Public school districts across Pennsylvania faced a deadline of June 30 to approve a budget for the coming fiscal year. Many balanced their budgets, banking on the legislature’s approval of a proposal that would save their districts more than $600 million in cyber charter school tuition.
But if the legislation to cap taxpayer-funded tuition for online charter schools doesn’t become part of the next state budget, it would send some districts, such as Delaware County’s William Penn School District, scrambling to close million dollar gaps in their spending plans.
William Penn and about 370 of the commonwealth’s other districts are also counting on the second installment of $526 million to correct the unconstitutional disparity in state funding between the wealthiest and poorest districts.
“Both of those items are factored into the budget, and those items are allowing us to balance our budget,” William Penn Superintendent Eric Becoats told the Capital-Star. “If the state does not pass those items or approve those items as they are, we are really going to have to go back to the drawing board and begin to look at art, music, athletics, as well as transportation.”
William Penn passed a $134.6 million budget last week that includes a 3.9% increase. That’s equivalent to about $185 a year for the owner of a property assessed at $150,000. The district’s tax rate of $32.86 per $1,000 of assessed value already ranks among the highest in Delaware County.
“The proposal is asking the community to do everything that we can ask them to do,” Becoats said.
Without a cap on cyber tuition, William Penn would need to plug a $2 million gap in its budget.
This situation is not unique. The School District of Lancaster’s board passed a 4.25% tax increase. That means another $172 a year for an owner of property assessed at the district’s median of $166,000.
“That’s a savings that would be passed along to our taxpayers,” School Director Dave Parry said.
Like William Penn, Lancaster balanced its budget, in part, by holding off on hiring for new positions or allowing jobs to stay open through attrition.
It’s unclear how many of the state’s 500 school districts approved a tax increase or included projected cyber charter reform savings in their budgets this year. The Pennsylvania Department of Education does not post aggregated school district budget data until later in the year.
State lawmakers have been unusually tightlipped about budget negotiations this spring, as Senate Republicans have sparred internally over new revenue sources and face pressure to compromise with the Democratic-controlled House and Gov. Josh Shapiro to provide more money for struggling transit agencies.
The General Assembly recessed for the July 4 holiday after missing its June 30 budget deadline and the Senate has no session days on its calendar until September.
Last month, the House passed a bill to cap cyber charter tuition at $8,000 per student next year. It would also establish a statewide formula for special education tuition. That would save public school districts across the commonwealth an estimated $616 million a year, according to a House analysis of the bill’s fiscal impact.
The Senate has not acted on the measure, but Majority Leader Joe Pittman (R-Indiana) has said criticisms of cyber charter schools, such as lack of oversight and transparency, have merit. House Appropriations Committee Chairman Jordan Harris (D-Philadelphia) said last week he believes there’s a “good chance” that it will be part of the final budget package.
Lancaster and William Penn were among six school districts in a historic lawsuit against the state. It culminated with a 2023 Commonwealth Court decision declaring the state’s reliance on property taxes to fund public education unconstitutional.
They argued the state had failed for decades to account for the disadvantages dealt to students in impoverished school districts.
School leaders in cities such as Johnstown, Lancaster and Wilkes-Barre, and rural districts like Shenandoah Valley and Panther Valley in the state’s coal region, have struggled to generate sufficient tax revenue by levying higher rates on less valuable property. Wealthier districts, such as Lower Merion in Montgomery County and Fox Chapel in Allegheny County, achieved per-pupil spending among the highest in the state with similar or lower tax rates.
After the Commonwealth Court decision, the legislature and the Shapiro administration convened the bipartisan Basic Education Funding Commission to assess the level of need across the state. It determined the gap between districts with adequate funding that achieved the state’s educational assessment goals and those that did not was $4.5 billion. And the legislature resolved to pay that out over nine years.
Last year, the state budget provided $526 million, or about 11% of the total, as the first installment of adequacy funding to be distributed through a new fair funding formula. That was on top of another $574 million increase in education funding distributed to all districts.
But Pennsylvania school districts pay about $1 billion a year in cyber charter school tuition calculated through a formula that critics allege doesn’t reflect the actual costs of providing an exclusively online education.
In a report earlier this year, Republican Auditor General Timothy DeFoor’s office found the money paid to cyber charter schools resulted in five of the largest accruing excessive surpluses. It also noted “uncommon” spending for taxpayer funded schools. Examples include $22 million in employee bonuses, $2.4 million in fuel stipends, $1.3 million for a vehicle fleet and $70,280 for a “Family Funfest Event.”
The cyber charter schools examined in the audit responded by pointing out that DeFoor’s office found no financial mismanagement, waste, fraud, or abuse of taxpayer dollars.
Susan Spicka, executive director of Education Voters PA, said cyber charter tuition eats into the gains that school districts could achieve through adequacy funding. She added that the state’s increases in basic education and special education funding have barely kept pace with inflation.
“If the legislature punts on cyber charter funding reform without increasing basic and special education funding they’re going to really harm a lot of students and a lot of districts,” Spicka said.