NJCSA Statement Regarding ELC Attacks on Charter School Fund Balances

Hamilton, New Jersey–September 24, 2015–The Education Law Center completely misses the mark in their “analysis” of charter school fund balances. In their most recent misguided assault on charter school viability, the ELC calls for a two percent limit on charter school fund balances without adequate research and without placing into context why charter schools must generate fund balances in the first place.

Unlike district schools, charter schools do not receive any facilities funding from the State. The only way for a charter school to purchase or renovate a building is to accumulate a fund balance from their operating funds. This balance must be large enough to give them access to additional financing from private financial institutions, such as banks, non-profit loan funds, or developers. Over the past decade, many charters have successfully completed facility projects using this method—and at a fraction of the per seat cost incurred by most school districts.

Additionally, the Charter Agreement authored by the NJ DOE requires all charters to maintain an escrow fund of $75,000 to cover expenses associated with the possible closure of the school. For smaller schools this would already exceed the two percent cap called for by the ELC.

Unlike the district public schools, charter schools have no ability to raise revenue through taxes. And while districts are limited to a nominal two percent increase per year, they also receive “waivers” that allow them to approve larger increases to cover things like health insurance costs; districts can also take advantage of “banked cap,” i.e., credit for increases they didn’t take in the previous years but which can be applied to future years. All of this adds up to greater flexibility to deal with fiscal uncertainty related to unscheduled, but necessary, capital improvements, facilities, rent, fees, and decreased per pupil funding.

Charter schools receive less per pupil funding from their district counterparts, and they receive no facilities aid. Nonetheless, some schools have managed to efficiently use their resources to not only meet the stringent standards of the Charter School Performance Framework, but to also maintain strong fiscal accountability and performance. Any cap on the financial reserves of charter schools ultimately threatens their viability and, thus, their ability to provide the academic opportunity students and families are seeking.

If we are going to engage in an honest conversation about funding, we should all work to see full funding of the School Funding Reform Act and equity in facility funding for charters. Instead of attacking strong charter fiscal accountability, we must work to ensure every child’s right to an excellent education.

About New Jersey Charter Schools Association
The New Jersey Charter Schools Association (NJCSA) is a statewide association representing the state’s charter school sector. New Jersey is home to 89 charter schools, serving nearly 40,000 children. NJSCA was formed in 1999 and today is charged with advancing a quality public education for New Jersey’s children through quality public charter schools. Our vision is that every child in the State of New Jersey has the opportunity to attend a high quality public school that best meets his or her needs. www.njcharters.org

Media Contact:
Amanda Vega
Manager of Communications & Marketing
(609) 989-9700, ext. 4413 | avega@njcharters.org

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