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City charters get $100M more for special ed than they spend; debate rages in Harrisburg

By Dale Mezzacappa on Jun 5, 2014 02:12 PM

Philadelphia charter schools received more than $175 million last year to educate special education students, but spent only about $77 million for that purpose, according to a Notebook analysis of state documents.

That is a nearly $100 million gap at a time when city education leaders are considering raising some class sizes to 41 students and laying off 800 more teachers in District-run schools due to severe funding shortfalls. Payments to charters, which are fixed under law, make up nearly a third of its $2.4 billion budget.

The issue goes beyond Philadelphia. Statewide, charters, including cybers, collect about $350 million for special education students, but spend just $156 million on them, according to calculations from the Pennsylvania Association of School Business Officials (PASBO). The Notebook used the PASBO analysis of state data to calculate the numbers for Philadelphia, which has half the state’s 170 charter schools.

Although most parties agree that this situation is the result of a faulty state charter funding system, there is fierce disagreement over how to fix it. While legislators and the Corbett administration finalize a 2014-15 budget, school districts and charter school proponents are engaged in virtual war as they all scramble for their piece of what most agree is an insufficient pot of money.

“The charters are benefiting from an unfair system, although they didn’t create the system,” said Susan Gobreski of Education Voters PA. “But the basic issue is inadequate resources. People are trying to hold on to anything they’ve got, and they choose not to be concerned about what happens to others."

Charter proponents say that losing this money – now often used to pay for other educational services, but also sometimes plowed into the coffers of for-profit school management companies – will compromise their ability to provide for student needs and even endanger the future of some schools that have become dependent on the funds.

“Politicians that I’ve talked to just don’t understand what this will do to charter schools,” John Swoyer, CEO of MaST Community Charter in Northeast Philadelphia, told the Harrisburg news service Capitolwire. “There are schools that are on that list that within six months the formula would destroy their program.”

Perverse incentives

As it relates to charter schools and special education, the current funding system is laden with perverse incentives and the potential for abuse.

Under state law, charters receive the same supplement for special education students regardless of the severity of the child’s disability, a sum that is usually two to three times higher than the payment for regular education students.

The amount is based on the average of what the host district spent in the prior year. For instance, in Philadelphia this year, charters got $8,419 for each regular education student and $22,312 for each special education student.

The law does not require charters to spend their special education allotment on services for those students.

“Now charter schools have an incentive to identify kids with the lowest level of service needs and avoid those with the highest level of service needs,” said Gobreski.

And that is what’s happening. An analysis by the Education Law Center showed that in 2011-12, charter and District schools had about the same percentage of special education students. But the charters had many more students, proportionately, in the least expensive disability category – speech and language impaired – and fewer in the categories that include more severe and expensive disabilities such as autism.

“If a student is labeled special education, we pay that per-pupil amount,” said District Chief Financial Officer Matthew Stanski. “We don’t know the kind of disability. The range of disabilities in special education requires different resources.”

This pattern was repeated in other heavily charterized districts, ELC found, including Chester-Upland. There, the state’s largest brick-and-mortar charter school is managed by the for-profit management firm of Gov. Corbett’s largest single campaign contributor four years ago, Vahan Gureghian.

In that year, Chester Community Charter School enrolled 42 percent of the students in the bankrupt district, but 46 percent of the special education students – and 80 percent of those were diagnosed with the mildest, least-expensive disability.

The per-student payment for a special education student in Chester is among the highest in the state: $35,000. Because CCCS drains the mildly disabled from the district, Chester-Upland is left with a concentration of the more expensive students. That drives up the district’s average special education cost, which is then used to determine the charter schools’ payments.

On a smaller scale, the same thing is happening in Philadelphia. Despite the District’s declining revenues, the charter tuition rate for special education students has increased by 19 percent since 2011-12, while the tuition rate for regular education students has declined by 8 percent.

“The current system for funding special education assumes that charters will proportionately serve all students regardless of the level of disability,” said ELC’s David Lapp. “What exists is that the charter system, taken as a whole, is disproportionately serving students with mild or low-cost disabilities.”

A state legislative commission tasked with devising a new funding formula has, after months of study, recommended revisions in the funding rules that would bring charter payments for special education closer to actual expenditures by creating three tiers of disability for charters, each with its own price tag.

The commission would also revise the special education funding mechanism for traditional school districts to more closely align payments with actual expenditures. But the new rules would only apply to a proposed $20 million increase in state special education funding, “holding harmless” the money that districts already get.

This rankles charters, who are expressing alarm that they will be unable to adequately serve their special education students.

“We reject the notion that charters have been overpaid, but are appalled by the position of our opposition that who gets the money is more important than adequately serving all children with special needs,” Robert Fayfich of the Pennsylvania Coalition of Public Charter Schools has told reporters.

This argument and the charters’ campaign against two bills designed to implement the commission's recommendations are trying the patience of State Rep. Bernie O’Neill, the Bucks County Republican who co-chaired the special education funding commission with Republican State Sen. Patrick Browne of Allentown.

O’Neill, interviewed during a recent education funding conference, boiled with anger.

Despite repeated invitations, he said, charter operators and their lobbyists declined to meet with the commission during its work, but then mobilized the troops against the bills. “They didn’t come to meetings, but then they went into panic mode,” he said.

“They admitted to me that they use special ed funding for basic education, for management company costs, for lots of things. I find it offensive that money designated for those kids is used for anything but those kids. What’s going on is wrong.”

Jonathan Cetel of PennCAN, a policy organization that supports charters, defended the charters’ position.

First, he argued, the proposed bills “don’t reflect the findings of the commission.” He also disputed PASBO’s calculations – he said they don’t account for all charter expenditures on special education students and exaggerate the amount that charters get for that purpose.

But primarily, he said, although there is acknowledgment that the special education formula needs to be fixed, the charter community is so upset because this is one of three funding hits that their schools could take for next school year.

Besides this change, lawmakers are also looking to end the so-called “double dip” state pension reimbursements to charters, another artifact of the 17-year-old charter law. And next year, charters, at least those in Philadelphia, face cuts in their per-pupil allotment for non-special education students, which is due to general school district spending reductions.

