After a top national investment firm reportedly warned some Massachusetts cities that passage of a ballot measure to raise the cap on charter schools could adversely affect their finances, opponents of the charter question are calling the dire warnings reasons not to raise the cap.
Credit-rating firm Moody’s Investors Service took the unorthodox step of reaching out to four municipalities in Massachusetts to warn them that passage of the charter school expansion question could harm their credit ratings and city finances—eight days before voters to the polls to decide the fate of Massachusetts' charters. Moody's assistant vice president Nicholas Lehman wrote to leaders in Boston that increasing charter schools would be "credit negative" for the cities, an indication that it could harm the municipalities' budgets.
In an email to email to Gail Hackett, the chief of staff to the city's chief financial officer, Lehman wrote that Moody's would release a fuller report on the matter and also report on Springfield, Fall River and Lawrence, after the election.
"Depending on the November 8 vote, the general credit view is the following: A vote of ‘no’ is credit-positive for urban cities. A vote of ‘yes’ is credit-negative for urban cities." Lehman wrote in the email.
"Moody’s has not published any research on Question 2 in Massachusetts, and cannot comment on any potential credit impact until after the outcome of the vote has been determined," Moody's Public Finance Group vice president and communications strategist David Jacobson wrote to WGBH News Wednesday.
A report from the Massachusetts Taxpayers Association from September concluded that "charter school funding is proportionate to charter school attendance, and that no predictable pattern connects charter school attendance with spending on traditional public schools."
A counterpoint to the charter supporters is that cost associated with traditional schools, like building costs, overhead and costs locked-in by union agreements, do not decrease while students flee to charters, taking funds with them and leaving city finances worse off. The state reimbursement does not cover the full amount of funds students take to their new schools.
Opponents of raising the cap suggest that the MTF report "deliberately omits the impact charter schools have on municipal budgets."
“Question 2, with its financial and credit impacts, should concern every voter. If Moody’s is concerned we should all be," Lawrence Mayor Daniel Rivera said, according to a press release from Save Our Public Schools, the group of Teachers Unions and other traditional district school education advocates that opposes the ballot question. The referendum before voters would allow 12 new charter schools to begin operating every year, with preference given to the state's lowest performing districts.
The unions argue that by absorbing funds when a student ennrols, charter schools take money away from struggling school districts. Charter-backers say some of those funds are reimbursed with state dollars, and that funds go with the student, lessening the district's' burden.
"A weakening of the municipal credit ratings of the state’s largest cities would not only put their financial security in jeopardy, but would gravely impact the public services they provide for their residents, including public education," wrote Save Our Public School spokesman Steve Crawford in the release.