SMALL ARIZONA CITY

                   Deb Dillon, B.S., M.S.,
                                 Ed Spec.

Deb Dillon is a current member of the Prescott Unified School District in Prescott, Arizona. This
paper is in no way supported by the school board or the school district. It is entirely a personal

This paper is designed to explain and eliminate some of the confusion about public charter

schools in Arizona and their impact on one school district. Arizona has about 550 charter

schools with the highest percentage of charter enrollment of any state in the U.S. This report

covers the development of charter schools, how they are governed and financed, and some of the

pros and cons of the charter movement. It then provides a look at how that has impacted one

small city and provides some recommendations for the future of Arizona charter schools.
Table of Contents

Introduction…………………………………………………………………………………… 1
What Are Charter Schools?
       Definition ………………………………………………………………………….......1
       History ……………………………………………………………………………....…2
       Need for Alternatives………………………………………………………………......3
       Value of Traditional Public Schools………………………………………………….. 3
       Results………………………………………………………………………………… 4
       Responses to Charter vs. District Debate…………………………………………........5
Arizona Charter Schools
       History………………………………………………………………………………... 6
       Regulations…………………………………………………………………………..... 7
       Charter Holders……………………………………….…………………………….....11
       Reporting/Oversight………………………………………………………………..… 14
Schools in Prescott, Arizona
       Charts………………………………………………………………………….…….... 15
       Effect of Large Numbers Leaving Successful Schools……………………….……... .18
       A Tale of Three Schools…………………………………………………………........ 20
               BASIS Prescott………………………………………………………….…..... 20
               Northpoint Expeditionary Learning Academy………………………….…..... 22
               Prescott High School…………………………………………………….….... 23
       PUSD Challenges…………………………………………………………………...... 24
Governmental Recommendations……………………………………………………...…...... 25
Conclusion…………………………………………………………………………………… 26
Appendix A – 2018 Auditor General’s Report for Prescott Unified School District……....... 30
References…………………………………………………………………………….. …….. 31
Other Resources………………………………………………………………………..…….. 34
One of the most contentious issues in education today is the role of charter schools. As with so
many other topics, this one tends to produce conflict. Unfortunately, there is much
misinformation about charter schools. This report is intended to provide some basic information
about charter schools – what they are, how they operate, and their impact on the education scene,
particularly in one midsize school district in Arizona.

I spent most of my career working with students for whom traditional schools were not a good
fit, and I appreciate options. However, when I arrived in Arizona seven years ago, I had only
minimal knowledge about charter schools, having come from one of only five remaining states
that do not allow charters. When I decided to run for the Governing Board of the Prescott
Unified School District (PUSD), I determined that I needed to learn more about charter schools.
Prescott is a community of approximately 46,000 with close to 7,000 school-age children.
Slightly more than one quarter of those students attends one of seven charter schools in the
community. About 58% are enrolled in PUSD, with the remainder attending private schools
(11%) or being home schooled (5%). The saturation of charter schools in Prescott coupled with
generally inadequate school funding from the state has prompted a need for greater
understanding of charter schools and their role and impact, not only by the governing board and
school district but also by the general population and lawmakers.

What Are Charter Schools?
In spite of all the discussion, many people still do not understand what a charter school really is.
Charters are public schools of choice, independent of the local school district. They write their
own “charter,” which is a “contract between those who run the school and the public entity that
authorizes the school’s existence (Jason, 2017).”

What’s the difference between district schools and charters? Both are public schools supported
by taxes. District schools are required to follow all state, federal, and local laws regarding
education and must base their curriculum on state education standards. They are governed by a
locally elected school board.

Charter schools, on the other hand, are governed by a board selected by the charter owner
(Harris, 2019b). Charter schools have greater autonomy than other public schools over curricula,
personnel, and budgets and are free of most regulations by which district schools are governed
(Jason, 2017). In exchange for that autonomy, they are expected to be held accountable for their
results. That freedom and the lack of apparent regulation have contributed to the battle over

It is not possible to accurately generalize about charter schools. Charter schools serve diverse
missions and appear in a range of models serving an array of different students in an assortment
of approaches: Montessori, arts, college prep, expeditionary learning, alternative, online, etc.
They differ greatly from each other and from traditional schools in how they are created and by
whom, how they are operated, and by whom they are governed (Strauss, 2018).

 The school’s charter “details how the school will be organized and managed, what students will
be expected to achieve, and how success will be measured (Wixom, 2018).” If a charter school
does not meet the accountability standards outlined in its charter, its charter may be revoked.

Charter schools were originally proposed as educational “labs,” intended to innovate and share
what worked with district schools. The movement’s pioneers anticipated that district schools
would then be able to adopt ideas that worked.

New ideas were the objective. “Early advocates envisioned small-scale, autonomous schools run
by independent operators able to respond to local community needs (Jason, 2017).” They did not
mean to create alternative schools. Charters were instead meant to be “testing grounds for
solutions, not the solutions themselves (Harris, Price, Ryman & Woods, 2018a). “

Minnesota passed the country’s first charter school law in 1992, which allowed for the
establishment of eight charter schools (Harris, 2018e). The first of these, St. Paul City Academy,
opened in 1992. The New York Times described City Academy's first class as "about 35 students
who have a history of truancy or other disciplinary problems (Jacobs, 2015)."

