Online Charter School Spending Trends

A bill to increase the cap on the number of Michigan public school students who can participate in full-time, online charter “cyber schools” is now pending in the state House of Representatives. Based on committee hearings, some legislators seem particularly interested in how these schools spend their money.

It appears that most online charter dollars go for the same things as conventional brick-and-mortar schools. In both, instruction tops the list. The current budget for the Michigan Virtual Charter Academy devotes about 61 percent to instruction, compared to around 60 percent at conventional schools, according to the state Department of Education.

The table below compares MVCA’s current spending to conventional district averages in 2010 (the most recent data available):

Conventional schools devote about 10 percent of their spending for things like counseling, tutoring and psychological services, vs. 9 percent at MVCA. In both, around 70 percent of the general fund revenues go toward instruction and instructional support.

Not surprisingly, the online charter has greater information technology expenses — around 7percent of its budget goes to a private contractor for this. Like all charter schools, it also has to pay its chartering institution (Grand Valley State University) a fee for the oversight it provides.

“Administration” at MVCA is handled by K12 Inc., a for-profit educational management company. (Regular school districts also contract out many noninstructional services.) The online charter pays 15 percent of its budget for this, vs. 12 percent by conventional schools. Some of the management company’s services could be counted under “operations and maintenance” or “other” in conventional school budgets, which may include things like facility maintenance, community services, repayment of past bond debt, capital expenses, etc. MVCA allocates another 2 percent to these, vs.14 percent on average at regular public schools.

Also not surprising, since it operates almost entirely over the Internet, MVCA spends virtually nothing on transportation, while its conventional school competitors devote 4 percent of spending on average for this. Unlike those competitors but in common with all other charter schools, MVCA can’t borrow and ask voters to pay higher property taxes to pay for buildings — its physical plant expense must come out of the operations budget.

Perhaps the most genuinely “transformational” difference that distinguishes all charter schools, including MVCA, is that they don’t get a single dime from the state unless conscientious parents actively choose to enroll their children. In contrast, conventional districts benefit from being the “default” school for all families within the district boundaries, and receive some revenue regardless of how many students they enroll.

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