HAWAI‘I EDUCATIONAL POLICY CENTER POLICY...

HAWAII EDUCATIONAL POLICY CENTER

POLICY REPORT

HAWAII EDUCATIONAL POLICY CENTER 1776 University Avenue, Castle Memorial Hall 133 Honolulu, Hawaii 96822

Dr. Jim Shon, Director Phone (808) 282-1509 [email protected]

http://manoa.hawaii.edu/hepc/

Exploring Financial Equity between HIDOE and Charter School Systems Prepared by Dr. Jim Shon, Director, HEPC

October 23, 2013 Executive Summary

The Hawaii Educational Policy Center continues to provide research, perspective, forums, policy briefs and analysis for policy makers on educational issues of importance to the State. One of these is the

ongoing efforts to ensure that Hawaiis public charter schools receive an equitable level of support. HEPC begins with the following questions:

How has Hawaii traditionally funded its public schools in terms of support for teachers and non-instructional administrative support at the school, district and state levels? On average, what are the fixed costs (and their percentages) that must be addressed to operate a public school and its support systems? Attached are our preliminary findings and research that concludes the following:

Hawaii, like most of the nation, funds its public schools by providing not only salaries and wages for teachers, but a wide range of administrative and programmatic support for those teachers.

Data from Hawaii and the U.S. DOE published in recent years indicate that, on average, support for direct instruction is approximately 40% of funding; for employee benefits 16%; and everything else is for administrative support at the school, complex or district level, and state levels.

HEPC estimates that in order to provide salaries and wages only for teachers, many charters must allocate up to 80% of state funding, leaving much less for other school related expenses, such as salaries for HGEA and UPW employees, facilities, computers, professional development, etc.

For example, in 2010 I was a member of the UH Laboratory Schools Local School Board. When we completed our negotiations with public unions, we were faced with the following financial situation:

UH Lab Contract and Financial Status. $5,363 per-pupil allocation X 444 students = $2,381,172.00. This figure represented the schools entire allocation from general funds in FY11. The following represents the actual salary totals.

HSTA Salaries $1,888,104.00

HGEA Salaries $461,932.00

Total Salaries $2,350,036.00

% State PP 98.69%




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It is quite obvious that of the general fund allocation for HIDOE schools, school level salaries alone did not represent 98% of the appropriations or costs.

HEPC also has reviewed in detail the 2012 listed positions of non-teachers in the HIDOE for school, complex area, and state level operations. We find that on average HIDOE schools enjoy dedicated funding for an average of 33.6 FTEs at each school (compared to an average of 12 FTEs at charters without dedicated funding) and at the state and district levels HIDOE employees 7.9 FTEs for every DOE school (compared to 0.23 for charters).

Current estimates of a calculated average per-pupil support for all Hawaiis public schools runs at over $11,500, while the most recent legislative appropriation asserts that charters deserve no more than $6,111.86. This is an enormous gap that cannot be explained by any amount of creative accounting. In addition, it should be noted that historically the state per-pupil allocations to charters were reduced by 2% each year to pay for the charter school administrative office.

In 2011, the National Alliance for Public Charter Schools compared district and charter school funding for 25 states. The average charter funding was $1,783 less than the district averages.

Since then, most states have increased their charter support, but Hawaii charters have experienced a 33% cut from 2007-08 to 2012!

Non-conversion charters must reduce their operational funds for instruction to pay for facilities. One year a charter needed to spend $800,000 just for rent.

Thus, data on the funding for operational capacity suggests that (1) charter schools must allocate a much greater percentage of state support to pay for basic needs (teachers) than HIDOE schools; (2) charter schools do not enjoy comparable administrative systems support; (3) charters must reduce their own operational financial support to pay for facilities and the charter office; and (4) even at FY 07 levels,

many states have provided far more support than Hawaii.

SUMMARY OF FINDINGS

Clean data comparing allocations and expenditures between HIDOE and Hawaii charters is difficult to obtain.

Since FY 08 there has been a 33% drop in general fund support for charters.

The average percentage of funding that must be earmarked for teacher salaries in the HIDOE is approximately 40%, while charters must utilize approximately 78% only for salaries.

The administrative support systems at the school, district and state levels are much greater for HIDOE than for charters.

A per-pupil allocation to charters based only on current debt service would be approximately $1,000 per-pupil.