“It’s time to fix the whole system,” Cetel said.

State Budget Secretary Charles Zogby, likely to be influential in resolving the issue, said that the change called for in the proposed special education legislation would have a “large impact.”

There is concern “about pulling too much money out of the [charter] sector” too quickly, said Zogby, a former state education secretary who also worked for K12, a company that provides curricula to charter and cyber charter schools.

The legislation, SB 1316, has cleared the Senate Education and Appropriations committees with a six-year phase-in, compared to three years in the original bill. The House has taken no action on its bill, HB 2138, waiting to see what happens in the Senate.

In the meantime, the special education payments to charters are affecting budgets in school districts across the state, not just Philadelphia, as they raise taxes, cut programs, or otherwise struggle to make ends meet.

Philadelphia’s funding situation is so critical that the School Reform Commission refused to adopt what it called an “unsustainable” budget by the end of May, the deadline called for in the City Charter.

The District says it needs $320 million in additional funds to reach a basic level of services, $96 million of which will just avert further layoffs and other cuts to the current decimated budget. Superintendent William Hite told the SRC that, among other inadequacies, without additional funds all supports would be stripped from special education programs beyond basic mandated services.

Gobreski, of Education Voters PA, noted that parents in Philadelphia often wonder how charter schools can afford expenditures like art teachers while District schools can’t. This is particularly noticeable in District schools that have been converted to charters, the Renaissance schools, which often hire more teachers and other staff than the District said it could afford.

Although not the only reason – budgeting practices and teacher work rules are also factors – the high special education payments contribute to this, said Gobreski.

“That money helps answer the question, ‘Why do they [the charters] get an art teacher and my school doesn’t?’ she said. “They get a chunk of special education money that they don’t have to spend on special education services.”

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Comments (75)

Submitted by Anonymous (not verified) on June 5, 2014 2:28 pm
Who wrote this article? It literally doesn't have an author listed. When the article uses analysis from an association of school district (i.e. anti-charter) business officers as fact, it makes a reader wonder about the objectivity of the author. I also think this section would be included in a "how not to write non-partisan education journalism" textbook. "Charter proponents say that losing this money – now often used to pay for other educational services, but also sometimes plowed into the coffers of for-profit school management companies"
Submitted by Anonymous (not verified) on June 5, 2014 3:14 pm
Why is reporting facts partisan? To say it shouldn't be reported is partisan!
Submitted by g (not verified) on June 5, 2014 10:59 pm
Well written article that clearly explains an outrageous situation! Thank you!
Submitted by anonymous (not verified) on June 8, 2014 10:11 am
What is more outrageous is Jon Cetel being an advocate for charter schools. Jon is a nice guy who couldn't teach. Suffered through a few years then, thanks to being born with a Silver Spoon in his mouth, was able to just quit and join (start?) a nonprofit. How many teachers can do that? Perhaps teachers whose parents paid for their Ivy League educations. How is Jon paid? From what source? From Corbett campaign donors and charter school operators? It's funny how those who don't know struggle are often feigning themselves as saviors of those who do. Instead of worrying about the impact on charters, Cetel should be working to improve conditions for the vast majority of kids--and severely underserved Special Ed students. If he can't see that the charters he advocates hurt most children, his education was for naught. Again, as a teacher, the head of PennCan, couldn't.
Submitted by Anonymous (not verified) on June 5, 2014 11:19 pm
really - someone is whining about an anti-charter bias, that takes a lot of guff!
Submitted by Anonymous (not verified) on June 7, 2014 5:35 pm
That's it, cast doubt whenever they might be catching onto what a ripoff charters have become. The point is, unless you can prove otherwise, special ed. funds should be used just for that and, it not, then returned to the school district.
Submitted by Anonymous (not verified) on June 8, 2014 8:16 am
The siting that I saw in this article included the Pennsylvania Association of School Administrators and Education Law Center. They did not report conjecture, they reported facts. They defined the students with different levels of special education funding and provided the amounts spent on the student. If you do not like the numbers that is too bad. They don't lie.
Submitted by sparky (not verified) on June 5, 2014 3:59 pm
Dale Mezzacappa. In green print just below the title of the article.
Submitted by Anonymous (not verified) on June 5, 2014 3:23 pm
Hey Sparky - the name just got added. Probably because someone noticed they messed up.
Submitted by Fed Up Schoolmarm (not verified) on June 6, 2014 9:13 am
Hey, "Anonymous", you Charter School Troll - every single Special Ed teacher in the Philadelphia public school system who has had to deal with your filthy sleight-of-hand accounting is wise to your game. Take a ton of Special Ed kids into your charter school in September, get your government funding for them, and as soon as you have that money in hand, DUMP THE MOST CHALLENGING KIDS - THE AUTISTICS, THE PDD'S, THE MULTIPLY DISABLED AND THE EMOTIONALLY DISTURBED - BACK ON THE PUBLIC SCHOOL SYSTEM AND SAY THAT YOU "CAN'T ADEQUATELY SERVICE" THEM. Sure: pile all of your violent, out-of-control, dangerous pupils into the classroom of some frazzled (dual-credentialed) teacher in a neighborhood school who has 25 "regular" kids and 15 "emotional support/ dual diagnosis" kids on her class list - BUT YOU GET TO KEEP THE MONEY FOR SERVICING THEM!!! Build another vacation home or buy a Ferrari for the charter school owners - and let the stupid/tree-hugging/Kumbaya-singing/lefty/usually female SDP instructor figure out how to teach your throw-aways with no money whatsoever on which to do it. After all, the SDP is now nothing more than a dumping ground for all the pupils that the charters reject, anyway - so let's give it the old full court press, eh, "Anonymous"? Don't give an inch! Burn the SDP to the ground! ...... Only remember what they say about folks who play with matches.
Submitted by Notebook reader (not verified) on June 5, 2014 3:56 pm
Dale Mezzacappa has written a powerful piece uncovering an important aspect of the funding crisis.
Submitted by Anonymous (not verified) on June 5, 2014 3:25 pm
Please provide both the original PASBO analysis and the Notebook analysis. No offense, but history indicates we shouldn't trust the ability of either to do basic math or objective analysis.
Submitted by Dale Mezzacappa on June 5, 2014 4:12 pm

There is a link above in the third paragraph to a PowerPoint from PASBO explaining how they arrived at the numbers.

