Charter schools need more money to reach funding parity with traditional schools, according to a legislative audit released Tuesday and presented to lawmakers in the the Legislative Management Committee.

The report also recommended the state control the growth of the popular institutions and enforce compliance to state board rules to make charter schools accountable.

Last April, state officials launched the audit to examine the financial viability of charter schools, funding equity with traditional school districts and their compliance with state laws.

Auditors found the majority of schools are in good shape financially but the state must do better in charter oversight and there is a need for clarification on what is expected from them.

"We have affirmed all recommendations and welcome an increased role definition from Legislature and welcome setting accountability as a top priority," said Superintendent of Public Instruction Patti Harrington.

Wayne Kidd, audit supervisor, told the committee that some of the bigger issues in the study revolve around funding equity. Auditors recommended lawmakers look at increasing the funding charters get in lieu of property tax revenue.

Unlike school districts, charter schools can't bond or create revenue. They must rely on state and federal funding to run their schools while school districts get additional money from local property taxes. So the state kicks in replacement funding for charters in lieu of local money.

But according to the audit the legislative intent was to have equal per-student revenue but "the current local replacement formula does not achieve that goal."

The audit recommends the Legislature consider different options including adjusting the local replacement formula with full state funding, establish a property tax sharing system with school district funding or having the state or a hybrid plan where the state and school districts share in the cost of those funds.

Another hot topic within the report is placing a cap on charter school growth.

The question is where to set the limit.

According to the report, federal start-up funding, facilities grants and other funding has not kept up with the growth of charter schools in Utah. Auditors recommended controlled growth could help conserve those funds.

Last spring, lawmakers limited approvals to five new charter schools each year. That significantly decreased the number of approvals in comparison to other years. But some say that is too tight.

"We need to have some kind of idea where that best fit is — how fast can we allow charter schools as part of the system to grow?" said Senate President John Valentine, R-Orem. "Five is too tight, and unlimited seems to fly in the face of audit recommendations."

Harrington suggested somewhere between 10 and 12.

Currently there are 53 Utah charter schools.

The report also indicated that charter schools aren't following the State Board of Education's accountability rules. Charters are required to submit annual progress reports for review committees to examine where they stand.

According to the audit, those reports aren't being submitted and those committees have never been formed.

The audit recommends the state board enforce the rules and establish review committees to ensure accountability.

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