Charter Bill: House Bill 97, PN 1339 (Rep. Mike Reese, R-Westmoreland)

Highlights of Key Sections

Section 1704-A

Charter School Funding Commission: A statewide funding advisory commission is created to explore funding issues related to charter school entities and make recommendations one year from the effective date of the act. The 14 members include:

  • The secretary of education
  • An at-large member chosen by the governor, president pro tempore of the Senate and the Speaker of the House
  • Four members of the Senate and four members of the House, with two appointees from the majority party and two appointees from the minority party in each chamber. The majority chairmen of the Senate and House Education Committee are included in that count and serve as the co-chairs of the commission.
  • A business manager of a charter school
  • A business manager of a cyber charter school
  • A business manager of a rural school district
  • A business manager of an urban school district

The commission will evaluate and make recommendations on the following:

  • Consideration of the establishment of a statewide authorizer
  • The charter school funding process (including potential funding inequities)
  • Funding for charter school facilities and management
  • A process to use the performance matrix to compare the academic performance of each charter school with the performance of the school district of residence of each student enrolled in the charter
  • Special education transportation
  • Consideration of a school district deduction for programs and services that are funded through competitive grants from private or public resources or from private contributions or donations
  • Funding for charter schools that primarily serve adjudicated youth.
  • Funding of costs associated with athletic
  • Consideration of a method for school boards to use to review whether charter schools are sufficiently distributed throughout the district and ensuring that an application is not denied based on geographic location
  • Consideration of the appropriate use of the special education funding formula that has been implemented for school districts with respect to charter school entities

PSBA Note: This language should mirror the previous BEF and Special Education Commissions and only contain legislators. The language contains many other distractions from the work of the commission – athletic costs, which will take the commission down the political path of issues regarding the Pennsylvania Interscholastic Athletic Association (PIAA), academic accountability and independent authorizers, which could be a study all to its own. The language of this commission should focus solely on the financial issue as previous commissions did.

Section 1715-A, 1716-A
Charter School Entity Requirement

Use of Sectarian Facility: A charter school may use a sectarian facility if it provides for separate entrances and covers religious objects and symbols to the extent reasonably feasible.

Cyber Charter School In-person Interaction:  A cyber charter school may use in-person interaction, testing or instruction for students who are covered under the Individuals with Disabilities Education Act or section 504 of the Rehabilitation Act of 1973.

Conflicts of interest: Charter school trustees and administrators must comply with the State Ethics Act and file statements of financial interest.  A charter school trustee or administrator may not participate in the selection, award or administration of a contract if he or she has a conflict of interest, subject to penalties imposed by the Ethics Commission. An administrator or immediate family member may not serve on the Board of Trustees. An immediate family member who is on the authorizing school board also may not serve as a trustee in the section.

Board and Administrator Compensation: Members of the board of trustees are prohibited from being compensated.  An administrator may not receive compensation from another charter school or educational management organization unless a sworn statement is submitted detailing the work for the other entity, with projected number of hours, rate of compensation and projected duration.

Dismissals: An administrator or trustee of a charter school entity shall be automatically disqualified and immediately removed from the board of trustees upon conviction for an offense graded as a felony, an infamous crime, an offense pertaining to fraud, theft or mismanagement of public funds, or any crime involving moral turpitude.

PSBA Note: Many of these provisions are a step in the right direction. However, while the new language indicates that administrators must comply with disclosure requirements when there are conflicts of interest, the administration is not actually precluded from receiving compensation from more than one charter entity or Education Management Organization (EMO).  Another issue is that the bill does not actually prohibit common board membership among charter boards and related entities; the provisions only require disclosure and recusal. Challenges occur with a few existing charters that have common board members sitting on the boards of multiple managed charter schools and related entities where money is being transferred among the different entities. The board should be (but may not be) voting on many matters that would affect the other entities, including expenditures, services, sharing of staff, etc. Those issues go far beyond simply voting on a contract.

Section 1717-A
Charter School Application Deadline
: The deadline to submit an application to a school board to establish a charter school is moved from November 15 to October 1 of the year preceding the school year the charter would open.

PSBA Note: Moving up the date of charter applications is a benefit to applicants and the boards. Boards would have more time to consider the applications. Moving the date up is a logical and needed benefit to applicants because they would have more time to get the school up and running if the charter is granted.

