Budget

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

February 23, 2016
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Higher Administration Charges of Arizona Charter Schools Cost Taxpayers $128 Million a year
The Largest corporate charters are the worst offenders
By Jim Hall
Founder, Arizonans for Charter School Accountability
Dave Wells
Research Director, Grand Canyon Institute

Executive Summary
Arizona’s approximately 600 charter schools spent $128 million more on administrative costs during the 2014-15 school year than traditional public districts would spend on the same number of students. While every state agency, including public schools, are held accountable for the efficient use of state funds by the Office of the Auditor General, charter schools are exempt by law from scrutiny by the Auditor General.
Charter schools in Arizona are held accountable for their academic performance through an Academic Performance Framework created by the Arizona State Board for Charter Schools, the only agency with oversight responsibility for charter schools. The Charter Board does not monitor how charter schools expend funds on administration or instruction.

While charters are required to submit annual financial reports to the Department of Education, they are not compiled or analyzed by the Auditor General. The Auditor General’s reports on traditional public school district spending has led to public policy debates regarding how money ought to be best spent. Unfortunately, nothing is known about charter school spending because they are not held to any actuarial standard.
This study involved the labor-intensive process of accessing 2014-15 Annual Financial Reports for each charter and public district as filed with the Arizona Department of Education and recording maintenance and operations expenditure data so that charter and public school district spending on administration could be accurately compared for the first time. Enrollment data was collected from the October 1, 2014 Enrollment Report, so per pupil expenditures could be calculated.
This report is the first in a series on charter school accountability in Arizona.

Key Findings:
1. Public districts spent an average of $628 per pupil for all administrative services. Charter schools averaged $1,403 per pupil, more than twice as much. If charter schools had the same administrative efficiency as traditional public schools, the state would save $128 million a year in administrative costs
2. The $775 per student administrative cost gap partially results from the smaller size of charters. Larger charter holders should be more administratively efficient. Instead the largest charter companies are among the most expensively managed agencies in Arizona. Their administrative costs are substantially higher, not lower, than the typical charter operation. If the seven largest charter holders spent the same on administration as traditional public districts, the state would save $54 million annually.
3. One of the largest charter companies, BASIS, Inc. (8,730 students) spends more on general administration than any charter or public district in the entire state, nearly $12 million. BASIS spent 30 times more per pupil on general administration than the six largest public districts combined (225,000 students).
4. The lack of transparency provided by Arizona charter legislation makes it impossible to determine how these funds are being spent. Consequently, greater oversight of charter school expenditures is needed.