[From the Executive Summary]
…Charter schools have high costs to the state and have similar levels of student performance as traditional public schools. Current costs to the state are driven by favorable education funding formula adjustments for charter schools that total $34.7 million. The small school site format of charter schools means that less of the state’s education funding is spent on instruction. Charter schools have to undergo an application process before opening and a charter renewal process every five years. The application process needs increased rigor to ensure only quality schools open; particularly in the areas of analysis of proposed budgets and cost assumptions, proposed facilities planning and inclusion of more objective and proposed objective performance measures that eliminate subjectivity from the charter authorizer renewal decisions. Charter authorizers need to play a greater role in determining charter schools’ role in the larger education framework, preferably through a proactive process like requests for proposals for education programs that target specific populations or serve specific areas. Until the State can provide an application and renewal system that strengthens accountability for schools and ensures only quality schools open, charter authorizers should not approve new charters.
Charter authorizers need increased oversight and monitoring of charter schools to ensure the academic and financial performance of schools, and the use of academic and financial watch lists could help facilitate this increase in profile for authorizers. Charter school site visits showed issues with regard to untimely financial audits, overpaying or neglecting tax obligations, improper expenses, lacking oversight functions, an over reliance on external financial management organizations, conflicts of interest and other examples of resource mismanagement. Charter schools need guidance in the lease arrangements they enter and should be required to solicit help from the Public Schools Facilities Authority (PSFA). The mandate for charter schools to be in public buildings by 2015 (22-8B-4.2 NMSA 1978) is in conflict with the need to close poorly performing charters (my emphasis). Nonrenewal of charter schools is a difficult decision for charter authorizers, and the State needs to mandate closure of poor performing schools by formalizing “second chance” renewal charters with conditions. If closure of poorly performing charter schools is not a viable option, policy makers should strongly consider a hard cap on charter schools Statewide.
• Charter schools generated about $24.1 million in small school size adjustments under the formula for FY10 for schools that have chosen a small school program.
• Charter schools generated $7.5 million in growth funding for FY10.
• Charter schools cost the State $3.1 million by being held harmless on the teacher training and experience (T&E index).
• Charter schools spend less than districts on instruction because of administration and lease costs.
• Charter schools experiment with performance pay.
• Administrator salaries at some charter schools compete with superintendent salaries.
• Charter authorizers receive two percent of charter school State Equalization Guarantee (SEG) funds but place it in their operational fund and cannot account for direct services provide to charter schools.
• Charter school spending shows questionable or improper expenditures and late payments to vendors and to tax obligations.
• Charter schools have operations that have the potential appearance of conflicts of interest with regard to lease arrangements, family hiring and other contractual arrangements.
• There is large diversity in use of procurement cards.
• Charter school administrators identified education practices they feel are innovative, but there is no formal process for sharing these practices with traditional public schools.
• Charter authorizers should freeze approval of all new applications until the application and renewal process has increased rigor, monitoring and oversight and charter schools are closed on the basis of poor performance.
• Exempt charter schools from receiving small school size adjustments under the funding formula and clarify growth thresholds needed to qualify for growth unit adjustments.
• Procurement card programs should adhere to guidance promulgated by the Department of Finance and Administration (DFA).
• Extend the deadline for putting charter schools into public facilities by 2015 until the full cost has been examined.
• Identify best practices among innovative education programs and disseminate them through a PED website.
• Require a market analysis in the charter application via a community petition with signatures totaling 75 percent of the proposed student population.
• Require review and approval of proposed facilities in new applications by PSFA’s planning and development division…