Governor Charlie Baker will propose overhauling the way school districts are reimbursed for tuition lost to charter schools when he presents his budget to legislators this week, the Commonwealth’s top education official said Monday.
Baker’s proposal is an attempt to address concerns that the state does not adequately reimburse school districts for the losses of funds that get diverted to charter school tuitions.
The proposal comes amid a hotly contested bid by Baker and other advocates to expand charter schools in Massachusetts. Last fall, Baker filed a bill that would permit 12 new or expanded charter schools each year in districts performing in the bottom 25 percent on standardized tests.
The new system would cut the number of years that districts can seek reimbursement from six to three, and restrict payments after the first year to low-performing districts with large numbers of charter seats, Massachusetts education secretary James A. Peyser said.
But Baker’s proposed fix would also double the amount districts receive in the second year from 25 percent to 50 percent of the lost tuition. It would also seek to ensure that districts eligible for reimbursement actually get paid — something that has not been guaranteed in recent years, as the state has underfunded the reimbursement system.
Charter schools are controversial in part because they are funded and overseen by the state and are not accountable to local districts. Critics also say charter schools deplete district budgets by taking thousands of dollars in funding for each student they enroll.
Peyser said that Baker hopes to address concerns expressed by school leaders and legislators by increasing funding in year two and pledging that the reimbursement system will be better funded — adding about $20 million above the allocation for this fiscal year.
“We expect that the Legislature will see this as an effort to work with them on an issue that they have raised as a significant concern,” Peyser said. “Putting an extra $20 million in the charter school reimbursement in a really tough fiscal year, I think, sends a strong statement that we’re willing to engage on this subject.”
He said Baker’s budget proposal will fund first- and second-year reimbursement needs for the next fiscal year, but not third-year reimbursements. In a budget that includes many cuts intended to address a looming deficit, though, he said $20 million is “a very significant increase.”
Baker hopes to fully fund all three years of reimbursements in future budgets, he said.
The proposal should appeal to cities with significant charter school sectors, especially Boston, Peyser said.
He pointed out that Mayor Martin J. Walsh previously proposed a plan that would reimburse districts for three years at the same levels — 100 percent for the first year, 50 percent for the second, and 25 percent for the third — but only for low-performing districts with large numbers of charter seats.
Walsh said Monday that he was “extremely encouraged by Governor Baker’s proposal.”
“This change would provide districts most impacted by charter enrollment growth with reimbursement amounts more reflective of the transitional costs associated with students attending charters,” the mayor said in a prepared statement.
Baker’s plan allows the 100 percent year-one reimbursement for all districts, but like Walsh’s proposal, it limits reimbursements for year two and year three to low-performing districts that, by law, can direct more than 9 percent of their budgets to charter schools.
It also requires that districts seeking year-two and -three reimbursements submit plans outlining how the funds will be used.
Under current state law, only underperforming districts can be allowed to lose more than 9 percent of their budgets to charters.
Under the state funding formula, all districts are supposed to be reimbursed for 100 percent of the funds lost to charter tuition in the first year that students leave the district and for 25 percent for the next five years.