Cyber Charter Funding Battle

The word around the Pennsylvania educational policy world is that lawmakers are discussing the funding formula for cyber charter schools. Cyber charter schools are K-12 fulltime online schools that deliver all of their course content via the Internet. They are part of the charter school movement because they operate independently of the traditional public school districts (they are authorized by the Pennsylvania Department of Education), but are public schools because they receive per-pupil tuition fees from sending districts (the school the student left has to pay a tuition rate to the cyber charter that the student selects).

The hangup in Harrisburg is this funding mechanism. Right now different sending districts send different tuition rates to the cyber charter schools. The rate an individual school district sends gets calculated as an average tuition rate of the sending district. This means that a given cyber charter school may charge $12,000 per student coming from, say, district A and only $8,000 per student from district B because district A spends more money in its own district per student than district B.

This formula has led to much controversy and the proposal in Harrisburg from the Wolf Administration is to create a flat cyber charter school rate of about $6,000 per student. I was in a meeting with one of the budget officers a few weeks ago and he said they derived this rate from calculating the cost per student at high performing online schools run by traditional public schools. This official basically said that this is the rate they have seen that can work effectively and if the cyber charter schools do not like the rate they can pack their bags and leave the Commonwealth. They argue this change in formula would save schools districts more than $150 million.

To me, this is an interesting conversation and I will be watching it closely. The cyber charter schools have some strong lobbying in the legislature, especially since some of the operators in this state are nationwide for-profit companies that have experience in playing this game. I hope this doesn’t influence the legislature in a negative way but I worry it might.

Overall, it is my opinion that the current Wolf funding proposal seems logical and will help traditional public schools. However, I am not sure if anyone (outside of the cyber charter school operators) know how exactly the cyber charter schools are spending their money. To me this is critical in discussing this issue in the legislature.

It is clear to me based on conversations with traditional public schools districts that a funding reform ABSOLUTELY needs to happen. These districts are getting harmed with funding problems due to cyber charters that are impossible to solve because of how the funding mechanism works. For example, one superintendent told me that on average he only loses 3-4 students per grade to a cyber charter school. This means he is losing the salary of a teacher per grade, but cannot let go of a teacher because he isn’t losing an entire class worth of students. This leaves him with a choice: Really increase class size or cut in other areas. Economies of scale are causing this problem to be unworkable in the current inception of the policy design.

The proposed funding cap of $6,000 would help solve this issue, but again we should be looking at the cyber charter school end and see how costs get allocated there (information not publicly available – some policy organizations wrote a Freedom of Information Act request to get this information, but it hasn’t come yet). Perhaps other techniques like cyber charter school consolidation or payments directly from the PA Department of Education are warranted, but it is iimpossible to know until we know exactly how cyber charter schools work and how they spend their money.

We don’t have to have a single bullet answer to this, but we do need to have an honest discussion. Cyber charter schools should open up their books and we should all think about efficacy of students in both cyber charter schools and traditional public schools so we can make better funding choices.

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