Section 1719-A
Standard Charter Application:
The PA Department of Education (PDE) must develop a standard application for charter applicants and for the renewal of existing charters. A school board may not use its own application or require additional information outside of the standard application form.

The application must include an organizational chart presenting the proposed governance structure of the school, and include a clear description of the roles and responsibilities of all entities in the organizational chart and standards for the performance of the board. If the charter contracts with an EMO, it must provide detailed evidence of demonstrated student achievement, and management of non-academic school functions, conditions for oversight and enforcement, renewal and terminations of the contract. The application also must include a plan for satisfying the proper criminal history record clearances and employment history reviews required for staff and policies regarding truancy, absences and withdrawal of students. The department is required to review the application every three years, but no changes may be made to the application forms unless the revisions are enacted by the General Assembly.

 PSBA Note: School districts should have the ability to amend or otherwise weigh in on the contents of the standard application. The department should review the form every three years, but they do not have the ability to make any changes without a change in the law. If districts cannot add content, the department should at least be provided with the flexibility to add content when there is a need. 

Section 1720-A
Increased Terms of Charter Schools:
The bill expands the initial charter period from three to five years and the renewal term from five to ten years. The ten-year renewal is subject to the academic quality benchmark established by the performance matrix (until the performance matrix is established, renewal will be for five years). Beginning in the sixth year of any ten-year period of renewal, a charter that fails for two consecutive years to meet the benchmark will be subject to review by the local school board. A charter or regional charter school that does not meet the benchmark may still be renewed for a five-year period. A review is not a renewal trigger.

PSBA Note: The language in the bill is unclear and appears to further remove authorizer oversight by eliminating the ability of school districts to review renewed charters annually. In current law, school districts already have the ability to close a charter for poor academic performance and other reasons at any time during the term of the charter. In addition to this issue, the bill does not consider that other deficiencies can exist other than poor academic performance.  What if the charter school hasn’t paid creditors, completed audits, provided special education services, etc.? There is no recognition of those types of issues that would warrant a shorter renewal term. If accountability is the focus of this legislation, these provisions raise concerns. The change to not review charters on a regular basis as current law dictates, and to limit that review takes the Commonwealth further away from accountability. 

Amending a Charter Document: The bill includes a process for a charter school to request amendments to its charter. The authorizing school board must hold a public hearing on the request within 60 days of receipt of the request. Failure to hold a hearing and/or grant or deny the request will be deemed an approval. Applicant charter schools have the ability to appeal the district’s decision, but have no time limit or parameters set on their right to appeal. The language in the bill does not specify what constitutes a material change necessitating an amendment.

PSBA Note: This is a faulty process for a charter school to request amendments to its charter. A charter is a legally binding agreement. If the authorizing school board fails to hold a public hearing and act to approve or deny an amendment within 60 days of receipt of the request, the request is automatically deemed approved. If the request is denied, the charter can appeal the district’s decision, with no time limit or parameters set on the right to appeal. There is a timeframe established for the district to act, but no time is set for when a charter must appeal a decision. A process of this nature could lead to a school district denying an amendment, only to have the charter school appeal to the state Charter School Appeal Board (CAB), get approval and undermine the original charter agreement. Material amendments to a legally binding agreement will result in a loss of innovation (the original reason for creating charter schools) with no accountability.  A substantial process that follows court precedents needs to be amended into this section. The time for substantial amendments is during reauthorization.

Section 1721-A
Charter School Appeal Board:
The bill expands the state Charter School Appeal Board (CAB) from six to nine members to include a public school principal, an administrator and a member of the board of trustees of a charter school entity. It also requires the parent member to have a school-aged child enrolled at a charter school entity.

PSBA Note: Only one new member of the CAB would be a public school principal not affiliated with a charter school. However, this means that three members of the CAB must be affiliated with a charter school, two members of the CAB (with the addition of a principal) must be affiliated with a school district and one member of the CAB, a teacher, could be affiliated with either a charter school or a school district. These changes provide an opportunity for charter school proponents to control the CAB in a majority of cases. PSBA prefers current law to this change.

Section 1722-A
Charter First Right of Refusal to Public School Buildings:
A charter school entity has the right of first refusal to purchase or lease an existing public school building, a part of an existing public school building or space in a public school building for educational purposes only. The bill includes a process for pricing and sale. School districts would be required to post a notice of building availability on PDE’s website 30 days prior to entering a contract to sell or lease their buildings.

Prohibition of Alcoholic Beverages in Charter Facilities: Alcoholic beverages are prohibited to be available for consumption or sale in any charter school facility. If the local school board reasonably believes sale or consumption of such beverages is occurring, it must notify PDE and fines may be imposed.

Section 1723-A
Admission and Enrollment Requirements:
The bill requires PDE to create a charter enrollment form that limits the information collected to student, grade level and residency information. Students must submit a completed enrollment form to be qualified for admission to a charter school and its lottery. Preference in the lottery process must be given to students residing in the school district and may be given to a child of a parent actively involved in the charter school’s development and to siblings of students currently enrolled or selected during the lottery process. The charter school is prohibited from requesting additional information beyond the contents of the enrollment form, but it may limit its academic focus based on a particular grade level, targeted population group of at-risk students, or area of study such as math, science or arts.

Nonresident Student Enrollment: Charters may enroll out-of-district students once the waiting list for resident students has been exhausted.

PSBA Note: House Bill 97 does not include language that appeared in 2015-16 legislation that allowed for a charter school that does not have any limits on student enrollment or caps to operate its schools at more than one location and to expand into additional grade levels.

No Payment for 4-year-old Kindergarten: Unless there is a contract between a school district and charter entity, a district will not be required to fund a four-year-old kindergarten program if it does not offer such a program in its own schools. Case law ruled that school districts are already exempt from paying tuition to a charter school for 4-year old kindergarten if the district does not offer the same. This provision gives the charter school the ability to negotiate to obtain a contract to receive tuition for these students.

Section 1725-A
Funding for Cyber Charters:
The bill reforms the funding formula for cyber charter schools or a two-year period beginning in the 2017-18 school year and continuing until the end of the 2018-19 school year or the enactment of a new formula. The formula allows for various deductions in calculating the amount to be paid by the school district of residence of each student. Any savings realized during those two years from the cyber charter school savings in a city of the first class (Philadelphia) must be directed to school based services.

Charters May Contract with School Districts and Intermediate Units for Services: Charter schools may request the intermediate unit or school district to provide non-special education and special education services. The IU or school district must provide the services and bill the charter.

Payment Disputes: A procedure is created for a school district to raise concerns regarding the accuracy of a charter school’s enrollment figures. A district has 30 days after a payment is made to notify PDE of inaccuracies. PDE must conduct a hearing within 30 days from the notice. Within 30 days from the hearing date the secretary must render a decision regarding the accuracy of the deduction and make the resulting adjustment. The decision may be appealed to Commonwealth Court.

PSBA Note: This procedure is problematic for several reasons, and PSBA believes that current law would be better than this change. The prevailing party is liable for legal fees, but since school districts have the burden of proof but do not have actual enrollment information, this is a seriously flawed process likely to deter districts from protecting taxpayers for payment for students who are not attending charter schools.

Further, the language creates some timing conundrums because it may not play out as it is written.  The department is not always timely in notifying districts of withholdings, so districts often find out first by seeing the deduction listed on the subsidy accounting, without having first received a letter from PDE notifying them of the deduction.

Another concern is what may be construed as a limitation on the issues that the district can raise in an objection and hearing.  Many objections do not fit neatly in the issues stated there.  For example, there are current cases before PDE on an objection where the district contends that the charter school should not be paid at the special education rate for certain students because there are gaps in their IEP service dates.  The district paid at the regular education rate for the gap dates and at the special education rate when the IEPs were in effect. 

Section 1728 – A
Annual Audits: 
Charter schools are required to have an audit of the charter school entity’s operations conducted annually by a qualified independent certified public accountant. The audit must include a verification of student enrollment, full review of expense reimbursements and receipts, federal and state tax filings, financial statements of any charter school foundation, review of the process for all publicly bid contracts, board policies and procedures. The audit and annual budget are public documents and must be made available on the charter’s website.

Access to Budgets and Other Information: Charter schools must provide their local school boards with access only to specified records such as financial reports, financial audits, aggregate standardized test scores (without student-identifying information), and teacher certification and personnel records. They also must provide a copy of their annual budget that must identify the source of funding for all expenditures, the amount of funds received from a foundation and a description of the use of such funds, administrator salaries and expenses for an educational management service provider.

