The Pennsylvania School Boards’ Association (PSBA)
recently issued a special report on charter school revenues, expenditures, and
transparency. The following is a summary of that report. The thoughts and
conclusions expressed below are the result of PSBA, and not original to me. I
agree with their conclusions.
Charter
schools need to be held to a higher standard of accountability and
transparency, equal to that of traditional public schools. More than 80% of
charter school revenue comes from public tax dollars paid by sending school
districts to educated students. Charter schools are not held to the same
standards when it comes to auditing fiscal decisions, operational costs, and
accountability.
Charter schools are
also the worst offenders of failing to comply with the Right-to-Know Law,
according to Terry Mutchler, Director of the Office of Open Records. Less than
54% of charter schools complied with a PSBA request without need of appeal.
Another 19 charter schools failed to respond even after OOR ruled in favor of
PSBA following a successful appeal.
PSBA discovered that
some charter schools spend significant monies on advertising, between $150-$500
per student. Reporting the money varied. Some charter schools showed
discrepancies in spending when the RtK request is compared with the IRS form
990.
The RtK request also
led to concerns regarding real estate and leasing. There is a lack of
consistency regarding lease agreements and expenses for charter schools. The
agreements may be in the best interest of the property owners and not
necessarily the charter schools.
PSBA recommends that a
more through and defined state mechanism be developed to hold charter schools
accountable. The accountability and transparency laws applicable to school
districts should be applied to charter schools.
School districts alone cannot
be responsible for ensuring that charter school operators are in compliance
with state and federal regulation. Charter schools must follow the Ethics Act,
Right-to-Know Law, Sunshine Law and code related to the Charter School Law.
Options other than revocation of the charter need to be made available to
public school districts. Local districts need to be able to hold charter
schools accountable. The costs of monitoring the charter schools need to be
reimbursed to the local school districts.
The current charter
school funding formula has consistently resulted in school districts overpaying
charter schools for special education students. Since 2009-2010, school
districts have paid $327 million more in special education tuition than charter
schools have reported in special education expenditures. It is supposed to be a
zero sum came. Revenues should equal expenditures. Therefore, this has been a
$327 million windfall for charter schools.
The current calculation
of special education tuition payments only takes into account the special education
expenditures of the student’s district of residence for the prior school year.
The calculation does not take into account the actual costs the charter school
incurs.
The charter school
funding formula for special education students should be based on the same
three-category formula enacted by the state legislature in 2014 a the
recommendation of the special education funding commission. Special education
payments should be capped and verifiable at actual per-pupil costs for each
sending school district.
The current special
education tuition calculation creates an inflated rate for charter schools.
Charter schools should be required to annually report the school district of
residence the actual costs of the special education services provided. There
should be a method for charter schools to return overpayments to sending school
districts.
Charter school
financial operations should be studied further by a legislatively created
commission. Reforms should be based on those findings. The public should have every
confidence that their money is being spent effectively.
The
data from the RtK requests and charter school IRS 990 forms does not match. A
number of inconsistencies exist in how charter schools report funding and
expenditures. Over 40% of charter school fees to contractors on the IRS 990
forms were placed in the “other” category. Also, discrepancies between the RtK
requests and the IRS 990 forms regarding leasing information and real estate
interests create a barrier to understanding the true expenditures.
Administrative
compensation varies widely when it comes to charter schools. Brick and mortar
charter schools are spending more than 2X per pupil on administrative salaries
and almost 4X as much per pupil on CEO expenditures when compared to public
school districts. When any organization spends questionable amounts on
management, administration, occupancy and/or advertising, it would certainly be
required to defend its actions. The state must require this responsibility of
all charter schools as nonprofit organizations receiving public tax dollars.
School districts need
relief from charter school tuition payments. These payments represent %5 of all
school districts expenditures. The tuition to cyber charter schools must
account for only those costs associated with providing an online educational
program. School districts are able to provide their own rigorous and
comprehensive cyber education at a significantly reduced cost. Many school
districts are able to provide a comprehensive online curriculum for a fraction
of the cost of tuition to cyber charter schools.
The state should
establish a fair and balanced commission to study and make recommendations on
charter school funding and financial operations. The state needs to create a
commission of stakeholders that would focus solely on the finances and
financial operations. The commission must consider the difference in
instructional costs in cyber charter schools from that of online academic
programs provided by traditional public schools. Where school districts offer a
comprehensive online curriculum, cyber charter tuition should be capped at the
school district’s cost to provide online education. If the district does not
offer an option, then a funding formula that reflects actual instructional
costs of an online education should be establishe
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