Also in the story is a link to the spreadsheets they used; it is repeated below. Under Expenditures, call up the 2001-02 to 2012-13 spreadsheet. PASBO added up the column "1200 Special and Gifted Education" for all charters in 2012-13 and got $143 million. PASBO added 9 percent to that figure to capture some additional costs to arrive at $156 million. I did the same for all the Philadelphia bricks-and-mortar charters and got $62.5 million, and added 9 percent to that. I also asked the school district for the amount they pay to cyber charters, and for how many students, in order to estimate how much the cybers were spending on special education students from Philadelphia. My best approximation was another $9 million, so I added that to get the final Philadelphia figure.

To get the tuition amounts paid to charters by Philadelphia and other school districts, call up the Tuition Schedule 2006-07 to 2012-13.

As the story notes, some from the charter community dispute the validity of the analysis,but they have not provided different figures. One point they do make is that their regular education payments are too low, which is why they argue for a fix to the entire system and not just this piece.

http://www.portal.state.pa.us/portal/server.pt/community/summaries_of_an...

Submitted by Anonymous (not verified) on June 5, 2014 4:33 pm
Dale, it is clear that PASBO has a strong opinion about this issue. Their report may be accurate, but it's clearly written to persuade legislators that the SPED funding process should be changed. If they have a strong opinion about this, why didn't they propose (or you ask) that they write an op-ed? I know The Notebook has published opinion pieces from advocates on all sides of many issues so why not this time. This is one of the first times I've felt that a reported piece by a Notebook writer is so clearly slanted.
Submitted by Dale Mezzacappa on June 5, 2014 5:19 pm

I did further reporting in an effort to determine whether the analysis was wrong. I interviewed a lot of people and included their objections. I asked one of the (Republican) chairs of the funding commission why they thought the formula should change, whether they determined that all the money sent to charters for special education is spent on special education, and whether PASBO's analysis was flawed. You saw how O'Neill responded. I went through the data sent by ELC, which advocates for special education students no matter where they go to school. I fired up my left brain in an effort to understand and explain how the tuition formula works -- that if charters educate a higher proportion of children with mild disabilities, the per pupil amount that determines their tuition payments goes up as students with more severe disabilities are concentrated in the districts. That leaves the districts with more expensive students less money and the charters with less expensive students with more money. That didn't seem a logical method for distributing scarce dollars and no one, in fact, defended it as such, except as a way to make up for money that charters feel they are not getting elsewhere. I quoted people who said that this should be part of a larger funding reform initiative and not taken in isolation. After all this, after interviews about both the analysis itself and the nature of the lobbying and the arguments being made by both sides, I used my journalistic judgement and decided that absent an alternative set of numbers provided by the charter community, that the PASBO numbers were if not precise, at least in the ballpark. If you or someone else can offer a better analysis or explain why both the analysis and the reporting were slanted, we would be happy to print it.

Submitted by Rich Migliore (not verified) on June 5, 2014 6:50 pm
Thank you Dale for your efforts on this issue. The entire funding system does need to be changed and so does the transparency and accountability to the public need to be changed. All public schools should be fully funded and all public schools should be fully transparent and fully account to the local school board, their parents, and their local community. If charter schools are going to hold themselves out as public schools, they should be "actually operated" as public schools subject to public scrutiny and public protections. We should all know exactly where our public money is going and how it is being used.
Submitted by Education Grad ... on June 6, 2014 12:52 am
Dale, I commend you for your excellent reporting. This issue of special education in charter schools is one that I've been hoping would be addressed and exposed sooner rather than later. As a special ed teacher for the SDP, I am very hopeful that reporting like yours will lead to changes that will provide teachers and other staff persons with what we need in order to best educate our students. It would be interesting to hear the perspectives of parents, as well as the District's SELs, principals, and Special Education Directors because they understand more fully how charter schools affect the District schools. Parents can provide the most information. With SDP employees, it is tricky due to confidentiality issues. However, the aforementioned individuals can provide you with numerous examples of how students have been dumped from charters into District schools. In some cases, their IEPs are so poorly written that these need rewriting when the child comes to a District-run school.
Submitted by Gtown_Teach (not verified) on June 6, 2014 9:24 am
Dale, this is an excellent piece. I find it extremely likely that special education money is being used in this manner. There should be a tiered system for special ed, in addition, there should be some sort of language in whatever bill that they pass that a large percentage of that tuition should go directly to the student(s). Similar to CTE, there should be clear accounting of where the 'extra money' goes.
Submitted by Anonymous (not verified) on June 5, 2014 5:14 pm
Dale, wouldn't it be more accurate to compare the difference between the SPED per-pupil rate and the general education rate vs. the charters' SPED costs? In other words, does the PASBO analyis account for charters using SPED per-pupil revenue to pay for rent, utilities, and other expenses that all are paid from per-pupil expenses of both SPED and gen ed students.
Submitted by Dale Mezzacappa on June 5, 2014 6:11 pm

That was one of the arguments made, and as I understand it one reason why PASBO added 9 percent to the number reported under 1200. One person suggested that the entire regular ed subsidy should be subtracted from the special ed subsidy to get a more accurate number, or that if a student is mainstreamed part of the cost of every regular ed teacher with a special ed student in the class should be included, and on and on. Maybe there is a better way to calculate actual charter special ed costs, but nobody yet has put a finger on it, and the charter community did not, according to O'Neill, engage with the commission to make any of these arguments during the commission's work. The bottom line for me, as I explain in the comment above, is that if the charters are educating disproportionately more of the students with milder disabilities, the way the formula is structured, their per pupil tuition payment ironically will go up because the average special ed cost in the districts, left with a higher concentration of the more expensive students, goes up. I didn't include this, but David Lapp explained it this way: There are five special ed students, four cost $10,000 and one costs $60,000. That makes an average of $20,000. So far, so good. But if all four of the $10,000 students go to charters, that leaves the district with one student costing $60,000.So the next year, the charter gets $60,000 for each of the $10,000 students. As I mentioned, even though overall district spending is going down (and the regular ed tuition reimbursement with it), the special ed tuition reimbursement is going up as this phenomenon plays out. Granted, this is only one of the many illogical and inexplicable aspects of how the state of Pennsylvania doles out its education aid, but it is the one that is the subject of a big battle right now.  

