Battle brews over charter school compensation for special education students

When it comes to the way charter schools are paid for teaching children in special-education classes, critics say Pennsylvania has been flunking basic math for years - and unfairly subtracting hundreds of millions of dollars from taxpayers' wallets.

Last week, the Wolf administration took the first step in a case observers say could bring the issue to a head - a bid to block $24.7 million in charter payouts in the cash-strapped Chester Upland School District.

Public school advocates say large charter school payouts are the result of faulty calculations that lawmakers and state officials have had a hard time erasing. Charter operators counter that the money is needed to offer a quality alternative to failing public schools.

Lawyers on both sides of the argument are set to clash Monday in Delaware County Court.

Chester Upland is a logical battleground: More than half of all of its students attend charters.

And the troubled district is now slated to pay charter schools $40,316 per special-ed child, nearly 75 percent more than Philadelphia does. Critics say that's because of unanticipated loopholes and bad assumptions in the formula, not because special education costs more in Chester Upland.

"The system is deeply, deeply flawed, because it sets up this weird incentive to game it," said Brett Schaeffer, a policy analyst for State Sen. Vincent Hughes (D., Phila.) formerly with the Education Law Center.

Charter school operators see the situation differently. They say Wolf's proposed changes for Chester Upland, which include slashing the special-ed rate for charters to $16,152 per student, and a legislative push for similar measures statewide, are part of a bid to crush the school-choice movement.

"We think this is a direct attack on charter schools," said Dan Hanson, spokesman for Widener University, which runs Widener Partnership Charter School in Chester. He said the Wolf administration's proposed spending cuts are arbitrary and will be roughly $10,000 per student less than what charters in nearby districts would receive.

Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, called the funding fight in Chester Upland "an effort to deflect the reason for a historically poorly managed district onto charter schools and parents who have chosen this."

A study by the Pennsylvania School Boards Association argued that in 2012-13, the state's charter schools made a $200 million profit because of loopholes in the special-education formula, which fails to account for the higher rate of special-ed students in low-income districts or large variations in costs between students with mild and severe disabilities.

Since 2012, the reimbursement rate for a special-ed student from Chester Upland has skyrocketed 63 percent.

Public school proponents say that high rate has particularly benefited the largest charter school, Chester Community Charter School, because it enrolls children with speech and language disabilities at a rate roughly 80 percent higher than the statewide average, and those students cost less to teach than others in special education.

Chester Community is managed by a firm headed by Montgomery County lawyer and major GOP donor Vahan Gureghian, which has added political overtones to the controversy. Wolf is a first-term Democrat who has enjoyed strong support from public school teachers.

A Chester Community School spokesman, A. Bruce Crawley, said a "disproportionate amount of focus" is on Chester Upland - a poor, mostly African American district - when some others, such as the wealthier Lower Merion, pay more for special-ed students.

Blaming CCCS for deficits in the school district when it has been state-controlled since 1994 is "disingenuous," he said.

Critics note that when the Pennsylvania charter law was passed in 1997, lawmakers expected the schools to be small, experimental projects and not the large-scale competitor for public students that they have become. The state's charter enrollment has spiked from just under 19,000 in 2000 to 128,716 in 2013-14, with many of those gains in lower-income communities.

Pennsylvania's complicated formula for funding charter schools takes into account the proportion of each district's special-education students. Statewide, that average is just under 16 percent. But in Chester Upland, 24 percent of the students require special education.

Advocates for conventional public schools say that charters are already receiving considerably more than it costs to educate each student, and that the reimbursement formula treats all special-ed students the same, even though certain disabilities lead to higher costs.

The rate is based largely on what traditional public schools spend to educate students with more severe problems, such as autism, even though charters tend to attract students with lower-cost issues, such as speech impairment. That, critics claim, creates a vicious circle in which charters receive millions more than their actual costs.David Lapp, a staff attorney with The Education Law Center, said parents of children with more severe disabilities are less likely to send their kid to a charter because they often don't have established track records or the right facilities for intensive special education.

Lapp said charters - which can't legally discriminate - might tell a parent the school can set up an autistic support classroom but stress they've never had one before. The message parents hear, he said, is "'Do they really want me there? Do they know what they're doing?'"

The sharp cuts the Wolf administration wants in Chester Upland are based on recommendations of a 2013 bipartisan legislative commission. Officials are also asking for reimbursement cuts to online cyber-charter schools - a move that would save the district an additional $4 million.

A proposal to slash cyber-charter reimbursements statewide has stalled amid the ongoing budget stalemate in Harrisburg. Meanwhile, other Pennsylvania districts are seeking new strategies to combat the soaring cost of reimbursing charters.

The Bethlehem Area school board - which recently sent taxpayers a notice blaming charters for increased levies - this month voted to withhold $304,615 in charter reimbursements, the amount it says it hasn't received from Harrisburg because of the budget impasse.

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@kathyboccella