North Chicago CUSD 187 (old)

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North Chicago CUSD 187 (old)

Charter Fiscal Impact

Afton leads school district through a charter authorization process, ensuring the new school is fairly funded and cost neutral to the district.

In a small suburban school district outside of Chicago, the city of North Chicago is proving how public school districts can offer choice to families in a fiscally responsible way. North Chicago Community Unit School District 187 serves over 3,500 students, 88% of whom are eligible for free and reduced lunch, 27% of whom are English Language Learners, and over 12% of whom have IEPs. The District has undergone a unique transformation since 2012 when the Illinois State Board of Education (ISBE) intervened in the District and replaced the elected school board with an Independent Authority and with a Financial Oversight Panel.

Last year, the District received an unsolicited charter application. As part of the charter authorization decision process, Afton Partners worked with Chief Education Officer Ben Martindale, Deputy Superintendent Joel Pollack, and legal counsel Nicki Bazer of Franczek Radelet to determine how they might be able to authorize another school in a fiscally responsible way while enrollment across the district is relatively stagnant.

Ultimately, a 300 student charter school was authorized. To ensure cost neutrality, the school district decided to close a district-run school and reduce 19 district positions. Also toward cost neutrality, the charter operator agreed to a new funding formula that is student-need based, ensuring funding equity for students no matter if they attend the charter operator’s schools or district-run schools.

Prior to this work, Afton was engaged by the District from 2012-2014 school year to provide financial alternatives to be considered alongside academic improvement plans. This work included identification of the causes of the District’s structural deficit and recommendations for cost reductions and operational changes that would alleviate the structural deficit and result in the least instructional impact.

Our Insights

The project incorporated several of the most interesting and debated matters in education finance today: charter school funding, student based budgeting, and the impact of charter schools on school district finances. Districts have difficulty reducing costs when facing enrollment decline, whether due to charter schools or otherwise. But there are ways to make it work. Afton believes in school choice, but not at the cost of other students in a school district. By charter schools attracting students away from districts, they expose the fixed nature of district cost structures and the inequities of intra-district funding. Unfortunately, as charter schools are authorized in enrollment stagnant or declining districts, students remaining in district-run schools may get less resources because districts struggle to adjust their costs accordingly. In the case of North Chicago, the administration worked tirelessly to come to agreement with stakeholders and the charter operator to make difficult decisions that would alleviate the district’s cost structure with the authorization of the charter school. Specifically, the district turned many typically “fixed costs” into variable costs that reduce with the loss of enrollment to the charter – namely, the district closed a school and reduced 19 positions. Charter schools have a responsibility to acknowledge certain burdens that districts face. One way they can do so is when gaining authorization of a new school, consider funding formulas that are both equitable and ensure that no children in a district are unfairly resourced. In the case of North Chicago, the charter operator agreed to a student-need based funding formula, which dramatically reduced their funding from prior levels, and was equitable considering the school’s student profile had lower levels of poverty, special education and English language learners. Furthermore, the funding formula shared the burden of legacy debt between the district and charter schools such that students are not unfairly resourced.

Stats & Impact

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