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A Fiscal Analysis of Hybrid Education. Anna M. Jacob, Department of Education Reform, University of Arkansas. Conclusions.

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a fiscal analysis of hybrid education
A Fiscal Analysis of Hybrid Education

Anna M. Jacob, Department of Education Reform, University of Arkansas


From my analysis, it seems that the hybrid charter schools in both Arizona and California receive similar operating revenues to the closest districts and county averages. The sources of their revenues differ however, with Rocketship in California receiving the bulk of its operating revenue from local sources while Carpe Diem receives the bulk of its revenue from the state. Rocketship reported receiving $22.27/ student in FY09 in private grants and contributions. Carpe Diem did not report any income from such a source.

While the achievement gains made by both of these hybrid model schools are substantial, given the populations they serve, claims of cost savings seem to be overstated. In FY09, Rocketship spent a mere $8.20 less/ student than the Santa Clara county average and Carpe Diem Collegiate High School spent $9.00 more/ student than the Yuma county average.


Results and Discussion


In Arizona, Carpe Diem Collegiate High School receives a higher total revenue than the two closest districts and the county average. The bulk of this revenue ($7,329.69 out of $8,341.38) comes from state revenue. This compensates for a lower local and federal revenue.

In California, San Jose Unified School District, the closest district to Rocketship, receives a higher total revenue than both Rocketship and the county average ($471.23/ student higher than Rocketship and $559/ student higher than the county average). Rocketship receives the bulk of its revenue from local sources.

The only districts or charters in my study that reported receiving other sources of revenue, such as money in the form of private grants, prizes or contributions from private donors or philanthropic foundations, charges for services and sales, interest and miscellaneous sources of Revenue in FY09 were San Jose Unified School District ($5,447.57/ student) and Rocketship Mateo Sheedy ($22.27/ student).


Schools are labor intensive enterprises susceptible to Baumol’s disease, named after the economist who published a book on the topic in 1966, William J. Baumol at New York University. Baumol’s disease explains why education costs will almost certainly continue to rise quicker than inflation. Some sectors of the economy are burdened by an inexorable rise in labor costs despite no increases in labor productivity in response to rising salaries in other sectors that have experienced such productivity increases.  

Hybrid Education

Online learning is spreading across the United States. In the year 2000, approximately 45,000 K–12 students took

an online course. In 2009, more than 3 million K–12 students did. Most of this growth is taking place in hybrid education environments, where adults supervise the learning. Initial instruction is complemented by computer-based practice and formative assessment. The model creates opportunities for more efficient use of funds and more targeted interventions to improve individual student performance.  

Rocketship Education, CA

Rocketship Mateo Sheedy serves low-income students in San Jose, nearly 73 percent of who are English Language Learners and 78 percent of who qualify for the Free and Reduced Lunch program. Their 2009 API was a 926 out of 1,000, making Rocketship the highest performing low-income elementary school in San Jose and Santa Clara county, and third in California. Rocketship’s operating costs are met entirely by traditional government funding. Students at the Rocketship Elementary charter school network spend 300 minutes per day in a traditional classroom setting and devote a further 100 minutes above the instructional time of surrounding schools to the Learning Lab. This period combines computer-based, individualized lessons on basic math and literacy core skills, independent reading and enrichment programs to focus on skills where students struggle the most. Students are assessed every two months to update their personalized individual learning plan. Thanks to the daily Learning Lab period, Rocketship saves one teacher and one classroom per grade level.

