How Chester Community Charter School got a 9-year deal

For years, charter school proponents have been trying to change Pennsylvania law so that operating agreement renewals could be extended from five years to 10.

They haven't succeeded in Harrisburg. But that didn't deter Chester Community Charter School.

One year into Chester Community's latest five-year agreement, Peter R. Barsz, the court-appointed receiver who oversees the financially distressed Chester Upland School District and wields nearly all the powers of a school board, took the unprecedented step of extending the Delaware County school's term for five more years to 2026.

Barsz contends that the move was designed to protect Chester High School: In return, Chester Community, which already enrolls about 70 percent of the primary grade students in the struggling district, agreed not to open a high school.

The decision means staff and parents at the state's largest bricks-and-mortar charter – already slated to receive more than $55 million in taxpayer funds this school year – won't have to worry about its fate for nearly a decade, even if its test scores continue to fall far short of state benchmarks.

It also guarantees that CSMI LLC, a for-profit education management company that operates the K-8 school with 4,200 students, will receive millions of dollars in revenue for nine more years.

Chester Community's extension comes as school districts across the commonwealth and nation are wrestling with the growth of charter schools, more privatization in education and the impact on traditional public schools. It also renews lingering questions about the intersection of politics, government and schools.

CSMI's founder and CEO is Vahan H. Gureghian of Gladwyne, a lawyer, entrepreneur and major Republican donor –the largest individual contributor to former Gov. Tom Corbett. And though CSMI's books are not public – the for-profit firm has never disclosed its profits and won't discuss its management fee – running the school appears to be a lucrative business. State records show that Gureghian's company collected nearly $17 million in taxpayer funds just in 2014-15, when only 2,900 students were enrolled.

Barsz, meanwhile, is a Delaware County Republican and accountant who has served as treasurer for multiple GOP groups, including Corbett's campaign. Over objections from the state Department of Education and at the urging of Chester Community, a judge reappointed Barsz the Chester Upland receiver in May. Weeks later, he extended Chester Community's charter to June 30, 2026.

Months after the move, state education officials have declined to discuss the matter in detail, but acknowledge they are researching a possible legal challenge to Barsz's decision.

The department, a spokeswoman said, "continues to review the documents provided by the receiver, the data reported by the charter school, and the Charter School Law to determine if any additional action is warranted."

State Auditor General Eugene DePasquale, whose office has scrutinized the Chester school's finances in the past and who has often called the state's charter law "the worst in the country," was unaware of the renewal until he was told this month by the Inquirer and Daily News.

DePasquale, a Democrat, said he had never heard of such a lengthy charter school renewal, and questioned whether the move limited the district's authority to demand improvements, especially at a school where test scores are so low.

"This is giving away the accountability that is so desperately needed … for nine years," he said.

David E. Clark, Chester Community's CEO, declined to be interviewed. But in a statement, he defended the renewal and said it would provide needed stability for Chester Community and the school district.

"This was viewed as an opportunity to improve our school and the instructional experience we provide, especially given the recurring financial and funding challenges faced by the Chester Upland School District," Clark said.

For decades, Chester has been a micro-lab for educational experiments, including charters. The city is perennially one of the state's poorest and its public school system among its neediest.

Five years ago, then-Education Secretary Ron Tomalis designated Chester Upland a district in financial distress. That decision led to greater control and funding from the state and the appointment of a receiver to oversee the system.

Charters were supposed to be one possible savior.

The privately managed schools educate 51 percent of the students in Chester Upland. And nearly three-quarters of the younger students go to Chester Community.

CSMI, its parent company, has long been a prominent player in the charter world – and not just in Chester. The company runs a school in Atlantic County, N.J., and until last year had another in Camden – New Jersey denied its renewal because of low academic performance.

Chester Community has also struggled to succeed. The Pennsylvania System of School Assessment (PSSA) exams released in September showed that Chester Community had some of the lowest scores among charter schools in the region: Less than 16 percent of students passed PSSA reading tests in the last school year; 6 percent passed math.

The scores were lower than all but one of the four Chester Upland district schools that have K-8 students.

That was the backdrop Barsz was dealing with when, in June 2016, he became the district's third receiver. The Chester Upland board recommended him for the appointment, and he had the backing of Chester Community and the other charters in the district — Widener Partnership and Chester Charter for the Arts.  State Education Secretary Pedro Rivera asked the Delaware County judge to appoint Barsz for a year.