Submitted by Education Grad ... on June 6, 2014 12:49 am
Outside of Renaissance Schools, namely Mastery Clymer, are there any charters that educate the most expensive students, those who cost $60,000/per year? The most expensive students, in my understanding, are the students in Multiple Disabilities Support placements. My educated guess is that most of the students who qualify for MDS placements are either in District schools or Approved Private Schools. It would not surprise me if there are more students with multiple disabilities attending APSs than charter schools in the city.
Submitted by Anonymous (not verified) on June 6, 2014 1:38 am
Dale, how much do charters receive in facilities funding?
Submitted by Ms.Cheng (not verified) on June 6, 2014 7:44 am
They get start-up funding (Fed tax dollars), plus can get State reimbursement for facility rental. Charters need to prove their worth because as independent schools they cost more. Taxpayers are not obligated to keep them in existence at this cost. So far in PA they have been getting more funding with less accountability. The State's charter funding formula is definitely flawed, but only in Philadelphia is this so error so hugely apparent. Instead of giving charters a fair amount that reflects true costs, it has been giving them an inflated amount. This applies to regular ed as well as Special Ed. The former for reasons unique to poor districts, and the latter for reasons which this article by Ms. Mezzacapa explains very clearly. The inflation, in Philadelphia and Chester Upland school districts, has been instrumental in crippling both the home districts, and diverting tax money from other State obligations.... and in Chester Upland's case, paying for Mr. Gureghian's castle.
Submitted by Education Grad ... on June 6, 2014 11:31 pm
Ms. Cheng, You raise a good point about the flaws of the charter school funding formula and how it impacts Philadelphia. The flaws in charter school funding are so apparent in Philadelphia because most of the charter schools in the Commonwealth are in Philadelphia. I forget what the exact number or percentage of charter schools are in Philadelphia, by if I recall correctly, I believe that at least 50% of CSs are in Philadelphia.
Submitted by Publius1788 (not verified) on June 6, 2014 6:20 pm
Dear Mr. Mezzacappa, If you read the comment by LS Teach 06/06/0541, he writes that the district run schools do basically the same thing as this article says the charters do. This is also my understanding based on years of experience, that most schools mingle funding – use funding received for one purpose to support other purposes. Can we expect a future article about that? If the topic of special education funding is important as a separate topic; can we expect an investigative report on the number of emotional support special education students at Masterman, Science Leadership Academy, Central and the other magnet schools? Go Frankford High! Sincerely, Publius 1788
Submitted by Rich Migliore (not verified) on June 5, 2014 4:21 pm
Dale Mezzacappa wrote this article and it is one of the most concise reports of some of the most important and pressing issues which I have read in a while. Thank you Dale. The basic question is, "Whose pockets are our children's funds going into?" The other basic question is, "Exactly what services are our school chilldren receiving for that money? And a third basic question is, "Exactly whose organizations are pushing for 'no transparency' in charter school finances and reporting." What is their motive and who are their funders? We should all know that the Charter School Law, in its present form, is a seriously flawed law which allows a "web of businesses" to be weaved to milk money away from our students into private pockets. I do believe Charles Zogby had a whole lot to do with the writing of that law. Where is all the money going? We are talking ethics and morality here everyone.
Submitted by Poogie (not verified) on June 5, 2014 4:18 pm
I blame the ignorant PFT teachers for this problem. For all those years they spent the Special Education money on Special Ed students who no doubt did not appreciate it. It took the Charter Operators and their Wall Street matters to figure out that you could just spent less money and then free that money up for higher and better uses. Like Cayman Island deposits. Champagne. Arena rental fees for College signing days etc. A must better use for the money than educating the unfortunate special ed kids.
Submitted by Anonymous (not verified) on June 5, 2014 5:47 pm
You really think that the PFT teachers of the special education students have NOT complained? Where were you when the children were/are being taught without the materials and funding for those materials?.....blaming the teachers? You need to think and then come up with a viable solution and get back to the SDP with it ASAP Linda K.
Submitted by Anonymous (not verified) on June 5, 2014 6:52 pm
I think that your sarcasm detector may need to be recalibrated. ;-) I believe the OP was written with tongue firmly planted in cheek. I don't the OP actually believes that champagne, management fees and arena rentals are actually better uses of the money than instruction of special needs children.
Submitted by Poogie (not verified) on June 5, 2014 7:32 pm
I read your post two or three times attempting to find the ironic point in your piece and I was unable to do so. It then dawned on me you were serious. Look up the word irony and maybe do 7 step lesson plan explaining it to your students. I find this helpful with things I do not understand.
Submitted by Anonymous (not verified) on June 5, 2014 8:41 pm
Thank you Poogie...you summed up what I wanted to say quite well. Linda K.
Submitted by anonymous (not verified) on June 5, 2014 5:00 pm

I had no idea that this was regular business practice until I heard sometime who has run a charter school discussing it very matter of factly recently: "They admitted to me that they use special ed funding for basic education, for management company costs, for lots of things."

Submitted by Anonymous (not verified) on June 5, 2014 5:00 pm

This detailed post by school-finance expert Bruce Baker of Rutgers is worth reading, on this subject - http://schoolfinance101.wordpress.com/2012/06/05/the-commonwealth-triple...

