Posted by Doug Turetsky, October 10, 2013

We rarely comment on publications by other organizations. But a report that includes IBO in its title that was just issued by the organization Save Our States demands a response on at least two counts.

The new report “revisits” our February 2010 fiscal brief and 2011 blog post, which compared the amount of public funding for general education at charter schools with that for the city’s traditional public schools. We found that charter schools co-located in public school buildings receive slightly more per student in public support than traditional public schools when the value of free space and other in-kind contributions are accounted for.

The authors of the SOS report, Harry J. Wilson and Jonathan Trichter, contend that our finding was flawed and that the amount of public support that charter schools receive is thousands less per general education student than the true cost of educating students at traditional district schools. What was the flaw? They say we failed to consider the underfunding of the city’s pension plans and commitments for retiree health care benefits for school staff and should have accounted for those future costs when totaling the amount of support for the traditional public schools.

The problem with their contention is that our focus is the current level of actual public spending in support of charters and traditional schools in a given school year, as presented in the Bloomberg Administration’s financial plan. (Moreover, estimates of future costs and when they will come due, particularly for retiree health care benefits, vary considerably.) We clearly state the basis of our comparison in the fiscal brief and blog.

But even if we did take unfunded pension and retiree health care liabilities into account, the SOS contention fails to hold water. Why? Because there are two sides to the ledger. The formula in state law that determines the allocation to charter schools for each student enrolled includes an amount based on the pension and fringe benefit costs of personnel at traditional schools. So, for example, if the city administration chose to increase the amount spent for pensions each year to more fully reflect future liabilities for staff at traditional public schools, that amount would also go into the formula for charters, thereby increasing the per student allocation for charters as well.

In short, the difference in public support between traditional and charter schools would remain unchanged. Of course, given that charters tend to rely on cheaper 401(k) plans for retirement benefits, taking unfunded pension costs into account would increase the public subsidy to charters even though their retirement costs have not increased.

The SOS report is framed as a critique of IBO’s analysis of comparative public support for the city’s charter and traditional public schools. While the report provides important insights into the critical municipal finance issue of unfunded pension and health care costs, it offers nothing to undermine our core findings on public support for charters and traditional public schools.