Questions gradually arose about charter schools' administration and performance, and Minnesota
passed reforms to its charter school law in 2009. After audits found conflict-of-interest issues,
Minnesota chose to restrict who may serve on a charter school board (e.g., no one closer than a
first cousin nor a contractor with the school). Administrators need not be certified teachers, but
teachers must be licensed. Charters are approved for five years. In 2017, Minnesota had 167
charter schools with 53,400 students (Harris, 2018e).

Today, charter schools are “less the incubators of innovation originally envisioned (Lifshitzhas,
2017).” Though some schools, like City Academy, continue to operate much as they did
originally, the laboratory concept has frequently yielded to the development of a parallel
education system. Market-based education reform, particularly in the form of charter schools,
has increasingly become “a belief system rather than a policy theory (Singer, 2017).”

As of September 2019, there were an estimated 7,000 public charter schools in 45 states and the
District of Columbia, with approximately 3.2 million students. That represents about six percent
of U.S. students, while traditional district schools enroll about 91% of U.S. students (National
Alliance for Public Charter Schools, 2019).

Need for Alternatives
Why are alternatives to traditional district schools needed? Currently, in addition to charter
schools, parents may choose to send their children to their local district schools, public schools in
another district, private schools, or online schools. Parents may also choose to homeschool their

Not every school fits every child, and charters may provide a viable alternative. “Having a
choice of learning models allows parents to opt for the school that best fits the needs of their
child (Langhorne, 2018).” Parents may also want a different type of curriculum for their child, or
the child may have particular needs and interests that the district schools cannot accommodate,
though in many cases district schools are the ones that offer those options. It’s important to
remember that district schools are also schools of choice.

What’s more, not everyone lives in an area with high-quality district schools, and charters may
flourish if those schools fail to meet the needs of many students. However, where this is the case,
one must question why the only solution is to open another public school. What has kept the
district school from meeting the needs of students, and what could be done to improve the
learning for all students?

Value of Traditional Public Schools
One need not listen too carefully in education circles to hear rumblings about efforts to do away
with traditional public education. In this atmosphere, it’s important to ask why those schools are
still needed and valued.

First and foremost, district public schools guarantee universal access to a free education,
regardless of a student’s ability, interests, or family socio-economic status. Schools that require
payment of tuition, parent transportation to and/or from the school, exceptional academic
requirements, and/or parental investment of time or money, are demonstrably exclusionary.
Traditional district schools welcome all students regardless of their ability to comply with any of
those requirements.

Traditional district schools are the foundation of a strong community. These schools are owned
by the community and are the places that bring people together. The resulting diversity in the
student body is an asset in teaching students – directly and indirectly – the life skills of working
with people who are different from them and may have different perspectives.
       If we are to bridge the divisions plaguing our country, we must improve our ability to see
       things from others' perspectives. We do that by improving our understanding of each
       other. District public schools, where children of various races, ethnicities and
       socioeconomic status learn side by side, offer the best opportunity for that. They offer the
       best opportunity to ensure the education of all our children, that which Thomas Jefferson
       said is the ‘only sure reliance for the preservation of our liberty’ (Lifshitzhas, 2017).

District schools are designed to prepare students for citizenship in a democratic society and to
become economically self-sufficient and productive members of the community. They also offer
many important non-academic services, such as school nurses, gyms, playgrounds, and meals,
and they aid all citizens of a community by increasing property values and providing a well-
educated workforce.

In his article outlining why public district schools are the best choice, Steven Singer includes
these points (Singer, 2017):

       Public district schools are at the heart of the community and do more than just teach
       District schools are committed to educating every child.
       District schools generally provide more choice, with a wider variety of classes, activities,
       and support.
       Greater diversity gives students an opportunity to learn how to interact with people who
       have different abilities, experiences, and attitudes.
       The community can see where and how tax dollars are being spent.
       District schools belong to the voters, and they elect the board members.

The entire community is directly invested in and impacted by the quality education of every
child. Undereducated adults are more likely to commit crimes, be homeless, abuse drugs, or
require public assistance. Those who have received an appropriate education are more likely to
contribute positively to the community. “Our public education system is a national resource
fundamental to our shared social, political and economic success (Pianta, 2019).” Turning our
backs on this bedrock of democracy isn’t in our children’s or our nation’s best interest
(Lifshitzhas, 2017).”

It is possible to find studies that show results varying from charter schools significantly
outperforming district schools to district schools producing the better results. However, the
preponderance of studies shows that charters, on average, produce results roughly equal to those
of district schools, though charter school performance may vary more than that of district schools
(Jason, 2017).

 While some charter schools excel, overall evidence does not support that charter schools
perform better than district schools on an apples-to-apples comparison. A true comparison
“requires a student-level comparison and that multiple differences between students be
controlled for. The performance of district and charter school sectors varies – sometimes
significantly – when student demographics are appropriately taken into account (Wells, 2019).”

High-quality charter operators have notched impressive gains, yet the industry remains plagued
by cases of weak oversight, profiteering, and poor management (Ratnesar, 2019). The overall
quality of charter schools is highly uneven. The record particularly of online and for-profit

schools is subpar. According to a January 2020 article in the Arizona Republic, “Not a single
Arizona online charter school this year meets the state Charter Board’s academic standards
(Harris, 2020).