PSBA Note: Charter schools are already required to give school boards “ongoing access to the records and facilities of the charter school to ensure that the charter school is in compliance with its charter and this act and that requirements for testing, civil rights and student health and safety are being met.”  By defining the records too narrowly in HB 97, chartering school districts would no longer be able to adequately review charter school entities’ compliance with its charter and laws they are subject to. To that end current law is more effective at accomplishing accountability than this change.

Section 1729 – A
Teacher Evaluation:
Charters must create an evaluation system for teachers that includes at least four rating categories and multiple measures of student performance. Principals are not included in the evaluation system.

PSBA Note: House Bill 97 does not require charter school teachers and principals to participate in the state-developed evaluation system required for other public school entities and it does not require charter schools to hold the same rewards and consequences for teachers and principals. Instead, it creates a dual system for public school educators: one for those in traditional public schools and another that allows each charter to create its own separate methods of evaluation. Under this legislation, charter school educators and leaders are not held to the same standards of accountability as teachers and principals that comply with the state-developed requirements.

Section 1729.2-A
Multiple Charter Organizations:
Provisions here allow two or more charter schools to consolidate into an organization. A charter that has not met student performance requirements within either of the most recent two school years or has failed to meet accepted standards of fiscal management is not eligible to consolidate with another school. The organization may be managed by a single board of trustees and a single administrator, rather than having a board at each school. This requires the approval of PDE and each school district that granted the initial charter of any charter school included in the proposed consolidation. There is no deadline for appeal of this decision in this section.  The provisions do 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 remains under the oversight of its initial authorizing board of school directors. 

PSBA Note: No one is designated to determine the performance level of the two schools and what the process will be to determine performance level. 

Section 1731.1-A
Fund Balance Limits:
For 2017-18 and beyond, limits are placed on the unassigned fund balance reserves of charter schools that are 4% higher than the respective limits placed on school districts. Any excess over the established limit must be returned by the charter to school districts within 90 days after June 30. Charter schools must annually provide to PDE and all school districts that paid tuition to the charter school information certifying compliance with these requirements by Oct. 31, 2018 and Oct. 31 of each year thereafter.

Section 1731 2-A
Performance Matrix:
The State Board of Education is required to create a performance matrix that must be used a s the primary factor in evaluating charter school renewals. The State Board must develop the matrix within 24 months and create regulations to implement the use of the matrix, which will measure and assess the academic performance of charter school entities. In developing the matrix, the State Board must convene an advisory committee that includes a minimum of seven representatives of charter schools, regional charter schools, cyber charter schools, and school district personnel. The bill does not specify a maximum number of committee members or how many representatives from each school type should be seated on the committee. The State Board also must determine an academic quality benchmark which will qualify a charter school entity for longer charter terms. The matrix developed by the State Board is the only criteria that may be used for evaluating a charter school entity. The matrix will be subject to PDE review every three years, and any revisions to it cannot be made unless the General Assembly enacts a law or the State Board amends its regulations.

PSBA Note: Currently, charters may be revoked or not renewed for material violations of the legally binding charter agreement as well as other reasons. Other reasons for revocation include failure to meet requirements for student performance, failure to meet generally accepted standards of fiscal management or audit requirements, and violations of the Charter School Law or any law that charter schools are subject to. However, House Bill 97 makes the performance matrix a “primary factor” in evaluating renewal of a charter. While student performance is a crucial measure of a charter school’s success, financial mismanagement and compliance with laws, regulations and material provisions of its charter must not be devalued. Presently, under case law, if a charter school does not meet the measurable academic benchmarks included in its own charter, the charter may be revoked when the sending school districts are performing better. Further, other states that set up accountability measures utilize the same valuation system between all public schools. 

Section 1742-A
Cyber Charter Access to Buildings for Testing:
School districts, intermediate units, community colleges and State System institutions of higher education must provide cyber charters with reasonable access to its facilities for testing. The cyber charter must provide 60 days advance notice of the need. Districts (and other entities listed) are not required to make their facilities available on dates and times that cause interference with its own educational programs, and they may charge a facility rental fee in accordance with the same policy that would be applied generally to other organizations and community groups.

Section 1745- A
Establishment of a Cyber Charter School:
School districts and intermediate units may establish cyber charter schools pursuant to the Charter School Law. It does not preclude school districts and intermediate units from offering online instruction that is not recognized as a cyber charter school.