The Growing Financial Strain of Charter School Expansion on Texas Public Schools 

Every year, the State Board of Education (SBOE) approves new charter schools following a comprehensive application, review, and public hearing process that culminates in late June. The commissioner of education also approves dozens of new charter schools through the charter expansion amendment process each year, a process which lacks SBOE input and involves minimal accountability and transparency with no public notice or hearings. 

To support SBOE members in making informed decisions about approving or vetoing new charter applications, Texas AFT collaborates with a broad coalition of public education advocates to analyze Texas Education Agency (TEA) data on school districts’ finances, enrollment, transfers, and cost of recapture. The rigorous analysis we provide to SBOE members aims to: 

• Estimate the current revenue loss experienced by school districts within new charters’ proposed geographic boundaries due to students transferring from their home school districts to charter schools (“charter transfers out” or “charter transfers”). 

• Project the additional estimated revenue loss these districts would face if new charters were approved based on their requested maximum enrollment. 

• Connect charter expansion with other relevant fiscal impacts, such as districts’ costs of recapture. Every new charter student increases districts’ recapture payments to the state that fund charter schools. 

This data-driven approach not only aids SBOE decision-making but also supports local advocacy efforts. School district officials, parents, educators, and community organizations use this information to voice their concerns to the SBOE, especially in districts facing rapid charter school expansion and its negative fiscal impacts. Across Texas, charter expansion is contributing to growing budget deficits, forcing many districts to consider closing neighborhood schools and holding Voter Approval Tax Rate Elections (VATREs) to balance their budgets. 

In response to public education stakeholders from across the state voicing their concerns, the SBOE vetoed two of the five Generation 29 charter applications in its preliminary vote on Wednesday, June 26, including two of the three new charters that our union has been most concerned about. One of the proposed charters was to be located within Arlington ISD, the school district with the ninth highest total estimated loss of revenue to charter transfers from the 2019-2020 through the 2023-2024 school year. These results were upheld in the final vote on Friday, June 28. 

Texas AFT extends the use of this district-level data to our legislative advocacy. During legislative sessions and the interims between them, we meet with current and prospective Texas Legislature members to discuss public education advocates’ concerns about charter school expansion and share data on how expansion affects the school districts they represent. This data-driven approach is effective to demonstrate the fiscal impact of charter schools even among legislators who were initially unconcerned about charter expansion. These hard facts help counter misleading claims made by charter school marketing campaigns and the many well-funded lobbyists employed by the charter industry. 

Detailed analyses of charter expansion’s fiscal impact on affected school districts can be found on our website. The results of our updated analysis on estimated revenue loss due to charter transfers are alarming. School districts statewide are experiencing a large and growing drain on their resources due directly to charter expansion, as charters enrolled about 8 percent of Texas students (ADA) in FY 2023 but received about 20% of Foundation School Program state aid for public education. 

Major urban districts like Houston ISD and Dallas ISD continue to experience significant fiscal impacts due to unlimited charter expansion, while smaller school districts have seen a comparatively small number of charter transfers translate into a large impact on their budgets. School districts in the Rio Grande Valley and the Houston, Dallas-Fort Worth, San Antonio, El Paso, and Austin areas have seen the most charter expansion over the past several years. Charter schools are rapidly expanding into rural Texas as well. 

These figures represent a significant financial burden, diverting resources that could otherwise enhance educational services and student experiences in public schools. The scope of this issue is expanding, as evidenced by the increasing number of affected districts and the rising total estimated revenue losses: 

• 2019-2020: $2.82 billion (at least 297 districts affected) 

• 2020-2021: $3.25 billion (at least 309 districts affected) 

• 2021-2022: $3.32 billion (at least 312 districts affected) 

• 2022-2023: $3.56 billion (at least 322 districts affected) 

• 2023-2024: $3.60 billion (at least 325 districts affected) 

When considering these figures, it is also important to realize that the number of charter transfers, total estimated revenue loss, and tally of affected districts are undercounts because the number of charter transfers out from a school district are sometimes not available (i.e. masked) to comply with the Family Educational Rights and Privacy Act (FERPA). Masked numbers are typically small although larger numbers may be masked to prevent imputation. 

However, the available data reveals a growing financial strain on public education resources: 

• The number of districts experiencing revenue loss due to charter transfers increased from at least 297 in 2019-2020 to at least 325 in 2023-2024. 

• At least 377 districts have faced some level of revenue loss due to charter transfers over the five-year period. 

The implications of these findings extend beyond district finances to the communities they serve. The growing financial pressure could lead to: 

• Increased class sizes, layoffs, and cuts to pay and benefits as districts struggle to balance budgets without necessary funding. 

• Reductions in extracurricular and academic programs, particularly those serving economically disadvantaged communities where charter expansion has been most prevalent. 

• Potential school closures, which have devastating effects on local communities and economies, leading to longer commutes for students and job losses for educators and support staff. 

The trends of increasing revenue losses and the broadening impact across more districts are unsustainable and demand immediate attention from policymakers. Action is needed to mitigate further adverse effects on public schools and ensure a more equitable approach to public and charter school funding. The data clearly shows that the financial viability of many districts is at risk, which has severe implications for educational quality and equity across the state. 

These stark realities underscore the need for robust, data-driven discussions among policymakers, educators, and community stakeholders. As we advocate for a more equitable approach, we must consider: 

• Implementing a more rigorous approval process for new charter schools and expansions, with greater emphasis on their potential impact on existing public schools and taxpayers. 

• Developing funding mechanisms that do not disproportionately disadvantage public school districts when students transfer to charter schools or create a funding advantage for charters. 

• Increasing transparency in charter school operations and finances to ensure they are held to the same standards of accountability as public schools. 

• Investing in public schools to enhance their ability to meet diverse student needs, reducing the perceived need for inefficient, parallel systems such as charter schools or private school vouchers. 

• Establishing a moratorium on new charter schools and on the expansion of existing charter school networks through charter expansion amendments. 

• Conducting a comprehensive study of charter school impact on public education, including the fiscal impact on public school districts, the state budget, students, school employees, and taxpayers. 

Texas AFT remains committed to using data-driven advocacy to protect and strengthen our public education system. We call on all stakeholders – legislators, educators, parents, and community members – to engage in this critical conversation about the future of public education in Texas. By working together and making informed decisions based on comprehensive data, we can ensure that all Texas students have access to high-quality education without compromising the financial stability of our public school districts. 

The challenge before us is significant, but with continued advocacy and collaboration, we can work towards a more equitable and sustainable educational landscape for all Texas students to thrive.