Carpe Diem Collegiate High School, AZ

Carpe Diem is a Grade 6-12 charter school with 232 students in Western Arizona, near the borders of California and Mexico. A value added analysis of test scores found that they have the biggest gains in the state of Arizona. In 2010, 60% of Carpe Diem’s students were on free or reduced-price lunch and 48% were minorities. In this same year, Carpe Diem ranked first in Yuma county in student performance in math and reading and ranked among the top 10% of all Arizona charter schools. Carpe Diem began as a traditional state charter school but adopted the Blended Learning/Hybrid Model when it lost its building lease in 2003. Today, students rotate every 55 minutes between self-paced computer instruction and a traditional classroom setting. Computer instruction takes place in a large learning center composed of 280 cubicles with computers where assistant coaches offer direction and assistance. Students attend classes four days per week, from 7:30 a.m. to 4:00 p.m. Only students who need extra assistance attend school on Fridays. Carpe Diem hires only five full-time certified teachers: one each for math, language arts, science, social studies and electives. Spanish and PE are both taught by part time teachers. Each teacher assumes responsibility for all of the students in the school for his or her subject. So far, Carpe Diem has never received financial support from philanthropic foundations and has operated solely on Arizona’s per pupil funding.

Looking Towards the Future:

In terms of future development, there are plans in place to replicate the Carpe Diem Collegiate High School in Flagstaff, Phoenix and Tucson, AZ. Around these three schools (referred to as "hubs") will be built further EduStations (drop-in centers) to coordinate with iSchool 2020, an open enrollment, tuition-free virtual school. The Hume Foundation are providing a grant to assist with marketing expenses, including the development of their website.

Rocketship has been soliciting private support from foundations and other donors to fund a national expansion, with plans to build 30 new hybrid charter schools by 2015. In 2010, it received the following grants:


  • Christensen, C. M., Horn, M., B., & Johnson, C. W., ‘Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns’, McGraw-Hill, New York, 2008
  • Horn, M., B., Staker, H., ‘The Rise of K-12 Blended Learning’, January 2011, Innosight Institute
  • Loeb, S., Girssom, J., Strunk, K., ‘District Dollars: Painting a Picture of Revenues and Expenditures in California’s School Districts’, Stanford University (2007)
  • Data Sources:
    • California Educational Data Partnership: www.ed-data.k12.ca.us
  • Rocketship Mateo Sheedy School Accountability Report Card 2008-2009 from Santa Clara County Office of Education: http://www.sccoe.org/
  • Arizona Office of the Auditor General: www.azauditor.gov
  • Arizona Department of Education: www.ade.az.gov
  • Rocketship Education and Its Affiliates Consolidated Financial Statements with Independent Auditor’s Report Year Ended June 30, 2009
  • San Jose Unified School District Annual Financial Report June 30, 2009: http://www.sjusd.org/pdf/Fiscal/0809DistrictFinancialAudit.pdf
  • Annual Report Of the Arizona Superintendent of Public Instruction FY 2008- 2009: http://www.ade.az.gov/AnnualReport/AnnualReport2009/
  • California Department of Education Educational Demographics Unit: http://www.cde.ca.gov/ds/sd/


  • It is very surprising that Carpe Diem’s maintenance and operation costs are so substantially lower than the surrounding districts and county average. In this charter school, most students take online classes in a learning center that features 300 low-sided cubicles in one big room. Student cubicles have a desktop computer and monitor. Computers and software are considered operational expenses. Curricular licenses are purchased though a software vendor; the students have no textbooks. Founder, Rick Ogston identified this as one of the cost saving techniques utilized by the school.
  • Carpe Diem spends less on certificated salaries ($920.72/student) yet spends substantially more on classified salaries ($1,990.77/ student) than the county average. Overall, they spend $1070.02 more on salaries per student. Rocketship, on the other hand, spends substantially less on both classified and certificated personnel salaries than the surrounding districts and the county average ($2,820.26/student less on salaries combined).
  • Carpe Diem offers higher benefits than the surrounding benefits and the county average ($450.24/student higher than the county average), making it an attractive choice for teachers in the area. Rocketship’s benefits, however, are much lower than the surrounding districts and the county average ($1,113.33/student lower than the county average).

Using FY09 data, this study serves to analyze the fiscal benefits of school hybridization.  In charter schools that incorporate technology into their instructional model, it is hypothesized that decreases in teacher salary expenses, offset by increases in technology costs, generate a decreased per pupil expenditure.  This fiscal analysis explores that question, seeking to inform stakeholders as to the efficiency and efficacy of the hybrid school model.