On January 30, the Madison School Board will consider a proposal from Isthmus Montessori Academy (IMA) to establish a new charter school within the Madison school district. As the name suggests, the school would offer a Montessori curriculum.
A key question is what would be the financial impact of the new charter on the school district. For several reasons, this is very hard to project.
The financial analysis that the MMSD administration prepared for the School Board’s benefit looks at whether the addition of the school would generate sufficient new revenue authority to cover its net costs to the school district. In other words, would we be able to raise property taxes enough to cover the cost? The answer: not for the first couple of years. This is because revenue limits are based on the number of students in a school district, and new students are phased in over three years for revenue limit purposes.
While this analysis is helpful, I think it may be more useful to look at the likely impact of a new charter school on the equalization aid we receive from the state. Will the additional costs of the new school be offset at all by an increase in equalization aid? If so, by how much?
It is hard to make projections of future equalization aid. The equalization aid formula is based on six variables. Three are calculated by the Department of Public Instruction (DPI) on the basis of statewide factors as well as on the total amount available in equalization aid in a given year. The other three factors are specific to the school district: the total number of students (calculated per DPI rules), the total amount of property value in the school district, and the total amount of school district expenditures (again calculated per DPI rules). (I wrote an explanation of the equalization aid formula a few years ago that you can find here.) Continue reading