Some insights from controller’s latest report on charters

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Philadelphia City Controller Alan Butkovitz has been studying charters in Philadelphia for a while now, looking into fraud and keeping tabs on the quality of School District oversight.

In his latest report, released Tuesday, he concludes that the way charters are funded is crippling the District’s finances.

The Butkovitz report mostly goes over well-trod territory, but he comes up with a few facts and figures worth drawing attention to:

♦ Since 1999, the overall number of students attending publicly funded Philadelphia schools has stayed about steady at 205,000, but now, almost one-third of them attend charters.

♦ "In 2013, while the [District] faced a deficit in the $70 million range, the Charter Schools posted an aggregate positive fund balance of $117 million."

♦ "The [state’s] decision in 2011 to stop reimbursing the School District for a portion of Charter School tuition has cost the [District] at least $100 million a year."

♦ "Minimal resources have been devoted to charter school accountability." The report notes that the 87 charter schools are overseen by a staff of six with an annual budget of less than $1 million. Only three charters have been revoked in 14 years, "despite numerous reports of waste, fraud, abuse, and poor performance," while dozens of District schools have been closed.

♦ Charter schools spent a much higher proportion on administration vs. instruction than the District, and much less per student on special education.

♦ Low-incidence special education students, the most expensive to educate, make up 5 percent of the population in traditional public schools. That’s twice as high a percentage as is found in charter schools.

Butkovitz recommends that the charter funding formula be overhauled to reflect "student need and actual costs, and must adjust for demographic differences between charter and traditional public schools. He says that "particular attention must be paid to how special education is funded."

Under the current law, charters are not required to spend money they get for special education students on those students. And while charters educate a much lower percentage of the highest-needs students than District-run schools, the District must pay charters the same standard amount per student regardless of the severity of the disability.

A chart in the report points out that the District spent about $12,000 per special education student, while charters spent about $8,000. Based on the complex formula that calculates how districts must pay charters for special education students, charters received more than $20,000 per special education student.

One big factor is that the proportion of low-incidence special education students in District schools is climbing, driving up the average cost of special education. As a result, the per capita payment to charter schools for special education is climbing.

Butkovitz says that even if the amount per charter student is calculated as the regular education amount plus a supplement for special education needs, actual charter expenditures for those students fall short of the supplement amount.

"In 2013 traditional public schools spent an average of $11,954 to educate each special education student; the charter sector spent $7,891. Yet the charter sector received a special education supplement of $11,564 per student. In other words, the Charter sector received about $3,600 more per Special Education student than it spent on Special Education instruction," the report says.

He also recommends a joint budget process between the District and charters and collaboration with charters on a five-year financial plan, with annual updates, accompanied by the creation of an independent fiscal review board.

Butkovitz suggests a careful evaluation of the Renaissance initiative in which low-performing District schools are turned over to charters.

As for state policy, he says that the charter reimbursement line should be reinstated and that the state should not create new authorizers, such as universities. Such a move is included in pending legislation in Harrisburg that has the charter sector’s support. That, he said, would "exacerbate the unsustainable fiscal situation … and do little to improve accountability."