ALLENTOWN (TNS) — The state auditor general recently questioned the amount of money some school districts have in their savings accounts. So what about cyber charter schools?
Wall Street bankers would be envious of how the savings of some cyber charters have grown in recent years. Their vaults are overflowing, but they are still siphoning off tax dollars from struggling school districts like Allentown.
The auditor general should look into that as well. And state legislators should step up to prohibit charter schools from hoarding money to be spent on children’s education.
Pennsylvania’s 14 cyber charter schools had a combined balance of $164 million in unallocated funds, meaning the money is not being held for a specific purpose, in the 2020-21 school year, according to a report last year from PA Charter. Performance Center, part of Children Primero, a progressive-leaning nonprofit advocacy organization in Philadelphia.
Those are the latest figures available. Figures for the last school year are expected to be available this spring.
Cybercharters more than doubled their savings of $75 million in 2019-20. And they had seven times the $22 million in 2018-19, according to the report.
He said the findings could not be attributed to increased enrollments because while enrollments increased, fund balances rose faster.
“There is something really broken in the way that we are funding cyber charter schools when they can be inundated with so much excess money when school districts are doing everything they can to try to give kids what they need and they are raising taxes on the property to pay for cyber charters. schools,” said Susan Spicka, executive director of Education Voters of Pennsylvania, a project of the left-leaning Keystone Research Center.
“The whole system just needs to be fixed,” he told me on Wednesday. “It’s unbalanced.”
I searched for a response from the Pennsylvania Public Charter School Coalition, but did not hear from them.
State law regulates how much a school district can save. To increase property taxes, your Unreserved and Undesignated fund balance cannot exceed 8% of expenses.
In a recent audit, state Auditor General Timothy DeFoor questioned whether some districts were playing “deceitful games” to circumvent that law while shifting savings to other designated savings accounts.
His audit was not fair to school districts because it lacked context. Many districts have good reason to have savings in special accounts, for example, if they are in the middle of construction projects.
But your point about monitoring fund balances is a good one. Now, it’s time for DeFoor or someone else to examine the loot the cyber schools are piling up.
Eleven of Pennsylvania’s 14 cybercharters reported unallocated fund balances that exceeded 8% of their spending in 2020-21, according to the PA Charter Performance Center report.
Some were grossly excessive, according to the report.
ASPIRA Bilingual Cyber, Esperanza Cyber and Central PA Digital Learning Foundation had savings that exceeded 50% of expenses. Insight PA Cyber and Pennsylvania Cyber reported unallocated fund balances of more than 40% of their expenses.
“Cybercharters are hoarding funds that should either be spent on students or returned to taxpayers,” ML Wernecke, director of the PA Charter Performance Center, told me Wednesday.
DeFoor’s office did not respond to my question about whether he plans to audit cyber charters.
Last year, he announced that his office would no longer audit schools. He said he doesn’t have the staff because the number of auditors has been drastically reduced over the years. Also, he said, school audits are the responsibility of the state Department of Education.
However, it did find the staff to audit tax increase and savings requests from a dozen school districts, including the Bethlehem area and the Northampton area.
I asked the Department of Education if it plans any audits. That question also remained unanswered.
It is disappointing when public officials dodge such questions. The public deserves the assurance that someone is monitoring how their tax dollars are being spent. The lack of answers does not instill confidence.
State legislators also have a responsibility to ensure that cyber charter schools spend the money they receive on education.
In January 2021, state Rep. Anthony DeLuca, D-Allegheny, introduced legislation that would limit how much charter schools could save to be eligible to receive tuition payments from school districts.
He suggested that charter schools be required to maintain their fund balances at less than 5% of their budgeted expenses.
DeLuca’s proposal was not adopted.
Only nine other representatives signed on as cosponsors and the bill expired last year without being considered by the House Education Committee. All of the co-sponsors were Democrats, including Lehigh County Rep. Mike Schlossberg.
DeLuca died last year. Another legislator needs to raise that flag and march forward.
Another way to ensure that cybercharters don’t collect more tax money than they need is for Pennsylvania to follow the lead of other states and create a state tuition rate.
I’ve raised this point several times before, and I’ll repeat what I said then: legislators don’t do their homework if they can’t see how ridiculous the funding formula for cybercharters is.
Under state law, they are paid at the same per-pupil rate as traditional charter schools.
But cybercharters don’t have the same buildings, supplies, and infrastructure to pay for. They may also have fewer teachers.
School districts now pay different tuition rates to cyber charter schools, depending on what it costs them to educate their students. Cybercharters can receive between $7,300 and $18,000 per student, depending on which district they hail from, according to Education Voters of Pennsylvania.
Legislation to set a state fee of $9,457, plus for special education students, did not win support last year.
It’s reasonable for cybercharters to have some money in the bank. Unlike school districts, they cannot raise taxes. Therefore, they must have reserves for unexpected costs. But they shouldn’t compete with Fort Knox.
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