The Adverse Impact of a Charter School

The adverse financial impacts of having a charter school locate in Summit, New Jersey would include but are not limited to:   

• State law would require Summit’s public schools to provide 90% of its average per pupil cost by grade to a charter school residing in the district.  This amount could total approximately $5 million (e.g., 400 pupils times the estimated elementary school average grade level per pupil cost of $12,500 whereas $14,300 is the overall average per pupil cost) if the charter school enrolled only 400 elementary school students.  Summit’s Board of Education and taxpayers not only would have crucial property tax revenues siphoned away but alsoSummittaxpayers would lack any control or even a town-wide vote over the amount and level of funds transferred.  Also, the amount transferred to the charter school could increase for many reasons including but not limited to its offering additional grades such as those for middle and high school or paying above market salaries to its officers, administrators, and staff. 
• Summit’s public schools would lose state and federal enrollment based aid in direct proportion to the numbers of students that enrolled in the district charter school which would force budget cuts to regular education. 
• The typical charter school’s practice of “cream-skimming” would not only tend to draw the top standardized test scoring students away from Summit’s traditional public schools resulting in lower district-wide standardized test scores such as those administered by NJASK and the No Child Left Behind (NCLB) Act but also lead to financial and operational penalties under NCLB because of the district-wide decline in proficiency rates (i.e., fewer students achieving an Advanced Proficient or Proficient rating). 
• Summit would not recoup most of the operating expenses associated with those students who left to attend a local charter school because students do not transfer to charter schools in uniform blocks which would increase Summit’s schools cost per pupil ratio.  Also, the rebalancing of the remaining student populations within the district following the migration of students to a local charter school might require expensive intra-district busing. 
• New Jersey 2.0% cap on property tax increases would have a disproportionate adverse impact. 

• For example, say the annualSummiteducational operating budget is $100 million and it is 100% funded by property taxes while $5 million is transferred to the charter school in town. 
• The budget would be capped at $102 million for the following fiscal year.  
• But if the charter school added middle and high school grades such that it required at least a $15 million transfer fromSummit’s traditional public schools for the following year, Summitwould be compelled to fund its total educational programs and services on a budget of only $87 million which would force severe cuts to regular education.
• This could be the most draconian fiscal impact!