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1. Data is a challenge. Consistent appropriations and allocation numbers comparing HIDOE and charter schools are difficult to obtain. Efforts to sort out ARRA funding for STEM initiatives by HEPC found wide diversity in sorting out various sources of federal funds, lists of programs that did not receive additional funds, and reports that virtually made up categories for federal funding. At times data reported to the U.S.DOE varies from data reported in state level reports. FY 09-10 is the last year U.S.DOE reported expenditures for national and state averages in separate categories such as all salaries and wages, benefits, instruction related salaries and wages, etc. HIDOE audits combine HIDOE and charter financials and do not permit comparisons. HIDOE financial reports often combine charter and DOE expenditures. Further complicating clean data was the mixing of ARRA federal funds reported as supplementing programs, but more often used to avoid cutting personnel and maintaining existing levels of support.

2. Steep drop in charter general fund per-pupil allocations. Between FY 08 and FY 12, State per-pupil allocations for Hawaii charter schools have been cut by $2,968.89, representing a decrease of approximately 33%. The State Department of Education did not receive cuts of this magnitude. [Source: Charter School Administrative Office.]

FY FY 08 FY 09 FY 10 FY 11 FY 12

Per-pupil $9,063.89 $7,837.36 $6,037.30 $5,363.00 $5,867.00

Per-pupil allocations for FY 14 and FY 15 were $6,111.86 and $6,046.77 respectively. At the same time the estimated per-pupil allocations for HIDOE schools will be well over $9,000. Thus, while DOE budgets have continued to increase, charter budgets on a per-pupil basis have not.

3. Charters must spend a much greater percentage on teacher salaries. Federal data suggest

the average allocations of funding for all categories of K-12 public education (both HIDOE and charters) in FY 09-10 that approximately 52% of the $11,574 average per-pupil expenditures, or $4,750 per-pupil, was only for instruction and instruction related salaries and wages. This is roughly the salaries and wages for teachers. That same year, according to the Charter School Administrative Office, the total per-pupil charter allocation was $6,037.30. If charters also spent an average of $4,750 per-pupil for all teachers in the charter system, teacher salaries required approximately 78% of funds. This is a 25% difference. (Note, see p. 13 below for the federal definition of instructional related expenditures. It is broader than teacher salaries only, and thus the actual percentage needed by HIDOE to cover salaries of teachers would be less than indicated above.)




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4. Charter administrative support is thin. While public education nationally and in Hawaii allocates more than half of its resources for non-instructional related support, Hawaii charters are not provided this overall system support structure. In the HIDOE, there are approximately eight support staff for each HIDOE school (at the district and state levels) while charters have less than one quarter of a FTE staff for each school. At the school level, HIDOE non-instructional administrative support staff runs at an average of over 30 per school, with charters at about 12 per school.

Thus, the following represents a rough picture of the percentages of funds available to an average HIDOE school and system; and charters: @ $9,000 general funds

HIDOE 40% teachers 60% everything else

@ $6,000 general funds

Charter teachers 78% 22% All else

Background On August 2nd, 2013, a Hawaii public charter school was abruptly notified that the Hawaii Department of Education would no longer provide bus service for several special education students and some fifty other regular students. School was to begin the next Monday. Previously, these services were purchased by the school at double the rate charged HIDOE parents.

The Administrative Rule that justified withdrawal of services was: TITLE 8 DEPARTMENT OF EDUCATION SUBTITLE 2 CHAPTER 27 TRANSPORTATION OF STUDENTS

(g) Students who attend schools or programs of choice, such as charter schools, magnet schools, or learning centers or schools outside of their home school attendance area, as determined by the students' legal residence, shall not be eligible for transportation subsidy, provided that this section shall not apply to the "No Child Left Behind" Act of 2001 "public school choice" provisions. This subsection also does not apply to students who are homeless and are attending their school of origin based upon a feasibility determination made by a school administrator, or are awaiting the outcome of the departments dispute resolution process for McKinney-Vento eligible students. [Eff 3/3/84; comp 9/5/95; am and comp 3/29/03; am and comp 6/15/09] (Auth: HRS 302A-1112) (Imp: Hawaii Const. Art. X, 3; HRS 302A-1101, 302A-1112, 302A-406, HAR chapter 8-13; P.L. 107-110)

The basic policy issue is whether it is legal or appropriate to exclude any class of public school students from access to services.




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In the landmark Supreme Court Case Brown v. The Board of Education (1954), Chief Justice Earl Warren wrote:

Today, education is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms.

