Many states fund phantom students, sucking up education dollars and reducing districts’ incentive to improve productivity, according to an Education Next article by Marguerite Roza, who runs the Edunomics Lab at Georgetown and Jon Fullerton, executive director of Harvard’s Center for Education Policy Research.
Declining enrollment — especially if it’s caused by charter competition — is a primary cause of phantom funding. The students are gone, but the dollars remain.
During charter negotiations, many states promised school districts they’d be protected financially if students left for charter schools. “Double funding” can be costly.
In Connecticut, districts receive revenues based on the enrollments of students living in their region, regardless of whether those students attend the district schools or attend charters (or technical schools).
. . . In Massachusetts, charter school students take with them the per-pupil net school spending (state and local) from their sending districts. To soften the blow to sending-district finances, Massachusetts provides a partial tuition reimbursement for up to six years after the district starts paying charter school tuition. When a district incurs new tuition costs, the state reimburses the district for 100 percent of the cost in the first year and 25 percent of the tuition cost for the next five years. Thus, the state essentially provides districts with 225 percent of a year’s tuition for each full-time equivalent student lost!
There’s little “incentive to improve services in an effort to retain more students,” they conclude. “When students leave a district to attend a charter school, the district may see an increase in per-student revenues.”
Some states also subsidize small districts. California is very generous to small districts, undercutting any incentive to merge for greater efficiency.