December 15, 2010: Charter school budget and finance issues continue to be a top priority for CCSA, even during the legislative recess. In an effort to keep these issues front and center, CCSA convened charter school leaders, members of the banking community, representatives from philanthropic foundations, the California School Finance Authority, the California Department of Education and Association staff for a presentation and in-depth conversation about charter school funding equity and access to working capital financing.
Colin Miller, CCSA's vice president of policy, led the group through a discussion aimed at developing an actionable definition of charter school funding equity. The group agreed that charter schools are not receiving funding equal to the total funding "available to a similar school district serving a similar population" as required by law. Components of a more equitable funding system might include an "adequate" base for each pupil, with additions based on pupil needs- or "weights." Although simplifying the state structure is a long-term, big-fix solution, looking deeper at funding equity by funding source provides a more strategic opportunity to begin closing the funding gap between charter and traditional schools. Participants worked in small groups to begin tackling issues such as Prop. 39 and other facility funding challenges, access to categorical funds (especially for new schools), discrepancies in "Basic Aid" districts and other local funding, and variances in special education funding and services.
Also contributing to the funding equity presentation were Michael E. Hersher of Middleton, Young & Minney, LLP, who presented on the history and influence of litigation on school funding and longtime charter school advocate Dave Walrath of Murdoch, Walrath & Holmes, who discussed the state budget and its historical impact on school funding in California.
Joe Harrington, CCSA's director of financial services, conducted the second portion of the forum, discussing charter school access to working capital financing. California's budget problems are creating an unsustainable situation; charter schools must cope with up to 10 payment deferrals and the shift of 28% or more of state aid apportionment funding from one fiscal year to the next. While districts can reliably access Tax Revenue Anticipation Notes (TRANs) to address most of their cash flow concerns, most charter schools have far fewer finance alternatives. A number of topics were discussed, including access to district TRANs and factoring. Michael Kremer of First Southwest presented on Revenue Anticipation Notes (RANs) and how this type of financing may be a potential working capital solution for charter schools.
Altogether, the Charter School Finance Forum laid the groundwork for future conversation aimed at finding a solution to these funding challenges which could lead to new fiscal policies or legislative proposals. Commenting on the overall success of the event, Jennifer Pryce of the Calvert Foundation shared that "the symposium exceeded my expectations...It was invaluable to have a diverse perspective on the topics discussed - representatives of government, charter schools, finance providers and others." The forum, she continued, "brought new conversations and possible solutions to bear. I look forward to continuing the conversations that were started and bringing others to the discussion as well."
Please contact Colin Miller or Joe Harrington with any questions about the Finance Forum. And members, keep your eyes open for the upcoming edition of CCSA's Charter School Financial Management Guide. The Guide highlights financial management issues that are crucial for charter school leaders and boards to consider, understand and practice.