Education Stimulus Funding and Charter School LEAs

The Department of Education (ED) recently released stimulus guidance intended to clear up some of the questions states and LEAs have regarding fund distribution, allocation, and accounting. Unfortunately, some uncertainty remains around several issues including how funds will be distributed to charter schools that are also local education agencies (LEAs). Depending on state law, some charter schools function as their own LEAs for federal funding purposes while others are part of an existing LEA. Although the guidance clearly states that charter LEAs are entitled to their fair share of State Fiscal Stabilization and Title I funds, the Department has left it up to state agencies to adjust their allocations to account for those LEAs.

In distributing the Stabilization Funds to states, ED provided each state with a share of the total $48.6 billion based on their total population aged 5-24 as well as their share of overall population. In the case of K-12 monies, states are expected to distribute their funds directly to LEAs (both traditional and charter) using the state’s primary education funding formula.

Here is the quandary. Some states fund charter school LEAs through different formulas than traditional LEAs. Other states provide charter LEAs with a certain percentage of their formula per pupil expenditure and give the remaining money to the traditional district the charter student is leaving. In either case, it appears that charter LEAs are often not fully accounted for in state education funding formulas.

As a result, relying on the “primary education funding formula,” even if it does include charters, may not equitably distribute funds to these schools. This disparity between the guidance and the reality of charter LEA funding in the states raises a few important questions:

• How will states that employ alternative methods to fund charter LEAs ensure that these LEAs get their fair share of SFSF?
• Or, and perhaps more importantly, does ED expect charter LEAs to get less SFSF money per student than traditional LEAs given the way state charter formulas typically work?
• Will ED provide states with technical assistance to ensure that charter LEAs are given their fair share of funding, and to what extent will the distribution of dollars to charter LEAs be monitored by Department officials?

The guidance for Title I funds also calls on states to ensure that charter LEAs get the funds their students are entitled to. ED published excel spreadsheets detailing how much stimulus Title I funding each traditional LEA is expected to receive. However, these spreadsheets do not include charter LEAs because they do not have physical jurisdictions like traditional LEAs do. As a result, charter LEAs do not have census poverty data available by which to distribute Title I funds.

ED recognizes that states will have to adjust their distributions to account for charter LEAs using the best available data states have. This could mean relying on free and reduced price lunch enrollment as an approximation of poverty or otherwise deriving an approximation of poverty from several localities’ census data. Both data sources could produce dubious results for charter LEAs because they tend to attract or target sub-sets of an area’s population (such as under-represented minorities) and are therefore not representative of that locality’s general population. This lack of reliable poverty data for charter LEAs means that state agencies can easily misestimate the number of impoverished students attending a charter LEA and, as a result, allocate fewer Title I funds to that LEA than is deserved.

Compounding matters, Title I formulas are frequently so complicated that an LEA or charter administrator would be unable to determine whether or not they are receiving adequate funds given their enrollment. The opaque nature of this fund distribution process allows charter LEA leaders little opportunity to challenge their state-determined Title I allocations.

Ultimately, these challenges leave charter LEAs vulnerable to state agencies that are hostile to charters or seek to send the majority of funding to traditional LEAs. Inequitable funding formulas and state reporting processes that disadvantage charter LEAs can ultimately hurt the students that attend these schools. In places like the District of Columbia, where more than one-third of public school students attend charter schools, these maneuvers could be detrimental to significant student populations. We hope that future guidance and reporting requirements seek to ensure that charter LEAs receive the stimulus funds their students deserve.