The Chief Justice specifically asserted:

(c) Where a State has undertaken to provide an opportunity for an education in its public schools, such an opportunity is a right which must be made available to all on equal terms.

Hawaii has often prided itself for equitable funding of its public schools. A closer examination reveals major differences in levels of financial support between the Hawaii Department of Education (HIDOE) school system and the Charter school system. Major differences between the two systems include master collective bargaining agreements (HIDOE) vs. supplemental agreements negotiated by each charter school; the control of and movement of personnel between school (HIDOE only); the existence of a weighted student funding formula (HIDOE only); the calculated per-pupil appropriations; the financial support for facilities (HIDOE only); schools control over curricula (charters only); application of the procurement code (HIDOE only); school level governance; and systems-wide governance. Questions often asked by the charter community are these: Does Chief Justice Warrens assertion regarding equal terms apply to citizens whose children attend public charter schools? Do the following sections of the State Constitution, particularly those underlined for emphasis, apply to treatment of charter schools, charter school employees, charter school students or charter school parents?




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ARTICLE I, Section 5. No person shall be deprived of life, liberty or property without due process of law, nor be denied the equal protection of the laws, nor be denied the enjoyment of the person's civil rights or be discriminated against in the exercise thereof because of race, religion, sex or ancestry.

ARTICLE X Section 1. The State shall provide for the establishment, support and control of a statewide system of public schools free from sectarian control, a state university, public libraries and such other educational institutions as may be deemed desirable, including physical facilities therefor. There shall be no discrimination in public educational institutions because of race, religion, sex or ancestry; nor shall public funds be appropriated for the support or benefit of any sectarian or nonsectarian private educational institution, except that proceeds of special purpose revenue bonds authorized or issued under section 12 of Article VII may be appropriated to finance or assist:

1. Not-for-profit corporations that provide early childhood education and care facilities serving the general public; and

ARTICLE X, Section 4. The State shall promote the study of Hawaiian culture, history and language.

The State shall provide for a Hawaii an education program consisting of language, culture and history in the public schools. The use of community expertise shall be encouraged as a suitable and essential means in furtherance of the Hawaii an education program.

These constitutional questions are often raised because (1) equal protection of the laws as it relates to financial, and infrastructure support for all students is in question regarding charter funding; (2) the State has declined to provide facilities for all public schools; and (3) because a significant number of charter schools are explicitly authorized to provide a rigorous Hawaiian education and language program. The Funding of Public Education The U.S. Department of Education regularly tracks and reports on revenues and expenditures for public schools. Among the data sets is a statewide average per pupil calculation for all expenditures, all salary and wages, all employee benefits, instruction and instruction related totals, salaries and wages, benefits, and support services. The most recent report provided by the National Center for Educational Statistics is for Fiscal year 2009-10i.

http://nces.ed.gov/pubs2013/2013342.pdf




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From this data it is possible to calculate the percentages of each category. As the data are presented for each state, we can compare the national averages with Hawaii.

Category National Hawaii

Total Per Pupil for 2009-2010 $10,314 (100%) $11,754 (100%)

Per Pupil All Salary & Wages (%) $6,316 (61%) $6,497 (55%)

Per Pupil All Employee Benefits (%) $2,202 (21%) $2,627 (22%)

Total Per Pupil Instruction & Related (%) $6,818 (66%) $7,807 (66%)

Per Pupil Instruction Salary & Wages (%) $4,588 (44%) $4,750 (40%)

Per pupil Employee benefits (%) $1,570 (15%) $1,896 (16%)

Per pupil all support services (%) $3,078 (30%) $3,400 (29%)

Support services salaries and wages (%) $1,535 (15%) $1,443 (12%)

Support salaries and benefits (%) $560 (5%) $619 (5%)

Percentages of expenditures for all categories are similar for national averages and Hawaii. Why are these data relevant? In order to operate all Hawaii public schools (HIDOE and charter), 55% of expenditures were devoted to salary and wages, 66% to instruction, and 29% to other support services. We can also see that of the overall category of instruction related expenses for Hawaii ($7,807), salaries for teachers ($4,750) would represent just 40% of the total public expenditures, and 61% of the instructional expenditures. Benefits, which are not paid by charters, represented 16%. That same year charters received $6,036 per pupil. The average amount for all teacher salaries calculated as a per pupil amount of $4,770 thus represented approximately 79% of the charter allocation. FY 2009-10 HIDOE percent of funding for teachers: 40%. Charter schools percentage of funding required for teachers: 79%. If Hawaii charter schools must utilize a greater percentage of revenues for teacher (instructional) salaries, they have significantly less to fund support services. There could be a significant equity question.




