In March 2004 the Legislative Office of Education Oversight (LOEO) of Ohio published a comprehensive report describing charter school funding in a number of states using funding information from the 2001/02 school year. At this time, charter schools were operating within 34 states and the District of Columbia and were included in LOEO’s survey of funding methods and levels. Of these 35 chartering entities, 26 responded to some or all of the survey questions. Based on the responses received, the report compared methods and funding levels of charter and traditional public schools.

Funding methods and sources of revenue
Funding formulas for charter schools are complex and different for each chartering entity. Further, some states use multiple funding methods for different types of charter schools within the state. Of the 26 states providing usable information,
LOEO found:

• Most states (17 of 26) use the same or a similar funding formula to determine per-pupil funding for charter schools as they do for traditional public schools. This calculation uses a “base cost amount” for all students with additional revenue provided for higher-cost students (e.g., those in special or vocational education).



• Charter schools, like traditional public schools, have access to state, federal, and private revenues. Fifteen of the responding states indicated that charter schools also receive local tax revenue.



• Most states distribute state funds to charter schools either through local school districts or totally independent of school districts. Three states distribute state funding to charter schools by subtracting the funds from school district allocations and then sending the funds directly to charter schools.



• The majority of states with virtual charter schools (7 of 9) fund them using the same funding formula as used to fund other charter schools.



• Fifteen of the 26 responding states require transportation for charter school students, but there is no common method of funding it. Five states fund their charter school transportation as a shared responsibility between the state and school districts.

Funding Levels
States were requested to provide the average amount of overall per-pupil operating revenue from all public sources for both charter and traditional public schools. However, some states do not maintain the total amount of operating revenue; only 17 states had usable data for both. From the 17 states providing usable information, LOEO found:

• Charter schools generally receive lower levels of overall per-pupil operating revenue—$7,500 versus the traditional public schools’ $8,200. However, national studies indicate that charter schools typically provide a lower percentage of the more expensive services, such as special education and transportation, than their traditional counterparts reducing charter schools’ operating expenditures. Most responding states (20 of 26) indicated that facilities funding is the primary funding challenge for charter schools since most states do not provide additional funding to charter schools for facilities necessitating the use of operating funds for this purpose.



• Charter schools tend to receive more federal funding than traditional public schools. In states where charter schools do not receive local tax revenue, the state contribution is higher.



• Although some states (9 of 26) provide state funding for start-up and planning, for most states, the federal Public Charter School Program fund is the most important source of funding for the start-up and implementation of new charter schools.



• The main factors that can influence charter schools’ funding levels include:
  • Receipt of local tax revenue
  • Provision of higher-cost students (e.g., special or vocational education students)
  • Amount of federal discretionary grant funds received
  • Transportation requirement and state funding for this service