Colorado Legislative Council Staff

LOCAL

REVISED FISCAL IMPACT

(replaces fiscal impact dated March 19, 1999)

TITLE:            CONCERNING EXPANSION OF CHARTER SCHOOLS.

    *   The bill requires a transfer of existing General Fund appropriations to the Department of Education, with no net increase in General Fund expenditures.

Summary of Legislation

            As amended by the Senate Education and Senate Appropriations Committees, the bill creates a State Charter School District (comprised of charter schools approved by the State Board of Education) whose boundaries shall be coterminous with state boundaries, and identifies the State Board of Education as the Board of Education for the State Charter School District. The bill's provisions, relative to the expansion of charter schools, also include:

            Senate Education Committee — February 3, 1999

            •   as amended, deletes provisions that allow a person to bring an appeal to the State Board of Education concerning a school district's decision to deny or grant a charter;

            •   as amended, grants the State Charter School District the power to contract with any public or private entity to oversee and administer the state charter schools of the charter school district;

            •   as amended, deletes the provision granting standing to charter schools to sue and be sued for the enforcement of contracts;

            •   as amended, deletes the provision allowing a school district to require a charter school transfer to the State Charter School District; and

            •   as amended, deletes the provision requiring charter schools granted or renewed on or after July 1, 1999, to receive a portion of any additional local revenues and bond moneys received by the school district.

            Senate Appropriations Committee — April 1, 1999

            •   as amended, defines "minimum state aid district" to be one that received state aid in the amount of 10 percent or less of the school district's total program for the immediately preceding budget year; and provides a method for limiting the number of students residing in a minimum state aid district who may enroll in a state charter school in any budget year;

            •   as amended, provides that only those students who were attending a public school, including but not limited to a charter school or a state charter school, during the prior school year shall be eligible to enroll in a state charter school;

            •   as amended, provides: (1) that any state charter school originally approved as a charter school and transferred to the state charter school district shall continue to be funded at the funding level agreed upon with the chartering school district, and the funding level shall not be renegotiated upon renewal of the charter; and (2) provides for transfer of charter schools to the State Charter School District; and

            •   as amended, provides that no additional General Fund moneys shall be appropriated to fund the State Charter School District; provides that each state charter school shall receive annually 95 percent of the state average per pupil funding for each pupil enrolled in the state charter school; and provides that the remaining 5 percent shall be allocated to the State Charter School District to offset costs incurred in implementing the State Charter School District.

NOTE:   As introduced, the bill had a General Fund fiscal impact of $9.5 million and a $5.25 million fiscal impact to local school districts. As amended by the Senate Education Committee, the bill had a General Fund fiscal impact of $8.0 million and no fiscal impact to local school districts. As amended by the Senate Appropriations Committee, the bill has no state fiscal impact and a fiscal impact to local school districts (less state aid). The bill includes an appropriation clause for 7.5 FTE in the Department of Education for administrative support to the State Charter School District.

State Expenditures

            Funding for Public School Finance. The amended bill limits state charter school enrollment to those students previously attending a public school (including a charter school or state charter school) during the prior school year. Therefore, it is assumed that students from either home schools or private schools, and students who are either dropouts or homeless, will be ineligible to enroll in a state charter school. The bill does not expand the number of students counted for the purpose of public school finance funding; therefore no state General Fund impact. Any moneys required in FY 1999-00 for new state charter schools would have been reflected in the prior year's appropriation for public school funding and would be redistributed from local school districts to the new state charter schools. Under the bill, local school districts will receive less state aid.

            Parents wishing to enroll their home-schooled child or children in a state charter school may choose to enroll their child or children in a public school for year one for the purpose of transferring their child or children to the state charter school in year two. The fiscal impact of this occurrence cannot be quantified.

            Financial Disincentives for Current District Charter Schools. In its current form, the bill creates financial disincentives for current district charter schools to transfer to the newly created State Charter School District. Due to these disincentives, the fiscal note assumes there will be no state or local fiscal impact, relative to current district charter schools, as noted below.

            •   The bill creates a financial disincentive for a charter school to transfer to the State Charter School District by eliminating any possibility of increased funding when charter contracts are renegotiated. Despite this disincentive, a school may elect to transfer to the state charter school district for the benefit of a new and perhaps more favorable governing authority. The fiscal note assumes that due to the funding restriction, current district charter schools will not transfer.

            •   "Minimum state aid district" is one that received state aid in the amount of 10 percent or less of the school district's total program for the immediately preceding budget year; and provides a method for limiting the number of students residing in a minimum state aid district who may enroll in a state charter school in any budget year. Currently, there are six school districts meeting the bill's definition of minimum state aid district. Of the six districts, three districts (Eagle, Park, and Summit) have charter schools with a total enrollment of 355 students. The students currently attending charter schools in these three districts are currently funded exclusively through property taxes. Should the charter schools in these three districts choose to transfer to the State Charter School District, the bill would limit the total number of students eligible to enroll in a state charter school to 125, and reflect a reduction of 230 students. Under this provision, it can be assumed that these district charter schools will not transfer to the State Charter School District because of the disincentive to do so.

            Section 22-30.5-305. Charter school board - powers and duties. This provision of the bill establishes the responsibilities of the State Board of Education to administer the business and programs of the State Charter School District (see fiscal note dated March 19, 1999, for discussion of anticipated costs). The bill provides that no additional General Fund moneys shall be appropriated to fund the State Charter School District; provides that each state charter school shall receive annually 95 percent of the state average per pupil funding for each pupil enrolled in the state charter school; and provides that the remaining 5 percent shall be allocated to the State Charter School District to offset costs incurred in implementing the State Charter School District.

            Since FY 1995-96, there has been a 150 percent increase in the number of charter schools in Colorado. In FY 1995-96 there were 24 charter schools, and for FY 1998-99 there are 60 charter schools with approximately 14,000 students. (Eight new charter schools were created between FY 1997-98 and FY 1998-99). The bill provides for the creation of state charter schools. Although the number of new schools that will be chartered cannot be quantified, it is likely that the number will increase under the State Charter School District. Assuming eight new schools with 150 students per school are chartered in FY 1999-00, $5,694,300 would be the funding available to the schools (95%) and $299,700 would be available to the State Charter School District for its administrative costs. These costs are not new costs and would not require any additional appropriations because the bill requires that only those students who were attending a public school, including but not limited to a charter school or a state charter school, during the prior school year shall be eligible to enroll in a state charter school. Thus, there is no expansion of students under the financing for public schools. Any moneys required in FY 1999-00 for new state charter schools and the State Charter School District would have been reflected in the prior year's appropriation for public school funding and would be redistributed from local school districts to the new state charter schools and the State Charter School District accordingly.

            The redistribution of moneys from local school districts to the newly created state charter schools under the State Charter School District should provide adequate moneys for the administrative costs of the State Charter School District. However, under this scenario above, local school districts would receive approximately $6.0 million less in state aid.

Local School Districts

            Although the total amount cannot accurately be quantified, using the scenario identified above, school districts would receive, at a minimum, $6.0 million less in state aid for public schools under SB 99-100.

State Appropriations

            The fiscal note indicates that the Department of Education should receive an appropriation which redistributes General Fund moneys accordingly: (1) reduces the appropriation for Public School Finance - Total Program by $299,700; and (2) appropriates $299,700 and 7.5 FTE to Administration for the State Charter School District's administrative costs. The bill currently includes an appropriation clause for 7.5 FTE with no transfer of moneys.

Departments Contacted

            Education

            Legislative Council