Charter advocates challenge school finance systems in Arizona and North Carolina

Charter school advocates in Arizona and North Carolina filed lawsuits last month alleging that their respective states have provided inadequate and inequitable funding for charters. The cases are the most recent examples of an emerging trend of charter school groups initiating education finance litigations.

The plaintiffs in Foley v. Horne—seven families of charter school students—claim that Arizona’s separate financing system for non-traditional schools contravenes the state constitution’s equal protection and uniform public education guarantees. Regular district public schools and charters receive a similar base level of support calculated in accordance with student enrollment, as well as some additional supplementary equalization assistance. District schools, however, also have the capacity to levy local taxes to augment the base revenues, and they are entitled to significant additional state aid for transportation and facilities.

According to the complaint filed in Maricopa County Superior Court, state equalization aid fails to adequately compensate for charter schools’ lack of access to these funding sources. Non-traditional public schools received, on average, $923 less in per pupil funding in 2007, they must procure funds for their physical facilities on their own, and their transportation aid is provided in a lump sum rather than through a more generous miles-traveled formula.

According to the complaint, charter school students constitute 10% of Arizona’s K-12 student population, and they are likely to be from minority or poverty backgrounds. Although they often benefit from innovative and individualized instruction available in many charter schools, they also may attend schools that lack adequate physical education and extracurricular experiences. In addition, the schools may be forced to rely on “uncertain and inconsistent [grant sources].” The plaintiffs are requesting a declaratory judgment declaring the funding system unconstitutional and immediate injunctive relief. [1]

In North Carolina, seven charter schools and 16 families have filed a suit with claims similar to Foley. Their complaint alleges that regulations prohibiting counties and local school districts from providing funds for facilities needs to charters violate the “general and uniform system of free public schools” clause in the state’s constitution. In North Carolina, only traditional public schools have access to the capital outlay fund, which provides monies for real property and capital construction. The plaintiffs allege that the expenditure discrepancies are discriminatory, and that they inhibit charter students’ access to “equal opportunity for a sound basic education.” Robert Orr, a former Republican politician and state Supreme Court justice, represents the plaintiffs. While on the Supreme Court, Orr wrote the majority opinion in Hoke County Board of Education v. State, which declared the provision of “sound basic education” a “paramount” priority.

These cases follow a number of victories for charter schools in North Carolina and other states in recent years. In Sugar Creek Charter School, Inc. v. Charlotte-Mecklenburg Board of Education, several charter schools based in Charlotte, N. Carolina—including plaintiffs in the lawsuit filed last month—argued that districts’ refusal to provide them categorical funding for specialized programs contravened the state law. The court ruled in their favor in 2008. In City Neighbors Charter School v. Baltimore City Board of Commissioners, a Maryland Appeals court decided that the city board of education—which provided charter schools 25% less in average per pupil funding than traditional schools—failed to satisfy a Maryland statute requiring districts to award funds “commensurate with the amount disbursed to other public schools in the local jurisdiction.”

Some commentators, however, question the merits of charter advocates’ claims, arguing that states subject charter schools to fewer regulations than their traditional counterparts, as they are expected to be incubators of innovation in curriculum and administration practices. According to Arizona law, for instance, charter schools must meet the same academic requirements as traditional schools, but are subject to fewer administrative regulations and less oversight, including budgeting and collective bargaining. These circumstances presumably promote greater efficiency and lower costs.

In a number of states, local school boards and/or local schools have sued to block funding of charter schools in their area. For example, in Georgia, a number of district schools recently sued the state over charter funding. In Gwinnett County School District v. Cox, the plaintiffs challenge the constitutionality of the state’s reallocation of funds from district schools to their charter counterparts. They allege that the Georgia Charter Schools Commission, a charter authorizer, “operates as a de facto independent school system…the Defendants are funding an unconstitutional entity and illegally using locally levied school tax revenues to provide funding.”

[1] Another new case recently filed in Arizona, Hobday v. Horne, by public school parents takes the more traditional tack of focusing on inequities of public schools in property-poor districts. The main issues here are that even if these school districts tax themselves at higher rates, they will not be able to raise sufficient revenues and that residents of poor districts are less likely to approve tax increases in override votes. Accordingly these districts can raise fewer funds than their affluent counterparts. Interestingly this case was also funded by the Arizona Charter Schools Association. Presumably their interest is that raising per capita funding for public school students in the property poor districts would also have the effect of raising the base per capita allocations for the charter school students.