Submitted by Anonymous (not verified) on June 5, 2014 6:48 pm
So Zogby is concerned about pulling money from charter schools too quickly. That's exactly what the state did to public schools.
Submitted by anon (not verified) on June 5, 2014 9:08 pm
well i don't know about you guys, but after reading how the state is diligently watching every last penny and how it is spent, i certainly feel better about being asked to take a 13% haircut by corbett, green, hite & friends.
Submitted by Anonymous (not verified) on June 5, 2014 11:48 pm
I have seen the rebuttal that the $350M includes $177M of what would have been "standard education" funding for these children, so only $173M is actual "special education" dollars. Is that the case? And does the $156M spent on special ed include the "standard ed" dollars? Are we comparing apples to oranges? Because if we are this looks really bad, and if we're not, it looks like charters are claiming they are educating special ed students for less than their standard ed funding.
Submitted by Anonymous (not verified) on June 5, 2014 11:14 pm
To ask that another way, does line 1200-"Special Education Expenses" include the base funding that would be provided to educate special ed students, or just the additional?
Submitted by Education Grad ... on June 5, 2014 11:21 pm
The fact that two Republicans, State Rep. Bernie O’Neill and State Sen. Patrick Browne are fed up with the way charter schools are using special education money speaks VOLUMES. Charter schools can argue till the cows come home about how a new means of funding special education based on the type of disability---one that people from various sides agree is a fairer, more sensible way of funding special education---will hit charter schools hard. This money is for SPECIAL ED! If charters are using this money for management fees and regular ed, it's a problem because the money is for special ed!!! If this practice is not illegal, it should be illegal. Where is the accountability? Where is the transparency? The lack of accountability and transparency is all the more reason to fight for public school districts, which must disclose a certain amount to the public and are subject to Freedom of Information Act laws. As private organizations, charter schools and Charter Management Organizations need not disclose as much. However, since it's taxpayer money at issue, the public has a right to know how all publicly-funded schools use public money.
Submitted by LS TEACH (not verified) on June 6, 2014 5:04 am
Is there a breakdown of how the special ed dollars are spent? Does this include teachers, aids, research based instructional programs, etc? Some SDP schools use their special education teachers to teach regular classroom positions. For example, since I am certified in Middle Years Math and English I teach 8th grade math along with my special education caseload and SEL position. Even though my position at my school is under the special education section in the budget, I teach outside that area. Principals can get pretty creative with their budgets. Are charters doing the same thing and is that a possible reason why there is such a discrepancy?
Submitted by Anonymous (not verified) on June 7, 2014 7:07 pm
I take it that you are also certified to teach sp.ed.? If that is the case you are not teaching outside of your area, you are being utilized because you are certified. The issue comes up with folks who are not certified for what they have been hired to do or nor certified for what was given to them. Linda K.
Submitted by Anonymous (not verified) on June 6, 2014 7:37 am
Dale Nice article, we knew from day one the formula was flawed. Yet here we are and nothing has been done. A special education pupil who gets 45 minutes of speech therapy a week will draw the same dollars as a full time special education student.
Submitted by Diana Liefer (not verified) on June 6, 2014 8:51 am
Question for Dale Mezzacappa, Does the school district also receive per student special education funding from the state? And if so, does the school district spend each of these dollars on special education students?
Submitted by Dale Mezzacappa on June 6, 2014 7:04 pm

School districts get special education funding that assumes 16 percent of their students are in the category. This is to discourage districts from overidentifying to get more money. But this system also causes issues and the special ed funding commission is recommending that it be changed, which this story didn't get into. For instance, since districts' special ed aid is not based on a per capita count, some don't have enough to fully serve the students they have. So they must draw from other sources of revenue. The overall pot of special ed aid hasn't gone up in six years. The 16 percent assumption also can skew the special ed formula that determines how much charters get. 

 

