Charter Schools in Minnesota

Minnesota passed the nation’s first charter school law in 1991 and opened the first two schools the next year. Since then, charter schools have expanded rapidly. According to the Minnesota Department of Education Statistics Summary, during the 2009-10 school year roughly 35,000 students in the state attended 154 charter schools. Charter schools in Minnesota are public schools and receive funding from the State based on a similar per pupil formula. (For those of you unfamiliar with charter schools, check out these handy FAQs from the MN Association of charter schools.) Since charter schools receive funding from many of the same resources as other district schools, there has been concern from parties on both sides about whether or not the allocation is fair. Two concerns had dominated this debate: 1) the fiscal management of charter schools and 2) how much money each receives.

In 2009, Minnesota 2020 issues a report titled Checking in on Charter Schools: An Examination of Charter School Finances that alleged gross fiscal mismanagement by charter schools and argued, “If charter schools can’t run their school in a financially competent manner, Minnesota should reconsider whether charter schools are worthy of public funding at all.” This is a heavy charge and not borne out by a closer comparison of charter school fiscal health to public district schools. For example, although a 2007 report from the MN Office of Legislative Auditor found concerns over charter schools’ financial management, they also pointed out, “In general, charter schools’ financial health is comparable to independent school districts.” In addition, 55 of the 125 winners of the 2010 Minnesota Department of Education “Finance Award” were charter schools. Roughly 35% of all charter schools were recognized for high quality fiscal management practices, compared to only 20% of public school districts.

The Minnesota 2020 report also complains that charter schools receive more funding from the state than district schools. In 2010, a report from Ball State University, Charter SchoolFfunding: Inequity Persists, found that the average per pupil amount of state aid received by charter schools and public schools is fairly equal; $11,081 and $11,250 respectively. The researchers also point out that charter schools’ inability to raise local revenue through local referendums actually puts them at a disadvantage in many communities. For example, in Minneapolis the per pupil expenditures are over 20% higher in district schools than charter schools because of the amount of revenue raised through local levies. The ability to raise revenue also helps school districts access credit at lower interest rates. A joint report by the Nonprofits Assistance Fund, Minnesota Association of Charter School, and Charter School Partners pointed out that schools districts were able to take out loans at about 1% or less interest rates, while loans to charter schools carried rates of 6% and higher.

While charter schools and public school districts both receive funding from the state, they each have a unique mission and should be considered complements rather than rivals.