Some charter schools release their lower performing and most problematic students, especially
before state testing; these students frequently return to district schools that accept all students
(Network for Public Education, 2019). Charters, in general, also serve fewer students with
disabilities, and disabilities of the students they do serve tend to be milder and easier to
accommodate. Most of these students take the same tests as other students, eroding overall
district test scores (Lifshitzhas, 2017).
Charters do tend to have some advantages over district schools. Charters often have reduced
school and class sizes and are able to avoid much of the red tape. Also, some charters choose to
specialize, likely resulting in students who may be more invested in their education.
On the other hand, academic/college-prep charters generally focus on exceptionally gifted
students and spend little or no funds for special education, ELL, or at-risk. Many charters offer
no food service or transportation, often resulting in “veiled segregation,” since parents must have
the resources to feed students and to transport them at the times they need to be taken to and
picked up from school.

Responses to Charter vs. District Debate
Parents deserve a choice. “So, both from an academic point of view and from the point of view
of parents having some control over the kind of education their kids get, Charter Schools are a
vital part of a healthy public education ecosystem (Sundbom, 2018).”
Charters “exist as a better alternative to terrible public schools (Jason, 2017).”

 “Charter school leaders have true autonomy over staffing, school models, curriculum,
budgeting, school calendars and schedules, and professional development. Without the
constraints of district policies, charter leaders can create educational models that work best for
their students. They can choose curriculum and materials that engage their teachers and students.
They can manage their own school budgets, using money creatively and effectively and to meet
the unique needs of their students. If needed, they can extend the school year (Langhorne,

Reasons Why Parents Choose Charter Schools over Public Schools (10 Reasons, 2016)
      Charter Schools provide an affordable option to private schools.
      The school population is fairly small, since charters have a cap on their enrollment.
      The teaching approach may be more innovative in charter schools, since charters have the
      freedom to set their own rules and guidelines.
      Charter schools may cater to unique needs, often with specializations such as for the
      gifted, musically or artistically inclined, or mentally challenged.

Another reason frequently given for choosing charter schools is a greater sense of parent control,
particularly over the types of students and teachers their children encounter.

“If you demand that engaged and committed parents send their children to school with the
children of disengaged and uncommitted parents, then you are obligated to explain why this
standard applies to low-income black and brown parents – and only to them… Some charter
school critics dub this argument ‘the lifeboat theory of education reform,’ in that the majority of
children are left to sink on the big ship. With this morally disturbing conclusion to his
unsparingly honest book, Pondiscio implicates all of us in the unforgivable neglect of children
and education in our poorest communities (Russakoff, 2019).”

Every student deserves access to excellent schools regardless of geography or economic means.
“As a bipartisan network of education leaders, we oppose attempts to undermine, misrepresent,
and politicize sound school choice policies and practices that work for families and communities.
We also acknowledge missteps along the way, such as school choice systems that have been
largely unmonitored and often unaccountable, or that have increased the racial and economic
isolation of students… Effective mechanisms of school choice—those that ensure quality,
accountability, equitable access, and equitable funding—provide opportunities that our students
need and deserve (Chiefs for Change, 2019).”

In his book How the Other Half Learns, Robert Pondiscio indicates he does not believe charters
cherry pick students; he demonstrates convincingly, however, that the network does cherry-pick
parents. He points out that “simply applying to a charter school is a sign of parent engagement.”
Research shows that “engaged parents and a stable family are more important than schools and
teachers to a child’s academic achievement. Children in such families, regardless of income,
already have won what Pondiscio calls the ‘parent lottery.’ “ With no busing or after-school care,
“There is something undeniably exclusionary about [charter schools].” Two-income-parent
families also appear to be overrepresented (Russakoff, 2019).
“District schools are best for diversity (Lifshitzhas, 2017).”

Arizona Charter Schools
Information in this section is taken from The Charter Gamble series, Arizona Republic (Harris,
Price, Ryman & Woods, 2018 a-e).

       The law authorizing establishment of charter schools in Arizona was initially passed in
       1994. At the time, Arizona schools were struggling. Charters were a new concept,
       experimental and unencumbered by many of the regulations governing traditional public

schools. They were seen as a possible solution for improving achievement and providing
       more academic choices.

       From the beginning, the state adopted few regulations, and guidelines for charter schools
       allowed for-profit charter schools, imposing no limit on owners’ profits. The law was
       designed to value innovation. Regulations could be added later as they were needed.
       Charter schools were established with the philosophy that if the schools were not
       effective, parents would simply choose not to send their children there, and the school
       would close.

       Charter schools proved to be very popular in Arizona, and even some of the initial
       regulations were reduced as the schools took hold. The annual limit on the number of
       charters was eliminated, and initial contracts changed from five to 15 years to make it
       easier for operators to get building loans.
       Charter schools became big business, and the state continually made it more difficult for
       new operators to open one. The non-refundable application fee for a new charter is now
       $6500. Total cost to open a school is estimated between $10,000 and $20,000, and these
       costs have changed the nature of applicants.
       Big corporate charters have driven out many of the smaller schools, and some smaller
       charter operators believe their voices have been drowned out by the big chains’
       dominance One third of Arizona’s charter schools are losing enrollment. According to
       the Grand Canyon Institute, from 2014-2017, just 10 charter companies, including
       BASIS, accounted for 73% of the growth in students attending Arizona charter schools.

