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Donate Charter School Lease Aid — good deal for taxpayers and students


by Joe Nathan

Despite some questionable assertions last week, lease aid for Minnesota charter public schools is a good deal for students and for Minnesota taxpayers. You don’t have to trust me on this — a 2003 Minnesota Office of Legislative Auditor (OLA) report concludes: “In general, we found that charter schools lease appropriate facilities and pay reasonable lease rates.”

While disagreeing on many things, Senator Clinton, Senator Obama and Senator McCain all have praised charter public schools.

More than 24,000 Minnesota students attending charters has increased, up from less than 100 in 1992. They are offering a variety of options such as Montessori, Chinese, Spanish or German language immersion, project based, classical, environmental and other themes to families throughout the state.

OLA found that charters average lower lease costs than other facilities the state rents:

Lease Rates Paid by Charter Schools and State of Minnesota, March 2003

Metro Area Cost Outstate rate cost
Per Square foot per square food

Charter Schools    $11.48 $9.76
State of Minnesota 16.67 11.36

The controversy starts with competition. State administrator, teacher union and school board associations have opposed opportunities like Post-Secondary Options, Open Enrollment, and the charter idea since Governor Rudy Perpich’s proposals in 1985. When Minnesota became the first state to approve the charter idea in 1992, education groups convinced legislators not to permit charters to levy taxes for buildings or operating expenses — as districts may do. This put charters at a huge financial disadvantage.

Unlike district schools, charters were forced to use state “per pupil” allocations to help pay for buildings. About a decade ago, legislators decided this was not fair to charter students. So legislators allocated lease aid — now $1200 per pupil unit, or 90% of a lease, whichever is less. As OLA notes,

“Charter schools are not allowed to issue bonds or levy taxes to pay for building space. Instead, the state provides lease aid that reimburses charter schools for a large portion of building lease costs if the lease terms are deemed reasonable.”

District public schools STILL can ask taxpayers for all they money for a new building, and for operating expense funds. Charters can’t do either.

Some district officials recently insisted that it is unfair that charters receive state funds to help pay building costs, while districts must get taxpayer approval. Quietly, a few years ago, St. Paul Public Schools received legislative approval to levy taxes for buildings WITHOUT a local referendum. Perhaps all districts should have that, along with the current responsibility to obtain state approval for their building plans.

Another controversy involves the fact that a few (11 out of about 140 charters) created non-profit corporations that own their buildings, since state law says the school may not own a building. The 2003 OLA report is concerned about this, and says state law should be clarified, perhaps allowing charters to own a building.
I’d support that only if charters must demonstrate effectiveness through their first 3 years before they can own a building, and the state (that’s us) receives revenue from a building’s sale if the school closes.

Minnesota’s charter idea has been adopted by forty states. Changes suggested above can help district and charter students, and show others “how it’s done.”

Joe Nathan, a former public school teacher and administrator, directs the Center for School Change, Humphrey Institute, University of Minnesota.

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