What does it cost to run a high quality charter school?

The answer is more than the state of California provides. In an attempt to maintain its 95% graduation rate for its low income black and Latino students, Inner City Education Foundation (ICEF) takes some serious risks that almost ended in bankruptcy. The big backers of the charter school movement are coming in to save the day including new leadership – Caprice Young, prior head of the California Charter School Association, and serious financial support from philanthropy. Early indications are that the CMO’s fiscal problems resulted simply from overspending – not making the necessary reductions when the state cut funding – and not from some misuse of funds. 

Part of the problem is that CA has not only cut its funding, but also delayed when the remaining funding will be provided creating cash flow problems. There are several ways that school districts can borrow funding for cash flow purposes, but charter have to go to the private market in order to borrow funds making the costs higher.

If schools including charters don’t keep a tight eye on the bottom line they can quickly end up in trouble. John Fensterwald provides the details of this high profile CMO’s financial woes. As with any school system, delays in adjusting to a new fiscal reality will only make the problem worse. In recent days they have announced dramatic mid-year reductions to start to align their expenditures with the funding level that the state provides. This will include laying off 1/6^th of the school’s staff.

A couple of issues to follow over time. (1) Will these reductions impact the impressive student performance at these schools. These school provided a lot of supports to students with academic or other needs, basically a what ever it takes approach. So, if they don’t have the resources to do whatever it takes, how will they react. (2) Will this change the minds of people who believe that there is enough money in the system. Some people who make this argument rely on the impressive success of charter schools like ICEF to justify there claims that it is inefficiency not inadequate funding that leads to low performance. Now that it turns out that there is not enough money to support their model, will it change people’s opinion about whether there are enough resources in the school. For example, will this change Meg Whitman’s take on education. She seems to buy into the charter schools and eliminating inefficiencies will solve the problems.

Tagged as: California Education, California State Budget, Caprice Young, Charter Schools, ICEF