Study: Philanthropic, Non-Public Funds for Charters Don't Close Revenue Gap

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FAYETTEVILLE, Ark. – A research team at the University of Arkansas has released a new, first-of-its-kind school funding report stating that, in 15 states, non-public revenue fails to close the gap between spending on traditional public schools and public charter schools. Even when philanthropic resources are included, traditional public schools in these 15 states received $2,706 more per pupil than charters, according to Patrick Wolf, holder of the Twenty-First Century Chair in School Choice and principal investigator of the research project.

“Our results contradict the conventional wisdom that philanthropic contributions to charter schools offset public funding inequities,” said Wolf, who is a Distinguished Professor in the Department of Education Reform in the U of A’s College of Education and Health Professions. “Building on the 2014 national findings, non-public revenue in general does not allow the public charter school sector to close the overall revenue gap with traditional public schools. In some cases, it makes the gap larger.”

The report shows that traditional public schools received nearly $6.4 billion and charter schools received $379 million in non-public revenue. However, non-public revenue for both was insignificant compared to public sources of funding and only slightly narrowed the overall funding gap.

The report, titled “Buckets of Water into the Ocean: Non-Public Revenue in Public Charter and Traditional Public Schools,” explored funding in states with both substantial charter school sectors and reliable data. It revealed that about one-third of non-public revenue for traditional public schools came from food service and at least 13 percent came from investment revenue. Meanwhile, philanthropic giving made up almost half of the non-public revenue that charter schools received but only 5 percent for traditional public schools.

In the 15 states analyzed in the study, all non-public revenue made up 2.6 percent of total revenue for traditional public schools and 5.3 percent for charters, the report showed. The full report, including a state-by-state breakdown, can be read on the department’s website.

But the report also found that philanthropy in general is such a small slice of total K-12 education funding that it cannot be relied upon to close the funding gap between traditional and public charter schools. In total public and non-public revenue, traditional public schools received $13,628 per pupil while charters received $10,922 per pupil, mainly due to disparities in access to public revenue.

“The source of disparity in funding continues to remain a largely uninformed public policy issue,” said Larry Maloney, lead researcher of the University of Arkansas team. “Traditional public schools reap the benefit of larger account balances that generate more investment income than charter schools can generate. Since charter schools receive less overall funding from public sources, more of their funding must be used in any given year.”

The traditional public school sector gets a larger share of philanthropic funds than the charter school sector, the researchers found, but the share translates into less in per-pupil funding because of the larger student enrollment at district schools.

Charters received about $173 million from charitable organizations, which translated into $264 per pupil, while traditional public schools received more, $331 million, translating to $18 per pupil. This means philanthropy contributed $246 toward closing the significant per-pupil funding gap between traditional public schools and public charter schools in these 15 states.

The report comes one year after the U of A research team published the third in a series of national studies on the general lack of equity in the funding of public charters compared to traditional public schools. “Charter School Funding: Inequity Expands” analyzed local, state, federal and private funding sources for 30 states and 48 major cities, revealing that public charter schools receive on average $3,814 less per pupil than traditional public schools. The funding disparity had increased by 54.5 percent over the previous eight years and was even greater in major urban areas with significant charter school enrollment.

All of the research has reached the same conclusion: that public charter schools tend to receive far less money and that inequity from state-allocated funding is mainly responsible for the gap in overall funding.

Other key findings:

• Twelve of the 15 states analyzed reported more per-pupil non-public revenue for public charter schools than for traditional public schools.
• Philanthropy is not evenly distributed across all charter schools, with 34 percent of charter schools in the study reporting no philanthropic support of any kind and 95 percent of all charter school philanthropy directed at schools that enrolled just one-third of the charter students in the 15 states.
• Although charitable funds from philanthropies make up almost half of the non-public revenue in the charter sector, they account for only 2.5 percent of total charter revenues nationally and therefore cannot be expected to close the growing 28.4 percent total funding gap between charters and traditional public schools.

About the Department of Education Reform: The mission of the Department of Education Reform is to advance education and economic development in Arkansas and nationwide by focusing on the improvement of K-12 schools. The Department of Education Reform is committed to producing and disseminating high-quality research that will inform policymakers, scholars, parents, teachers, administrators and the general public about policies and practices that could improve the performance of schools in Arkansas and nationwide.

About the University of Arkansas: The University of Arkansas provides an internationally competitive education for undergraduate and graduate students in more than 200 academic programs. The university contributes new knowledge, economic development, basic and applied research, and creative activity while also providing service to academic and professional disciplines. The Carnegie Foundation classifies the University of Arkansas among only 2 percent of universities in America that have the highest level of research activity. U.S. News & World Report ranks the University of Arkansas among its top American public research universities. Founded in 1871, the University of Arkansas comprises 10 colleges and schools and maintains a low student-to-faculty ratio that promotes personal attention and close mentoring.