Submitted by Anonymous (not verified) on June 6, 2014 9:06 am
This is another reason why the PFT should give on anything. We are being asked to pay for the crimes of corrupt charters, as well as incompetent oversight.
Submitted by Publius1788 (not verified) on June 6, 2014 7:04 pm
Dear Mr. Mezzacappa, So basically the SDP gets 16% for special education and spends it to cover its expenses? This is also my understanding based on years of experience, that most schools mingle funding – use funding received for one purpose to support other purposes. This means that the district basically does the same thing as the charters. Why not pay the charters 16% based on the same assumption? I am looking at a chart that shows many charter high schools with significantly higher percentages of special education students than many /most district high schools. Go Frankford High! Sincerely, Publius 1788
Submitted by Anonymous (not verified) on June 7, 2014 7:45 pm
The SDP can not mingle and co mingle unless they want the state to show up and then big trouble. Charter schools on the other hand do not seem to have the same restrictions.....how that happened and why no changes have been made is a mystery to me, Linda K.
Submitted by Publius1788 (not verified) on June 7, 2014 9:18 pm
Linda K. Thank you for this information. We need to work with Harrisburg to correct this. Go Frankford High ! Sincerely, Publius 1788
Submitted by Anonymous (not verified) on June 6, 2014 7:47 pm
Hey Publius dude, Mezzacappa is a woman not a Mr.
Submitted by Publius1788 (not verified) on June 7, 2014 9:32 pm
Dear Anonymous and Ms. Dale Mezzacappa, I apologize for my error. Madam (Dale Mezzacappa), I did not intend to offend you in any way. Go Frankford High! Sincerely Publius 1788
Submitted by Anonymous (not verified) on June 7, 2014 8:40 am
People need to do their homework. Take the total size of school budgets and divide them by the amount of students in a school. Charters receive and spend about 70-75% of what a traditional district spends per student. Charters are funded at lower levels overall and get better results in Philly. Better for kids and a bargain for taxpayers. Know the facts.
Submitted by Larry Shaeffer (not verified) on June 7, 2014 10:33 am
the difference between what they get and what they spend on spec. ed. is one of the reasons the guy running the Chester charters can build his new 42,000sq.ft vacation getaway house on the beach at West Palm-all on the backs of Chester students/taxpayers.
Submitted by Anonymous (not verified) on June 7, 2014 5:34 pm
Vahan Gureghian runs the Chester Community Charter School and is Corbett's single, biggest political contributor. When his school was finally monitored for PSSA cheating they had a thirty point drop in scores. Funny how Corbett investigated the Philly schools, but gave his buddy, Vahan, a pass.
Submitted by Ms.Cheng (not verified) on June 7, 2014 7:08 pm
Chester Community CS, 2012-13 (per State website): total revenue $51,513,978; total expenditures $49,348,356. A surplus of $2,165,622. The reason they gave for the drop in their test scores, was a drop in funding from the State. Too sad.
Submitted by Anonymous (not verified) on June 7, 2014 8:41 pm
Maybe it was needed for Chester Community Charter's owner Vahan Gureghian's second home in Palm Beach. http://tinyurl.com/pbv64s9 and http://tinyurl.com/lx2stbn Being Corbett's biggest campaign contributor in 2010 sure paid off for him. http://tinyurl.com/okqhk7w
Submitted by Anonymous (not verified) on June 7, 2014 7:51 pm
Please share where you got your facts about charter school budgets. Linda K.
Submitted by Ms.Cheng (not verified) on June 7, 2014 7:23 pm
Take a look at Green Woods, and some Mastery schools. (State's website, look up revenue, total expenditure, total enrollment for 2012-13). Definitely not 70 - 75%. Yes, a few charters appear to be spending 80 to 90% of the SDP average $13,077 per child (based on ADM of 202,134, 2012-13), but what is the cost of the charter office, and what will the cost be to establish adequate oversight of over 85 different systems? Unlike the SDP, many of the charters appear to have more total revenue than total expenditures. How is that happening, and who has control of the surplus? Not a bargain for the taxpayer.
Submitted by Anonymous (not verified) on June 8, 2014 9:59 am
The reality is that school districts in Pennsylvania have an aggregate of $3.3 billion in fund balance reserves (that's billion with a B). The other reality is that independent charters have fund balances that are within reasonable limits, despite receiving a lesser per pupil expenditure. Let's look at the various funding and expenditure areas that seem to consistently be brought into question. Dale's article on special education does not include the fact that many expenditures for services/staff providing special education functions are not coded under special education line items. In small charters, many staff members where multiple hats and provide services that are not captured in funding line items. A Principal or CEO may spend significant time with special education, as do counselors and other support staff. Evaluations and other therapeutic services are also not coded under special education. On the district side, the Philadelphia School District also codes various IU services for special education in their budget. Beyond special education consider that charters are under funded or not funded for certain vital/required functions. Most notably charters receive limited, if any facilities funding. Charters have buildings, utilities, insurances and maintenance that must be accounted for, but get no funding. Legal services, human resources, compliance and other administrative services (not to mention consultation and professional development) are provided in the charter school, while district schools receive those functions from central office. There should be a full study of district and charter funding and expenditures. I'm sure there would be inconsistencies in both sectors that would need to be addressed and further investigated. Simply providing one sided assessments of the funding situation will not solve the problem and is a disservice for all Philadelphia public school students (charter schools are public schools also).
Submitted by tom-104 on June 8, 2014 10:24 am
I agree that we need a full, fair and thorough accounting of all school funding. You do not give any references for the positions you take in your comment, however. As to expenses: who can forget that Audenreid was given to Universal rent free for at least two years? Also, one expenditure you do not include is the massive advertising budget the charters obviously have, something the public schools have no money for nor should they because education should not be a business or a commodity. Advertising is a waste of scarce resources.
Submitted by Anonymous (not verified) on June 8, 2014 10:42 am
Let's be really clear here, Audenreid is a "Renaissance" school. This (Renaissance) is something created by the district. It's nowhere in charter law. The only thing close is the ability to convert a district school to a charter, but the law requires a majority of teachers and parents agree with that (parental choice). Renaissance does not have this feature and was created by districts. You should also remember that charters are required (by law) to make parents in the entire district aware of their school and its open enrollment. Some do this on a minimal level, while others go all out to get students. They should and do advertise for enrollment within the district. Let's also remember that many advertise for open positions (HR) and that function is done by central office at the district (often on a national basis).
Submitted by Ms.Cheng (not verified) on June 8, 2014 2:06 pm
The point of this article is not about whether charters cost more. They do, and this would be acceptable to the taxpayer/shareholder in the framework of true innovation/R&D. The fact is independent units cost more to operate than a larger one, providing both have the same level of utilization.You can see this in the total expenditures on the State's website (and charters do get separate reimbursement for capital (lease) expenses - they are running at a surplus right now.) What needs to be done is compare charter budgets with individual SDP school budgets for schools of similar demographic, enrollment, and (most importantly), utilization. The point of this article, which needs to be re-stated many times it seems, is the State's charter funding formula is not doing what it is supposed to do, which is award charters "reasonable cost". Utilization is not factored in, and this leads to giving far more than what is "reasonable". Multiply this by far more charters than are true innovation, and you have a disaster/the current funding crisis at the SDP on into the City and State. Here's a relevant quote from "Touring a North Philly Renaissance school, a microcosm of the city's education debate" by Kevin McCorry for Newsworks: [Why would the district send Scholar Academies $5.1 million to operate Kenderton, if the district sent only $2.7 million to the school when it was under its own control? "Charter per pupil payments are based on what the district spends the prior year, not on a specific school per se, but it's what the district spends as a whole," explained Matt Stanski, the district's chief financial officer.] It is this charter calculation that is in error - this is what Ms. Mezzacappa's article is about. It is long overdue for a correction.
Submitted by Education Grad ... on June 8, 2014 3:40 pm
