Another Fiscal Impact Study Shared

Another letter showing the fiscal impacts of adding a Charter school has been shared to show how these additional choices impact other students.  While choice can be a great thing, it must be thoughtful as there are often unintended consequences to other children.

 

 

June 12, 2014

 

Jefferson County School District

Board of Education

1829 Denver West Drive, Bldg 27

Golden, CO 80401

 

Members of the Board of Education,

 

 

A key factor in the financing of school districts in Colorado involves the per pupil allocation established by the Colorado State Finance Act. The per pupil allocation has a unique aspect relating to the enrollment trends of a district. When a district is experiencing a growth in the number of students, there is typically a financial benefit as the incremental cost for each additional student will normally be less than the per pupil amount of revenue received. This occurs because the student will probably attend a school where he/she can be absorbed within the current enrollment with minimal need for additional resources. The only possible increased cost may include additional teacher assistant hours which are based on a formula identifying hours per student and per pupil for operating supplies and materials. If exceptional growth is occurring in a single school, it may be necessary to provide additional teaching staff, but even in this situation, the district will normally receive a positive financial benefit as the overall increase in revenues from multiple students will be greater than the incremental cost for the increased teaching staff.

 

 

In districts with declining enrollment, the effect is reversed. The loss of a single student will reduce the revenue received; however, the reduction of a student in a classroom will not alleviate the need to have a teacher in that classroom. In this case, there will be a slight savings from the reduction in the allocation of hour’s for teacher’s assistants and the allocation of resources for materials and supplies; however, the overall cost to the district remains the same for both the classroom and for the infrastructure costs incurred by the district. If a single school experiences a large decline in enrollment, there may be a savings involving the reduction of the teaching staff.

 

 

According to information on page 277 of the 2013-2014 Adopted Budget, Jeffco enrollment has been declining for the past decade, thus, the district has been required to manage the negative financial impact of a decreasing number of students. This problem is exacerbated when students from district-managed schools elect to attend charter schools. The impact of students leaving for charter schools is no different than the impact of the general reduction in the district enrollment.

 

 

The pending application of the Cornerstone Academy Charter School can serve as an example of how the addition of a new charter school can have a negative financial impact on the General Fund and the non-charter school students in the district. The basis for this discussion is the August 15, 2013 Cornerstone Academy Charter School application. This analysis uses the materials included in the Cornerstone Academy Charter School application because it is available on the district web site and provides information that can serve as a basis for this analysis. It should not be seen as making a judgment about the Cornerstone Academy Charter School application.

 

 

The exhibits included in this letter present a pathway to arriving at the ultimate cost to the district if the Cornerstone Charter School application is accepted and Cornerstone becomes the 16th charter school in the district. The estimated loss of revenue to the district associated with this application is provided in Exhibits F and G.

 

The Cornerstone application includes a listing of the number of students that have indicated a commitment to attend the Cornerstone Charter School and identifies the current schools being attended by these students. This list identifies a total of 124 students of which 62 are identified as being from Jeffco schools with the others being from Denver schools, private schools or home schooled students. This listing is indicative of the problem faced by the Jefferson County School District. With the exception of the larger number of students identified from Westgate Elementary where the two organizers of the application currently teach, the number of students from the other seven schools range from two students to seven students from each Jeffco school included in the application.

 

Exhibit A identifies the impact on Jeffco if only the 124 students identified in the application elect to attend Cornerstone Academy. Exhibit A includes the current allocation of resources for charter schools per the power point materials entitled Student Funding Models: Charter Schools Compared to District-Managed Schools prepared by district staff. The amount of $6,481 per pupil is the amount provided by the Colorado Finance Act and is included only for those students identified as currently enrolled in Jeffco schools. The amount of $247 per pupil of mill levy override resources is included for all of the identified students as this allocation will be provided for all students and represents an increased loss of revenue for Jeffco. Exhibit A also includes an estimated savings to the district of $88,448 which represents the estimated reduced teacher assistant hours, estimated reduction in the cost of instructional operating supplies and materials and the estimated reduction of one teaching position because of the potential reduction of 29 students from Westgate Elementary School. The calculation of the amounts for the teaching position, the teacher assistants and the instructional operating materials is provided in Exhibit B.

 

Exhibit A

Exhibit B provides the detailed calculations of the various categories of potential savings to Jeffco when students leave the district. This includes the estimated cost for one teacher and the cost per pupil for the teacher’s assistant and instructional operating materials. These estimated amounts become the basis for the estimated savings to be realized from the district if the Cornerstone Academy application is approved.

 

Exhibit B

Exhibit C provides a summary of the estimated savings to the district using the calculations included in Exhibit B.

 

Exhibit C

Although Exhibit A identifies the net cost to the district if only the 124 students identified attend Cornerstne Academy Charter School, the Cornerstone Academy application does not anticipate only 124 students for the first year. The application includes a five year enrollment projection that includes 284 students for year one (267.2 funded students) with expected growth to 423.2 funded students in year five. Exhibit D provides an updated estimate of the potential lost revenue to the Jefferson County School District from the approval of the Cornerstone Academy application using two scenarios. The first scenario assumes the same relationship of pupils from Jeffco as the original list of committed students, which is 50 percent of the total enrollment. The second scenario includes an assumption that 75 percent of the funded enrollment will be drawn from Jeffco schools.

 

Exhibit D indicates that the potential lost revenue to the district may range from $931,860 to $1,364,791 in year one and ultimately be in the range of $1,475,000 to $2,161,000 in year five. This Exhibit assumes the current level of funding for the entire five year period and does not take any district savings into consideration.

Exhibit D

Exhibit E provides a calculation of the estimated savings to the district using the two scenarios in Exhibit D. This exhibit continues to assume that only one teaching position will be reduced. It is important to note that if one teaching position is reduced, it may still be necessary for the district to backfill a portion of that position depending upon the impact the reduction of students has on each class in the school. A total of $652,700 identified as “class size relief” is included in the district budget for elementary schools to accommodate these types of circumstances.

Exhibit E

Exhibit F provides a summary of the estimated net revenue loss to be experienced by the district using the two scenarios included in Exhibits D and E. Exhibit F indicates that the best case scenario in the use of 50 percent of the students coming from Jeffco schools is a loss of revenue in the amount of $822,663 for the first year and a loss of $1,341,047 for years four and five.

 

The more realistic scenario of 75 percent of students coming from Jeffco indicates a loss of $1,237,039 for year one and $2,001,349 for years four and five.

Exhibit F

Exhibit G provides a similar analysis for Cornerstone Academy if the full amounts of the mill levy overrides are provided to the charter schools. This has the effect of increasing the loss of revenue to the district in the later years by just under $500,000 annually.

 

Exhibit G

A similar type of analysis could be undertaken for each active charter school for the past year and it would indicate similar or greater losses of revenue resulting from the creation of the charter schools.

 

There is little question that the creation of any charter school in Jeffco will have a negative financial impact on the overall fiscal position of the district. Essentially, the lost revenue relating to just over 6,000 funded charter schools students has a negative impact on the 74,000 funded Jeffco students in district managed schools.

Respectfully submitted,

Don Oatman

 

Read the full letter here – Fiscal_Impact_of_Charter_Schools[1]