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What's the real cost of the new charters?

  • l charter hearings 1 of 1 10 1
    Photo: Kimberly Paynter/WHYY

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We went down the rabbit hole on this one.

And in the end, the Philadelphia School District revised its own math.

After the Philadelphia School Reform Commission voted Wednesday night to approve five new charter schools, SRC Chair Bill Green said the decision would have a "very minimal" impact on the School District's budget.

The commission granted conditional three-year charters to: Independence Charter School West, KIPP DuBois, MaST-Roosevelt, Mastery Gillespie and TECH Freire.

In fact, the SRC's action does not drive up the District's $80 million budget gap for next year.

On Thursday, the District said that the decision to create these 2,684 new seats would cost $13 million over five years.

Fact-checking by WHYY/NewsWorks found that this cost estimate was actually overinflated by almost double.

Matt Stanski, the District's chief financial officer, verified this assessment Friday, saying that the true cumulative cost of expanding these charters is $6.8 million.

The discrepancy comes from the fact that the District forgot to account for the 280 seats it authorized for KIPP's DuBois application. (More on this later).

But even this accounting hides the actual cost of those additional seats.

Assuming, as the District does, that each new seat costs the District an average of $7,000 in stranded costs, the four-year cost is actually $40.6 million.

This figure doesn't count the 280 seats of KIPP's granted charter -- which may grow to 500 seats.

The District has already been paying for these 280 seats, so it's not a "new" cost.  I'll explain this further below.

First, here's a breakdown of the $40.6 million.

2015-16: 0 "new" seats = $0
2016-17: 1446 seats = $10.1M
2017-18: 1962 seats = $13.7M
2018-19 2404 seats = $16.8M

Total cumulative cost = $40.6M

Many have challenged this $7,000 stranded cost figure, which comes from the report done by the Boston Consulting Group in 2012.

When the Philadelphia School Partnership made its $35 million offer, it assumed stranded costs at $2,000 per student.

Even accepting the District's figure, it would be expected that the added costs of charter migration would diminish over time through school closures and layoffs. But the District doesn't account for this.

Asked about the challenges to the $7,000 figure, Stanski repeated: "It's the number we're currently using right now."

At Thursday night's SRC meeting, the commission approved a contract with the Aston Group to analyze and update its stranded cost estimates.

Savings from closing charters

OK, so how does a $40.6 million added cost become $6.8 million?

This requires a second set of calculations.

The District expects to defray the $40.6 million by counting the savings it hopes to actualize based on closing low-performing charters.

Under this logic, although new charters add 2,684 new seats, the net number of seats created is much smaller.

The District had originally counted 784 net added seats when it did its calculations Thursday.

After conversations with WHYY/NewsWorks, this number was revised to 504.

Here's the math that gets you there.

Read the rest of this story at NewsWorks

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Kevin McCorry

Kevin is WHYY/NewsWorks' senior education writer.