Cyber Charter Reform Could Finally Be Coming To Pennsylvania

Pennsylvania has long been a wild west for cyber charter schools, but there could soon be a new sheriff in town. The House has passed a bill to put major reforms in place for how the Keystone State handles cyber charters.

In cyber charters, students go to school via an internet connection. Like all charter schools, they are privately owned and operated, but funded by taxpayer dollars taken from the public school district where the student would have attended. In Pennsylvania, that tuition cost is based on local per pupil expenditures and so varies wildly from district to district.

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A report released in January of 2022 by Children First found that of the 27 states with cyber charters, Pennsylvania spends the most (currently about $1.4 billion annually) but has the “weakest systems to ensure students and taxpayers are getting their money’s worth.” And taxpayers are not; reports repeatedly find that the cyber charters are underperforming.

Even the National Alliance for Public Charter Schools has called for cyber charter reform. Nationally, cyber charters have a low graduation rate; one report found that 73% of cyber charters have a graduation rate below 50%. Another reports that students stay in cyber-charters for an average of only two years.

But cyber charters in Pennsylvania grab a ton of money for their owners, and though the previous governor pushed hard for some simple reforms, Tom Wolf left office with those reforms still unrealized. Meanwhile, the pandemic added to the cyber income.

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Consider this insight offered by Kenneth Berlin, superintendent of Wattsburg School District:

“When the pandemic started, our district contracted an online learning system from K12 Learning Solutions (Stride) to offer our students an online schooling option facilitated by our teachers. Because we use our teachers and equipment, the average cost per student to the district is about $3,000. I want to note that the K12 Learning Solutions platform we purchased is the exact same platform used by Insight PA Cyber Charter School. I also want to point out that if a regular education student enrolls in Insight PA Cyber Charter School, our taxpayers are billed a mandated $13,118 per student. For special education students, the cost rises to $23,587 per student. Given that we can provide the exact same cyber learning experience as the Insight PA Cyber Charter School for just $3,000 per student, I believe that the current cyber school funding scheme is an unjustified waste of taxpayers’ hard-earned money.”

Now that reform could be coming over the horizon. HB 1422 passed the House last week, with yes votes from all Democrats and 20 Republicans, a sign that many local districts, particularly poor ones, are hit hard by cyber charter costs, and that conservatives can share concerns about unaccountable spending of taxpayer dollars.

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What’s in the bill?

The marquee item is the creation of a single tuition cost for all districts in the state. Instead of a tuition rate can currently vary from $9,000 to $22,000 per student, the bill sets a standard rate of $8,000 per “regular” student.

It also closes a longstanding loophole for special ed students; Pennsylvania public schools fund students with special needs based on separate tiers of spending levels based on the student’s needs. Charter schools get a single high tuition payment for all students with special needs, even if the student’s needs are a simple as one hour a week with a speech therapist. Under the bill, cyber charters would be paid using the same method of tiers used by public schools.

The Democratic House Caucus estimates that the new payment system would send $455 million back to public school districts.

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But beyond the issues of money, the bill also creates more accountability and transparency in cyber charter operation, bringing them in line with the rules governing public schools.

Cyber charters may not advertise themselves as “free,” but must acknowledge that costs are “covered by taxpayer dollars.” Also, a cyber charter won’t be allowed to sponsor a public event, which is perhaps a reaction to Commonwealth Charter Academy’s sponsorship of a float for the 6abc Dunkin’ Donuts Thanksgiving Day Parade, part of a larger pattern of cyber charter marketing by sponsoring community events. Education Voters of PA has determined that cyber charters spent a grand total of $52 million of taxpayer funds on marketing over just three years.

Probably with an eye on Oklahoma’s Catholic cyber charter, the bill explicitly forbids religious instruction and requires that the school will be “nonsectarian in all operations.”

The bill requires cyber charters to provide 180 days or a required number of hours (900 for elementary, 990 for high school) per year, just like any public school.

The bill is extremely specific about the governing board requirements. There must be seven non-related members, and they may not have in any way, shape, or form a financial interest in the cyber charter or anyone doing business with it (and like all Pennsylvania school board members, they must serve without compensation.) The board must hold open meetings in compliance with the state’s sunshine law, just like any public school board.

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There are numerous restrictions on administrators and board members to prevent entanglements. For instance, no administrator or administrator’s family member may serve on the board. Nor may someone serve on both the local public school board and a cyber school board, a clear conflict of interest.

And at several points, the bill requires the immediate dismissal of administrators or board members if convicted of a major crime, including “fraud, theft, or mismanagement of public funds.” Would such a law ever even come up? Well, cyber charter giant K12 was founded by junk bond king and convicted felon Michael Milken. Nicholas Trombetta used Pennsylvania Cyber School to funnel $8 million tax dollars to himself, but it was federal authorities and not the state that finally caught him.

There has been recent criticism of cyber charters for amassing large stockpiles of taxpayer dollars; the bill lays out limits for such unrestricted fund balances. Just like public school districts.

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There are requirements for regular audits, both internal and external; this may seem like an obvious requirement, but n December of 2020, an investigation by the Scranton Times-Tribune found that six of the 14 cyber charters had never been reviewed by state auditors, and others had been audited only once.

Many reports are to be made publicly available, including an annual report and a “publicly accessible internet website detailing the salaries and other compensations” for employees, officers and directors of any educational management service providing a service to the school. Annual budgets should also be available to the public, just as they are public school districts.

There is a list of reasons that the cyber charter may be non-renewed or revoked, including financial mismanagement, failure to meet reporting requirements, or designation as a Comprehensive Support and Improvement school at least twice. Had such a requirement been in place previously, Pennsylvania’s cyber schools would be struggling to avoid shutdown.

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Pennsylvania House Republicans (or at least the ones who voted against the bill) accuse Democrats of limiting educational choice, but bill author Rep. Joe Ciresi says, “My goal with this bill was to preserve school choice, but while ensuring cyber charter schools are held to the same rules and regulations as traditional public schools.”

The reduced revenue may cut into marketing budgets and unfunded reserves, but need not be an existential crisis for cyber charter. The many new operational requirements simply call for cyber charters to operate under the same rules as public schools, providing transparency and accountability to the taxpayers who are footing the bill. Surely that level of accountability is not too much to ask. Cyber charter operators need not ride off into the sunset if they can just live peacefully under the same rules as the rest of the townsfolk.

Next stop: the Pennsylvania Senate, currently dominated by the GOP, which loves charter schools, but also loves accountability for taxpayer dollars. Stay tuned.