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Recent State Funding of Charters If in FY 2011 the HIDOE reports a per-pupil General Fund expenditure of $11,461 (which includes a free facility), how is this equal to the $6,036.37 provided to charters? In the 2013 State Budget bill, the Legislative Conference Committee included the following comments on the per-pupil funding amount.

The Department has projected regular education enrollments of 175,868 students for fiscal year 2013-2014 and 172,493 for fiscal year 2014-2015, which HIDOE does not include the Department's projected 5,100 junior kindergarten students. This equates to a funding amount of $6,111.86 per student for fiscal year 2013-2014 and $6,046.77 for fiscal year 2014-2015.

How the $6,111.86 and $6,046.77 were calculated as the per-pupil cost of HIDOE expenditures is not clear. Previously a representative from the State Department of Budget and Finance informed a task force that it had no obligation to reveal how the department calculated the charter school per-pupil allocation.

It may be that there is confusion between the average amount spent at the school level vs. the significant non-school district and state offices, or the amount thought to be the weighted student formula for HIDOE. In any case, the HIDOEs own financial reports consistently report a per-pupil cost of over $11,000.

The HIDOE financial report does not use all of the same categories as the U.S.DOE report referenced above, but it may be possible to impose the average percentages on the HIDOE data.

Total expenditures for all categories (not including CIP and adult education) in FY 2010-2011: $2,062,716,116. Total instruction and instruction related services: $1,612,004,526, which represented 71% of the total for all expenditures. Of that, general instruction (presumably teacher salaries) totaled $763,421,709 which represented 47% of all instructional expenditures, and 37% of all non-capital expenditures for public education that year. Why is this important? The cost of charter school contracts for teachers is one of the fixed costs that charters must incur. The salary schedule Master Contract for the Hawaii State Teachers Association is in effect, nonnegotiable. On average, the cost of salaries and wages for




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teachers within the entire system is between 37% and 40%, suggesting that funding of public education recognizes that support services at the school, district and state levels are considered essential. The 2010-11 HIDOE Consolidated Annual Financial Report of Expenditures reported general fund expenditures at $1,659,445,902. This amount divided by the HIDOE (169,987) and charter (8,202) enrollments that year of 178,189 = general fund per-pupil calculated amount of $9,312.

For many years, State funding for charters has used a formula that excludes federal funds, as this is thought by many policy makers to be equitably distributed to charters. Thus, the $9,312 per-pupil general fund calculation is important in comparing the overall HIDOE average with the allocation to charters that year of $6,036 a difference of $3,276! The per-pupil equity question is raised because individual HIDOE schools are not required to reallocate their funding for a wide range of support and services that are funded at a district/complex or systems level, such as bus transportation ($60 million), nurses aides ($8.3 million), computers or other technology purchased at the state level, and many resource support staff. Fixed and inflexible costs imposed on charters might include the cost of teacher wages and salaries, the cost of school-based administrative support, the cost of facilities, and the 2% assessment of the per-pupil allocation to pay for the Charter School Administrative Office through FY 2013, and subsequently the Charter School Commission. In 2010-11, HIDOE reported it spent $23 million on instructional support (professional development, curriculum services, and school health services). The Department also spent $268 million on school support (safety and security services, school food services, operation & maintenance, student transportation, etc.) State and Complex Area Administration cost $50 million. This adds up to well over $341 million of support the State Administration and the Legislature felt was justified to run the HIDOE school system. Divided by the HIDOE enrollment that year of 169,987, these expenditures alone are calculated to equal $2,000 in per pupil funding to the HIDOE. ii By this Equity Lens, charters should be receiving at least an additional $2,000 per pupil!! National data on per-pupil funding, collected by the National Alliance for Public Charter Schools, indicate significant and persistent gaps between traditional public school revenues and that for charters. In Fiscal Year 2006-2007, the average per-pupil funding for charters among twenty-five surveyed states was $9,469, or $1,783 less than the average for traditional district schools in those states. These figures are six years old. For the most part, charter funding has

