Digging for Consistent, Comprehensive Financial Data on New Jersey Charter Schools

I’ve commented in the past about the difficulties of obtaining reconcilable data on finances of New Jersey Charter Schools. What do I mean by reconcilable? Well, when I’m looking at financial data on charter schools in particular, I like to be able to see some relationship between expenditure and revenue data reported on IRS 990 filings (Tax returns of the non-profit boards/foundations/agencies that operate the charters) and state government (department of ed) reported expenditures and/or any annual financial report documents that might be required by charter authorizers. This really is an authorizer/accountability issue. A financial reporting requirement issue.

When I did my study on New York City Charter schools last year I was quite pleased to find a) annual financial reports on nearly all NYC charters housed by the State University of New York, b) IRS 990 filings for nearly all NYC charter schools, and c) a pretty strong relationship between the reported expenditures on one form and the reported expenditures on the other. Here are two graphs of those relationships – the first including the higher outliers (which is partly a reporting issue, with KIPP Academy embedding systemwide expenses-an issue consistent on both forms).

Example: NYC Charters

Here’s how it looks if I focus on those spending less than $20,000 per pupil:

Example: NYC Charters

So, in NYC, I have pretty solid information from both sources, well aligned but with some notable exceptions. Some of these exceptions were further reconciled, or at least changed positions, when we added in expenditures from affiliated foundations (Harlem Children’s Zone, HCZ in particular).

In New Jersey, financial data on charter schools seems to be improving, but remains sparse. For example, in my most recent search of IRS 990 filings through Guidestar, I was able to obtain the following distribution of numbers of institutions by most recent available year –

2010 (2009-10 school year) = 40

2009 (2008-09 school year) = 8

2005 = 1



1998 = 1

Yet, the New Jersey Department of Education (NJDOE) reports data on 64 charter schools (63 with expenditure data). So, I can still only easily access up-to-date IRS filings on about 2/3 of NJ charter schools. This to me, is a concern, but it is a massive improvement over the past few years. I now actually have enough data from each source to check the relationship between the two, and where data are reported, that relationship is strong:

But we still have limited information on many NJ charter schools, and only a single source of data on which to rely. Indeed, it is the official state department of education data, but it’s always nice to be able to reconcile with other official data/filings/reports.

Note also that in NY, the points that fall in line, fall right in line – on a straight line – with exactly reconcilable numbers. The NJ ones which are reported are getting better… mostly in line.

Here’s how the spending per pupil rankings play out in NJ using each source. First, the IRS 990 data:

Next the NJDOE spending guide data:

Note that things change a bit when we add in those cases where IRS 990s weren’t reported.

So, there are a lot of schools missing in that first graph, and adding the others in does change things a bit. But I’d like to see both forms of data readily available on an annual basis.

Among other things, these data reveal some striking differences in spending, which perhaps result at least partly from access to non-public funding, but also partly result from differences in host district funding. An important question here is whether these differences are driven systematically by differences in the needs of the student populations served by these particular schools.

That is, are the differences in spending across charters a predictable function of various student needs, such as concentrations of low income children, English language learners or children with disabilities?

Are the differences in spending across charters partially explained by regional differences in labor costs? (e.g. competitive wages for school employees such as teachers?)

That is, to what extent to these substantial differences in spending across charters enhance equity, as opposed to eroding it.  And to what extent should we be concerned about the role of charters within the public system eroding equity (e.g. are traditional resource equity concerns relevant when individuals and families choose less well resourced schools? Do more well resourced schools tend to have longer waiting lists? Makes for a fun legal question, as well as a moral/ethical question).

I’ll explore these issues in a future post. For now, I’ve just been trying to get enough coverage of data on the financing of NJ charter schools in order to be able to conduct such analysis. And it has been very frustrating that such data are not readily available for all schools and easily reconcilable.


Published by schoolfinance101

Bruce Baker is an Professor in the Graduate School of Education at Rutgers, The State University of New Jersey. From 1997 to 2008 he was a professor at the University of Kansas in Lawrence, KS. He is lead author with Preston Green (Penn State University) and Craig Richards (Teachers College, Columbia University) of Financing Education Systems, a graduate level textbook on school finance policy published by Merrill/Prentice-Hall. Professor Baker has written a multitude of peer reviewed research articles on state school finance policy, teacher labor markets, school leadership labor markets and higher education finance and policy. His recent work has focused on measuring cost variations associated with schooling contexts and student population characteristics, including ways to better design state school finance policies and local district allocation formulas (including Weighted Student Funding) for better meeting the needs of students. Baker, along with Preston Green of Penn State University are co-authors of the chapter on Conceptions of Equity in the recently released Handbook of Research Education Finance and Policy, and co-authors of the chapter on the Politics of Education Finance in the Handbook of Education Politics and Policy and co-authors of the chapter on School Finance in the Handbook of Education Policy of the American Educational Research Association. Professor Baker has also consulted for state legislatures, boards of education and other organizations on education policy and school finance issues and has testified in state school finance litigation in Kansas, Missouri and Arizona. He is a member of the Think Tank Review Panel, a group of academic researchers who conduct technical reviews of publicly released think tank reports on education policy issues.