Experts view much of the innovation for which charters were established evaporating under the
corporate charters. According to Jim Hall of Arizonans for Charter School Accountability
(ACSA), there hasn’t been a single educational innovation created by charter schools that public
districts can use (Hall, 2019f).

Arizona has the largest percentage of charter school students per capita among all the states
(18%) with more than 200,000 students in 544 charter schools (Harris, 2019b). Since 2008,
enrollment in Arizona’s charter schools has grown 81%, while district schools increased by only
2.7% (Harris, 2018a). However, since 1994 when charters were first allowed in Arizona, at least
382 charters have closed (Harris, 2019b).

Possibly the most distinguishing feature of charter schools in Arizona is the difference in
regulation between them and district schools. Arizona charter schools are largely exempt from
laws governing public districts and are recognized (and often praised) as the least regulated in
the country (Hall, 2019d). In contrast, school districts are subject to a wide variety of regulations.

Some overall regulations do apply to Arizona’s charter schools. Title 15, Chapter 1, Article 8 of
the Arizona Revised Statutes is sometimes referred to as the "charter law," and it covers many of
the responsibilities concerning charter schools in Arizona (Arizona Revised Statutes, 2019).
Amongst the regulations that apply to charter schools, the schools must do the following:

       Ensure compliance with federal, state, and local rules, regulations, and statutes relating to
       health, safety, civil rights, and insurance;
       Ensure that it is nonsectarian in its programs, admission policies, and employment
       practices, and all other operations;
       Ensure that it provides a comprehensive program of instruction…, except that a school
       may offer this curriculum with an emphasis on a specific learning philosophy or style or
       certain subject areas;
       Ensure… participation in the statewide assessment and the nationally standardized norm-
       referenced achievement test…and the completion and distribution of an annual report
       Ensure that, except as provided in this article and in its charter, it is exempt from all
       statutes and rules relating to schools, governing boards and school districts;
       Ensure that, except as provided in this article, it is subject to the same financial and
       electronic data submission requirements as a school district…procurement rules…, and
       audit requirements. A school’s charter may include exceptions to the requirements of this
       Ensure compliance with all federal and state laws relating to the education of children
       with disabilities in the same manner as a school district;
       Ensure that it provides for a governing body for the charter school that is responsible for
       the policy decisions of the charter school;
       Contract for at least an annual financial statement audit conducted in accordance with
       generally accepted governmental auditing standards. An independent certified public
       accountant shall conduct the audit. (A.R.S. 15-194);
       Maintain total student enrollment at or below the school’s enrollment cap set by the
       Arizona State Board for Charter Schools;
       Admit all students on a first-come, first-served basis or selection by lottery if
       oversubscribed (Charters are not required to admit students once the school has reached
       its enrollment cap nor when the school year is already in progress.);
       Charge no tuition.
On the other hand, Arizona charter schools are exempt from all the following:

       All statutes and rules relating to schools, governing boards and school districts (from
       A.R.S. 15-183E.S. above);
       Procurement and gifting laws (Goshert, 2018);

Competitive bidding:
           o Charters are allowed to engage in (Harris, 2018e):
                       No-bid management and construction contracts with their founders or
                       Related-party transactions;
                       Purchasing of curriculum, materials, technology, etc., from their own
                       private company;
       Conflict of interest laws;
       Monitoring by the Auditor General (By law, charter schools are the only state agencies
       receiving public funds that are not monitored by the Auditor General [Hall, 2019e]);
       Limits on spending outside the classroom;
       Providing transportation and/or food service;
       Limits on how much charter owners pay themselves (Harris, 2018e);
       A cap on the number of new charters;
       Restrictions on the location of charters;
       Following state curriculum guidelines;
       Hiring state-certified teachers;
       Public election of the school’s board;
       Making operational decisions in a public meeting.
Though the majority of charter schools operate responsibly, these exemptions for accountability
and transparency leave the door open for significant fraud, waste, and abuse (Lifshitzhas, 2017).

Charter school quality starts with the authorizers. Ineffective authorizers, whose job is to approve
and monitor the performance of the schools, are one of the biggest impediments to charter school
quality (Tantillo, 2019). Authorizers’ inability to provide adequate monitoring and oversight is
the primary source of failure (Jason, 2017). If they are doing their jobs, authorizers must hold
charter schools accountable (Langhorne, 2018).
Every charter school has a state-sanctioned organization that grants its license, reviews its
performance, and renews or terminates its contract (Jason, 2017). In Arizona, any public or
private person or organization (except school district governing boards) may apply to open a
charter school. Arizona charter schools may be authorized by the State Board of Education; State
Board for Charter Schools; a university under the jurisdiction of the Arizona Board of Regents;
or a community college district(s). The State Board for Charter Schools operates as the statewide
authorizing body (Arizona Revised Statutes, 2019). Most members of the State Board are
appointed by the governor.

On its website, the Arizona State Board for Charter Schools indicates:

       Through its Performance Framework, the Board has established clear performance
       expectations for its schools. It has identified the points at which the Board will intervene
       if schools fall short of meeting those expectations and will reward schools that continue
       to meet the Board’s expectations by reducing submission requirements and making it
       simpler for them to serve more students through their quality programs (Arizona State
       Board, 2019)..
According to Arizona Statute 15-183, a charter school authorizer may deny a charter school’s
request for renewal if the charter school has failed to do any of the following: Meet or make
sufficient progress toward the academic or operational performance expectations; complete the
obligations of the contract; or comply with any provision of law from which the charter school is
not exempt. Arizona does not set a threshold beneath which a charter school must automatically
be closed (Arizona Revised Statutes, 2019).

