PSBA position on charter reform

Charter schools are public schools, but by their very nature they have been designed through state law and regulation to be both equal and unequal to traditional public school districts. PA's Charter School Law exempts charters from many of the state's statutory and regulatory requirements, creating an uneven playing field that has not led to a transparent, accountable or high-performing system of education. Charter school reform continues to be an important topic of discussion with the goal of creating a fair and transparent charter school law. PSBA urges the General Assembly to enact these common-sense policy changes to the current charter school law in order to restore some balance to the current inequities in charter school/school district authority and accountability. The changes suggested will have an immediate, positive impact on school district operations and finances with respect to charter schools and will help course-correct charter school performance across the state.

PSBA believes that the following issues must be enacted for meaningful charter school reform:

Needed Reform: Charter school funding formula must be revised

Pennsylvania's school districts are being asked to provide more services and increased educational opportunities for their students despite thinning resources. Each year, the costs mandated by the state for school districts to pay for the costs of charter schools continues to climb — from $434 million in 2006-07 to a staggering $1.26 billion in 2012-13. The costs to districts continue to grow with no help from the state since partial reimbursements (which provided districts with about $225 million in state funding each year for up to 30% of their charter costs) were eliminated in 2010-11.

The basis of calculating the tuition payments to charters is weighted in favor of charter schools. School districts make payments to charter schools for their resident students who attend, and the payments bear no relationship to the actual instructional costs incurred by the charters to educate the student.   In order to balance competing financial priorities in upcoming years, school districts must be afforded immediate relief from the flawed charter school funding formula so that it is based on the charter or cyber charter school's actual instructional costs, not on how much it costs to educate a child in the sending school district. The current state funding formula for charter and cyber charter schools bears no relationship to the actual instructional costs incurred by the charter schools. Rather, it is based on the sending school district's prior year budgeted expenditures per average daily membership minus certain budgeted expenditures of the district of residence.

The list of costs that school districts can deduct from their total budgeted expenditures when determining the per student amount paid to a charter school should be expanded. Under section 1725-A of the Public School Code, school districts may deduct their expenditures for nonpublic school programs, adult education programs, community or junior college programs, student transportation services, special education programs, facilities acquisition, construction and improvement services, and other financing uses. The list of deductions should be expanded by allowing districts to subtract their tax collection costs, athletic funds and costs related to school-sponsored extra-curricular activities, and tuition to charter schools. Further, school districts should be allowed to make additional deductions in calculating their payments to charter schools, particularly for services and programs that cyber charter schools do not offer, including costs for food services, library services, and health services. By proposing these additional deductions to the current charter and cyber charter school funding formula, the cost of charter and cyber charter school tuition will decrease for all school districts.

Needed Reform: Charter school funding formula for special education must be revised

Special education tuition to charter schools is overfunded, and this is unfair to the school districts and taxpayers who are footing the bill.

Special education funding is currently paid on a per-student basis for charter and cyber charter schools, with money transferred from the school district of residence for each eligible student. The existing funding process is flawed, using an assumed percentage of 16% of all children enrolled in the district of residence and paying the same rate regardless of student differences in educational need and cost. Compared to school district, charter and cyber charter schools on average enroll relatively few students with high special education costs.

The current special education tuition rates paid to charter schools by school districts ranges from just over $12,000 per student in one school district to over $41,000 per student in another.  During the 2012-13 school year, school districts sent charter schools over $350 million in special education tuition, while charter schools only spent approximately $156 million on special education, leaving them with nearly a $200 million profit.

Needed Reform: The funding formula for special education should be capped at actual costs

The charter and cyber charter school funding formula for special education differs from the formula used to calculate school district special education subsidies and again is based on the student's district of residence's special education expenditures for the prior school year. PSBA believes that payments school districts make to charter schools for special education services should be capped at the actual cost of the special education services the charter school provides resident students.

Charter schools should be required to report to the school district annually the actual cost of the special education services provided to each special education student of residence.  Where the school district has paid the cyber charter school in excess of the cost of the actual special education services provided to resident students, the cyber charter school should be required to refund the excess to the school district.  When a cyber charter school identifies a student as a special education student, the school district of residence should have the power to administer and deliver the educational services the student needs in lieu of paying the special education tuition rate to the cyber charter school.

Needed Reform: School districts deserve proper due process in making charter school payments

PSBA believes that if a direct pay system is established, school districts must receive proper due process in making charter school payments.  No direct payments should be taken directly from the school district's funds without advance notification from the charter school to the district or for the district to have the opportunity to review the invoice and check for accuracy. PSBA suggests that districts receive the invoice for review prior to the date of payment with proper documentation from the charter school for each enrolled resident student of the district.

School districts also deserve proper due process in contesting a tuition invoice. The burden of proof for any inaccuracies or overpayments should belong to the charter school, not the school district, in proving the invoices and documentation it produced are valid and accurate. To do otherwise creates disincentives to the district to dispute even egregious subsidy deductions, due to the cost and difficulty of recuperating the funds.  PSBA suggests districts have at least a 30-day period prior to the date of payment to review the invoice and documentation from the charter school and to have the opportunity to appeal the invoice prior to the payment deduction.