8 thoughts on “Digging for Consistent, Comprehensive Financial Data on New Jersey Charter Schools

  1. Perhaps the reason the 990s for prior years do not exist is that, until 11/18/2009, when guidance was issued by the NJ CSA, many charter school auditors were relying on directives from NJDOE that 990’s were not to be filed by NJ charter schools, since they were considered public school governmental entities by the State of NJ, subject to all NJDOE regulations, and not non-profits as charter schools are in New York State. This is a key difference between the 2 states. ( I have a copy of it if you would like to see it, but I think that explains it).
    Kathy Mone School Business Administrator, Elysian Charter School

    1. Indeed. And I had been informed of as much by others as well. But even by 2010, we’re looking at only 2/3 coverage. My point is that these data are particularly useful for making comparisons, in part, because the 990s often include revenue not reported on the official state documentation. It’s my opinion that NJDOE has been particularly sloppy in this regard. The comparative spending guide data lack useful detail. And, they don’t provide downloadable complete annual financial reports or electronic data from AFRs. They should. I have little doubt that most charters would file if required, as they do in NY. And that’s what I’m hoping to see. Thanks for your input!

    1. In NJ, it’s 90% of the foundation formula revenue per pupil (which is not 90% of total revenue per pupil, since many host districts have received aid above their foundation formula revenue – see my SFRA post for information on SFRA). Assessing the fairness of this funding level cuts both ways enough times so that it’s not possible to evaluate well – which would of course imply the need for a better method – a more direct method of funding charters. First, host districts have the transportation obligation, justifying the reduced payment… partly. Special ed money is embedded in the foundation formula (2/3 of special ed money), yet charters in many NJ districts serve very low shares of special ed kids (leaving the host with nearly all high need special ed kids). Overall, I’ve shown many times on this blog that many NJ charters serve far fewer low income and ELL kids than host districts making their per pupil costs lower. Hard to get a handle on overall effect of those pieces. But, of course, charters are having to take lease payments out of their operating expense, but this is highly inequitable across charters, some of whom have access to high quality facilities space supported by benefactors. One charter operator was kind enough to disclose to me that the school lease payment was about $1,500 per kid per year. So, you’ve got significant pieces cutting both ways, and no really clean way to net them out. In NYC it’s a little easier to peel back the school site budgets to comparable components, since the Independent Budget Office has already established some precedent for doing that – for identifying the charter related expenses incurred by the host district (NYC BOE). This issue complicates if not entirely undermines most of the oversimplified charter -host spending comparisons out there – especially the junk analysis by Public Impact/Ball State which did not account for any of this. For example, in NYC, the host district total expense actually includes the expense on the facilities of all co-located charters, as well as transportation costs. Dividing that across host district students and attributing it to them is, of course, wrong.

      This topic has been an interesting one for me to explore and a real pain in the ass. Many people rely on per pupil spending comparisons… and assume that per pupil spending can and should be compared simply. It should be that simple, if we’re going to report this stuff. NJ (and many other locations) needs to do some significant work for this to be possible. One place to start might be with the funding formula for charters, with one possibility being to fund them directly from the state and based on their actual student needs, including special education. This would also require changing the special education formula to be based on actual district needs (which has been my suggestion and seems to be the suggestion of a new report done for the state by Augenblick and colleagues). Because this would remove local pass-through funds from the charter revenue puzzle, this would increase the total cost to the state. But, there might be ways to remedy this. For example, I’ve always been fond of statewide and/or regional sharing of property tax revenues form non-residential (commercial/industrial) properties (written about by Helen Ladd in the 1970s and Brian Brent in the 1990s). The state could generate revenue for development zones or a statewide development fund from these revenues. State school finance systems that rely too heavily on sales/income taxes are too volatile when the economy swings. As much as property taxes are hated, they are the stable component of the revenue portfolio (by comparison).

      So… a long answer to a short question… but some issues I thought were worth airing.

      1. As you well know, however, being advised and being able to keep those costs in those ranges may be two different things, especially in a real estate market like Jersey City. One of my biggest concerns is the emerging inequity across charter schools – among those with access to substantial external resources and those without and the likelihood of spreading resources more thinly with more rapid expansion – meaning a likely greater pace of expansion of have nots than haves. I’ll admit though, that it’s been hard to discern any substantive quality differences in the outcomes of charter haves versus charter have nots… at least in NYC. But, this is likely due to the very lumpy nature of year to year private revenues and expenditures especially as charters scale up (even the first 10 years or so for any given school, as it fills in grade levels).

  2. We have a lease payment equal to $1,667 for each student or an annual cost of $ 366,672. This falls within the range that Kathy described. As far as the per pupil spending goes, the numbers are inflated for those of us charters that do have a high special education population. The additional funding to cover the provision of services such as CST evaluations, speech, OT, PT and extra teachers to meet the smaller class size requirements gets entered into the base pool and inflates the per pupil numbers. Emily Fisher and Academy Charter may be exceptions but it is worth noting that we have higher special ed percentages than our resident district. Currently ACHS is 25.2% special education – with profound disabilities such as blindness, autisim, ODD and mild cognitive impairments (total IQs in the 50s and 60s). Also, as our students arrive with outdated CST evaluations we must conduct new ones right away – paying two consultants, one person is in house. Then as a high school we need to have evaluations conducted within the last three years to access the Division of Voc Rehab transition and support services for our graduates – thus another round of evals for each of the specil needs kids. Put it all togther and the monies disappear quickly.

    Mary Jo McKinley
    Director, Academy Charter High School

    1. You raise the critically important point about the heterogeneity of charter schools across NJ. They differ quite significantly from each other and from their hosts. Some in one direction and some in other directions. One of my concerns would be that the funding streams are not sufficiently sensitive to those differences. As such, there is little incentive to try to serve higher need populations, which may explain why few do. These issues require careful consideration in the design/redesign of charter funding formulas. Unfortunately, charter funding in many ways shows signs of the disparities that were so persistent in the past with traditional public schools. Funding is highly dependent on access to philanthropy as opposed to differences in student needs. As such, in many contexts the most financially viable charters are those which are best connected to philanthropic networks and in many cases have the benefit of NOT facing the types of budgetary pressures you describe above.

Comments are closed.

%d bloggers like this: