INDEPENDENT STUDY AND NONCLASSROOM-BASED REGULATIONS

Funding Formulas and Definitions Accepted by the State Board of Education

May 30, 2002

The State Board of Education (SBE) accepted the following definitions and criteria for funding determinations of non classroom-based schools that was recomended by the Advisory Commission on Charter Schools (ACCS). The permanent regulations will now set different criteria in the 2002-03 fiscal year than that for the 2003-04 fiscal year, and will establish multiple tiers of funding for charter schools operating non classroom-based and independent study programs, depending on the amount that the school spends on certificated employees and benefits, pupil/teacher ratios, and the amount spent on things defined as instruction and instruction-related activities.

The State Board of Education is required by law to send these regulations out for public comment, and it voted to do so at its May 30 meeting. They will be coming back to the SBE for final approval at its June meeting. The only area which still seems to be in dispute is whether "full funding" will be 100 percent or 90 percent. The Governor has proposed a cut of 10 percent to all district-run independent study programs, and State Board President Reed Hastings has asked staff to come back with a proposal that would set full funding at 90 percent for charter school independent study programs in the event that the Governor's proposal on school district independent study cuts is accepted by the Legislature. The proposal adopted by the State Board has defined several key terms in its proposal as follows:

Definitions of Key Terms

Benchmark funding level -- The funding level identified in the statute. This is 80% in 2002-03 and 70% in 2003-04 and each year thereafter.

Full funding level -- Staff has proposed setting this to be at whatever level the Legislature and Governor adopt for noncharter independent study programs so as to not encourage school districts to convert their independent study programs to charter schools. The Governor has proposed a 10% cut for school district independent study programs for next year, so staff recommends that "full funding" be established at 90%, rather than 100% for next fiscal year, if the Governor's proposal is accepted. The ACCS proposal defined full funding as being 100%, rather than the 90% proposed by staff, regardless of whether the Governor's proposal is adopted.

One-half the difference between "benchmark" and "full funding" level -- The ACCS proposal sets "full funding" at 100%, so this would result in a funding level of 85% (one-half the difference between 70% and 100%) in the 2003-04 fiscal year and each year thereafter. The ACCS did not recommend this one-half funding level as an option for the 2002-03 fiscal year.

Total Public Revenues -- It would include local in-lieu property tax funding and all state revenues. Excludes all federal and state grants, including startup, implementation and dissemination grants.

Total Revenues -- Includes federal start-up, implementation, and dissemination grant funds in addition to the local in-lieu propery tax funding and state revenues. Excludes the ending balance from the prior fiscal year.

Small and new schools -- Serious consideration for full funding shall be given to charter schools with less than 100 units of average daily attendance in the year prior to the application being processed or that are in their first year of operation.

Defining "employees" to include district employees in some circumstances -- District employees may be considered charter employees if all of the following conditions are met: the district is the employer of all charter staff; the district is the ultimate governing authority for the charter school (i.e. the charter school is not incorporated separately from the district); the district's certificated employees are assigned exclusively to work at the charter school or, if assigned to the charter school on a part-time or itinerant basis, only if the charter school pays for the services on a documented fee-for-service basis rather than as part of a master service agreement with the district. Under no circumstances shall certified employees of the district that provide services as part of a master agreement between the charter and the district be considered charter school employees.

Defining "employees" to include special education instructors in some circumstances -- All certified contract special education instructors can be included to help the charter school meet the tests related to the percentage of total expenditures spent on certificated salaries and benefits. These "employees" may actually be employees of a district, county office of education, SELPA, or private contractor.

2002-03 Fiscal Year

To receive 80 percent funding level, a charter school would have to demonstrate ALL of the following:

1. The charter school's total expenditures on certificated employee salaries and benefits must be at least 35 percent of the charter school's total public revenues; AND
2. The charter school's total expenditures on instruction and instruction-related activities must be at least 55 percent of the charter school's total revenues.

To receive full funding, a charter school would have to demonstrate ALL of the following:

1. The charter school's total expenditures on certificated employee salaries and benefits must be at least 50 percent of the charter school's total public revenues, unless mitigating factors exist.

Less than 80 percent funding is possible:

1. If a charter school does not meet ALL of the minimum requirements to receive 80 percent funding, then the funding level is set at 70 percent unless there are mitigating factors.

Mitigating factors that might allow a school to reach full funding or 80 percent funding even if it falls short of the above requirements include:

2003-04 Fiscal Year and Each Fiscal Year Thereafter

To receive 70 percent funding level, a charter school would have to demonstrate ALL of the following:

1. The charter school's total expenditures on certificated employee salaries and benefits must be at least 40 percent of the charter school's total public revenues; AND
2. The charter school's total expenditures on instruction and instruction-related activities must be at least 60 percent of the charter school's total revenues.

To receive one-half of the difference between the 70 percent funding level and full funding, a charter school would have to demonstrate ALL of the following:

1. The charter school's total expenditures on certificated employee salaries and benefits must be at least 50 percent of the charter school's total public revenues; AND
2. The charter school's total expenditures on instruction and instruction-related activities must be at least 70 percent of the charter school's total revenues.

To receive full funding, a charter school would have to demonstrate ALL of the following:

Mitigating factors that might allow a school to reach full funding, 70 percent funding or the mid-range funding level even if it falls short of the above requirements include: