NEWS RELEASE: PSBA report shows need for greater charter school transparency and accountability

The Pennsylvania School Boards Association (PSBA) has released a report examining Pennsylvania charter school revenues, expenditures and transparency. The findings highlight the need for reform and suggest the need for further study into how charter schools are operated.

“Financial integrity and operational transparency must be demanded of publicly funded charter schools, just as it is of traditional schools,” said PSBA Executive Director Nathan Mains. “Taxpayers have an expectation that public dollars are guarded the same way no matter which schools they fund.”

Data for this report was obtained in three ways: a Right-to-Know (RtK) request sent to each charter school; accessing publicly available data from the Pennsylvania Department of Education (PDE); and analyzing organizational tax returns (IRS 990 form) for each charter school where a return could be found.

In May 2015, PSBA sent requests under the Pennsylvania Right-to-Know Law to all 173 charter schools then in existence. As local agencies under the law, charter schools are required to allow access to public records in accordance with the law. The requests sought information related to salaries of administrators (including contractors), real estate transactions, and marketing/advertising expenditures.

The compliance, or lack thereof, tells a story itself outside of the data that was actually gathered.

  • Slightly more than 53% of charter schools complied with the request without any additional action by PSBA.
  • PSBA filed 75 appeals with the Pennsylvania Office of Open Records (OOR) due to the request being denied or deemed denied due to a lack of a response by the charter school. Twenty seven charters complied with the request once the appeals were filed.
  • Another 29 complied after OOR either granted or partially granted the appeal.
  • Nineteen did not comply even after PSBA’s appeal was granted or partially granted by OOR.

Equally concerning were noticeable differences between the advertising expenses reported in the IRS 990 form and the information received in response to the RtK request. Several charter schools included in this analysis did not report any advertising expenditures on their IRS 990 form but did submit records indicating advertising expenses with their RtK submission for the same time period covered by the IRS 990 form.

Based on the RtK submissions, the 134 charters that provided advertising information for 2014-15 spent over $4.3 million in 2014-15. Based on the IRS 990 forms, 167 charter schools reported spending only $3.3 million on advertising in 2013-14.

Occupancy expenses also were gathered as part of PSBA’s analysis. The conclusion after analyzing this information was that documenting real estate expenditures is incredibly difficult, even with IRS 990 forms and copies of leases. Because the leases for each charter were so different and reported data in different formats, accurate comparisons of the real estate expenditures across charter schools in any systematic manner could not be made. This finding, in addition to the recent report from the Pennsylvania Auditor General’s Office that showed the Pennsylvania Department of Education provided $2.5 million in questionable lease reimbursements to nine charter schools, shows a need for changes to the way charters lease property.

Some other key findings of the report:

  • Charter tuition payments have outpaced charter enrollments. Since 2007-08, charter school enrollment has increased 97.4%, however, tuition payments from school districts to charter schools have increased 139.3%.
  • Charters continue to be overpaid for special education costs. In 2014-15, school districts paid more than $294.8 million in special education tuition payments to charter schools, while charter schools reported special education expenditures of $193.1 million – an overpayment of $101.7 million.
  • Charters are allocating a much higher percentage of their budgets on administration than school districts. On average, districts spent 5.6% of total expenditures on administrative costs while charters spent 13.3%.
  • Charters are spending over three times as much per student on chief administrator salaries – $43 for school districts and $130 for charter schools.
  • Cyber charters spent significantly more on advertising costs than brick-and-mortar charters. Based on RtK data gathered, five cyber charters spent more than $3.7 million on advertising compared with $591,000 spent by 129 brick-and-mortar charters.

Based on the analysis, PSBA’s report makes the following recommendations:

  • A more thorough and defined state mechanism must be developed to hold charter schools accountable.
  • Funding for special education students attending charter schools should be based on the same formula applied to school districts, and payments should be capped and verifiable to actual per pupil costs.
  • The state should establish a fair, balanced commission to study and make recommendations on charter school funding and financial operations.

The full report and all the RtK data submitted by charters can be found online at https://www.psba.org/issue/charter-school-reform/.

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PSBA is a nonprofit statewide association of public school boards, pledged to the highest ideals of local lay leadership for the public schools of the commonwealth. Founded in 1895, PSBA was the first school boards association established in the United States.

CONTACT:  Steve Robinson, Senior Director of Communication, 717-506-2450, ext. 3315