Release on High Administrative Costs of Charters Cost Taxpayers $128 Million a Year

February 23, 2016

Higher Administration Charges of Arizona Charter Schools Cost Taxpayers $128 Million a Year

PHOENIX- Arizonans for Charter School Accountability and the Grand Canyon Institute have released a report on the high administrative costs associated with charter schools. This report is the first time all Arizona district charter schools’ maintenance and operation expenditures have been examined.

The report, “Higher Administration Charges of Arizona Charter Schools Cost Taxpayers $128 Million a Year,” calculates on a per pupil basis that Arizona’s charter schools spent $128 million more on administrative costs during the 2014-2015 school year than traditional public schools. While every state agency, including public schools, is held accountable for use of state funds, charter schools are largely exempt.

Using a data base developed from the Annual Financial Reports submitted to the Arizona Dept. of Education, the study found school districts average $628 per pupil in administrative costs, while charters were more than double that cost at $1,403 per pupil.

“This report highlights the need for increased scrutiny of charter school spending. It also spotlights the corporations running them that have excessive administrative costs that never reach the classroom,” said Jim Hall, founder of Arizonans for Charter School Accountability.

“While Arizona’s public schools are required to justify every penny, charter schools are allowed to spend taxpayer dollars with insufficient accountability. This imbalance is unacceptable and harmful to Arizona’s teachers, students and parents. It’s time we demand that charter schools operate on the same level playing field as public schools,” Hall said.

The largest corporate charter holders are among the worst offenders, while other charters do much better.

Grand Canyon Institute Research Director, Dave Wells, noted, “The results of this study are very similar to one done in Michigan in 2012. Although we should see economies of scale with school operations. Both studies found that larger corporate charters that contract out to related for-profit management companies have higher, not lower, per pupil administrative costs. The seven largest companies spend $19 million more in administrative costs than if their spending matched the $1,403 per pupil average of charter schools—and it’s about 3 times what public school districts would spend for the same number of students.”
To shine a light on how and where this money is being spent, Arizonans for Charter School Accountability and the Grand Canyon Institute have three solutions to make corporate-owned charter schools more accountable to Arizona taxpayers.
1. Require charter school financial data to be collected and monitored by the Auditor General’s Office (just as they are for traditional public districts). The Arizona Board for Charter Schools should be required to use this data to investigate and sanction charter schools that misuse taxpayer dollars.
2. Charter management companies need to be transparent in reporting salaries and other financial information related to administration expenses.
3. Implement a public database that shows public districts and charter schools expenditures on administration and the classroom, so parents can make more informed choices when looking for the right school.

Arizona‘s lax laws on charter school accountability combined with these schools being privately owned makes it impossible to see how excessive administrative funds are being spent. Money that should be invested into the classroom instead is redirected to administrative costs. These recommendations would do much to put public schools and charter schools on an even playing field and make sure Arizona’s taxpayer dollars are used responsibly.

Arizonans for Charter School Accountability was founded in September 2014 by James Hall, a retired principal, most recently in the Washington Elementary School District. The Grand Canyon Institute, a centrist think tank, was founded in 2011 by community leaders former lawmakers and academics to improve the debate on important fiscal and public policy matters in Arizona.

The report can be found at http://grandcanyoninstitute.org/wp-content/uploads/2016/02/AZCharterAccuntability_GCI_Policy_Paper_ChartersHigherAdminCosts2-23-16.pdf.