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Some Indianapolis charters see financial position weaken

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Half of the charter schools overseen by Indianapolis Mayor Greg Ballard showed a weakening financial position during the 2008-09 school year, according to a report made available last week.

But most of those weaknesses were due to late payments from the state government because of late collection of property-tax payments, said Kevin Teasley, president of Indianapolis-based GEO Foundation, which operates two charter schools.

Charter schools are funded by taxpayers but they are freed from some restrictions placed on traditional public schools, and most do not have unionized teachers.

One key financial metric for charter schools is the cash balance in their general funds, calculated as a percentage of their annual general-fund spending. Ballard’s office wants schools to have cash balances of at least 10 percent of their annual spending.

In the 2008-09 school year, which ended on June 30, only three of 17 schools met that criterion. In the previous year, eight out of 16 schools met the mayor’s threshold.

The strongest schools were the Challenge Foundation Academy, with a general-fund cash balance equal to 54 percent of its annual spending, and Herron High School, which held 30 percent of annual spending in a cash reserve.

Three schools had negative balances, according to the Mayor’s report: Stonegate Early College High School and GEO’s two schools, Fall Creek and Fountain Square.

“The way the mayor looks at is somewhat skewed,” Teasley said, noting that his charter schools were due to receive payments from the state government in June 2009, but didn’t receive the money until August. That money does not show up in the mayor’s report. Without that hiccup, he said, GEO’s schools posted a surplus for the school year.

Some charter schools that operate under a parent organization, such as Christel House Academy, hold cash at the parent level instead of at the school level. That makes Christel House appear financially weak when it, in fact, has plenty of cash in reserve. But most schools have more straightforward accounting.

Karega Rausch, director of charter schools for Ballard, stressed that charter schools, unlike their traditional public school peers, do not receive funds from the state to pay for transportation or facilities. So charters tend to operate with smaller reserves than traditional public schools.

"While some schools don’t have as much cash on hand as we would like to see, most schools have relationships with community organizations and other firms that have pledged support should it be needed," he wrote in an e-mail. "At this point, we do not have any Mayor-sponsored charter schools that we are concerned about having to close for financial reasons."

When Ballard issued his annual charter school accountability reports on Friday, he stressed that students in charter schools showed greater gains on their standardized test scores than their peers in traditional public schools.

The average charter student gained nearly 7 points on Indiana's standardized test, called Indiana Statewide Testing for Educational Progress-Plus. Primary students at traditional public schools in Marion County posted, on average, a 1.5-percent gain. High schools students at traditional public schools saw their scores decline slightly.

Teasley, who is an advocate for charter schools statewide, seized on those numbers.

“The longer students stay in a public charter school, the more they know and the more successful they are,” he said.

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  • Outputs
    I am glad to see that we have some conversation on the status of charter school outputs. Student performance is primary, but do not forget to consider staff satisfaction, turnover, misconduct, professional growth. These are of particular concern (after student learning performance) in a non-union environment that largely lacks any public transparency or accountability. Next we need to look at Board makeup, ethics conflicts, performance, local control dynamics, public access meetings and reporting accountability issues. My final concern would be fiscal accountability, which would only be an increasing concern under the following three scenarios: when individual learning performance deficiencies present in comparison to IPS(outputs), when per student total funding levels (for the academics facility and transportation) approach that of IPS (inputs), or when we need to argue for increasing funding for Charter Schools.
  • Charter Schools
    A better financial indicator may be the current ration (current assets divided current liabilities). A ratio of 1 or better could be set for the schools. Other accounting ratios could be used on the statement of financial position and the statement of activities to help measure trends in charter school activities.

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