Many Chicago Charter Schools Run Deficits, Data Shows

Friday, August 13, 2010

Even as the Obama administration promotes charter schools as a way to help raise the academic performance of the nation’s students, half of Chicago’s charter schools have been running deficits in recent years, an analysis of financial and budget documents shows, calling into question their financial viability.

Charter teachers may do more than teach. Ryan Beaudoin, an 11th-grade teacher at Perspectives Calumet, painted his room.

On Monday, Chicago Public Schools released a bare-bones budget that included a cut of about 6 percent in per-pupil financing for charter schools — to $5,771 from $6,117 per pupil for elementary school students and to $7,213 from $7,647 per pupil for high school students. The cuts are a result of shrinking tax revenue and lagging support from the strapped state government. The city’s 71 charter schools, which enrolled 33,000 students last year and expect to enroll another 10,000 in the 2010-11 school year, stand to lose $15 million under the cuts.

It is difficult to compare the cuts with those that are being made at traditional schools because those schools do not receive money on a per-pupil basis, but district officials said they tried to make the amount of cuts comparable to those being made at traditional schools.

As a result, charters will become more dependent on private donors to provide the extras — more counselors, smaller classes, longer school days and up-to-date technology — that charter operators say set their schools apart from traditional public schools.

But even though Chicago’s charter schools brought in $21 million in private money from foundations, corporations and wealthy individuals in 2007 — the last year for which complete information is available — half have run an average of $700,000 in deficits in recent years, with some of the shortfalls reaching $4 million, according to an analysis of Chicago Public Schools data by Catalyst Chicago, an independent magazine on urban education.

The data showed that two-thirds of the schools could not cover core expenses, like salaries, facilities and overhead, without private money. A third needed private money to fill more than 20 percent of their budgets. A recent study by Ball State University found that Chicago’s charter schools depend far more on private financing than those in other big cities, including Boston, Miami and New York.

Robert Runcie, chief administrative officer for Chicago Public Schools, said the district needed to take a “serious look” at the fiscal health of charters and was developing a system for stricter oversight. Four Chicago charters have been shut down since the 1990s largely because of financial problems.

Charter schools, which receive public money but are run by private for-profit and nonprofit organizations, were established to foster innovative educational practices by freeing the school from state and local regulations, for example, the requirement that all teachers be state-certified.

Chicago Public Schools officials and national education experts say that charters, to be considered fiscally sound, should be able to cover all their general operating costs with public money. If charters raise private cash, it should be just for additional programs, said Greg Richmond, president of the National Association of Charter School Authorizers.

Advocates of charter schools say inequitable public financing is the root of the problem. Charters are forced to rely on private money because they receive less public money than traditional schools, said Larry Maloney of the Aspire Educational Consulting Company in Washington, D.C., one of the authors of the Ball State study.

“The question is, are we intentionally setting up charter schools to fail?” he said.

Opponents of charters blame the financial problems of the schools on the expense of extra bureaucracies. In addition to principals and assistant principals, the schools often have executive directors and financial officers on staff, all of which cost extra money.

“I think the charter school system was always built on a house of cards, and once the economy took a dive, it would crumble,” said Jackson Potter, staff coordinator for the Chicago Teachers Union and co-chairman of the Caucus of Rank and File Educators, which now leads the union.

Union leaders have vigorously fought charter schools, which they consider privatization of public schools and a way for school districts to abandon their responsibility to children. Charter schools also have mostly nonunion teachers, although teachers at two charters in Chicago have recently formed unions.

President Obama and Education Secretary Arne Duncan, a former Chicago schools chief, view charter schools as a way to spur innovation in public school systems that they say are too resistant to change. States that do not allow charters or restrict their replication jeopardize their chance to receive federal financing, Mr. Duncan said last year. “We want real autonomy for charters,” he said.

Mr. Duncan has also pressed charter operators to take over failing schools under the so-called “turnaround” strategy, which involves replacing the entire staff of existing schools.

Charter schools are a centerpiece of Chicago’s Renaissance 2010 strategy, which was started in 2004 by Mayor Richard M. Daley and Mr. Duncan, who was then the chief executive of Chicago Public Schools. The program’s goal is to close failing schools and replace them with new ones, including charters.

The initiative has been controversial from the start, and charter finances are not the only concern. New schools have been spread unevenly across the city, and half of the 25 neighborhoods considered most in need of better schools have yet to get them.

In addition, teacher turnover at charters is high: Catalyst Chicago’s analysis of charter teacher lists found that half of teachers left from 2008 to 2010, a rate comparable to that in many of the most troubled district-run schools.

Charter school operators say teacher turnover can be good if it means that bad teachers are being fired. But education experts say that high turnover is often a result of poor working conditions, and charter teachers typically work longer hours for less pay than teachers in traditional schools. Experts also say high turnover causes an unstable learning environment.

Educators have said the real test of charters is whether they are driving improvement in public schools. The Catalyst Chicago analysis showed that most charter schools in the city outperform traditional schools in their neighborhoods, but only eight have reached the higher state average for student achievement.

A host of national studies have found that charter-school performance is mixed and, on the whole, no better than that of traditional public schools.

Charter operators say that there are other measures besides test scores. This year, a handful of the charter high schools called attention to the fact that almost all their students got into colleges.

Around the Calumet campus of Perspectives Charter School on Chicago’s South Side are posters and murals with the motto “College For Certain.” To reach that goal, Perspectives has college counselors dedicated to taking students on college tours and helping them navigate the journey from poor South Side neighborhood to leafy college campus.

In May, the school celebrated its first graduation, with 70 percent of the class having been accepted to at least one college, the school reported.

But the 6 percent cut in Chicago Public Schools spending on charter schools is going to make it increasingly difficult to fulfill the promise of college, said Rhonda Hopps, chief executive of Perspectives, which operates five schools. The proposed cuts would mean $710,000 less, based on current enrollment, to hire the additional college counselors Perspectives had planned to add. Ms. Hopps said she would try to find volunteers to fill the gap.

“I am worried about the direction of the cuts,” said Ms. Hopps, who joined Perspectives last spring as the school’s first chief executive. Her major task, she said, is to raise money.

Beth Purvis, the executive director of Chicago International Charter Schools, the city’s largest charter operator with 13 schools, said her board of directors believed that “public education should occur with public money.”

Leaning on outside sources might work in the short term, while charters are still the toast of the philanthropic community, Mrs. Purvis said, but the strategy may not work in the long run.

“We don’t want to just be in a community for 15 to 20 years,” she said. “We want to be in a community for 50 to 100 years.”