Charter School Funding Suits

Last Updated: October 30, 2009

This article appeared in the October 2009 Rural Policy Matters.
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North Carolina Charter Schools Bring Funding Lawsuit: A coalition representing seven charter schools and 50 students has sued the state and other defendants over funding disparities they say violate North Carolina's constitutional education clause and equal protection provisions.
In North Carolina, charter schools receive the same per-pupil state funding as other public schools but they do not have access to capital funding, which comes from the state's lottery, corporate income tax, and local sources. Authors of the original charter school legislation have commented that this funding plan represented a compromise to garner greater support for charter schools in the state and to encourage local communities desiring charter schools to support their building needs.
Charter schools in North Carolina and elsewhere typically do not receive state capital funding and often enter into agreements with local districts or other organizations to convert or repurpose unused schools and other buildings. In previous school finance decisions the North Carolina Supreme Court has not found liability on the part of the state based on equity claims and many school finance experts doubt the court will veer from that course in this case.
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Arizona Charter Advocates Charge State With Unfair Funding: Charter school advocates in Arizona are funding two lawsuits against the state citing disparities in facilities. Charter schools account for 25% of all public schools in Arizona.
In one suit, charter school students and their families claim that the funding system causes "inequitable student funding" resulting from charters having fewer opportunities to raise revenue than "their counterparts in district public schools." It also charges that charter school students receive lower per-pupil funding because the state does not fund buildings or transportation for charter schools. In the companion suit, traditional public school students are named plaintiffs and claim that the funding system has "inequitable student funding formulas and disparities in the ability to access additional revenues from local property taxes." The charter advocates' strategy of naming public school students in the lawsuit in intended to achieve a complete finance system overhaul.
According to the state superintendent's report for the 2007–08 school year, some public school students received more than $6,000 less than others.
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Georgia District Resists Providing Local Money to Charter: Rather than seeking support for charter schools, the Gwinnett County school district, the largest in Georgia, has brought a lawsuit against the state for forcing the district to turn over $850,000 in funding to a charter school located in the district. The Ivy Preparatory School, the charter in question, was authorized by the Georgia Charter Schools Commission (GCSC), a recently created state agency. The law creating the GCSC requires districts to provide local matching funds for students attending a GCSC-chartered school.
In the lawsuit, Gwinnett County is challenging the constitutionality of the GCSC and charging that the state is operating as a de facto independent school system and unconstitutionally eroding local control of public schools. Gwinnett County has two other charter schools, which the district (rather than GCSC) authorized. In 2007, prior to the establishment of the GCSC, Gwinnett County denied Ivy Preparatory School a charter.
Other states have had similar lawsuits with varying outcomes: a Florida district's challenge resulted in the dissolution of that state's charter authority on the grounds that the state's constitution gives local districts not the state the authority to operate schools. A court in Colorado upheld the constitutionality of that state's charter authorizer.
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Read more from the October 2009 Rural Policy Matters.