Ms. Cheng, Thank you for citing the Newsworks article "Touring a North Philly Renaissance school, a microcosm of the city's education debate." Reading this article causes me to have a number of questions which elaborate on the points and questions that you raise. First, why is there such a large difference in District-funded operating expenses for the Kenderton building for the current school year, it's first as a "charter" school, relative to the same category of operating expenses for the previous school year (12-13), it's last year as a District-run school? (I'm excluding Title I money and other non-District sources of funding that go toward operating expenses). The District spent $2.7 million in District funding on Kenderton in 12-13 for operating expenses, yet this school year, Scholar Academies receives $5.1 million in District funding for the purposes of operating expenses. Some of the increase has to do with an increase in enrollment. However, the operating cost per pupil was $8,226 in 12-13 and this year is $9,127, so it appears that the increase is not just due to an increase in enrollment. Second, it's not just the Pennsylvania Charter School Law that is flawed here, but also Act 83, which established the SRC. According to the following publication, "Charter and Cyber Charter School Reform Update and Comprehensive Reform Legislation" (see http://www.pahouse.com/PR/Charter_and_Cyber_Charter_School_Report.pdf), Act 83 treats charter schools in Philadelphia differently than in the rest of the Commonwealth. I have included that below: ___ Charter School Law in Philadelphia School District: Act 83 of 2001 established that The School Reform Commission (SRC) is responsible for the operation, management and education program of the Philadelphia school district. The powers and duties of the board of school directors of the district were suspended. Act 83 allowed the same provision as under current law for the establishment of a charter school by an individual or entity authorized in law to establish a charter school however the law makes the following changes concerning the conversion of an existing school building in Philadelphia into a charter school: The conversion of an existing public school building to a charter school may only be initiated by the SRC, the provision are as follows: o An existing school building cannot be converted into a charter school by individuals or entities authorized to establish a charter school, only by the SRC; o Removes 50% parent/staff approval requirement to convert an existing building; o All provision related to the application, approval/denial, revised application and appeals process are suspended; -The charter application required the charter to demonstrate sustainability of support, capability of academic achievement, conformity to legislative intent and ability to serve as a model to other public schools. No longer required. o The Charter Appeal Boards exclusive review of denied or non-renewed/revoked charter school appeal is suspended; - SRC has the power to approve and deny all charter applications and non-renew or revoke a charter with no review by the appeals board. o No public hearing required for conversion of an existing school to charter school; o No majority vote by board needed to convert existing school into charter school; o Not required to establish alternative arrangements for students attending converted school who do not wish to attend the charter school; o Not required to comply with charter school staff provisions which include: - Certification requirements for 75% of staff, enrollment in the PSERS, health care benefits and leaves of absence for professional employees. ___ Third, this begs the question: Given the existence of Act 83, Would changes to the Pennsylvania Charter School Law even affect the SD of Philadelphia? Finally, it is also important for citizens of Philadelphia and the rest of the Commonwealth to ask these questions: - By what standard is it appropriate to treat the SD of Philadelphia so differently than the other school districts in the Commonwealth? - Since the SD of Philadelphia is being treated differently, is this treatment discriminatory? - What grounds did the Legislature use to justify Act 83, which treats the SD of Philadelphia differently? Are these grounds, if any exist, sufficient and compelling in order to justify the differential treatment of SD of Philadelphia? Or are these grounds ARBITRARY?
Submitted by Ms.Cheng (not verified) on June 8, 2014 8:32 pm
EGS, you have good questions which I could not begin to answer. The charter funding formula needs to be fixed just to meet its original intent. This should not require major changes in charter legislation. Mr. Mccorry's article (which was also posted here on the Notebook) was the most immediate example of how it is affecting the District's budget. Same school, same demographic, but per charter funding formula, much higher cost, even factoring independent administration.
Submitted by Anonymous (not verified) on June 8, 2014 4:58 pm
You are incorrect on several points. First, charters account for approximately 7% of the state's public education students, but are 5% of the public education expenditure. Similarly in Philadelphia charters enroll 32% of public education students, but represent only 29% of the budgeted expenditures. Charters get a minimal lease reimbursement (not necessarily a capital reimbursement). Facilities acquisition, contraction, renovation, utilities and maintenance are not funded, nor is debt service. If you look at charter finances for the past year, you will see that many independent charters showed losses for the fiscal year. When you look at the Kenderton operating budget, were debt service, professional services, legal, human resource, central technology and other administrative functions included? Again, a full funding study needs to be completed. Districts throughout the state can't be doing that bad, remember the $3.3 billion dollars rattling around in bank accounts around the state. Are those districts being over funded? Should some districts be able to spend money of college level stadiums, while poorer districts struggle for basics.
Submitted by Ms.Cheng (not verified) on June 8, 2014 8:47 pm
Anonymous, imbedded in the home district's spending are the payments to charters. You have to subtract them first from the total to get your comparison figure. For SDP: Let's say then that you have .29T, well T is actually .71T if you subtract .29T. O.k. then you have a ratio of .29T over .71T and that works out closer to a ratio of .41 or 41% for an enrollment of 32%. If you read Mr. Mccorry's article, he actually does subtract the administrative costs to arrive at a adjusted (taxpayer) spending comparison of $9,127 per child for the charter vs. $8,226 per for traditional (see the chart he created). Here you have the same school, same demographic. I'm not sure how you could defend a formula that is so obviously flawed. Experimentation will always cost more; but can we justify making experimentation 1/3 of one our largest school districts? How did innovation become the same as "choice"?
Submitted by Ms.Cheng (not verified) on June 8, 2014 9:35 pm
Sorry I forgot to state that the simple math is an approximation for "stranded cost" inflation. Probably the correct percentage is not as high as 41%, but I defer to Mr. Mccorry's illustration to explain how charter per child right now, is higher than the District's traditional.
Submitted by Education Grad ... on June 9, 2014 9:09 pm
Ms. Cheng, I particularly appreciate your comments because you are a supporter of charter schools. The fact that you support charter schools but also see the flaws in the funding formula says something to me. It says that reasonable people who see the problem believe that the problem needs fixing. The biggest opposition to fixing the charter school formula is the charter school community because they "lose." However, it's not their money to lose because the money doesn't belong to them in the first place. Rather, the money is PUBLIC money which must be used to promote the interests of children. Instead, the charter schools have basically been given extra money that they don't deserve. There seems to be an entitlement mentality on the part of some of the charter schools. Receive special education money but don't use it for special ed. In the case Walter Palmer Leadership Academy CS, sign a contract with the District which contains an enrollment cap, but then violate that enrollment cap year after year. It's a scam.
Submitted by Education Grad ... on June 7, 2014 7:35 pm
Anonymous, Can you provide a source/sources for your information? The reason that charter schools receive less than traditional public schools is due to certain functions that the School District performs for all schools (public, private, and charter) in Philadelphia. For example, the District contains the Intermediate Unit for Philadelphia, handles transportation, enrollment, Title I funding, funding for school feeding programs, and additional functions as well. Charter schools benefit from these services without performing them, and that is why the District takes a percentage of the money for each pupil enrolled in a charter school.
Submitted by Anonymous (not verified) on June 7, 2014 8:31 am
Keep feeding your delusions but it doesn't make it reality.
Submitted by gloriaendres (not verified) on June 7, 2014 10:44 am
First of all, thanks so much for this brilliant article, Dale. As others have pointed out already, we need reform on many levels. The charter school law was originally sponsored by Dwight Evans who immediately formed his own charter school. That should have been the first clue that there was snake oil involved. The support for and steady increase in charter school expansion without sufficient oversight is another sign that corruption lies beneath. The fact that charter schools are allowed to discharge special needs students while holding on to their funding is an example of pure fraud. Not only the charter school law needs reform, but of course, as we have been saying all along, Pennsylvania needs a consistent funding formula that applies to every district, every school. We have had enough experimentation in our state with takeovers, private management organizations and boutique charters. We need sensible reform of how schools are governed and funded. And any politician with a conflict of interest, including the present and/or future governor, needs to disclose all.
Submitted by Morrie Peters (not verified) on June 9, 2014 10:21 am
Gloria, The most obvious evidence that the Charters are perverse is the reality that Dwight Evans, Vince Fumo and Anthony Hardy Williams all opened their own Charter Schools immediately upon the creation of the SRC. Yet even today you have Helen Gym and James "Te Torch Is Out" Lytle stating they are open to the idea of Charters. Charters are a quickly metastasizing cancer. The patient is dying and so is our once just society. The School District of Philadelphia and so our society is now in the long goodbye. The AFT is corrupted and so is our President. It is over. Philadelphia is run by greasy, selfish and intellectually limited human beings.
Submitted by Ron Whitehorne on June 7, 2014 7:55 pm

