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Cyber charter school legislation

Before the Senate Education Committee
Ms. Marilyn Messina
Vice-President - Woodland Hills School Board of Directors
 JULY 31, 2007

Good afternoon, I am Marilyn Messina, a school director with the Woodland Hills School District with 20 years of elected service.1 I want to thank Chairmen Roebuck and Stairs for the opportunity to address the committee on the issue of cyber charter schools and three of the pieces of legislation before us today.

Before addressing the legislation, let me briefly summarize Woodland Hills School District 's experience with cyber charter schools. Woodland Hills, like other school districts, has been double-billed for students, received invoices for nonresident students and billed for students before they have transferred to the cyber charter and are presently attending classes in the school district. Attached are just a few examples of correspondence sent by my district's administrative team to cyber charter schools in response to these issues. I can provide additional documentation if requested by this committee.

In the 2004-05 school year, Woodland Hills School District paid $776,914.66 in cyber charter school payments. Only one year later, that expense increased to $1,061,812 for 136 students to attend cyber charter schools (see Attachments A). This is a 37% increase in just one year . The cost of Woodland Hills' cyber school payments in the 2005-06 school year was equal to 0.6712 mils. Clearly, there is no predictability associated with this line item or ability for my school district to control this cost.

House Bill 446 (P.N. 494), sponsored by Representative Karen Beyer, and House Bill 738 (P.N. 865), sponsored by Representative Anthony DeLuca, provides a fairly comprehensive solution to the problem of increasing cyber charter school payments for school districts. The bills remove the requirement of cyber charter school payments from local taxpayers and transfer the responsibility to the Pennsylvania Department of Education (PDE). In addition, House Bill 446 establishes unreserved fund balance restrictions and payments for students that are below a district's age of beginner. PSBA maintains that the heart of these proposals, namely the alignment of academic and fiscal oversight of cyber schools with state funding, is sound public policy in a time when accountability for public dollars is a priority for both taxpayers and legislators.

PSBA's first priority is that the Commonwealth assumes 100% of funding for cyber charter schools. Since 2002, the Commonwealth has been solely responsible for the creation of these schools and for their renewals and oversight. It does not make sense that school districts and the taxpayers that support them continue to fund cyber charter schools. School districts, regardless of how many students they send to a cyber charter schools, have no authority to check on the progress of those students to see if the investments they are making on behalf of the taxpayers who pay the bill are a good use of public dollars.

If the Commonwealth is unwilling to make this investment, then PSBA requests that the General Assembly establish a standard per-student funding formula for students who attend cyber charter schools. This will put some limitation on school district and taxpayer payments to these entities. It makes no sense to have two school districts paying different amounts per student for children attending the same school and receiving the same services. This kind of reasoning assumes that school districts still receive subsidy from the state on a per-student basis. That has not been true for the last dozen or so years, so it makes sense to change how cyber charter schools are funded to recognize the current state funding method for public schools.

The association also recognizes the need for the funding formula to accurately reflect cyber schools' per student expenses. Therefore, PSBA recommends that the committee determine the actual cost of providing a cyber education that meets the Commonwealth's academic standards. With only three cyber charter schools meeting adequate yearly progress in 2005-06, it should be fairly simple to determine those three cyber schools' per student expenditure to come up with an accurate number.

However, funding is not the only important component of House Bill 446. The legislation provides financial accountability, specifically for restrictions on cyber schools' unreserved fund balances, independent auditing, and a budgeting timeline similar to that of school districts. The fund balances of the Commonwealth's school districts are limited to between 8% and 12% of budgets, but no such restriction exists on charter or cyber charter schools. The Pennsylvania Department of Education reports that five of the 12 cyber charter schools have unreserved fund balances over 30% of budget (see Attachment E). This represents millions of dollars that are simply sitting in accounts while districts continue to raise property taxes to finance increases in special education, pension costs, healthcare, and cyber charter school payments. You will hear arguments that the charter schools need these fund balances because school district are late with their payments or simply refuse to make them at all. Our response is that the size of these fund balances, in many cases, are well in excess of the dollars needed to replace the missing payments from school districts. House Bill 446 proposes a 10% restriction on cyber schools' unreserved fund balances, but does not provide for the millions of dollars remaining in cyber charter schools' accounts. Prior to consideration of the legislation, PSBA recommends that the committee examine how the dollars above the proposed threshold established in the bill should be refunded to school districts.

The proposed requirements for independent auditing and a budgeting timeline that is identical to the timeline school districts operated under prior to Act 1 are simple good governance measures. In short, the budgeting timeline requires public openness by making cyber schools' budgets available to the public. Independent auditing, a requirement for all of Pennsylvania 's public school districts, ensures that there is no conflict of interest in how the tax dollars appropriated to cyber charter schools are being evaluated. Accountability and public knowledge are the cornerstones of districts' budgeting process. There is no reason to exclude other public school entities from such procedures, including cyber charter schools.

In addition, PSBA supports the provision in House Bill 446 that establishes a minimum student age qualification for funding of cyber charter schools. PSBA continues to be a supporter of early childhood education opportunities for children, but maintains that taxpayers should not be financially accountable for the education of cyber school students who have not reached the established age for beginning students in a child's resident school district. Due to ambiguity in current statute, districts are paying cyber charter schools for such services even if a child does not meet the minimum age requirements established by the school board of directors. This means that local taxpayers have been paying for the education of cyber students for whom they would not be financially responsible if those children were enrolled in the school district. House Bill 446 ensures that the Commonwealth would not be financially responsible for all children's early childhood education, via cyber schools, if PDE took over funding.

With regard to House Bill 1655 (P.N. 2146), although the legislation does not provide 100% financial relief for school districts, PSBA supports the general concept of prohibiting school districts or the Commonwealth from providing per-student funding to cyber charter schools if a student's resident school district or intermediate unit operate a cyber charter school. In this region, the Allegheny Intermediate Unit manages the Pennsylvania Learners Online Regional Cyber Charter School (PALO). In fact, my school district was one of PALO's founding school districts. 2

The districts and the intermediate unit responded to the need to diversify instruction for students and incorporated the distance-learning strategy, through PALO, into our communities. If House Bill 1655 were enacted into law, Woodland Hills School District 's cyber charter school expenses would immediately drop by $502,448.3 These savings would be a significant help to my district, as we had to reduce our fund balance by $5 million to balance our budget for the 2007-08 fiscal year. This was after the majority of my board voted to eliminated 36.5 district positions, including special education paraprofessionals, guidance counselors, nurses, clerks and hall and lunchroom monitors and reinstate 23.5 district positions with a portion of a 0.75 mil tax increase. The cost of those 23.5 district positions was estimated at $460,000. You can see that the $500,000 reduction in cyber school expenses, offered by House Bill 1655, would more than finance those positions without a tax increase.

Thank you for your attention to these important pieces of legislation and the opportunity to present these comments. PSBA looks forward to working with the members of this committee over the summer to improve House Bill 446 prior to consideration this fall. I will be happy to answer any questions.

The Woodland Hills Area School District is located eight miles east of Pittsburgh and is comprised of thirteen and a half square miles in Allegheny County , including twelve municipalities. The district serves approximately 5,100 students in kindergarten through grade twelve in nine schools, including: three primary schools, three intermediate schools, two junior high schools and one high school.

Other founding school districts include: Allegheny Valley , Bethel Park, Deer Lakes , Shaler Area, West Allegheny, Baldwin Whitehall, Chartiers Valley , Moon Area, and South Allegheny .

This number is based on Woodland Hills School District 's 2005-06 cyber charter school expenses illustrated in attachment A.