http://www.hawaiipublicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdf




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gone up. Virtually all states in that year were providing more financial support for charters that the State of Hawaii is providing this year. The current average funding deficit for charters nationally is $2,247 per-pupil. iii The cost of a teacher. Notwithstanding their flexibility and many differences, Hawaiis charter schools have little to no practical flexibility in several cost items, particularly the salary schedule and costs for all teachers who belong to the Hawaii State Teachers Association (HSTA), and bargain under Unit 5. This is partly true as well for schools that employ Hawaii Government Employee Association (HGEA) staff, including the costs of a principal, vice principal, and other school level non-instructional staff. Increasingly, charters are also employing staffs who are members of the United Public Workers Association (UPW). However, charters have much flexibility in how they staff and manage their schools, and the largest and most significant fixed costs relate to teachers. The cost of a school facility. With the exception of so-called conversion charters, who are allowed to use a HIDOE owned facility, all other charters must carve out some portion of their general fund allocation to rent or lease or invest, along with a nonprofit partner, in a non-state owned learning environment. In FY 2011 HIDOE reported spending $166 million on debt service for those HIDOE schools that are still paying off their original building bonds. (This is actually less than half the schools, as over 50% are over 50 years old.) A pro-rated per-pupil subsidy based on current debt service alone would total between $900-$1000 per student. For some larger charters, this would amount to well over $500,000 in additional revenues. For a majority of the years charters have operated in Hawaii, they have not been provided this additional facility subsidy. Recent comparisoniv between nonprofits building new charter schools and HIDOE appropriations for a new HIDOE school indicate that for the cost of the new Kihei High School, nonprofit partners could build ten charter schools. In 2012, the National Alliance for Public Charter Schools conducted a survey on facility funding for charters. Top trends identified by the survey include:

Over half (56 percent) of charter schools do not have access to a facility that will be adequate for enrollment in five years;

Schools located in the Northeast and school serving the elementary grades indicated the highest difficulty accommodating growth;

Over a third (38.9 percent) of charter schools are paying market rate rent on their facility;

One-third (32.8 percent) of charter schools share facilities with another entity; Nearly one-third third of charter schools (31.5 percent) pay an annual fee between $1-$100,000 for their facility;

http://www.publiccharters.org/data/files/Publication_docs/Final_Funding%20Inequity_IB_June2011_20110803T102136.pdfhttp://www.hawaiipublicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdf




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Nearly one-quarter (24.6 percent) of charter school facilities are owned by the district or a for-profit entity (23 percent) that is not related to the charter school; and

Charter schools spend an average of 13 percent of their operating budget on facilities.

This report will focus on the use of Equity Lenses to highlight disparities between how and how much the State funds HIDOE schools and charter schools. Specifically, the report examines:

1. National Data on Hawaii and all states that provide an important context. 2. The number and distribution of non-instructional support personnel in Hawaii DOE and

charter systems; 3. A Case Study of one charter schools operating budget 4. A Case Study of one charter schools CIP Costs 5. Ongoing Data Transparency Issues

1. Useful National Data HIDOE annually reports a wide range of financial data to the United States Department of Education and the United States Census. A typical report filled with comparative and state level data is: Revenues and Expenditures for Public Elementary and Secondary School Districts: School year 2009-10 published by the National Center for Educational Statistics. Often the data provides specific categories not usually reported in the annual HIDOE Financial Reports. For example, Table 5 of the report breaks down Hawaiis expenditures for all staff salaries and wages, employee benefits, and, more importantly, the salaries, wages and benefits for instruction-related expenditures (teachers). The Per-Pupil Cost of Teacher Salaries in Hawaii These data indicate that, on average, Hawaii receives 15% of its total K-12 budget from federal funds. Of the states general funds expended by HIDOE, about 40% go to instruction salaries and wages. The benefits for instructional employees represent roughly 40% on top of that. (If your total cost were $100, $40 would go to teachers salaries, and $16 would go for their benefits.) These are useful percentages to keep in mind. Because charters do not have to pay for benefits, we can calculate roughly how much to subtract from HIDOE totals to give us a fair comparison. Table 1 illustrates the amounts reported by HIDOE to the U.S. DOE, as well as key financial elements provided in the HIDOE Financial Report for that same year, FY 2009-2010.




