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Date Posted: 17:40:07 02/11/11 Fri
Author: Larry
Subject: An example might help
In reply to: CharterStarter, Too 's message, "Re: I have exact local number only for 2010" on 14:10:43 02/09/11 Wed

Letís say the state has only one Regular ED category with a 1.0 multiplier and one SPED category, with a 2.5 multiplier. The state sets the base funding at $2,000 per kid, so the Regular ED kids get $2,000 in QBE funding and the SPED kids get $5,000 each. Itís important to note the way the QBE formula is structured, this doesnít mean the SPED kids will cost $3,000 more to educate, but that they will cost two and a half times as much as a RegED kid.

Now, letís create system with one school and 100 kids, where 75 are RegED and 25 are SPED. The QBE earnings for this system will look like this:

1) 75 Regular Ed @ 2,000 Ė $150,000
2) 25 SPED @ 5000 Ė $125,000
3) Total state funding - $275,000

To make it easy (and oversimplify it) letís say the local BOE totals all the school tax bills and finds they will generate $275,000 a year. The local BOE can now budget a total of $550,000 ($275,000 from the state plus $275,000 local revenue.) In other words, half of this districtís education expense is QBE funded.

Since this is a system school, there is no one law that dictates how the BOE splits this money among students, but because the SPED kids cost 2.5 times as much to educate, their budget will - by necessity - reflect spending $4000 on each RegED kids ($2k QBE plus $2k local) and $10,000 on each SPED kid ($5k QBE plus $5k local).

Now letís inject a Startup Charter school, where 25 kids enroll in the charter school and 75 stay in the system school.

The total of $275,000 in QBE funding doesnít change, but it is split between the system and the charter school, with the amount each school receives determined by the funding category of the kids who attend each school. Letís say the 25 kids enrolled at the charter school are the 25 SPED kids. The system school would get $150,000 in QBE funding for the 75 RegEd kids (line #1 in the above QBE sheet) and the charter school would get $125,000 in QBE funding for the 25 SPED kids (line #2 in the above QBE sheet).

Since this is a Startup Charter, it receives local funding (this IS a law) in the same QBE/local funding ratio as the system school. Because QBE funding is half the total funding, the charter school would get $125,000 in local funding and the system school would retain $150,000. If you divide this out, youíll see all students are funded at the exact same rate as when they all attended the system school, with the only difference being how this funding is divided between the two schools.

The Charter Schools Commission doesnít figure it this way. They would take the $275,000 in available local revenue, divide that by the total number of students (100) and arrive at a local funding amount of $2750 per student. Since a Commission School isnít allowed to receive local funding directly, the Commission makes adjustments to the QBE funding for both schools. In this example, they would multiply the $2750 average by the 25 students enrolled in the charter school and use $68,750 as the ďCommission Local FundingĒ amount. The QBE sheets would look like this:

Charter School
1) 25 SPED @ 5000 Ė $125,000
2) Commission Local Funding - $68,750
3) Total state funding Ė $193,750

Local System
1) 75 Regular Ed @ 2,000 Ė $150,000
2) Commission Local Funding Ė ($68,750)
3) Total state funding - $81,250

Because of the Commissionís flawed funding calculations, the charter school has 25 kids that are expected to cost $250,000 to educate (25 kids X $10,000 from the initial calculation), but will only get $193,750. Also, the system school (since it retains all local funds) will have a state plus local funding total of $356,250 for 75 RegEd kids Ė an average of $4750 per student Ė for kids that will only cost $4000 each. See the problem? Itís interesting to note that this potential for underfunding a Commission School was mentioned in the current legal case not by Ivy Prepís lawyer, but by Gwinnettís lawyer.

What actually happened last year with Ivy Prep was the opposite case. In our hypothetical, it would be as if the 25 kids enrolled in the charter school were all RegEd students who should received $2,000 each in local funding. But because the Commission uses an average, the Commission Local Funding amount would remain $2,750 per student Ė leaving the system school on the short end of the stick.

Using our example numbers, Ivy Prepís lawyer argued that since the number of students was the same (100) and the total of QBE and local funding was the same ($550,000), the Commissionís funding method is accurate. While itís true the totals donít change, the funding is going to the wrong school Ė which is an issue he didnít address at all.

As to how closely this example relates to the real world - the basic funding (where I used $2000) is actually $2739.77 for this year, and the Special ED multipliers (I used 2.5) range from 2.4 to 5.8. I ignored a lot of details in the example, but this is the effect of the Commissionís funding method.

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