With increased freedom, charters are expected to be subject to increased accountability. The
problem in Arizona with this expectation is twofold. First, the State Board is responsible both for
overseeing and for promoting Arizona’s charters, occasionally creating a conflict of interest.
Second, the State Board lacks sufficient staff (recently increased from eight to twelve) to conduct
adequate oversight of the state’s 540+ charter schools (Harris, 2018b). In contrast, Denver has 36
charter schools with nine staff, and the District of Columbia has 101 charter schools with 26
staff, both with a ratio of one supervisor for every four schools. Arizona’s ratio is approximately
one to 46.

The Arizona State Board for Charter Schools is an 11-member body charged with monitoring
more than 500 Arizona charter schools including responsibility for audit and compliance of those
schools (A.R.S. 15-194). The board’s current strategic plan calls for it to approve applications;
grant charters; monitor academic performance and fiscal and contractual compliance; and
provide educational choices. It is the “only state agency with responsibility for charter schools
(Hall & Wells, 2016).” Charter schools are not monitored or regulated by the Auditor General,
and state law blocks the AG’s office from fully investigating charter schools (Hall & Wells,

“What charter owners do with the money they get from taxpayers is pretty much up to them
(Fischer, 2018),” and the ideology of free-market school choice at times eclipses accountability
(Harris, 2018a). “No mechanisms are in place to monitor charter spending (Strauss, 2018),” and
the state’s regulatory system does not ensure that tax dollars given to the schools are primarily
used for the education of students. According to a report in the Arizona Republic, what charter
schools report about finances is frequently inaccurate, and the information is never checked for
accuracy (Harris, 2018d).

The Charter Board has asserted that they have no jurisdiction over charter reporting on financial
reports (Arizonans, 2019). The board only evaluates charter schools’ financial viability, not
potential financial malfeasance (Harris, 2018b), and it relies on an annual independent audit
provided by the charter owner to demonstrate that the charter is a profitable company.

“The board does not monitor how charter schools expend funds on administration or instruction
(Hall & Wells, 2016)”; how tax funds are spent is not addressed (Hall, 2019d). The 2019
Legislature did, however, pass a law that would allow the Charter Board to intervene and shut
down a school for poor financial performance, and the Board could soon begin taking action as
needed against some charter schools (Harris, 2018c).
Locally, district school boards are elected by voters, board meetings are typically held at least
monthly, and they must be open to the public. Members of district boards are accountable to their
communities, but charter board members are not. Though public, charter schools are exempt
from the oversight of elected boards. Their boards are appointed by the charter owner, who in
some cases is also on the board (or may even be the sole board member). Members of the board
may be employees of the school; relatives or friends of the charter holder; or persons who have
business dealings with the charter owners. They are not required to represent parents or

Charters must ensure that they provide for a governing body that is responsible for policy
decisions of the school. All operational decisions (personnel, curriculum, expenditures,
discipline, etc.), on the other hand, may take place at non-profit or for-profit corporate board
meetings that are exempt from open meeting laws (Hall, 2019d). These meetings may take place
as infrequently as once a year.

Charter corporate boards are private companies regardless of whether they are non-profit or for-
profit (Hall, 2019e), and many large charter chains are owned by non-profits created by for-profit
corporations that actually run the school. Every decision made at the corporate level is outside of
public purview, and public records requests cannot be made regarding those decisions (Hall,

Charter Holders
Arizona charter schools may be owned by non-profit organizations or by for-profit corporations.
In 2011-2012, 50% of Arizona charters were run by for-profit education management
organizations (Hall, 2019b). Frequently, especially with the large chains, charter holders are
business owners who have no educational experience or training. They are looking for profit as
they would with any other business, and the charter regulations in Arizona assist them in doing

“The lack of independent oversight has allowed several Arizona charter school operators to
become multimillionaires through related-party transactions or insider business deals that would
be illegal at traditional school districts (Harris, 2019b).”

Everything purchased by the charter owner with tax revenue becomes the sole private property of
the charter holder, even if the school goes bankrupt (Hall, 2019d). They may pledge, assign or
encumber their assets to be used as collateral (A.R.S. 15-183). Buildings constructed by charter
school owners belong to the owners, who remain free to sell them and keep any profits (Fischer,

Though the majority of charter holders are fiscally responsible with public funds, much has been
published in the last couple of years regarding the vast funds earned by some charter owners
from taxpayer money. This report will not detail that alleged misuse of public money.

School financing in general is very complicated and confusing and is likely the most complex
and frequently misunderstood aspect of Arizona’s charter schools. Conflicting claims abound
over who, between charter and district schools, gets shorted on taxpayer funding. Who, if either,
really does get more money?

The state of Arizona spends more per student on charter schools that it does on district schools.
In 2018, Arizona spent $1.5 billion to fund charter schools. That is because charters receive most
of their funds (84%) from the state and are eligible for no local property taxes. District schools,
on the other hand, are primarily supported by local property taxes (60%). Basic state aid in 2018
was $7,385 for each student in a charter school compared with $3,929 for those in district
schools (Hoffman, 2019). Since 2008, state funding for charters increased $714/pupil; during
that same period, funding for public districts declined $927/pupil (Hall 2019b).

