Another Take on Michigan Administration Costs

Additionally, the Center’s research did not include a separate analysis on the charters in Detroit, in which a significant number of the state’s charter schools are located.[i]  In my previous work examining charter school revenue patterns, I have found that the financial dynamics of major metropolitan areas often differ from the state as a whole.  For example, in Charter School Funding: Inequity Persists, a project I worked on for Ball State University, we found that when all funding streams are analyzed, Detroit charters received 28.7 percent less funding than the district, while the state variance was 19.7 percent. (Across the country, the average per-pupil charter funding compared to the district school funding is 80.2% in statewide data and 72.2% in urban districts).

So, over the course of several days, I reviewed data for Detroit Public Schools and the charter schools located within its boundaries to see if the Center’s research from FY08 applied to Detroit in FY11, the most recent year available.[ii]  Interestingly, a different pattern emerges from the one depicted in the Center’s study in revenue provided to the district and the charters.  The Center’s analysis from FY08 showed the district and charters statewide at near parity in funding with a difference of only $293, or 3.3 percent.  That is not the case for Detroit in FY11, where Detroit Public Schools averaged $9,937 per pupil in revenue, while the charters received $8,591 per pupil, a variance of 14 percent.

A second departure from the results of the Center’s study appeared in the comparisons for spending on Instruction, where the Center indicated that districts statewide spent $5,629 on basic instruction in FY08, while charters spent only $4,942.  For Detroit, both the district and the charters spent considerably less per pupil on Instruction than the averages presented by the Center, but the Detroit charters spent more than Detroit Public Schools.[iii]  In FY11, Detroit Public Schools dedicated $3,081 per pupil for basic instruction, while the charters spent $3,217 per pupil.  Also of note is that the charters spent a higher percentage of their available dollars on basic instruction – 40.1 percent compared to 31.3 percent for the district.  And this is consistent with research in other cities – charters dedicate a higher percentage of their available funding to instruction than school districts.

The Center’s study also indicated that Michigan charter schools spent more than traditional public schools for administration.  In FY11, it is true that the charters spent more than traditional public schools for school administration - $722 versus $641 per pupil.  My work in other major metropolitan areas has led to similar results – charter schools must pay a competitive wage to attract talented school leaders, but if a school has fewer pupils over which to spread that cost, the per pupil analysis will show a higher cost.  The percent dedicated to school administration will be even higher for new charter schools that have not reached full enrollment.  For the two other administrative categories, however, general administration and business administration, Detroit charter schools logged a lower per pupil cost when compared to the district.  In FY11, Detroit Public Schools recorded $121 per pupil for general administration, while the charters recorded $73 per pupil.  Business administration costs also were lower for the charter schools - $379 per pupil versus $602 per pupil for the district.

When all the administration categories are combined, Detroit charters recorded lower administrative costs across all categories - $1,174 per pupil versus $1,364 for the district.

It is interesting to note that charter schools have taken measures to maintain their administrative costs – 86 percent of Detroit charters have no salaried business manager as of FY11, relying instead on consultants and contractors to fill the business needs of their schools.

The Center’s research provides another indicator of the financial conditions of Michigan’s schools.  But, it is a point in time indicator alone.  As the data from FY11 indicate, rapidly changing financial conditions can result in charter schools adjusting the way they spend their money.  Equally important, research efforts such as the one undertaken by the Center need to consider that funding and expenditure patterns will vary within a state’s largest cities where many charters provide services.

Larry Maloney is President of Aspire Consulting, LLC and worked as part of the research team on the Thomas B. Fordham Institute’s study, “Charter School Funding, Inequity’s Next Frontier,” and Ball State University’s 2010 follow-up, “Charter School Funding, Inequity Persists.”

Updated citation on May 1, 2012