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States Struggle to Hash Out Funding Formulas for Virtual Charter Schools

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Several issues complicate the creation of funding formulas for virtual charter schools, such as the lack of a designated enrollment area for the schools, says a new primer on the subject published by the Education Commission on the States.

Virtual charter schools, which operate in about 30 states (although 34 states have laws allowing them), may enroll nearly limitless student populations because many of them do not have defined enrollment boundaries, and they are not restricted by the limitations of physical buildings, the report says. A graphic from the report shows the percentage of students currently in virtual charter schools:

virtualcharter.jpg

The study found, for instance, that the Pennsylvania Cyber Charter School enrolled 10,340 students during the 2012-13 school year, which is more than three times the amount of students in the average Pennsylvania school district.

Virtual charters also make it hard for school districts to predict the amount of funding they will receive each year because, unlike brick-and-mortar charter schools, which open within the district's community, virtual charters can pull students from across the state, says the report. That "removes] any possibility of predictability" says the brief, and it could impact suburban and rural school districts, which may not have as much experience with charter schools as their urban counterparts.

Such schools could also provide an additional fiscal strain on districts by attracting previously homeschooled or private school students back into the public school system. For every homeschooled student who decides to enroll in a public virtual charter instead, that student's home district will then have to transfer an additional per-pupil funding amount to the virtual charter, the report says.

In order to stem some of these impacts, the brief suggests placing a cap on the number of virtual charter schools allowed or adjusting funding formulas to help ease the financial strain on districts, using strategies such as spreading out the loss of students and per-pupil funding over several years.

The brief says that although no studies pinpoint the exact differences in cost between operating a brick-and-mortar and a virtual school, the general consensus is that it is less expensive to operate a school virtually because of the lack of transportation, operation, and facilities costs. (An assertion virtual education advocates have disagreed with.) 

The average traditional school spends about 24 percent of its budget on those factors, says the report, which could be a jumping off point for how to weight funding formulas for virtual charters. Currently Georgia, Pennsylvania, Colorado, and Ohio all pay virtual charter schools a lower per-pupil amount than brick-and-mortar schools.  

Around the country, many states are considering moratoriums on virtual charter schools. Legislators in Maine, for instance, are considering a year-long moratorium on the schools, and Illinois Gov. Pat Quinn signed a one-year moratorium on virtual charters in districts outside of Chicago last year. The Illinois State Charter School Commission will be reporting their findings about how well students learn in virtual charters, the costs of operating the schools, and what oversight the schools should receive by March 1 of this year.

In addition, for the second consecutive year, the Pennsylvania Department of Education denied all the virtual charter school applications in the state, in part because the boards of five out of the six proposed schools were too closely tied to the for-profit companies that would be receiving contracts if the schools were approved. 

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