey,
17 enrolled 20 or fewer IDEA-eligible students. Two survey
respondents told us that the requirement for schools to join
consortiums to access IDEA funds discouraged or prevented them from
pursuing these funds.
Moreover, some charter school officials have philosophical
differences with IDEA requirements and forego IDEA funding because it
does not accommodate their educational methods, according to a
charter school technical assistance provider we visited. She said
that IDEA requires schools to develop written individualized
education programs (IEP) for disabled children, and requires schools
to follow specified processes in developing these IEPs. In order to
receive IDEA funds, schools must have prepared these IEPs for
disabled students. In contrast to preparing IEPs for disabled
children only, she said some charter schools approach to education
includes considering that all children have special needs.
Accordingly, they develop a unique education plan for each child,
stressing individualized instruction. The Hudson Institute, in
conducting its study, visited charter schools and spoke with school
officials and parents who said they preferred that their children not
be "labeled" and did not want their educational needs met in
"cumbersome, standardized ways."
The application process was also cited as a barrier. However, survey
results to date have revealed that of those charter school operators
expressing an opinion, more thought that the title I application
process was "not at all difficult" than thought it was "very
difficult"--over three-fifths versus about one-fourth. Regarding the
IDEA application process, somewhat less than half of charter school
operators expressing an opinion believed it was "very difficult,"
while slightly more than half said it was only "somewhat" or "not at
all" difficult. Nonetheless, several officials told us that the
costs and the time involved in applying for funds and complying with
monitoring and reporting requirements were not worth the effort. One
charter school official in Arizona told us that he estimated it would
cost him about $85,000 to obtain $35,000 in federal funds for his
charter schools. Another official in Arizona said that his charter
school would only qualify for about $1,000 in federal funding, and he
would not bother pursuing any funds unless the grant would amount to
about $4,000 or $5,000. Another official told us that she had been
unaware that she would be required to file a joint application with
other LEAs in order to receive IDEA funding until the state informed
her of the requirement. Another official told us that although she
had contacted a local school district that was willing to jointly
file an application with her school, a lack of time to prepare the
application and the small amount of funds to which her school would
be entitled led her to decide not to pursue the funds.
In our discussions with them, several charter school officials
emphasized that they had very little time and resources available to
devote to accessing title I and IDEA funds. These officials often
played multiple roles at their schools, including principal, office
manager, nurse, and janitor. One operator told us that it would not
be stretching the truth much to say that if all he was required to do
was to sign on a dotted line, stuff an envelope, and lick a stamp, he
would not have time. Another operator told us that if she receives
anything in the mail with the words "title I" on it, she throws it
away because she has so little time to attend to such matters. This
operator also added that she found the costs of accessing federal
funds excessive since she would be restricted in terms of how she
could use these funds. She said that it was more reasonable for her
to determine how such funds should be spent than for federal and
state regulations to dictate these decisions.
CHARTER SCHOOL OFFICIALS REPORT
A VARIETY OF FACTORS FACILITATE
THEIR ABILITY TO ACCESS FEDERAL
FUNDS
---------------------------------------------------------- Chapter 0:4
Charter school operators reported that outreach and technical
assistance were key factors that facilitated their ability to access
federal funds. Other factors cited by school officials included the
use of consolidated program applications, the use of computerized
application forms and processes, and the ability to rely on
sponsoring district offices for grants administration.
OUTREACH AND TECHNICAL
ASSISTANCE MOST FREQUENTLY
CITED AS FACILITATING
FACTORS
-------------------------------------------------------- Chapter 0:4.1
Charter school officials most frequently cited receiving information
about the availability of federal funds and how much their schools
would be eligible for as facilitating factors in accessing title I
and IDEA monies. Officials cited a number of sources from which they
had obtained such information, including their own states'
departments of education and local school district officials. In
addition, charter school officials credited training and technical
assistance provided by these sources with helping them to access
federal funds.
On the basis of our conversations with school officials, it appears
that some states are doing more than others to provide assistance to
charter schools. In particular, survey respondents in Arizona
reported nearly unanimous praise for the amount and availability of
assistance provided by the state department of education. They noted
that the state has actively informed them of funding opportunities
and offered them technical assistance on many occasions.
A respondent in another state cited the use of consolidated
applications as a facilitating factor in accessing funds. Under the
title I program, SEAs may allow LEAs to submit one application for
several federally funded programs.\15
Another respondent told us that her SEA's use of the Internet, over
which she could obtain and submit her school's title I application,
facilitated her access to these funds. Still another respondent told
us that being able to rely on his charter school's parent LEA for
federal grants administration relieved him of the burden of
administering the grant and thus facilitated his access to federal
funds. Finally, some respondents told us that their schools employed
consultants to assist in applying for federal and state funds, which
enabled them to focus their time and effort on other matters.
--------------------
\15 These other programs include the title II Eisenhower Professional
Development Program, title III educational technology programs, the
title IV Safe and Drug-Free Schools and Communities--state and local
formula grants--program, and the title VI Innovative Education
Strategies program.
CONCLUSION
---------------------------------------------------------- Chapter 0:5
In conclusion, our preliminary work suggests that the barriers that
charter schools face in accessing federal funds appear to be
unrelated to whether charter schools are treated as school districts
or as members of school districts. Rather, other barriers, many of
which are not related to the path federal funds take, have had a more
significant effect on charter schools' ability to access title I and
IDEA funds. These other barriers include state systems that base
funding allocations on the prior year's enrollment and student
eligibility data, the costs of accessing funds relative to the
amounts that schools would receive, and the significant time
constraints that prevent charter school operators from pursuing
funds. Despite these barriers, most charter school operators who
expressed an opinion believe that title I and IDEA funds are
equitably allocated to charter schools.
-------------------------------------------------------- Chapter 0:5.1
This concludes my statement, Mr. Chairman. I would be happy to
answer any questions you or Members of the Subcommittee may have.
CHARTER SCHOOLS OPERATING IN
SCHOOL YEAR 1996-97 IN SELECTED
STATES, INCLUDED IN OUR SAMPLE,
AND RESPONDING TO OUR SURVEY
=========================================================== Appendix I
Cumula
tive School
percen School s that
Charte Percen tage s refuse School
r tage of School survey d to s yet
school of total\ s in ed to partic to
States s total a sample date ipate survey
------------------------ ------ ------ ------ ------ ------ ------ ------
Arizona 164 34 34 13\b 9 1 2
California 109 22 57 15\c 10 1 3
Colorado 32 7 64 3 1 0 2
Massachusetts 22 5 68 7 2 0 5
Michigan 76 16 84 5 4 0 1
Minnesota 19 4 88 6 5 0 1
Texas 16 3 91 1 1 0 0
All others\d 42 9 100 \e \e \e \e
================================================================================
Total 480 100 50 32 2 14
--------------------------------------------------------------------------------
\a Cumulative percentages of total may not add due to rounding of
percentages.
\b Although included in our universe of charter schools, one school
had its charter revoked prior to the 1996-97 school year.
\c Although included in our universe of charter schools, one school
was not yet in operation during the 1996-97 school year.
\d Charter schools are also located in Alaska, Delaware, the District
of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, New
Mexico, and Wisconsin.
\e Not applicable.
Sources: Center for Education Reform, Washington, D.C., and GAO
analysis.
CHARTER SCHOOL STATES AND NUMBER
OF SCHOOLS OPERATING IN SCHOOL
YEAR 1996-97
========================================================== Appendix II
(See figure in printed
edition.)
Source: Center for Education Reform, Washington, D.C.
*** End of document. ***