Needed Reform: Charter schools should be required to prepare an audit to determine actual costs of services

In an attempt to further alleviate the financial burden of charter schools on school districts, PSBA believes that legislation should require the PA Department of Education (PDE) to implement an audit process for these schools to determine the actual costs of providing regular and special education services to students. Certain costs, such as advertising costs, lobbying costs, and the costs of bonuses provided to administrators or members of the board of trustees, cannot be considered instructional costs.  Charter schools should be required to conduct an annual year-end audit of their instructional costs and reconcile their actual costs with the payments received from school districts so that money will be refunded back to school districts if there was overpayment.

Needed Reform: No expansion of charter school authorizers should be permitted

PSBA is opposed to any expansion of the list of charter school authorizers beyond local school boards, including a governing board of an institution of higher education.  The association supports charter schools, provided they are authorized by the school boards in the communities where they are located.  The local school board should determine accountability, such as determining the criteria that will be used in establishing the charter. Further, local school boards should retain the authority to decertify or not renew the charter of any school that fails to meet criteria set forth in the charter or as otherwise specified, including but not limited to a requirement that charter schools demonstrate improved student achievement. PSBA believes charter schools should have to abide by the same fiscal and accountability laws that public school districts must.

Legislation to permit the expansion of charter schools without any involvement from the local community serves to silence the voice school boards and local taxpayers, yet still making them responsible for providing ever-increasing funds to support charter schools in their districts. As long as local taxpayer dollars are taken from school district subsidies to fund charter schools, some level of local control is essential to ensure that these charter schools are accountable and responsive to taxpayers in their local communities. Financial responsibility for charter schools is not aligned with the authorizer.

Needed Reform: Charter schools must have increased accountability

To ensure that charter schools are accountable to the taxpayers who are footing the bill, charter schools must be held to the same financial and academic accountability requirements as their traditional public school counterparts.  Under Pennsylvania's system of rating the performance of its public schools using the School Performance Profiles, the results show that charter schools continue to academically underperform.  Looking at the 2013 SPP scores,  less than half of the brick and mortar charter schools met the benchmark score of 70 necessary to be moving toward success as defined by the PA Department of Education, and none of the cyber charter schools met the mark.  Only 43% of the 148 brick and mortar charter schools in PA earned a score greater than 70.  None of PA's 16 cyber charter schools scored above 70. These results must be considered before critical decisions are made. Are charter schools providing quality education for their students?  Why should changes be made to allow for the expansion of charter schools and charter school authorizers?

Appropriate requirements and mechanisms for authorization, oversight, and intervention, such as annual audits, fund balance caps, and a self-executing revocation for repeated failure to achieve academic performance, are needed to remedy funding and governance concerns, and administrators and members of a charter school board of trustees must be held to the same ethics and transparency standards that govern their counterparts at traditional public schools.

Needed Reform: Current provisions regarding charter school enrollment caps should be maintained.  Removing caps diminishes charter school accountability and jeopardizes school districts.

Eliminating the ability to place enrollment caps in a charter allows for unlimited expansion of charter schools without ensuring that they are performing equal to or better than their local school district. This diminishes accountability for charter schools and jeopardizes the local school district as it could lead to disproportionate charter school enrollment and unsustainable fiscal impact for school districts with multiple charter schools.

Uncapping enrollment could lead to large fluctuations in student enrollment in the local district and, therefore, adversely impact educational programming as the district would have to quickly adjust to such changes in enrollment. For example, since students rarely leave a school district to attend a charter school in neat groups of 25 from each grade, districts cannot reduce costs proportionally. Consequently, the school district cannot furlough staff, close classrooms, reduce transportation or reduce its debt payments as a result of having a few less students enrolled.

Furthermore, lack of any type of enrollment cap on the charter school is detrimental to the enrollment procedure specified in Section 1723-A of the Charter School Law that requires a charter school to randomly select students from a lottery to fill the number of attendance slots available. Therefore, a definitive enrollment cap must be agreed upon for the charter school to fulfill this obligation.

Currently, enrollment caps can be added to a charter if both the authorizing school district and the charter applicant agree. PSBA believes that this provision, added in 2008, remain intact.

Needed Reform: Provisions for multiple charter school organizations should be limited

If provisions regarding multiple charter school organizations are included in charter reform legislation, they should be targeted to address specific situations. Such provisions could include language intended to allow two or more high-performing charter schools to consolidate into an organization for the purpose of allowing it to be managed by a single board of trustees and a single administrator, rather than having a board at each school. This would have to require the approval of PDE and each school district that granted the initial charter of any charter school included in the proposed consolidation. The provisions would not affect the terms or conditions of individual charters and the ability of local school districts to approve or deny individual charters. Each charter school would remain under the oversight of its initial authorizing board of school directors.