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What's Up With That

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It’s Called a Balance Sheet

One of the arguments against the Charter School Amendment is that it will de-fund education. The facts do not support this claim. More importantly, amendment opponents are only discussing one side of an equation.

It’s called a Balance Sheet
assets = liability + equity

Yes, if a student leaves a traditional school the local district will no longer receive state funding for this student.  But the opposition fails to acknowledge that the corresponding “liability” (the cost of educating that child) is also removed from the balance sheet. Because the cost to educate that one child is greater than the amount that the state sends to the district, combined with the fact that the district will keep all of their local tax dollars; the end result is that they removed more liabilities (i.e. cost to educate) than they removed “assets” (state funding). This results in an overall improvement on their balance sheet and improved position relative to every other child in the district. They now have more money per student than they did before.

Don’t let anyone fool you – you must look at both sides of the equation.

Here’s an extremely simple example:

Before charter in district (100 students):

Assets Liabilities
State funding = 500,000 ($5000 for 100 students) Cost of educating 100 students: $750,000
Local Funding = 500,000 Reserves = 250,000
Total assets = 1,000,000 Liabilities + Reserves = 1,000,000
Assets per student: $10,000

After Charter enrolls 10 students from district:

Assets Liabilities
State funding = 450,000 ($5000 for 90 students) Cost of educating 90 students: $675,000
Local Funding = 500,000 Reserves = 275,000
Total assets = 950,000 Liabilities + Reserves = 950,000
Assets per student: 10,555 (5.5% more per student after charter school)

 

 

(12) comments
  1. GA children need better choices for their future. I support Charter Schools as a first step in giving parents a chance to make a difference in their childs future. I do not understand why the powers that be are so afraid of supporting quality education choices to allow students and teachers to acheive all they can be. Let’s raise the bar and see how far the education system can go. The Charter schools that I know anything about have proven that they get the job done!! There are a lot of good schools in GA but their are also many who are not so good. Why shouldn’t parents have the choice to choose a school that will meet the needs of their child. Vote “YES” on the Charter School Amendment.

  2. [...] just posted a new blog: It’s Called a Balance Sheet. Click on the title to read and comment. If you haven’t already read my last blog on the [...]

  3. As a parent, I support the charter school amendment. However, as an accountant, I would need to see more but on the face of it your math does not work. You presume the cost per student remains the same with fewer students. It does not. The cost to educate a student includes both fixed costs and variable costs. There likely are also semi-variable costs as well. The cost for teachers salaries (presuming the drop in number of students results in fewer teachers), books, supplies, etc. will likely go down but the cost of administrators, lighting, heating, cooling, the (in my opinion bloated) cost of the Dekalb County Schools central office, etc. will likely remain the same. The final result may still be a higher number for assets per student but it may also result in a lower number.

  4. The incumbent system is only concerned about the top line. Government bureaucrats build power and oft times personal wealth by directing the flow of that money both internally and to outside vendors. Crony capitalism benefits the bureaucrat as well as the corporation. Threaten that money–you threaten that power and you’ll have a fight on your hands.

    The teacher load balancing creates a fear within the system that is firmly rooted in self-awareness. A charter school may not be able to screen incoming students, but can and will screen teachers. Perhaps that will not constitute an immediate “brain drain” from incumbent DeKalb public schools, but over time it is likely that the best teachers as well as the best students with the most engaged parents will gravitate to any available successful charter. This would drive the public school metrics even further downward. If that is possible.

    If you are a typical public school teacher or administrator then charter schools may appear to be something that will change your world. In a way you may not like. If these folks go to the polls in greater numbers than those they are supposed to serve they will (again) carry the day.

    It will be an interesting vote.

  5. Hi Stephen,
    There is incontrovertibly more money per child. Given the school has less total money, it is up to them to figure how to use it. If they are serving fewer people, seems logical they can make some cuts somewhere. Some suggestions: fewer of any of these – administrators, teachers, buses, mechanics, schools, etc …

  6. Using averages to calculate the incremental cost of educating a child is not appropriate. The incremental cost to add or remove a single child to a classroom is essentially zero(0). They don’t pay teachers or anyone else in the school system per student. Only when can you reduce a class-size number of kids in a grade will the costs decrease when you remove a teacher.
    If I use the example above, the school will fire a teacher to address the 50k in less funding the class sizes will increase for the remaining kids.

  7. **and the class sizes will increase for the remaining kids.

  8. Nancy, thank you for explaining the balance sheet, but I do not understand how one is to differentiate between “local tax dollars” that you say will stay with the child and “state tax dollars” that you say will be removed and sent to the state charter(s) when/if they are opened.

    I don’t recall paying separate state vs. local tax dollars for education. I know I pay property taxes and a portion of this amount goes for education. Is this considered state or local? I know I pay sales tax that includes SPLOST dollars – but I doubt that the addition of new state schools were included in that plan.

    SO, where does a newly approved charter get its funding if, by what you are saying is correct and “the cost to educate that one child is greater than the amount that the state sends to the district” – then it does not sound like this idea is even one that is feasible.

    Thanks!

  9. Mad Dad,
    Of the total spending on K-12 education in Georgia, roughly 40 percent comes from local sources, 55 percent from state sources and 5 percent from the federal government. While Georgia raises revenue primarily from income and sales taxes, local school systems rely heavily on property taxes to fund education as you know. In recent years, however, local sales taxes (SPLOST) have become an important source of revenue, but the proceeds of the sales tax can be used only for school construction and not for school operations, although there are a few exceptions.

    With the new Commission being proposed, the districts will not lose any local funds at all (it is prohibited in HB 797). The state charters will earn their state funds and be provided a supplement from the NON K-12 portion of the state budget (so the districts’ state funds are also not being impacted negatively). The total amount the charters will earn will be, as the Governor’s office confirmed, about 66% of what a traditional public school student would earn.

  10. Concerned Taxpayer.
    You’ve got that right. If my class and the class next to me looses half its students to the charter school across the street then they are going to combine those two classes.

    On the bright side, the charter school across the street is going to need teachers. I would be HAPPY to leave DCSD behind and work for the charter school across the street.

    If enough students leave, it sure would be nice to get out of the trailers. I think my class size max has been reached, so I don’t anticipated getting any more students in here. It sure would be nice to loose a couple of students to charter schools.

  11. the governor removed you from your post, please go away! You are no longer relevant

  12. dunwoody parent – [Nancy] is the only one of the six removed who should NOT have been!

The comments are closed.

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