News: CJ Exclusives

Charter School Wins Funding Battle in N.C. Court of Appeals

Charter advocates want legislature to ensure equal funding in the future

RALEIGH — The North Carolina Court of Appeals has reaffirmed that local school systems must give charter schools a portion of their general operating budgets, even if the budgets include funds that are designated for special programs that charter schools don’t offer.

A three-judge panel decided unanimously in September that the Rutherford County public school system owes Thomas Jefferson Classical Academy more than $730,000. Appellate judges agreed the school system had shorted the charter school funding for the 2007, 2008, and 2009 budget years.

The court issued a similar ruling in 2008, finding that Charlotte-Mecklenburg Schools systematically underfunded Sugar Creek Charter School and four other public charter schools in the county.

Charter advocates see the ruling as a victory, but hope the General Assembly will clarify and strengthen the law dealing with charter school funding.

At issue in both cases was whether traditional public schools must share funds designated for special programs — such as the More at Four prekindergarten program — with charter schools that don’t offer them. The court ruled that districts must share.

“Funds restricted as to their use, but placed into a school board’s ‘local current expense fund’ must be considered in the computation of monies due to a charter school pursuant to N.C. General Statute 115C-238.29H(b),” the opinion states.

Since 1996, “district schools were supposed to give charter schools a portion of all the money in their current expense funds — their general operating fund, their main bank account,” explained Terry Stoops, director of education studies for the John Locke Foundation.

“But through the years they have taken it upon themselves to keep funds used for programs charters don’t have.”

In both the Thomas Jefferson Classical Academy case and the Sugar Creek case, the appellate court ruled that “if it’s in the current expense fund, charters are entitled to it, even if they don’t have the programs,” Stoops said.

But traditional schools still have a legal avenue for withholding the funds.

As a response to the Sugar Creek decision, the Department of Public Instruction created something called Fund 8, “a place to keep special funds — special projects, earmarks, private donations — out of the current expense fund,” Stoops said.

In its opinion on the Thomas Jefferson case, the appellate court restated the school districts’ right to do this:

“Under our prior holdings in Sugar Creek I and II, the county schools can place restricted funds in accounts other than the local current expense fund.”

Darrell Allison, president of Parents for Educational Freedom in North Carolina, finds the court’s recent ruling reassuring, but sees a need for further legislative action.

The ruling “reinforces the message that charter schools are public schools and they should be funded equally,” Allison said.

But now that the state has eliminated the cap on charter schools, the legislature needs to come up with a more fair and balanced funding system, he said.

“Our funding system has been in place since 1996. It allows significant discretion at the local level when it comes to dollars set aside for charter schools,” Allison said. “Now that we’re going to have more charter schools, we need to re-evaluate it. It may need to be tweaked, modified.”

“If we want to make sure more charter schools are available in economically distressed urban and rural areas, they’re going to need every dollar they can possibly secure in order to be a viable, quality charter school.”

“This ruling restores fairness and equity to public school finance by ending the accepted practice of withholding or concealing funds from charter schools,” said Stoops.

In August, a separate three-judge panel of the appeals court rejected a lawsuit filed by the Sugar Creek Charter School seeking access to county education funds for capital construction.

Sara Burrows is an associate editor of Carolina Journal.