The Maryland state school board voted Tuesday to advance a regulation they hope will bring peace between factions warring over how the state’s 50 charter schools are funded.

For more than a decade, charter school leaders have complained that school districts have been shorting them the money they need to educate 25,000 students, while district leaders have said charters are expecting too much. Three times, those disputes have gone as far as Maryland’s Supreme Court.

The new regulation, if it clears legislative hurdles and a final vote next year, will lay out a clear formula to calculate how much money a charter school will get for each student it enrolls.

“With these regulations, we draw a clear line: Maryland will no longer operate without transparent rules for funding charter schools,” said state board president Josh Michael.

“Our students cannot wait another decade for clarity,” he added.

Charter schools are publicly funded and privately operated as schools parents can choose. In Maryland, unlike other states, a nonprofit needs approval from the local school district to run a charter school. School districts review their performance every few years, and can decide not to extend a charter if they aren’t satisfied.

The new funding formula for charters is laid out in the regulation as a detailed math problem that begins by adding together state and local revenues for the school district and then subtracting the costs of a series of items the school districts pay.

For instance, the school district must carry some big-ticket items including teachers’ retirement and health insurance, negotiation of union contracts and some special education services.

On top of that, school districts will be able to charge an administrative fee of up to 5% that covers the cost of the school system’s central office staff who work with charters. If they decide to charge the upper limit, school systems will need to show their calculations to justify the cost.

The new formula would allow school districts to deduct between 15% and 19% from the amount a charter school gets for educating each child, according to the state.

How much the state’s charters can be charged for those items has been disputed for years, particularly in Frederick County and Baltimore City, which has the vast majority of Maryland’s charter schools.

A spokesperson for Baltimore City Public Schools in a statement called the regulation “incredibly disappointing."

“The State Board is poised to siphon tens of millions of dollars from traditional schools to subsidize charters. City Schools participated in the State Board’s process in good faith, however, today’s State Board action represents arbitrary and unfair compromises rather than thoughtful policymaking,” the statement said.

Baltimore schools CEO Sonja Santelises wants to increase what districts can charge.

Santelises had asked the board Tuesday to add an amendment that would allow districts with 15% or more of their students in charter schools to charge an 8% administrative fee without state board approval. She said 20% of Baltimore students go to charters.

“With this level of volume, it is critical that traditional schools are not subsidizing essential services that charters must receive centrally,” Santelises said, adding that Baltimore City values and is committed to its charter schools. “Providing such services is a significant and extensive undertaking. These are not one-time expenditures that we can turn on and off at will.”

Santelises also asked the board to protect special education and retiree health benefits as approved exclusions, saying the board should understand that “any deviation from what you have drafted will be seen as an attack on our most vulnerable students, many of whom attend charter schools.”

A spokesperson for Frederick County Public Schools said the district is just beginning to review the proposed regulation and could not comment on its potential impact.

McKenzie Allen, executive director of the Maryland Alliance of Public Charter Schools, said she expects charter schools to lose money statewide. But the impact could vary from district to district and even year to year, depending on whether the school district’s leaders support charter schools, she said.

“If they like charter schools, they can calculate an amount that would protect them and allow them to continue to operate,” Allen said. “If they don’t like charter schools, then they can calculate an amount that would drive them into financial disarray.”

Allen’s organization is calling to cap the amount school districts can withhold at 5%. With that figure, all of Maryland’s charters could stay open without depleting their savings over time, she said.

Without a cap, Allen said, charters won’t be able to predict the funding numbers that drive their annual budgets. Charter operators foot the cost of running their own organizations. Charters also pay for their curriculum, assessment tools, professional development for staff, and building maintenance.

“If your funding is changing year to year, and you buy a building with a calculation based on what it is one year and then the next year it drastically changes,” Allen said, “all of a sudden, you might not be able to pay your mortgage.”

On Tuesday, Michael said the state board would ask Maryland’s General Assembly to consider dedicating funding for charter school buildings.

Marsha Reeves is the executive director of KIPP Baltimore, which runs two West Baltimore charter schools on the same campus for 1,400 kids in pre-K through eighth grade. She warned that the new rules could discourage new charters from opening and drive existing schools to closure. Special education costs in particular are ill-defined and could take a massive chunk out of a charter school budget, she said.

These proposed changes come at a time when some charters already feel squeezed. Reeves said she had to cut $1.1 million from this year’s budget because revenue increases are not keeping pace with expenses and Baltimore City has withheld more money in recent years. She said she had to cut a staff role that supported students struggling with attendance or behavior, for example, shifting that burden to other employees.

“We’re asking ourselves the question whether we can deliver on our promises to students and families,” Reeves said.

On Tuesday, Allen said that since the state’s landmark education bill known as the Blueprint for Maryland’s Future took effect, many charter schools are being critiqued or even shut down by their school districts for poor fiscal sustainability while receiving fewer public dollars from those same officials.

Allen said districts should not be able to cut down what charters think they’re owed, “create instability and then cite that instability as proof that charter schools are the problem.”

The new regulation was developed by a task force of charter school operators and school district and state leaders. It now goes to a legislative committee for review, and the public has a month to comment on it.

If the board decides not to change the regulation based on legislative and public review, it can take a final vote, which makes it law.

If enacted, the regulation would also allow parents to apply for all charter schools in their school district at once.

About the Education Hub

This reporting is part of The Banner’s Education Hub, community-funded journalism that provides parents with resources they need to make decisions about how their children learn. Read more.