Cyber charter changes that could save public schools $530M may be in this year’s budget

Pennsylvania’s public school districts could save roughly $530 million annually if the legislature makes long-sought changes to how cyber charters are funded.

Democratic and Republican lawmakers told Spotlight PA such reforms could be included in this year’s budget, which is expected to focus on education. The Democratic-controlled state House is already moving a sweeping bill that would cap the tuition that districts pay to cyber charters, change the tuition calculation for disabled students, and increase oversight.

“It's no secret that education is the centerpiece of this budget,” said state Rep. Jesse Topper (R., Bedford), the minority chair of the House Education Committee. “We're talking about basic education, we're talking about higher education, we're talking about every possible aspect of education in this budget as being a key piece of it. So why wouldn't this be the year to maybe finally get something done on this issue?”

The changes aren’t a foregone conclusion. The idea would need buy-in from the GOP-controlled state Senate.

“Addressing cyber charter reforms as well as truancy reforms are certainly areas of interest for our Caucus,” Kate Flessner, a spokesperson for Republicans in the upper chamber, said in a statement. “Any changes must seek to empower parents in the education of their children.”

State Rep. Pete Schweyer (D., Lehigh), chair of the House Education Committee, said he’s hoping the cyber charter changes can thread a tricky needle.

Brick-and-mortar charters are largely concentrated around cities. But students across the commonwealth attend cyber charters, which means lawmakers everywhere are newly familiar with them, he said.

Topper agreed and said focusing on cyber charter schools makes sense to him, adding that there “isn't a concentrated constituency with a cyber charter. A cyber charter might be headquartered in someone's district, but those students come from all over the state.”

Then there’s the cost to public school districts, which topped $1 billion a few years ago. Schweyer noted they are “just absolutely going up significantly year after year after year.”

“There's an opportunity for us to save some money,” he said.

In Harrisburg, savings often have bipartisan appeal.

As of the 2022-23 school year, the state Department of Education says that more than 160,000 Pennsylvania students are enrolled in public charter schools; nearly 60,000 of those students attend cyber charters. Enrollment at the commonwealth’s cyber charters has expanded rapidly since the pandemic.

For years, lawmakers and advocates for traditional public schools have pushed to overhaul the more than two-decade-old law that dictates the way the commonwealth funds all charter schools.

The law is the same for both brick-and-mortar and cyber charter schools. Public districts pay per-student tuition directly to charters, and that tuition is based on the district’s per-student spending, with some deductions like facilities expenses.

If a student has a disability, their tuition is built on that base rate for the district, plus a standard percentage of its spending for all disability services — regardless of the kind of disability the student has.

The state House bill advancing in the chamber doesn’t focus solely on cyber charter schools. It’s a comprehensive response to a 2023 Commonwealth Court ruling that found the state’s public school funding system is unconstitutionally inequitable.

The legislation adopts many of the recommendations from a Democratic-authored report that emerged from a series of legislative hearings centered on overhauling the education system. Along with the cyber charter changes, it would put $5 billion into basic education over the course of seven years in an effort to correct funding shortfalls.

It’s unlikely Republicans in the state Senate will embrace all of these Democratic ideas. Still, lawmakers from both parties have approached the court-mandated task with the assumption that changing the law that governs charter schools will be part of the fix.

The portion of the state House bill that focuses on cyber charters would make three major changes.

Instead of calculating tuition based on public districts’ spending, cyber charter tuition would be a flat rate across the state: $8,000 per student, which is lower than any public district’s per-student rate.

The bill would also change the way tuition is calculated for students with disabilities. Instead of using a percentage of a district’s total spending for disabled students — which lumps together disabilities like speech impediments with more complex ones like nonverbal autism — it would create a tier system where disability payments are calculated based on students’ needs.

Finally, it would create new oversight around cyber charters. Schools would no longer be able to carry an unlimited financial surplus. Instead, they would be limited to surpluses between 8% and 12% of their total budgeted expenditures, depending on their size.

Advocates for traditional public school districts have scrutinized cyber charters in recent years for building up millions in assets and using the money for purposes like buying property — something critics have called “profiteering.”

Organizations that advocate for public schools including the Education Law Center and Public Interest Law Center support the state House’s proposal, calling it “groundbreaking.” They are among the groups that brought the lawsuit that ultimately saw a judge rule Pennsylvania’s school funding system unconstitutional.

Charter school advocates do not support the bill.

Anne Clark, who heads the Pennsylvania Coalition of Public Charter Schools, said she thinks lawmakers are acting too hastily in setting uniform tuition rates and surplus caps for cyber charters. She said it’s “bizarre” to claim that public schools are underfunded, but to also say that “students who go to cyber charters in that community, they deserve less.”

“It is a flawed argument [that cybers are cheaper],” she said. “Cybers have buildings. Transportation is much much more expensive. We have staffing. We have technology needs and expenses for curricula and resources that other schools don’t need.”

Schweyer argues there are good reasons why cyber charters in particular need extra oversight and attention.

He cited “egregious” recent examples of schools taking advantage of the current system’s lack of financial transparency, like charters’ spending on advertising, or Commonwealth Charter Academy using its money to buy up more than two dozen properties over the past several years.

This legislation was prompted, he said, by “the lack of transparency when it comes to how they’re spending their money, and the impact on students, coupled with things like lower standardized test … participation rates.”

Topper said he and other Republicans have a long list of issues with the Democratic bill. He thinks cyber charters need more oversight, but argues they should have higher allowances for their surpluses. He also thinks Democrats’ per-student tuition rate is low, and says that while there should be accountability measures for student success that apply to cyber charters, they should likewise apply to all public schools.

“The other side, I believe, sees some of these problems and thinks the answer is to cripple the networks of cyber charters so that they're no longer viable options,” he said. “That's what my concern is.”

Disagreements aside, Topper said he senses this budget cycle could bring a breakthrough. He’s worked on overhauling the charter law for years, he said, and this round feels a little different.

But he admits he’s been wrong before. “I've given up being in the prognostication business,” he said.