The state also provides charters with funds termed “charter additional assistance.” In 2019, that
amounted to “$1,734 per pupil in K-8 and $2,022 per pupil in grades 9-12. The additional funds
are intended to cover costs for capital purchases, facilities, and transportation (even if the school
is online or does not provide busing), since charters cannot seek operating or building
funds through local elections as district schools can via bonds and overrides, though there is no
guarantee these efforts will receive voter approval.

When public school supporters say charter schools get more tax money, they're generally
referring to charter additional assistance funding. Conversely, when charter advocates claim that
district schools receive more money than charters, that is primarily because of federal funds
provided for special needs students, low-income students, and lunch programs,
which average $1,829 per student. When district schools receive more federal dollars, that is
because they have more students in poverty and special education (Harris, 2018a).

Charters point out that they don’t have districts’ ability to raise taxes. They want more funds for
facilities and other capital needs. Meanwhile, some districts say they are struggling to serve
larger populations of low income and special needs students, who typically cost more to educate.

They want more money per pupil – and more freedom to spend what they get, since districts are
highly restricted on how they spend their funds.

Another difference in funding results from the method of payment to charters and districts.
Charter schools are paid monthly for the number of students currently enrolled in the school.
Districts, on the other hand, receive payment only for those students who are enrolled during the
first 100 days of the school calendar. Any student who arrives after Day 100 comes to the district
with no funding.

The entire school funding issue is further complicated as a result of “weighting,”
a funding mechanism that aims to allocate funding based on individual student needs. This
weighting applies to both charter and district schools.

The weighted student number is multiplied by the base support to determine the final payment.
Among the weighting factors are school type (K-8 = 1.158; 9-12 = 1.268); small school size; and
student disabilities. Furthermore, the severity of a student’s disability affects this weighting. For
example, autism carries a weighting of 6.024, while a learning disability is just .003. Even with
the additional weighting payments, schools spend roughly $1.50 for every dollar they receive to
educate special needs students.
When considering opportunities for facilities funding, both charters and districts have options.
Districts can apply for funding for specific projects from the state’s School Facilities Board
(SFB), which may or may not approve their requests. Overall, the SFB provides an average of
$56 per district student (Harris, 2018a).

The Charter School Stimulus Fund provides financial support to charter school applicants and
charter schools for start-up costs associated with renovating or remodeling existing buildings.
The fund consists of monies appropriated by the legislature plus grants, gifts, bequests, and
donations from public and private sources. Charter school applicants or charter schools may be
awarded an initial grant of up to $100K during or before the first year of the charter school's
operation. Recipients of initial grants may apply to the Arizona Department of Education for an
additional grant of up to another $100K (Arizona Revised Statutes, 2018).
Arizona has also instituted a formula for performance funding. “Results-based funding awards
largely reflect the background of students in a school and not necessarily the impact that a school
has on student learning (Arizona School Boards Association, 2020).” Much of that funding
currently goes to the large-chain charters rather than to schools serving higher numbers of
students in poverty, with disabilities, and from non-white/non-Asian ethnic groups.

Administrative costs are a frequent target of concern in school spending. District schools
typically spend about 10 % on administration and about 75% on instruction. Ninety percent of
Arizona charters spend more on administrative costs than districts do (Harris, et al., 2018c). In
2014-2015, school districts spent an average of $628 per pupil for all administrative services,

while charters averaged $1,403 per pupil (Hall & Wells, 2016). Per pupil administration costs
were $616 in PUSD in 2017; at BASIS Prescott they totaled $2,465 (Hall, 2019b). Those
administrative costs may include salaries; management contracts and administrative services; IT
costs; capital expenditures; or other uses. There is no limit on how much money charter schools
may spend outside the classroom and no way to track that amount (Harris, 2019a).

With the current focus on teacher salaries, it should be noted that Arizona’s charter schools
“typically pay their teachers several thousand dollars less that the state average,” in a state that
has among the lowest teacher salaries in the U.S. (Harris, 2019b).

Reporting- Oversight
Much has been written regarding a lack of reporting and transparency by some charters. Some of
that is a result of deliberate obfuscation, but much is built into the structure of the state’s charter
school laws.

In Arizona, district school finances and other data are readily accessible through yearly reports
from the Arizona Auditor General. In addition to reporting individual district results, the report
compares those results with peer and state averages in each category. The Prescott Unified
School District report may be found in Appendix A. Among the categories included in the
Auditor General’s report (available at
203_Report_With_Pages.pdf) are the following:

       Spending by operational area (e.g., instruction, administration, plant operation, etc.);
       efficiency measures for operational areas; per pupil spending in each area; school letter
       grades; percentage of students who passed state assessments; student and teacher
       measures (e.g., attendance rate, graduation rate, poverty rate, special education
       population, students per teacher, average teacher salary, average teacher experience, etc.);
       and per pupil revenues (Perry, 2019).
Since charters do not report to the Auditor General, it can be difficult to access similar
information about those schools, and there is little public accounting for how tax funds are spent.
Once charter owners are paid the per pupil rate by the state, it is up to school officials to decide
how to spend that money. Some charter owners argue that all tax funds they receive from the
state become private funds once they receive them, and these cannot be examined or regulated by
the state (Hall, 2019d).
In an article in the Feb. 12, 2019, Arizona Republic (Robb, 2019), Robert Robb explained:

       Charter schools are private businesses. All their funds are private funds.
       Charter schools are paid by the state for providing a service, the education of the students
       enrolled. They are paid monthly based upon the number of students attending, so the
       services are paid for as they are provided.

