PSBA opposes flawed charter reform plan under Senate Bill 1

Senate Bill 1 as approved by the Senate Education Committee June 7

On Monday, June 7, the Senate Education Committee approved Senate Bill 1, (Sen. Martin, R-Lancaster), a charter school reform proposal that also contains an automatic Education Improvement Tax Credit (EITC) program funding escalator. Although the bill contains provisions which increase charter school transparency and accountability, it does not provide funding reform and as originally introduced would have created a statewide charter authorizing commission that removes local control at district and taxpayer expense. PSBA is opposed to the bill.

Key areas of concern with Senate Bill 1 are that it removed local control from the charter school authorizing process, did not address the critical need for charter funding reform, and created an automatic escalator to the Education Improvement Tax Credit (EITC) program which will shift precious resources away from the majority of students in the commonwealth.

• The most significant flaw is the creation of a new statewide authorizing commission, allowing charter school to make an end run around local taxpayer control and diminishing any chance to ensure that charter schools are accountable and responsive to their local communities.
• As long as taxpayer dollars are taken from school district subsidies to fund charter schools, local control is essential. The statewide authorizer proposed in Senate Bill 1 undermines Pennsylvania’s long-standing tradition of local control. Creating a system that allows charter schools to shop for the authorizer with the least oversight and to transfer oversight away from their local school board essentially silences the voice of the school district and taxpayers footing the ever-increasing bill.
• Senate Bill 1 does not address the critical need for charter funding reform. It does not include any financial reform of the charter school tuition calculation that would provide needed relief to school districts that are over-paying millions of dollars in charter school tuition costs. In 2019-20, school districts in total spent nearly $2.2 billion in charter school tuition payments.
• The bill also dramatically expands the state’s two education tax credit programs. The proposal would take the current programs which cost $185 million for EITC and $55 million for the Opportunity Scholarship Tax Credit (OSTC) and grow them to a combined $1 billion in five years, $3 billion in 10 years and $8.5 billion annually in 15 years by including an automatic annual 25% increase escalator.

Senate Bill 1 as amended by the Senate Education Committee June 15

Following the Senate Education Committee’s action to approve Senate Bill 1, the Senate was crushed with letters and phone calls from public school advocates opposing the bill. As it became increasingly clear that there were not enough votes to pass the bill on the Senate floor, the strategy was to amend it to provide minimal changes thought necessary to get the measure passed.

In an attempt to make charter provisions under Senate Bill 1 more palatable, the measure was returned to the Senate Education Committee where it was amended to remove provisions related to the statewide charter authorizing commission and create minimal cyber charter school savings for school districts. However, because the bill does not address funding reform in a meaningful way and fails to remove the existing provision in the bill related to an automatic escalator for the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs, PSBA remains opposed.

The amendment to Senate Bill 1:

• Removes the establishment of the Public Charter School Commission that would have authorized the creation of charter schools.
• Adds a minimal, phased-in adjustment to the payments made by school districts to cyber charter schools. School district tuition rates for cyber charter students would be adjusted as follows:
  • For the 2021-22 school year, for each nonspecial education student enrolled, subtract $250 from the amount and, for each special education student enrolled, subtract $500 from the amount.
  • For the 2022-23 school year, for each nonspecial education student enrolled, subtract $500 from the amount and, for each special education student enrolled, subtract $1,000 from the amount.
  • For the 2023-24 school year and each school year thereafter, for each nonspecial education student enrolled, subtract $750 from the amount and, for each special education student enrolled, subtract $1,500 from the amount.

Concerns with Senate Bill 1 as amended

No real funding relief: Without substantially addressing the priority of charter school funding reform, including an efficient and fair reconciliation process, Senate Bill 1 will not provide any real relief for school districts or taxpayers.

• Senate Bill 1 still does not adequately address much-needed charter school funding reform. Instead, it creates minimal cyber charter school savings by providing school districts with what amounts to a savings coupon to be deducted from the tuition rates for regular and special education students who attend a cyber charter school.
• These savings coupons will do little to help school districts struggling to balance their budgets under the strain caused by ever-increasing mandatory charter school tuition payments. Based on preliminary estimates, savings for the average school district will amount to only $39,000 (or 1.7%) off their entire cyber charter tuition bills in the first year under the program.
• Despite coupon amounts increasing in the second and third years, those increases will not keep up with the current and anticipated increases in charter tuition rates school districts are experiencing due to increases in mandatory expenses such as pensions, charter school tuition, and special education, not to mention the impact of the migration of students to cyber charter schools due to the COVID-19 pandemic.
• Senate Bill 1 continues to ignore the recommendations of the Legislature’s own bipartisan Special Education Funding Commission to implement a tiered funding system for special education students enrolled in a charter school. Further, it fails to implement a single statewide tuition rate for cyber charter students. Implementing these recommendations would save taxpayers hundreds of millions of dollars.
• School districts will continue to pay widely varying tuition rates for students receiving the same cyber charter school education. In the current school year, tuition rates vary by as much as $13,000 for regular education and $35,000 for special education.
• Senate Bill 1 does very little to correct the fact that school districts are overpaying cyber charter schools for special education, and completely ignores brick-and-mortar charter school special education funding.
• Because of the uncorrected flaws in the charter school funding scheme, tuition costs are now the top-rated budget pressure among school district leaders. The cost of this mandate forces school boards to raise local property taxes and/or cut programs and opportunities for students in district schools in order to afford the ever-growing tuition payments to charter schools.

EITC/OSTC expansion: Senate Bill 1 still contains an unprecedented expansion of the EITC and OSTC programs.

• If the goal of the EITC and OSTC programs is to help students in struggling schools, expanding the program would shift much-needed resources away from schools that need it the most, which the majority of Pennsylvania parents do not support. In a recent statewide survey, parents were asked how to best help students in struggling schools, 63% of parents said that they supported providing additional resources and supports to the struggling schools.
• Traditional public schools that educate roughly 90% of the children in Pennsylvania continue to fight for minimal increases in state education funding every year, despite Pennsylvania ranking near the bottom (44^th out of 50 states) in terms of the state’s share of education revenue. Comparatively, Senate Bill 1 would take programs that currently costs $185 million (EITC) and $55 million (OSTC) this year and grow them to a combined $1 billion in five years, $3 billion in 10 years and $8.5 billion in 15 years.
• At a time when the state’s economy is only just starting to recover from the COVID-19 pandemic and the Independent Fiscal Office is projecting multi-billion-dollar state revenue deficits over the next several years, school districts have concerns with such a drastic increase when difficult state budgets as well as increasingly restrictive school district budgets lie ahead in the foreseeable future.