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Table 1. HIDOE Financial Breakdown FY 2010

UNITED STATES DOE EXPENDITURE REPORT

Key Elements U.S. DOE 2009-10 Amounts Reported to U.S.DOE

Total Funds 2010 2,564,856,000

Fed Funds (% of all) 382,400,000 (15%)

State general funds only 2,093,300,000

Instruction salaries & wages (%) 837,320,000 (40% of State gen)

Instruction benefits (%) 341,693,000 (40%)

HIDOE FY 2010 FINANCIAL REPORT

Key Elements HIDOE 09-10 Financial Report

Amounts Reported by HIDOE

HIDOE FY 10 Enrollments 170,830

HIDOE FY 10 total Expenditures 2,101,300,000

HIDOE FY 10 General Fund Expenditures 1,958,000, 000

HIDOE FY 10 Total Exp. $$ Per-pupil cost 11,762

HIDOE FY 10 General Fund Per-pupil cost 11,461

If the general fund expenditure in FY 10 was $2,093,300,000, and 40% of that went to instructional salaries - or $837,320,000, then we can calculate the per-pupil cost of teacher salaries: $837,320,000 divided by 170,830 students = $4,901 per student for teachers. That same year, charters received from the State general fund $6,036. $4,901 is just a little over 80% of the charter per-pupil allocation. HIDOE is not spending 80% only on teacher salaries. The above data show that HIDOE spends approximately 40% of its general funds on instructional salaries and wages, but Charters must spend a much greater percentage.

2. Comparing Administrative and Technical Support between the HIDOE and Charters All public school systems recognize that teachers and principals need to focus on student learning and leave all the paperwork, and non-instructional administrivia to others. The Hawaii State Department of Education Directory 2012 provides important information on the standards of administrative and technical support we provide our HIDOE schools, and the opportunity to compare Districts as well as Charter Schools. The following are the various divisions of Hawaiis HIDOE Statewide offices and the number of individual positions under each as listed in the Directory:




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Statewide Offices: Office of the Superintendent 97 staff listed. Office of Curriculum, Instruction and Student support 175 staff. Office of Fiscal Services 66 staff. Office of Human Resources 215 staff. Office of Information Technology Services 136 staff. Office of School Facilities and Support Services 154 staff. TOTAL 843 Personnel

There are 255 HIDOE schools: or 3.3 state level personnel for each HIDOE school. In addition, there are 204 HIDOE students for each state level support position. The following table (also compiled by counting positions from the HIDOEs 2012 Official Directory) compares these figures for the State, each District, and the Charter Schools. In 2011 the total cost of HIDOE State and District/Complex operations was listed as $50,299,541.

Table 2. State and District Level Administrative/Technical Support

Level of Admin

Schools Served

Total Students Served

Number of positions and staff

Support Staff Per Schools

Students per admin

support staff

State Level HIDOE 255 172,104 843 3.3 204

Honolulu District 52 31,017 198 3.8 157

Central District 42 32,502 130 3.1 250

Leeward 42 39,519 277 6.6 143

Windward 30 14,829 203 6.8 73

Hawaii 42 23,327 192 4.6 121

Maui 30 20,434 92 3.1 222

Kauai 16 9,207 70 4.4 131

HIDOE State + Districts

255 172,104 2,005 7.9 86

All Charter Schools 31 9,109 8 0.26 1,139

The first notable observation is that the non-instructional staff is unevenly distributed among the HIDOE districts. Windward District, for example, has an average of 6.8 support staff per Windward HIDOE School, yet Maui has only three.




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A second observation is that the charter schools have had significantly less administrative and technical support than their HIDOE counterparts. For example, the statewide average of support per school is nearly eight (8) support staff, whereas the charter support per school is well under (0.26) one staff person. Another way to compare systems is the number of administrative support staff per-pupil. Again, the table indicates that statewide there is an admin support staff for every 86 students. However, for the charters, there are over 1,100 students for every support staff. Because the cost of the Charter School Administrative Office is taken from the charter per-pupil allocations, the support services expenditure for charters is essentially zero.

It has been argued that each charter school has the capacity to provide adequate administrative or technical support for itself or to purchase it. However, the Table 3 indicates the levels of school non-instructional support throughout our HIDOE system compared to that of charters. According to the National Center on Educational Statistics, the following definition is used for instructional.

instruction and instruction-related expenditures Include expenditures for instruction and instructional staff support services. These are expenditures that are directly related to providing instruction and for activities that assist with classroom instruction. These include salaries and benefits for teachers, teaching assistants, librarians and library aides, in-service teacher trainers, curriculum development, student assessment, technology (for students but outside the classroom), and supplies and purchased services related to these activities.

