Pennsylvania, Charter Schools, and Public School Finances
Pennsylvania school districts have a problem — charter schools. But we’re not focusing on political views and student outcomes; let’s talk about finances. In Pennsylvania, students do not pay tuition to charter schools; the majority of their funding comes from their residence school districts. The amount a charter school receives is determined by a statutory funding formula that sets tuition rates for both nonspecial and special education students.
The funding model creates a major problem for school district finances. Pennsylvania has 500 school districts that range in size from approximately 200 students to more than 140,000 students. When a charter school enters a district, physical or virtually, it starts to syphon off resources from the district.
A recent rating action moving a school district deeper into junk noted “the district’s sharply declining enrollment that is driven in part by significant competition from local charter schools” as a key factor. For years the district’s enrollment has been declining, straining its finances, and resulting in school closures. Recently, the district announced it was eliminating positions and likely to raise property taxes by 4.4 percent.
This week we dig a little deeper into charter schools in Pennsylvania.
- According to the Pennsylvania Coalition of Public Charter Schools, the state cyber and brick-and-mortar public charter school enrollment grew by about 15.5% from 2020 to 2021.
Cyber charter funding disputed during area school district meeting North Central PA
- School board treasurer said, “one month tuition has cost the district $61,838. This makes the total annual cost to the district $742,056 for just those 48 students.”
Charter schools impact HASD budget Huntingdon Daily News
- “$3 million of the district’s $34 million operating budget goes towards charter school tuition. Covering a student’s charter school tuition is as much as 50% more than if the student was learning in the district.”
Allentown School District is looking to raise taxes by more than 5% The Morning Call
- “The Allentown School District is looking to increase property taxes by 5.3% to help fund the district’s $394 million budget. Charter school tuition payments are projected to cost the district about $64.4 million.”
- “Pennsylvania has more cyber charter school students than any other state in the nation, according to a recent report. And during the pandemic, that population has ‘surged by 59 percent’”
CHART OF THE WEEK
Any student in Pennsylvania may apply to any charter or cyber schools in the state. However, each school district is required by law to pay a tuition cost for each child from its district who enrolls at these institutions. During the pandemic enrollment in charter schools, and costs for districts, dramatically increased.
The chart below depicts actual and planned charter tuition increases since 2012–13. Because COVID cost retraction is projected for 2021–22, the projected rises for 2020–21 are more significant than those for 2021–22. Furthermore, the forecasted increase in charter tuition for 2020–21 is predicted to exceed the entire statewide district property tax increase for the same fiscal year.
From their total local resources, school districts pay charter tuition. The estimated total charter tuition cost of $2.83 billion for the 2021–22 academic year is expected to exceed $3 billion in 2022–23. Even a minimal single-digit percent yearly charter expenditure growth at a $3 billion base will exceed all previous annual average amounts the state has provided for basic education funding (BEF) increases.
According to a PASBO survey, far too many districts noted that charter costs (as a single budget item) exceed their property tax increase limits and/or their BEF allocation. For students in these areas, educational program sustainability will be very tough. One source of inequity in funding is that cyber charter schools receive the same funding as regular brick-and-mortar public schools, despite their operational expenses being vastly different.
PA Disconnect in Cyber Charter Oversight and Funding (Jan 2022) Children First
- The Issue: Cyber charter school enrollment is growing rapidly and funded the same way as brick and mortar schools despite lower costs.
- Key Findings:
According to new research from Temple University’s Public Policy Lab, charter fees are projected to soar by $1.7 billion by 2025 and are the fastest growing cost in the state’s education system.
Last year, 99.7% of the Pennsylvania’s charter enrollment growth occurred in virtual charter schools, making cybers accountable for virtually all the charter school-related cost increases to school districts and local taxpayers.
Numerous academic studies, financial analyses, and audits demonstrate that cyber charter schools have cost structures that are roughly 25% to 30% below brick and mortar schools.