Case 9: KIPP Houston Public Schools C-103taxes, which means they receive no state funding for
facilities.^22
KIPP Houston CFO John Murphy says the lack
of funding for facilities is without a doubt the biggest
financial challenge the district faces.^23 One independent
study found that primarily due to this facilities funding
discrepancy, in the 2009–10 school year, KIPP Houston
received from government sources $966 per pupil less
than Houston Independent School District.^24 At KIPP
Houston’s current enrollment level, that amounts to
$8,292,144 per year.
KIPP Houston made up for the deficit through both
fundraising and frugality with facilities. Many KIPP
Houston schools are housed in low-cost modular build-
ings, and some have relatively little land and green space
compared to other public schools. The facilities KIPP
Houston has acquired have come primarily through
philanthropy. In the fundraising drive to finance the KIPP
Turbo expansion, individuals and foundations commit-
ted well over $40 million to KIPP Houston.^25 The KIPP
Houston board of directors generally transfers these
funds to the PHILO Finance Corporation, an indepen-
dent nonprofit 501(c)(3), which helps charter schools
secure financing by guaranteeing bond issues and issuing
grants to repay debt. In 2012, KIPP Houston’s total liability
for bonds and notes payable was $125,787,976, with most
bonds bearing interest rates between 4 and 6.4 percent.^26
Not surprisingly, KIPP Houston’s biggest expense is
instruction-related costs, which, over the span of 2008
to 2010, made up about 42 percent of per pupil expen-
ditures.^27 Of this share, the vast majority goes toward
teacher salaries. In 2012, the average KIPP Houston
teacher earned a salary of $46,883.^28 The next highest
cost is school and district administration, which rep-
resents 23 percent of per pupil expenditures (2008–10).
The district spends about 15 percent on student services
(e.g., food services, transportation, and counseling),
9 percent on facilities maintenance and security, and
5 percent on facilities debt service. (For KIPP Houston
cost allocations compared to Houston ISD and YES Prep,
see Exhibit 4. For the KIPP Houston 2013 expected bud-
get, see Exhibit 5.)Organization: Bottom Up and
Top Down
At the core of KIPP Houston’s operations are its teach-
ers. A typical KIPP Houston instructor teaches a single
subject in a single grade level of 85 to 110 students. Most
schools employ one of the grade-level teachers to be a
grade-level chair, leading the culture (behavioral norms)
Exhibit 4 Percentage of Expenditures Per Pupil (ADA), 2007–2010CostHouston
ISDKIPP
Houston^1 YES Prep
Instruction 54.62% 42.31% 53.50%
Administration
(Central and School)10.24% 23.30% 18.49%Student Services 7.07% 14.99% 14.27%
Plant Maintenance and
Security9.78% 9.88% 10.98%Facilities and Debt Service 16.05% 5.47% 0.49%
Other 2.22% 4.04% 2.27%(^1) Due to accounting anomalies in 2007–08, KIPP Houston numbers are an average
of 2008–09 and 2009–10.
Source: Analysis of McGee, Josh B. “Houston School Finance Report.” Arnoldfoundation.
org. Laura and John Arnold Foundation, January 18, 2013. Accessed April 20, 2013.
http://www.arnoldfoundation.org/resources/houston-school-finance-report.
Exhibit 5 KIPP, Inc. Consolidated District Final Budget For the Year
Ended June 30, 2013
Other Revenues from Local Sources $9,635,525
State Program Revenues 60,998,666
Federal Revenues 11,149,111
Total Revenue $81,783,302
Basic Instruction $33,724,037
Instructional Resources and Media Services 62,510
Curriculum Development and Instructional
Staff Development
859,936
Instructional Leadership 1,707,373
School Leadership 9,580,515
Guidance, Counseling & Evaluation Services 2,853,292
Social Work Services 637,097
Health Services 366,415
Student Transportation 4,624,577
Food Services 5,379,537
Extracurricular Activities 728,194
General Administration 6,976,854
Plant Maintenance and Operations 9,880,396
Security & Monitoring Services 1,121,375
Data Processing Services 2,794,611
Community Service 537,479
Debt Service 7,144,023
Fundraising 1,632,532
Total Expenses $90,610,756
Net Contribution –$8,827,454
Source: Consolidated District Final Budget. KIPP Houston Public Schools, n.d.
Accessed April 21, 2013. http://kipphouston.org/sites/default/files/file_attach/
FY13_Functional_Budget_121114.pdf.