Table 3. School Level Non-Instructional Personnel 2012

Level of Admin

Schools Served

Total Students Served

Total School

Level non instructional

Personnel per District

Average

Non Instructional Support Staff Per Schools

Districts

Honolulu 52 31,017 1,506 29

Central 42 32,502 1,357 32

Leeward 42 39,519 1,751 42

Windward 30 14,829 900 30




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Hawaii 42 23,327 1,490 35

Maui 30 20,434 1,087 36

Kauai 16 9,207 475 30

TOTAL Districts 255 172,104 8,566 33.6

All Charter Schools 31 9,109 386 12.4

Table 3 suggests that unlike the unequal distribution of support staff among HIDOE district offices, the average number of support staff in HIDOE school offices is quite similar. However, the average amount of school level support staff for charters is about one third that for HIDOE schools. Even with much fewer support staff for the charter system, and much fewer support staff at the school level, ACT 130 of 2012 eliminated the Charter School Administrative Office and prohibited certain technical assistance from the new Charter School Commission. Section 5(f) states:

An authorizer shall not provide technical support to a charter school it authorizes in cases where the technical support will directly and substantially impact any authorizer decision related the authorization, renewal, revocation, or nonrenewal of the charter school. This subsection shall not apply to technical support that an authorizer is required to provide to a charter school pursuant to federal law.

While the State acting as an SEA (State Education Agency) has specific obligations, it is not clear what sections of federal law specifically pertain to state established authorizers. In other words, the exemption may have little practical effect, and the authorizer may be challenged or prohibited from providing most forms of technical assistance. The burden of all reporting and accountability would then fall on the individual schools, unlike the HIDOE which as a well developed system level support structure. 3. A Case Study: The University of Hawaii Laboratory Charter School (UH Lab) The following information was provided to the State Department of Budget and Finance. (They did not respond.) It is based on U.S. DOE data suggesting that approximately 60% of funds go to instructional level support, which includes much more than salaries. In 2010 the UH Lab school (a charter) negotiated an agreement with HSTA. This provided an important insight into the relationship of the obligations of charters to pay salaries consistent with the HSTA Unit 5 Master agreement, and the overall cost of running a school. UH Lab is an




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interesting example because the school seeks to replicate HIDOE classroom circumstances in order to more validly test new curriculum for use in the HIDOE. Therefore, the teacher-pupil ratio is pretty close to that of the HIDOE for most grade levels. UH Lab found that just its Unit 5 salary costs amounted to nearly 80% of its per-pupil allocation. To put this in perspective, for many years the Institution of Education Sciences (IES) has been tracking public school expenditures. Nationally and in Hawaii the level of all expenditures dedicated to Instruction and Instructional related expenses has been approximately 60%. This means that HIDOE allocated about 40% of the HIDOE budget for everything else. The definition used by NCES includes much more than just teacher salaries, and yet amounts to 64% of ALL expenditures (including federal funds) and about 60% of Hawaii s reported non-federal expenditures. The Education Laboratory as a Case Study. The Education Laboratory Charter School, often called the UH Lab School, has been a charter school since 2001. During the previous legislative session the per-pupil allocation appropriated by the Legislature was set at $5,363. UH Lab Current Contract. $5,363 per-pupil allocation X 444 students = $2,381,172.00. This figure represented the schools entire allocation from general funds in FY11. The following represents the actual salary totals.

HSTA Salaries $1,888,104.00

HGEA Salaries $461,932.00

Total Salaries $2,350,036.00

% State PP 98.69%

It is quite obvious that of the general fund allocation for HIDOE schools, school level salaries alone do not represent 98% of the appropriations or costs. The UH Lab Unit 5 contracts only = $1,888,104 = 79% of per-pupil allocations, not 64%, not 60%, not 55%; certainly not 50%, which would be closer to the percent of general funds for HIDOE schools. (This excludes federal funds, stimulus funds, and special education support.) Consider the following calculations:

IF HIDOE Teacher Salaries (Unit 5) represent 64% of HIDOE general funds, then the $1,888,104.00 should also represent 64%. The total PP allocation for UH Lab should then be $2,950,162, and the school would be short $568,990. The appropriate per-pupil allocation should then be $6,644, not $5363.




