OKC district’s effort to penalize charter schools for attracting students prompts lawsuit

November 13, 2019

Ray Carter

The Oklahoma City school district has announced plans to impose a fee on area charter schools that would, among other things, financially penalize charter schools for attracting students from the traditional district. Two area charter schools say that proposed “administrative” fee increase violates Oklahoma law and have filed a lawsuit in response.

Under Oklahoma law, an entity that sponsors a public charter school—in this case the Oklahoma City school district—is allowed to assess the charter school a fee of up to 5 percent of the charter’s state funding “for administrative services rendered.” While charter schools have substantial independence, they are required to have a sponsoring entity, typically a local traditional school district.

Currently, the Oklahoma City district assesses a 3-percent fee on area charter schools, but has announced it will raise that fee to 5 percent by the 2022-2023 school year.

Families for Education, which operates Independence Charter Middle School and Harding Charter Preparatory High School, has filed a lawsuit in response. That lawsuit notes Oklahoma City district officials have claimed the 3-percent fee does not cover the costs the district incurs related to charter-school supervision, but stresses that district officials have also repeatedly said the fee increase was “to make up for the loss of students it incurs due to those students leaving its school to attend the various charter schools, such as the Plaintiff’s, thus calling into question District’s claim of simply wanting to ‘break even’ on the costs it incurs in rendering services to its sponsored charter schools …”

According to the lawsuit, officials linked the fee increase to the Oklahoma City district’s loss of students in statements made at Feb. 5 and Oct. 7 meetings. Oklahoma City Superintendent Sean McDaniel also explicitly linked the fee increase to the district’s loss of students to charter schools in an April 23 letter. In that document, McDaniel said the fee “compensates the district for the cost of reduced student enrollment” as well as administrative costs.

Because Oklahoma City officials have repeatedly said the fee increase is to boost the district’s funding as students choose to leave it for charter schools, the lawsuit argues there is reason for “good faith belief” that the proposed fee increase “exceeds the costs of the services rendered by District to its charter schools …”

The lawsuit says charter schools have requested an itemization of services provided by the district to charters and the associated district costs, but were informed “that an itemization would not be provided.”

“There is no reasonable basis for denying Plaintiff’s charter schools the right to receive the itemization of the services rendered to it and the expenses therefore that they are responsible for paying with taxpayer funds,” the lawsuit states.

Because Oklahoma law allows the administrative fee to be assessed only for “administrative services rendered,” the lawsuit argues it is illegal for the Oklahoma City district to impose a fee on charter schools that financially penalizes them when families choose to enroll children in a charter school rather than the traditional Oklahoma City school district.

Under Oklahoma law, the charter-school plaintiffs argue, the Oklahoma City district “does not possess the discretion to assess a charter school more than the costs for the services it renders.”

The fees imposed by the Oklahoma City district on the metro’s charter schools have long been a source of contention. In a recent interview, Chris Brewster, president of the Oklahoma Public Charter School Association and superintendent of Santa Fe South, Oklahoma’s largest brick-and-mortar charter school, said little documentation has been provided to justify the fee.

At Santa Fe, the charter will pay the Oklahoma City school district $700,000 this year for the administrative fee “for nothing, for no services,” Brewster said.

That fee will rise to more than $1 million in 2022 under the proposed increase.

Brewster’s school was not a party to the lawsuit filed by Families for Education, but he cited similar problems in getting Oklahoma City officials to provide itemized costs.

“We’ve sought, for nearly 18 years, the district to account for the real costs associated with a charter being in the district,” Brewster said, “and they have never given us an accounting for that.”

System wide, the impact of the fee increase on Oklahoma City charter schools could be substantial. It’s estimated the fee would result in the diversion of up to $775,000 total from charter schools to the Oklahoma City district. For Harding Charter Preparatory High School, the fee increase would divert $52,000 while at Independence Charter Middle School the fee hike would shift nearly $35,000 from the charter to the traditional district.

Under the state's school-funding formula, districts that experience declining enrollment may continue receiving state funding for students who have left for up to two years, informally referred to as “ghost students.” The fee increase the Oklahoma City district seeks to impose on charters for its loss of students appears to be in addition to any excess state funding it could already receive for departed students.

While traditional school districts receive local property tax funding along with state appropriated funds, charter schools receive no local property tax. This results in charter schools having less per-pupil funding than traditional schools.

Typically, Brewster said charter schools receive about 76 cents in funding for every $1 given to traditional public schools, accounting for all funds.

Despite their lower levels of funding, academic performance at charter schools in the Oklahoma City metro typically far exceeds the performance of the Oklahoma City school district. Oklahoma City’s academic performance typically ranks among the worst in the state. Harding Charter Preparatory High School, in contrast, has ranked among the best schools in the nation, not just Oklahoma, for years.

The academic results produced by charter schools, along with a safer environment, have led many area families to choose those schools over the traditional district. For example, Santa Fe currently has nine locations and serves 3,500 students, but that charter school has another 1,700 children who are on a waiting list.

The Oklahoma City school district issued a brief statement in response to the lawsuit that did not address the substance of the arguments put forth by charter schools.

In addition to citing Oklahoma law and noting the proposed increase will raise the fee to 5 percent, the statement reads, “The district is currently working with each charter as its contract comes up for renewal to incorporate this consistent change which will affect all charter schools equally and give them several years to plan. OKCPS cannot comment on pending legal matters. We look forward to working through the legal process to find a timely resolution.”