To: From: Date: RE:

Cranston City Council Mayor Allan W. Fung August 9, 2011 Proposed Mayoral Academy Fiscal Impact Analysis

I. Background Rhode Island General Law describes the states method for determining per-pupil funding for public school districts, state-run schools, charter schools, mayoral academy charter schools and other independent public schools. Essentially, core public education funding for all public schools and districts in Rhode Island is comprised of revenue from state and local sources, the proportions of which vary by community depending on community wealth and property tax capacity. Almost all public schools and districts receive other revenues as well, from federal, private or other sources. In June 2010, the mechanism for issuing Rhode Island state funds to public schools districts and independent public schools changed significantly. The new funding formula is designed to ensure that all districts and public schools are funded based on actual enrollment, and in an amount that is responsive to fluctuations in student poverty rates. Student poverty is commonly associated with higher levels of educational needs and costs. Like many cities and towns in Rhode Island, Cranstons level of state funding has been too low for more than a decade according to calculations of the new funding law. As a result, Cranston will receive a higher allocation of state funds for education beginning in FY2012 with additional increases each year for the next seven years.
Figure 1: Estimated State Funding Increases to Cranston School District: FY2012-2018. FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 2,349,234 4,698,468 7,047,702 9,396,936 11,746,170 14,095,404 16,444,638

Source: Office of Finance, Rhode Island Department of Education

II. Achievement First Mayoral Academies On March 1, 2011, Achievement First and Rhode Island Mayoral Academies (RIMA) submitted an application to the Rhode Island Board of Regents proposing to open a mayoral academy charter school serving Cranston and Providence students. If approved, the mayoral academy would open in August 2012 with a maximum enrollment of 88 students from Cranston and 88 from Providence, growing a grade each year. After five years, the mayoral academy would be required to undergo a charter renewal process to continue operations, at which point the Board of Regents would vote to renew the charter and allow it to continue operating, or revoke the charter and close the school.

By state law, mayoral academies must offer urban and non-urban communities an equal number of enrollments (RIGL 16-77.4-1) though actual enrollment will depend on the number of applicants from each community. The maximum number of students who could enroll from Cranston is shown in the table below.
Figure 2. Maximum Cranston Enrollment in Achievement First Mayoral Academies: 5 Year Charter Term FY2013 FY2014 FY2015 FY2016 FY2017 Maximum Cranston 88 219 302 379 460 AFMA Enrollment*
Source: Proposal for Achievement First Mayoral Academies, March 1, 2011

* It is essential to note that Cranston enrollment into the mayoral academy may be less than (but not more than) the number above. In this case, funding for those students would be reduced from the estimates below on a per-pupil basis. If no Cranston families apply to attend the mayoral academy, it would not receive any of the designated funding for Cranston students. III. Per- Pupil Funding for Achievement First Mayoral Academies If we assume that Cranston students enroll into AFMA at maximum levels, and we also assume that 65% of Cranston students attending AFMA are from low-income households, the school would be funded as follows:
Figure 3. Funding for Cranston Students Who Choose to Attend Achievement First Mayoral Academies. FY2013 State share ($): Low-income student State share ($): Non low-income student Local share ($): Each student Total Per Pupil ($): Low-income student Per Pupil ($): Non low-income student Enrolled Non Low-Income (35%): Enrolled Low-Income (65%): 5,791 4,137 6,685 12,476 10,822 31 57 FY2014 5,791 4,137 7,241 13,032 11,378 77 142 FY2015 5,791 4,137 7,798 13,589 11,935 106 196 FY2016 5,791 4,137 8,354 14,145 12,491 133 246 FY2017 5,791 4,137 8,354 14,145 12,491 161 299

Total Cranston Enrollment: Total Funding for Cranston Students Attending AFMA ($):

88 1,046,945

219 2,727,229

302 3,929,050

379 5,141,552

460 6,240,406

Source: Office of Finance, Rhode Island Dept of Education

In summary, the revenue designated to serve Cranston students attending AFMA, per the new formula, would range between approximately $1M in the schools first year to $6.2M in the schools fifth year. IV. Effects of AFMA Funding on Cranston School Department Funding The amount of funding designated for Cranston students attending Achievement First Mayoral Academies at maximum Cranston enrollment does not equal the amount of revenue that would cease to go to the Cranston district. Just as the state funding for the district is being increased over the next seven years, the shift of state funds away from the district for Cranston students attending AFMA would be phased in over seven years. In other words, assuming the mayoral academy opens in FY2013 as scheduled, only oneseventh (1/7) of the state funding that would go to AFMA in its first year, or $76,390, could be considered a reduction in state funding for the Cranston district. Due to this phenomenon of the phase-in of additional state funds at the same time as the creation of a new independent public school, there is no single year where revenue to the Achievement First Mayoral Academies has a net decrease on revenues to the Cranston district. The state increase to the Cranston district is always larger than the funding required for AFMA.
Figure 4. Net State Revenue for Cranston School District, Assuming Maximum Cranston Enrollment into Achievement First Mayoral Academies. +/(-) FY2012 FY2013 FY2014 FY2015 FY2016 State Shift 0 (76,390) (228,177) (393,394) (658,276) for AFMA Local Shift 0 (588,280) (1,585,799) (2,354,996) (3,166,166) for AFMA Total Shift 0 (664,670) (1,813,956) (2,748,390) (3,824,442) for AFMA Add Cranston 2,349,234 4,698,468 7,047,702 9,396,936 11,746,170 State Aid Increase Net to 2,349,234 4,033,798 5,233,746 6,648,546 7,921,728 Cranston

FY2017 (1,198,796) (3,842,840) (5,041,636) 14,095,404

9,053,768

Source: Office of Finance, Rhode Island Department of Education

V. No District Services for Independent Public Schools In Rhode Island, all independent public schools, including charter schools and mayoral academies, must arrange and pay for their own facilities, facilities maintenance, garbage/recycling, transportation services, food service, custodial services, and all other school services. Unlike school districts, independent public schools must fund these services with the core operating revenue or development revenue they receive. In addition, charter schools must arrange and fund all special services for students, including any English language services, services for students with disabilities, and special education services. Neither districts nor municipalities are required to provide any services to charter schools. As such, neither the City of Cranston nor the Cranston School District will be required to provide or fund any services, property, supplies or equipment to Achievement First Mayoral Academies or any other independent public school. VI. Conclusion Hopefully, you can see from the above analysis that statements in the resolution by Councilman Navarro of July 25, 2011 that the Mayoral Academy would necessitate new tax dollars, or may add an additional tax burden on Cranston residents are unfounded. Even if the maximum number of students allowable under the proposal enrolled from Cranston into Achievement First Mayoral Academies, the program would not necessitate new funding. Concurrently, whether the mayoral academy program opens or not, the Cranston district would receive an additional and considerable influx of state aid under the new funding formula.