The check on the use of the money received from the state is the ability to attract
       students. No students, no money.
       But once a charter school is paid by the state for providing the service, that money is
       wholly private. The transaction with the state is done. Provided the service contracted for
       is rendered, what is done with the money, or whether it is commingled with other funds,
       should be none of [Attorney General] Brnovich’s business…
       But, in the market-based model of education, whether a charter school operator is using
       the public monies received wisely or appropriately isn’t supposed to be determined by
       state bureaucrats or the AG. It’s supposed to be determined by the choice of parents about
       which school offers the best educational opportunity for their children.

Large charter chains are generally owned by non-profits created by for-profit corporations that
actually run the school. Both may be owned by the same person(s). When a for-profit company
runs the school, records are not available to the public, so these large chains operate outside the
public view. Contracts with private companies for administrative services also shield schools’
finances from the public (Hall, 2019e).

What is reported about charter schools’ finances can include errors and inconsistencies. Though
charter operators are required to file reports with the state to account for all revenues and
expenses, the information may never be checked for accuracy (Harris, et al., 2018d). According
to Arizonans for Charter School Accountability, “Charters have been allowed to systematically
submit false and incomplete spending data to the state. Charter owners routinely omit data and
make up spending numbers, making it impossible for state and federal agencies to accurately
track charter expenditures. (Strauss, 2018).”

Schools in Prescott, AZ

Prescott Schools (Arizona Department of Education, 2020a)

Name/Type of School                        Number of Students (ADM) FY
Prescott Unified School District           4027 (58%)
Charter Schools                            1838 (26%)
Private Schools                            762 (11%)
Homeschool                                 363 ( 5%)

Enrollments FY 2019 (Arizona Department of Education, 2020a)

School                  Grade 9      Grade         Grade       Grade     Total
                                     10            11          12
Prescott High School    347          359           400         401       1507
BASIS                   36           39            32          23        130
Northpoint              54           42            40          31        167
Tri-City College Prep   58           51            59          50        218

School/Student Ethnicity 2019 (Arizona Department of Education, 2020a)

   School                                  Ethnicity #                              Total #
                White   Hispanic      Black       Native   Asian       Multi-
PUSD           3056        659        39        73        39            151          4027
BASIS           611        105        15         *        55             17           808
Northpoint      172         21         *         *         *              *           212
Tri-City Prep   166         43         *         *         *              *           218
La Tierra       102         13         *         *         *              *           128
Mtn Oak         136         13         *         *         *              *           164
Skyview         198         19         *         *         *              *           227
Willow Crk       56         19         *         *         *              *            81
*Numbers under 11 are not reported for privacy reasons (FERPA)
School/Student Characteristics 2019 (Arizona Department of Education, 2020a)
                                                                                  # of
                                                    % of          % of          Language
                 District/        Grade         Free/Reduced     Special        Learners
School           Charter          Levels           Lunch        Education        (ELL)
PUSD                D              K-12              34*           11              1
BASIS               C              K-12                0            3              0
Northpoint          C              7-12               40           20              0
Tri-City Prep       C              9-12                0            0              0
La Tierra           C              K-5                56            9              0
Mountain Oak        C              K-8                50           14              0
Skyview             C              K-6                29           18              0
Willow Creek        C               1-8                0           19              0
*PUSD K-6 F/R is 45%

Performance 2018: State Letter Grade/Percent Passing AZ Merit Exam
745              Abia    Lincoln   Taylor Granite          Mile       La    Mountain Skyview           Willow
                 Judd              Hicks Mountain          High      Tierra  Oak                       Creek
AZ Letter         B         B        C      B               B          B      D         A                A
Reading           71       43          54                             40          40         67          44
Score Gr. 4
Math Score        73       46          56                             22          36         54          40
Gr. 4
Reading                                         54           49
Score Gr. 8
Math Score                                      51           45
Gr. 8

                             PHS               BASIS              Tri-City Prep         Northpoint
AZ Letter Grade               B                   A                    A                    B
     ELA                      43                 80                    68                   34
    Math                      33                 84                    68                   31
   Science                    47                 89                                         31
Graduation Rate         339/404 (83%)       13/13 (100%)          44/44 (100%)         33/40 (96%)

Finances FY 2018 (Arizona Department of Education, 2020b)

School                  Total Revenue       Total Expenses         Administration          SPED
                                                                         Cost            Expenditure
PUSD                     35,408,8741         31,904,454               2,874,796          3,800,6182
BASIS3                    5,991,326           6,995,820               1,921,559            212,129
Northpoint                1,662,777           1,604,332                238,408             135,930
Tri-City College                                                       178,508
Prep                   1,953,173              1,740,237             (811/student)           73,034
  Included $3,000,000 from land sales
 SPED revenue received was $1,857,000; remainder of funds ($1,943,000) from Maintenance &
Operations budget
    Received 165,182 in Results-based funding

Effect of Large Numbers Leaving Successful Schools
Much of the literature on charter schools, especially nationally, touts the need for charter schools
in communities with failing district schools, especially urban districts. But what is the need for
and impact of charter schools in a community with successful district schools? This is the
situation in Prescott, AZ.