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IF HIDOE teacher salaries represent 60%, the total pp allocation should be $3,146,840, or the school was $765,668 short. The appropriate per-pupil allocation should then be $7,087. IF HIDOE Unit 5 salaries represent 55%, the total pp allocation should be $3,432,916, or we are $1,544,812 short. The appropriate per-pupil allocation should then be $7,732. IF HIDOE Unit 5 salaries represent 50%, the total pp allocation should be $3,776,208, or we are $2,003,551 short. The appropriate per-pupil allocation should then be $8,505.

4. A Case Study in The Relative Cost of Facilities In 2012, West Hawaii Explorations Academy (a public charter school) was working with its partner nonprofit organization to design its new campus referencing its unofficial learning motto: No Child Left Inside. In its planning phase WHEA compared the costs of its project-based, hands-on, activity oriented campus for 300 students with those planned or build using more traditional models in Hawaii. Total projected cost was $15 million.

School State CIP Funding Initial Cost per-pupil WHEA: if 10% of project were funded by the State $1.5 million $5,000

WHEA: if 33% of project funded $4.95 million $16,667

WHEA: if 50% of project funded $7.5 million $25,000

WHEA: if 100% of project funded $15 million $50,000

Wailuku II Elementary: 100% $44.98 million $81,781

Ewa Makai Middle School: 100% $67 million $95,714

Kihei High School: 100% $145.5 million $90,625

The figures above illustrate facility cost per-pupil based on enrollment capacity requirements in several traditionally designed Department of Education schools compared to WHEA. Even if the state funding were for 100% of the project ($15 million) the per-pupil costs would be well below what is provided for other HIDOE school projects. If the total cost of the WHEA campus is considered, the per-pupil facilities costs of approximately $50,000 is still significantly less than for Wailuku II Elementary at $81,781, Ewa Makai Middle School at $95,714, and Kihei High School at $90,625. Notably, the cost effectiveness of WHEAs plan is a bargain for the State on multiple levels, and an illustration of how flexibility for charter schools can result in significant facility savings.




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5. Ongoing Data Transparency and Collection Issues

Audits. Each year the HIDOE gives the State Auditor contract to a private firm to do a financial audit. The audits explicitly state that HIDOE and charter financials are combined, making it difficult to sort out whom is expending how much for what purpose.

The Consolidated Financial Expenditure Report. As data is made available, HIDOE posts a Financial Report. This report provides a variety of ways to look at financial revenues and expenditures. However, the following questions which relate to equity are not easily answered by these documents: 1. How are per-pupil amounts calculated and reported by the U.S. DOE, the Charter

School Commission, the HIDOE, the State Department of Budget and Finance, and the Legislative Committees? What is included? Excluded?

2. What is the actual amount and percent spent on teacher salaries? Teacher benefits? 3. What is the amount and percent spent on school level non-teacher salaries and

benefits? 4. What is the number and cost of personnel funded through federal grants or

revenues? 5. What specific services are funded only for HIDOE and not for charters? 6. What is the actual cost for each of the HIDOE District Offices?

Conclusion: Are A New Set of Equity Lenses Helpful? This report suggests there are several alternative equity lenses that provide evidence of relatively equal support for HIDOE and charter schools. Accountants can debate specific formulas, but if charter school must spend 80+ percent of their funds for staff, or receive only a fraction of the non-school administrative support as do HIDOE schools, then legitimate questions should be asked. If Hawaii follows the national trends and supports a funding distribution formula for the HIDOE that roughly allocates 40% of funds for staff salaries alone, with the remaining funds for other necessary expenditures to run a school system, should we not seek a similar distribution for charter schools? And from a research and analysis point of view, should not policy makers require basic reporting documents to provide financial breakdowns that facilitate useful comparisons? More fundamentally, if Hawaii supports Chief Justice Earl Warrens assertion that there is a legal obligation for equal treatment, how can the State justify the apparent disparity of support?




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i http://nces.ed.gov/pubs2013/2013342.pdf

ii http://www.hawaiipublicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdf

iii http://www.publiccharters.org/data/files/Publication_docs/Final_Funding%20Inequity_IB_June2011_20110803T102136.pdf iv http://www.Hawaii publicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdf
http://nces.ed.gov/pubs2013/2013342.pdfhttp://www.hawaiipublicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdfhttp://www.publiccharters.org/data/files/Publication_docs/Final_Funding%20Inequity_IB_June2011_20110803T102136.pdfhttp://www.hawaiipublicschools.org/DOE%20Forms/State%20Reports/FinancialReport2010-2011.pdf

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