Thanks Dale for this excellent exposure of a major inequity that has been little understood.

 

Submitted by Steve Schmidt (not verified) on June 9, 2014 8:59 pm
You did not mention the Charter Schools are PUBLIC SCHOOLS that receive 75% of the amount that a traditional public school. Charters are already starting out with a disadvantage. Charters manage their money, not like many districts...
Submitted by Rich Migliore (not verified) on June 9, 2014 11:01 pm
Charter schools are privately owned nonprofit organizations paid for with public money. They are private businesses. They are not operated publicly. They have private boards of trustees which are not elected. Every federal forum which has ever looked at the issue of whether charter schools are public entities or private entities has ruled that they are private entities. Their boards of trustees are not elected by the general electorate, nor are they appointed by someone who is elected by the general electorate. That is the "Hawkins County test" laid down by the U.S. Supreme Court for determining if an entity is a public entity. Neither are they "actually operated" as public schools so they cannot even pass the minority test for public entities which is known as the "actual operations test." Their assets are not public property but private property. As to what they receive compared to public schools, I do believe you are a bit off, too. We do not know how well they manage their money and who is really pocketing the money because they lack transparency. Some are good schools managed well and some are not. I am all for charter schools in their original intent, and if they are actually operated as public schools. However, sadly, what they have become more often than not, is simply, that they are business enterprises. What the SRC presently promotes are the "Walmart school" variety of charter schools, which of course, is a bastardization of the concept of charter school. The "Walmart model" of charter school chains is a threat to the independent charter schools which I term "true charter schools." I have always supported the true charter schools and admire and respect their founders. They have neither made education less costly, nor improved overall student achievement. What the parents voted for at Steel and Munoz-Marin was to keep their schools "public."
Submitted by Anonymous (not verified) on June 9, 2014 10:22 pm
How would we know that since the charter budgets are not public? Also, the census bureau does not agree that charters are public schools. http://tinyurl.com/m8g4lb2
Submitted by pparris9 (not verified) on June 10, 2014 4:03 pm
According to this article Philadelphia Charter Schools received 175 million for special education, but only spend 77 million for that purpose. State wide charters collect 350 million and spend 156 million. The article goes on to say that there is a faulty state funding system. For example, Cyber charters schools get paid varied figures based upon where the child lives instead of based upon their needs. Charter schools also contradictorily, get paid an average for special education students within the district instead of the actual funding for each individual special education need. Pulling the rug out from charters now is changing the rules in the middle of the game. It is simply unfair and punitive to change funding formulas after a charter financial system has been set up. Since charter schools special education students are reimbursed based on averages instead of the actual money following the student, the state is already acknowledging that a tier system of special education payments does not make sense. Charters have more special education students in the less expensive categories because the traditional school district has already developed the resources to care for these extreme needs. Parents can easily see that, and choose the district that provides the best services. Charles Zogby is a former Cyber School K-12 executive. He is now budget secretary for the Corbett Administration. He is a former state education secretary. SB 2013 has a six year phase in. Philadelphia School Reform refuses to adopt an un-sustainable budget by the end of May. The State Representative Bernie O’Neil and Sen. Patrick Browne in the article complain that cyber schools were invited to discuss these reforms as they were being formulated. It will be interesting to see the kind of funding reforms that Zogby recommends, since he was at one time at the point of the charter reform movement. Which The PA School Board Association considers, Cyber Charter schools the most disruptive. Perhaps the best way to end this discussion of Senate Bill 1316 is to ask the question that parents are asking in the article. ‘Why do they [the charters] get an art teacher and my school doesn’t?’ The author says... “They get a chunk of special education money that they don’t have to spend on special education services.” Charter schools typically grant more flexibility, and support than traditional schools. They can do this because of less regulation, and flexible systems. Here are the questions that are not asked in Dale Mezzacappa’s article … Why to special needs parents choose to place their children in charter schools? Does the district spend its special education funding with less effectiveness? Do school districts spend the dollars they receive for special education funding for their students with severe needs in an efficient way? Do traditional schools ever divert funds? Do the charters use the special education funds with more parent satisfaction than non charters? When these questions are answered we may have better answers to help us reform the educational funding of our public schools. Traditional schools all over the state have been starting cyber charter schools. I do not believe this would be happening if the charter school movement did not exist. In the mean time it does not make sense to cut funding on innovation before change has taken place.

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