The Massachusetts Board of Elementary and Secondary Education

Charter Schools — Charter Authorizing in Lynn under Net School Spending Caps

Members of the Board of Elementary and Secondary Education
Jeff Wulfson, Acting Commissioner
February 16, 2018

This memorandum discusses the statutory requirements for Commonwealth charter schools regarding enrollment and net school spending (NSS) caps specific to each school district. As I indicated in my accompanying memorandum on this year's applications for new charters, the application for Equity Lab Charter School substantially met the criteria for approval. However, I was unable to recommend this school for a charter because of upcoming changes in the NSS cap for Lynn, as discussed below.1

While the purpose of this memorandum is to explain why I cannot recommend that the Board grant a charter for an application that sufficiently addressed the criteria, I also wish to recognize the teachers and administrators in the Lynn Public Schools, under the direction of Superintendent Catherine Latham, for their on-going efforts to support student learning and their success in improving student outcomes.

NSS Caps and Enrollment in Commonwealth Charter Schools

The charter school statute establishes limits on the amount of charter school tuition that can be charged to a sending school district in any given year. The limits are expressed as a percentage of the district's "net school spending" for that year. Net School Spending is a term originally developed as part of the Chapter 70 state aid program. It basically represents the district's spending on school operations from state and local general fund revenues. It does not include spending funded by grants, nor does it include most spending related to capital facilities, transportation, or adult education. In the case of municipal school districts, it can include spending on behalf of the schools by other municipal departments.

The NSS caps are found in the charter school statute at G.L. c. 71, § 89(i)(2), (3), and (4). Section 89(i)(2) of G.L. c. 71 provides as follows with respect to NSS:

In any fiscal year, no public school district's total charter school tuition payment to commonwealth charter schools shall exceed 9 per cent of the district's net school spending; provided, however, that a public school district's total charter tuition payment to commonwealth charter schools shall not exceed 18 per cent of the district's net school spending if the school district qualifies under paragraph (3).

G.L. c. 71, § 89(i)(2) (emphasis added). Section 89(i)(3), referred to in the language quoted above, provides as follows.

In any fiscal year, if the board determines based on student performance data collected pursuant to section 1I, said district is in the lowest 10 per cent of all statewide student performance scores released in the 2 consecutive school years before the date the charter school application is submitted, the school district's total charter school tuition payment to commonwealth charter schools may exceed 9 per cent of the district's net school spending but shall not exceed 18 per cent.

G.L. c. 71, § 89(i)(3) (emphasis added).

If the calculated tuition charges for all of a district's students attending charter schools would exceed the district's NSS cap, the Department is required to reduce the tuition paid to the charter schools to bring the amount under the cap.2 Any such excess is prorated proportionately across all of the charter schools with students from that district. We try very hard to avoid such situations, using such tools as enrollment limits and directives permitting schools to skip over students from "near cap" districts in their enrollment lotteries. But managing the NSS caps is an inexact science, because decisions around the award of charter seats and the admission of students are made well in advance of a school year, while the final tuition rates, enrollment numbers, and district NSS levels needed to calculate cap compliance are not known with certainty until well into the school or even later.3 As a result, we rely heavily on estimates and projections when recommendations are made to the Board for the award of new seats.

The situation is further complicated by the fact that a charter school can draw students from multiple districts, and multiple charter schools can draw students from any particular district. When the Board awards a charter, students in the district or districts specified as the charter's region are given preference in enrollment. But under state law, any child is entitled to attend any Commonwealth charter school. Enrollment preferences based upon residence may enhance a student's likelihood of admission but do not deprive other students of consideration for admission or of inclusion in an admission lottery. So managing the NSS caps also requires us to estimate and project how many students from a particular district will be attending a particular charter school in future years.

The current list of the "lowest 10 per cent" districts, for whom the NSS cap is 18 percent, was issued by the Department in spring of 2017, based on 2015 and 2016 student assessment results.4 Each year's list is intended to inform admissions decisions for the coming school year as well as the seats available for new schools and expansions of existing schools. Lynn is in the lowest 10 per cent on that list, so its NSS cap is 18 percent. Under this cap, there are slightly more than 1,000 seats available to be awarded, more than enough to support a new charter school.

We have not yet released the new district rankings, based on the 2016 and 2017 student assessment results, which will inform next year's application cycle. But the results are in, and I can report to you that Lynn will be moving out of the lowest 10 per cent. I have included with this memorandum a summary table showing both last year's district rankings as well as the expected rankings for this year.5

The charter school statute contains explicit direction on how to calculate a district's NSS cap when the district exits the lowest 10 per cent:

If a district is no longer in the lowest 10 per cent, the net school spending cap shall be 9 per cent, unless the district net school spending was above 9 per cent in the year prior to moving out of the lowest 10 per cent in which case the net school spending cap shall remain at the higher level plus enrollment previously approved by the board. The department shall determine and make available to the public a list of the school districts in said lowest 10 per cent.

G.L. c. 71, § 89(i)(3) (emphasis added).

In FY2017, Lynn's charter tuition assessment represented 8.41 percent of its NSS.6 Based on the statutory language above, this would set Lynn's new NSS cap at 9 percent, insufficient to support a new school.7 In effect, any seats awarded by the Board this month under the 18 percent cap would "disappear" by the start of school next September. Given these circumstances, I have made the decision not to recommend the award of a new charter. It is unfortunate that the complicated NSS cap framework can result in untimely notice to an applicant group that seats previously thought to be available are no longer available.

Although not directly relevant to this discussion, it should be noted that Lynn's new NSS cap will be somewhat higher than 9 percent to accommodate seats previously awarded in 2013 to the Pioneer Charter School of Science II (PCSS II), which is located in Saugus but includes Lynn in its chartered service area. This exception derives from a separate statutory provision:

Notwithstanding any general or special law to the contrary, if a district qualifying under paragraph (3) is no longer in the lowest 10 per cent, the net school spending cap shall be 9 per cent; provided, however, that if the board of elementary and secondary education previously approved a higher level of enrollment for a charter school in the district while the district was in the lowest 10 per cent, the net school spending cap shall remain at the level necessary to support such enrollment. This paragraph shall apply only to charter school enrollments approved before July 1, 2014.

G.L. c. 71, § 89(i)(4) (emphasis added).

As more districts move closer to their statutory NSS caps, and as districts move in and out of the lowest 10 per cent, providing accurate estimates to inform chartering and admissions decisions becomes more and more challenging. I have asked the Department's charter school and school finance staffs to review the statutory and regulatory framework over the next several months and to consult with our key stakeholders to see what improvements to the process might be possible. We will also be working closely with the Commonwealth charter schools that currently serve Lynn students to implement the city's revised NSS cap.

Cliff Chuang, Senior Associate Commissioner; Rob Curtin, Associate Commissioner; and Alison Bagg, Director of the Office of Charter Schools, will be at the February Board meeting to answer your questions. In the meantime, if you need any additional information, please contact Cliff (781-338-3222), Alison (781-338-3218), or me.



Download Excel Document
District Ranking for the 2017-2018 charter application cycle (final) and for the 2018-2019 charter application process (preliminary)