Trying to Make Sense of Arizona’s Small School Rule

TUSD’s Drachman Primary Magnet School has about 300 students. State law says that schools with less than 600 students should receive extra funding because of their small size, since it costs more to run a small school than a larger school which benefits from economies of scale. But Drachman doesn’t qualify for small school funding because it’s part of a larger district which has plenty of opportunities to take advantage of economies of scale. No TUSD schools qualify, nor do schools in other districts with more than 600 students total.

Imagine Elementary Charter School in Tempe has just under 300 students. Currently, it qualifies for the extra small schools funding— hich, so far as I can tell, varies from about $200 to $1,000 per student depending on the size of the school—because it’s a single charter school, so its costs are greater because of its small size. The same is true of other charter schools with fewer than 600 students.

Except, that’s not exactly true in the case of Imagine Elementary in Tempe. It’s one of 17 to 20 (depending on how you count) Imagine charter schools in Arizona, with about 7,000 students total and a central administration. In essence, Imagine Schools is a charter school district, meaning the Tempe charter, like TUSD’s Drachman, has all the economies of scale which come from being part of a larger group of schools.

The reason Imagine schools, as well as BASIS schools and some other charters, have qualified for the small school supplementary funding is because each campus calls itself a separate school, and they make a point of keeping each school’s enrollment below the 600 student cutoff. The schools have been considered individual units by the state rather than part of a larger group of schools. In other words, they’ve gamed a system. The small schools funding was set up for small, isolated schools or districts that genuinely have larger costs because of their size. According to the spirit of the law, small school districts and truly separate charter schools which aren’t connected to other schools should get the extra funding, not Imagine schools and not BASIS schools which, like Imagine, has about 7,000 students total—or other charter groups that have been taking advantage of the system.

But that scheme looks like it’s coming to an end because of a new section added to the state education budget. For once, the legislature got it right. SB 1476 says, if a charter school is part of a larger entity, the state looks at the total student population, not the individual school populations, and if the total goes over 600, the extra funding will be phased out over a three year period.

(The latest wrinkle here is, The Arizona Department of Education interpreted the new small school legislation very broadly — too broadly, in my opinion—saying it includes any group of charters, even if its total student population is less than 600, and so it shouldn’t get the small school funding either. That doesn’t make logical sense, nor does the legislation say that according to my English teacher’s non-lawyerly reading of the language. I expect the ADE decision will be reversed.)

Let’s look at the way the system has been gamed by some of the major charter players in the state.

As I said, Imagine schools has a total of about 7,000 students spread out over a number of schools. Let’s just look at one school by way of example: Imagine at Coolidge. Or is it two schools? Or three schools? Or four schools? What I know for sure is, about 1,100 K-through-12 students share one address and adjoining campuses. According to the numbers the school turned into the state, the elementary school has 630 students, but they’re divided into K-3 and 4-5 “schools.” Coolidge Prep has 490 students divided into 6-8 and 9-12 “schools.” Are they designated as two, three or four schools by the state? I honestly can’t tell for sure, but I do know these joined campuses have the ability to share facilities, services and administrative staff, meaning none of them really qualify as under-600 schools, even if you want to ignore the fact that they’re part of a 7,000 student charter district. Imagine has a total of five combined schools like this.

BASIS has a few campuses with a total of more than 600 students. Tucson North, for example, has about 900 students, divided into 650 elementary and 250 high school students. Do they each get small school funding? Again, I can’t say for sure. School funding formulas get very complicated. But I know that SB 1476 will stop any BASIS school from getting the extra funding.

Let’s dig one level deeper here. BASIS is constantly complaining it doesn’t have enough money, and it fundraises like mad among parents and other supporters. But according to Peter Bezanson, CEO of the Basis Schools, BASIS gets about $4 million a year from the small schools funding, which according to my figuring comes to about $560 per student—money it never should have received, except that it gamed a part of the law that wasn’t written to apply to charters with multiple campuses. But instead of saying, “Well, it was great while it lasted, but now the game is up and we’ll have to make do without the small school funding,” Bezanson said, if BASIS isn’t allowed to keep gaming the system, it’s going to take its marbles and, not exactly go home, but refuse to build any more schools in Arizona.

“I can say without qualification that Basis will not grow any more in Arizona with this new funding reality,” [Bezanson] said. “We won’t add any more schools.”

For Imagine schools, getting rid of the small school loophole will mean, according to Rhonda Cagle, senior vice president of communications for Imagine Schools, a loss of $200 to $275 per student the first year. Now, since the first year will only take away a third of the schools’ small school funding, I’m going to guess the Imagine schools have been playing the state for $600 to $825 per student per year, or about $5 million total.

This article appears in May 28 – Jun 3, 2015.