Currently, there are six district schools and seven charter schools in Prescott. Slightly more than
one quarter of school-age children in Prescott attend charter schools. Those 1838 students
represent a loss to PUSD not only of more than $11.5 million in per pupil payments, but also in
opportunities to enrich the education of all students in the district schools both through increased
funds and through broader student interaction. This chart shows the enrollment impact of charter
schools in Prescott since 2008.

Prescott District vs. Charter Enrollment, 2008-2019 (Arizona Department of Education,

                                            2008              2012               2019
                                          Enrollment        Enrollment         Enrollment
Prescott Unified School District            5443              4958               4027
Charter Schools in Prescott                  559               759               1838

At what point does the saturation of charter schools negatively impact the local district schools?
When year after year district school boards must cut services and increase class sizes as they see
more funds directed to charter schools (in some cases with huge amounts going to
“management” companies), it’s not surprising they have become frustrated.

In Prescott, charter school saturation has created a variety of issues. Less funding in district
schools means smaller staffs, fewer resources, and fewer services for students. When a district
loses students, a higher percentage of available funding goes to overhead, since around 19% of
the fixed costs associated with that student remain (Lifshitzhas, 2017). “In most cases, it is
politically impossible for school districts to proportionally decrease their number of employees
as their student enrollment declines…Some costs like pensions and health care can actually
increase, becoming more concentrated and dependent on the funding of students who remain.
This process leave less money for everything else (Ramanathan, 2017a).”

Unfortunately, the proliferation of charter schools is not neutral. Arizona charter schools have
been increasingly funded since 2008, while district revenue has been cut significantly, though
recently improving somewhat. “Every child that leaves a public district for a charter school costs
the state additional funds to pay for a new building for the child’s seat, leaving an empty seat in a
building already paid for by local property taxes approved by community voters (Hall, 2019a).”
This leaves less for district schools.

How much of charter school proliferation results in duplication, and how much do taxpayers pay
as a result of that duplication of services? Do all charters provide opportunities that district
schools do not? A problem arises when new schools open that don’t offer something that is not
already available in the successful district schools.

Comments from parents seem to suggest that smaller class sizes are a primary reason families
choose charters over district schools. The state of Arizona apparently sees the value in smaller
schools and classes, since it has enacted caps on charter school enrollment. So, while charters, by
law, provide those smaller settings, districts are left with no choice but to raise class sizes to
accommodate students with the faculty the district can still afford (Chen, 2012).
But how would taxpayers respond if the local district were to open additional schools in order to
reduce class sizes? That’s essentially what taxpayers are paying for. Unfortunately, we can’t
afford two school systems.
Some of the opportunities and/or services PUSD has had to reduce, forego, or eliminate as a
result of budget cuts are:

Smaller class sizes                                  Full-time school librarians
Low-enrollment classes                               Music/art electives
Updated curriculum                                   Middle school math intervention teacher
Competitive teacher salaries                         Separate boys/girls PE teachers
Support staff                                        Orchestra teacher
Social/emotional personnel and resources             Facilities upkeep (building and equipment

The first round of charter establishment in Prescott took place in the mid-1990s. That resulted in:

       Closure of Dexter Elementary (in a low socioeconomic neighborhood),
       Startup of Skyview Elementary (by excellent Abia Judd teachers),
       Accelerated teacher retirement.

The second round of charter expansion began in 2008-2009, the same year significant school
funding cutbacks started. This has led to:

       Startup of BASIS school,
       Social pressure to send children to charters,
       Veiled segregation by socioeconomic status,
       Rise in PUSD K-6 Free & Reduced population (45%),
       Increased class sizes because of revenue loss.

A Tale of Three Schools (Arizona Department of Education, 2020a)

                                       Prescott High          BASIS             Northpoint
                                       School (9-12)       Grades 9-12         Grades 9-12
# of Students                        1507                130                 167
# of Teachers                        64 (91%             60 (66%             11 (90%
                                     Experienced)        experienced)        Experienced)
State Grade                          B                   A                   B
Transportation Provided              Yes                 No                  Limited
Lunch Available                      Yes                 No                  No
Advanced Placement (AP)              Yes                 Yes                 No
Career Technical Education           Yes                 *                   Yes
(CTED) Offered
Dual Enrollment Offered              Yes                 *                   Yes
*Not available

BASIS Prescott         Website:
Opened: 2014

Mission Statement
BASIS Prescott will provide an accelerated liberal arts education at internationally competitive
levels for all students. The rigorous college preparatory education at BASIS readies students for
the competitive admissions process, helps them become eligible for scholarships, prepares them
to prosper at top colleges, and enriches their lives (BASIS Prescott, 2020).

In every grade, teachers focus on the development of two fundamental competencies: the
organization of complex tasks and the productive management of students’ limited time.
Teachers ignite students’ desire to surmount challenges; master complex tasks and concepts;
establish habits of disciplined, critical enquiry; and develop a passion for lifelong learning
(BASIS Prescott, 2020).

Unique Elements
From the moment students walk through the doors at a BASIS high school, they begin preparing
to perform well on standardized tests and AP exams. All students must pass comprehensive tests
at various levels or they will be retained. At most U.S. high schools, students can start taking AP
courses their sophomore year; BASIS requires all freshmen to take them. Freshmen also take AP

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