Poor Little Charter Schools—How to Profit in Poorly Funded California?

John Fensterwald notes that while one in every six charter schools is in California, most would be much more profitable if they operated in other states that fund education more liberally than liberal California. (See the study Location, Location, Location: How would a high-performing charter school network fare in different states? which focuses on the “plight” of Oakland-based Aspire Public Schools).

California funding for public education is 20% below the national average, the primary reason charter school cannot make as much money here as elsewhere. (Charter schools take in taxpayer revenues and attempt to provide educational services more cheaply than traditional public schools, pocketing the difference as profits). Most charters in California rely on philanthropies to fund a portion of their expenses. Aspire relies on philanthropies for 7% of their funding needs.

The question one should be asking is why so many for-profit charter schools are operating in California is the profit margins are so low compared to other states. For Aspire, there is an alternative public revenue stream that provides additional funding: local bonds.

The State Board of Education held hearings today to discuss when charter schools should be allowed to operate as statewide enterprises, thus bypassing local district rules and oversight. The board has only granted statewide status to three charter school organization since 2006: High Tech High, Pacific Technology School and Aspire. This privilege allows charter organizations to start schools wherever they want, without the risk of rejection by local districts. It can also be a huge financial boon. Aspire has passed millions of dollars in bonds to build their own buildings since acquiring statewide operating status, which would be nearly impossible to do under district control.