Missouri Education Watchdog: St Louis Fed Proposal for Charter School Funding

Missouri Education Watchdog: St Louis Fed Proposal for Charter School Funding:

St Louis Fed Proposal for Charter School Funding

by Anngie

2010 - 08: December 2010

Charter School Tax Credit: Investing in Human Capital

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This working paper considers how two existing policy tools--investment tax credits and charter schools--could be combined to raise operating funds for charter schools that successfully close the poverty-related academic achievement gap. Some charter schools have succeeded in dramatically improving low-income student performance (those run by KIPP, Achievement First, and the Harlem Children's Zone, for example). However, these successful schools differ significantly in type and approach. As a result, it is difficult to identify a single, or combination of variables in any one charter that, if replicated, would produce the same results across the public school system. This working paper acknowledges the difficulty of so-called "silver bullet" school reform replication and considers an alternative: cultivating a diverse array of education approaches using tools developed by the community development finance industry over the last 30 years.

Author: Ian Galloway, Federal Reserve Bank of San Francisco

Date of Publication: December, 2010

Last Updated: December, 2010

The St. Louis Federal Reserve has developed a working paper that proposes a charter school tax credit, similar to  Low Income Housing Tax Credits, to potentially end the perpetual cycle of experimentation that currently plagues the charter system. Their proposal is explained by Ian Galloway at StLouisFed.org.

Credits would be allocated to the states, which, in turn, would award them to high-performing charter schools. Upon receiving the credits, schools would sell them to private investors and use the proceeds to fund wrap-around services or intensive classroom-based initiatives. The price paid for the credits would be based on the investor's level of confidence that those services and initiatives will deliver the academic results necessary to stay in program compliance and avoid credit recapture. Compliance requirements would be specific, measurable goals demonstrating low-income student achievement. These standards would have the dual benefit of allowing the government to monitor improvement while also allowing the school to evaluate its own programs and adjust them as needed.

A similar plan was proposed last year by the MO Senate to allow tax credits to those who fund private school