Allentown School District wants to cut charter costs to fill budget hole

The Allentown School District’s costs for students to attend charter schools have grown faster than anywhere else in Pennsylvania, district officials say — and the district is taking the possibly unprecedented step of asking charters to accept a pay cut.

Charter advocates worry that other districts might make similar requests.

Superintendent Thomas Parker says charter costs have grown from $15 million to $60 million annually in the last seven years, “crippling” the state’s fifth-largest school district.

Facing a deficit in its $341.8 million budget, the district has asked charter schools that educate Allentown students to agree to accept smaller payments.

So far, most of the 23 charters — which are paid based on a state formula — have refused, saying they aren’t the cause of the district’s financial troubles. The situation will likely be closely watched by school districts across the state amid intensifying debate over charters and their mounting costs to districts.

And the charter community is wary. Allentown’s request “could certainly be replicated” by other school districts under financial distress, said Ana Meyers, executive director of the Pennsylvania Coalition of Public Charter Schools.

While charter schools can go to the state if Allentown or another district withholds payments, Gov. Tom Wolf’s administration is “unfriendly” toward charters, Meyers said. “It wasn’t by accident that the governor made his announcement in Allentown.”

In mid-August, Wolf announced he would take executive action to increase charter accountability, and called on lawmakers to reform what he termed "one of the most fiscally irresponsible laws in the nation.”

Nationally, the schools have been facing blowback, particularly from Democrats, who have faulted charters for weakening the traditional public school system. New York lawmakers have left a cap in place on the number of charters allowed to open in New York City, while in New Jersey, Gov. Phil Murphy’s administration has been reviewing the state charter law. In California, a deal announced this week would allow local school boards to deny new charter schools based on their potential fiscal impact on districts.

Such a provision doesn’t exist in Pennsylvania, where state law has been interpreted as barring school districts — which are tasked with authorizing charters — from denying the schools based on their costs.

And those expenses have been rising. “It’s a huge cost driver across the state,” said Hannah Barrick, assistant executive director of the Pennsylvania Association of School Business Officials. Pennsylvania school districts paid $1.8 billion to charters last year, triple the cost from a decade earlier, Barrick said.

Part of the reason for the increase is enrollment growth at charters, Barrick said. But districts with steady charter enrollment are also paying more: State law requires school districts to pay charters based on what districts spend on their students. So other increases in district spending mean increases in charter payments.

“Even the charter school ... expenditures themselves get rolled back into the calculation,” Barrick said.

Charter proponents blame other costs — including pension obligations — as the culprits for school district financial woes. And they say it’s become increasingly difficult in Pennsylvania to open new charters, despite continued parental demand for the schools.

The state has 181 charter schools; two are opening for the first time this fall, both in Philadelphia, which is home to 70,000 charter students — about half the statewide charter population. In New Jersey, which has 88 charters, one new school is opening. While data aren’t yet available to compare the two states with the rest of the country, new charter school openings have been slowing nationally.

Despite the slim number of openings, some existing charters are expanding. And Pennsylvania’s cyber charter schools, which educate about one-quarter of the state’s charter students — and cost districts the same amount as brick-and-mortar charters — can enroll as many students as apply, from anywhere in the state.

Mark DiRocco, executive director of the Pennsylvania Association of School Administrators, estimated that “anywhere from 100 to 150 districts” are feeling budget pressure from charter schools. Along with special education and pension costs, charter school tuition has been one of the three biggest drivers of district expenses.

And because Pennsylvania pays a lesser share of public education costs than many other states, poorer districts — which have less ability to raise money through local property taxes — especially struggle to cover the costs.

“What’s happening in Allentown is almost a perfect storm of that. They are in serious trouble,” DiRocco said.

The $341.8 million budget Allentown submitted to the state is contingent on charter schools taking a $6 million pay cut. Meyers’ association responded last week on behalf of 19 of the charters, refusing the cut.

Of the prospect Allentown would withhold money from the schools, Meyers said, “It would not be wise to break the law.”

Earlier this year, Commonwealth Court ordered the Chester Upland School District to pay cyber charter schools $4.1 million after the district had reduced their payments several years earlier. While brick-and-mortar charters had agreed to take lesser payments as part of a financial recovery plan for the district, which is under state receivership, cyber charters had not.

Parker, the Allentown superintendent, said that while “I don’t see a lot of willingness” from the charters, he still hopes they will talk with the district.

In 2011-12, the district cut nearly 20 percent of staff, then made more cuts two years later. Parker sees that as part of the problem: the district lost programs that parents liked, making charter schools more attractive. About 5,200 Allentown students attended charters last year, compared with 17,000 enrolled in district schools.

While Allentown may be “ground zero” for the impact of growing charter school expenses, Parker said, it’s not the only district affected.

“This district’s beginning to crumble has implications for the city at a large scale, but also a number of districts with demographics similar to ours — we just may be getting there first," he said. “But there are a number of districts that are right behind us.”