By law, a receiver takes on most responsibilities of a school board, including approving budgets and renewing charters. The elected board still levies taxes. Barsz, 60, a certified public accountant, is a partner at a regional accounting firm. His $144,000 receiver's salary is paid by the state.

But in time, his relationship with state education officials grew strained.

In May, Rivera said he could not recommend Barsz's reappointment when his term expired in June, and the department asked Delaware County Court Judge Chad F. Kenney to replace him.

David W. Volkman, executive deputy secretary of the department, said in court filings that Barsz had not been able to provide the leadership needed to improve Chester Upland's academics and finances.

He alleged Barsz was distracted by other duties and was not devoting his full attention to Chester Upland. He also said that Barsz had been aware the district was delinquent in making earned-income tax payments months before the department was told, which led to the district owing more interest costs and penalties.

Barsz denied the allegations and asked to be reappointed. The Chester Upland school board sided with him. "Well, you don't change nothing that's working," Board President Anthony Johnson told the judge at a hearing May 24, according to the transcript.

Other charters, including cyber schools that enroll district students, took no position on Barsz's remaining as receiver.

But Chester Community said in a filing to the judge that Barsz had taken steps to improve the district's finances and should be reappointed. Barsz's "continued service as receiver is integral to ongoing progress," the school said.

In his May 25 decision, Kenney said that replacing Barsz would cause Chester Upland to have its fourth receiver in five years and create "a lack of continuity in leadership and direction" that would not be good for the district or its students. He reappointed Barsz for two years.

A little more than three weeks later, Chester Community submitted its charter renewal proposal. Five days later, on June 27, Barsz approved the plan, extending the school's term to June 30, 2026.

Amy Munro, acting chief of the state Education Department's charter division, said the  department learned about the renewal the day it occurred – and objected to the move.

State law "expressly provides that a charter may be renewed for five-year periods," Munro later wrote in a letter to Barsz.  She said there appeared to be nothing in the law that would allow an early renewal during a charter's existing period without "a comprehensive review" of its operations during its current term.

In his response, Barsz said he had conducted a detailed review of Chester Community, including examining its annual reports, yearly audits and test scores.

He said he acted because Chester Community offered to forgo opening a high school – one that had been previously approved – and instead remain a K-8 school through 2026. Approving the proposal, he said, was a way to safeguard Chester High School from a further decline in enrollment. The school, which had 1,605 students a dozen years ago, had fallen to approximately 1,100 in 2016-17.

"In short, we were presented with a unique opportunity to help secure the future of an extremely challenged school district," he wrote in his letter to Munro. "Chester High School is the flagship of the Chester Upland School District… The potential creation of the charter high school in the district threatened to undermine the future of the entire district."

The two-page charter renewal Barsz signed also gave the school a green light to expand its K-8 enrollment — authorizing a fourth site in Aston and "any other added" locations in the district "as deemed necessary by Chester Community Charter School from time to time…"

The fourth campus is a leased building in an industrial park in Aston that had housed the Chester Charter School for the Arts before it moved to a $30 million new campus in August.

A. Bruce Crawley, Chester Community's spokesman, said recently that CSMI supported the renewal and that the management firm provided "technical and legal support" during negotiations with Chester Upland for renewal terms. He and CSMI declined to name the company representatives or say if  Gureghian was involved. Crawley said it was difficult to identify CSMI's participants because the matter was discussed at more than one meeting.

In a written response to questions from the Inquirer and Daily News, Crawley said the renewal was not tied to the charter's support in court for Barsz in the dispute over his reappointment. He said the Chester Upland board was the primary backer of Barsz's  reappointment. He said the hearing transcript shows that another charter had attempted to voice support for the board's position, but that the judge said the charters had no role in that discussion.

"Clearly, therefore, there was not a connection between the renewal of CCCS's charter and Mr. Barsz continuing as … receiver," Crawley wrote.

In an interview this fall, Barsz said that while evaluating the renewal application, he reviewed Chester Community's sub-par test scores but was as concerned about student performance in the district as a whole.

"Our academics are not good — our school district," he said. "And [Chester Community] I'm concerned about as well. We all need to get better."

Barsz also said he was not sure he even knew that Chester Community had advocated for his reappointment.

"In all honesty…this is the first I'm hearing that," he said. "I didn't think they took a position. It's nice to hear they supported me; I needed it."

Barsz added: "On the other side, I cannot think that the judge let one letter influence his decision – especially since he extended [the appointment] for two years."