Auditor General calls for cyber charter funding reform
By Christina Lengyel | The Center Square
(The Center Square) – A new analysis of cyber charter school funding offers a familiar recommendation: consider recalculating how the state pays to keep them operational.
Auditor General Tim DeFoor recently announced the completion of his audit of five of the state’s 13 cyber charter schools. He is the third consecutive auditor to have done so.
DeFoor concluded that the state’s approach to cyber charter funding needs to be re-evaluated and says the governor should appoint a task force that includes the schools to determine a new formula. Reform would ultimately need to be taken up by the legislature.
The General Assembly has seen deep division on charter schools, despite varying degrees of bipartisan support for school choice. DeFoor acknowledged that his report would likely displease people on both sides of the issue.
“We decided that we were no longer going to perform audits where we just rubber-stamped information school districts sent to the Department of Education,” said DeFoor. “Instead, we focused our audits on how schools are funded and if they are operating within the law.”
He noted that the process wasn’t limited to cyber charters. In fact, his first audit of twelve public school districts found them to be using legal loopholes to stockpile funds and drive up property taxes.
In the case of cyber charters, enrollment and revenue shot up during the COVID-19 pandemic. From 2020-2023, charters legally increased funding by $425 million and reserves by 144%. In this way, the schools toe the line between public education and private industry.
The charters receive tuition for each student based on their district’s education cost per student. That number varies widely from district to district and doesn’t reflect the different expenses of cyber and brick-and-mortar schools. In some cases, cyber charters receive between $7,000 and $20,000 per student without special needs and up to $60,000 for special needs students.
“The cyber charter funding formula needs to change to reflect what is actually being spent to educate students and set reasonable limits to the amount of money these schools can keep in reserve,” said DeFoor, who emphasized that the current formula was created in 2002.
The Pennsylvania Coalition for Public Charter Schools is critical of the “blanket assertion that cyber charter schools operate at lower costs,” citing incomparable costs for faculty salaries, technology infrastructure, cyber security and individualized student support services.
Many of the costs cyber charters have listed are outside the scope of what one would expect to spend during the course of education, including property investments, gifts and bonuses, travel and vehicle expenses, and entertainment expenses.
The Commonwealth Foundation, a conservative think tank and school choice proponent, issued a statement saying, “Cyber charter schools exist in a delicate financial balance. Unlike traditional district schools, cyber charters cannot rely on consistent funding sources like local and state taxes.”
The foundation maintains that, “The only way for these schools to provide a stable, predictable environment for students, teachers, and staff is by maintaining a reliable reserve.”
“Reserves are meant to cover unanticipated bills so there’s no interruption in a child’s education,” DeFoor said. “It isn’t money meant to sit in the bank of a cyber charter school growing year after year. These are your tax dollars.”
One school in particular, Commonwealth Charter Academy, the state’s largest cyber charter, spent $196 million to purchase and renovate 21 buildings. Insight Academy, another of the audited schools, say it isn’t fair to be grouped together.
“The Auditor General’s audit report has confirmed what we already knew, that Insight PA is a good steward of taxpayer dollars,” Eileen Cannistraci, CEO for Insight PA, said. “I commend the Auditor General’s team for conducting a thorough and professional performance audit, and their collaborative approach to this process.”
Audits of and responses from the individual schools can be found in the auditor’s full report.
Spending aside, neither Insight nor the other schools audited meet state and federal academic standards. The schools have lower graduation rates, lower proficiency in English and Language Arts, and lower proficiency in math and science than their traditional counterparts, even in struggling districts.
