An audit conducted by the Pennsylvania Auditor General, Timothy DeFoor (R), looked into the finances of five large cyber charter schools.
Attention has increased on the cyber charter sector as Governor Josh Shapiro (D) is seeking to reduce their funding in his budget proposal. In last year’s budget negotiations, a change will reduce funding to cyber charter schools for special education students by hundreds of millions over the next two years.
All schools received a clean bill of fiscal health, with no findings of illegal financial practices. The Auditor General’s report did raise concerns that the Charter School Law has not been significantly updated since its inception in 2003, though this call for reform is not based on any malfeasance by the cyber charter schools in the audit. The full report is available for the general public from the Auditor General and is the primary source for this article.
Cyber charter schools are public schools that all Pennsylvania students are eligible to enroll in and so each of the 13 operating cyber charter schools must be ready and able to enroll any student who requests admission. The schools are also required to provide all instructional materials, a computer, monitor, printer, and any other hardware and software as needed, plus pay the internet bill for enrolled students. As government schools, cyber charters must also provide special education services and ensure in-person state assessments across the Commonwealth as required.
Cyber charter schools collect tuition for each enrolled student from the district of residence for that student. The tuition rate is calculated according to the Charter School Law and reflects the taxpayer spending of the student’s home district minus certain discounts due to the different costs of cyber schooling. Cyber charter schools only receive about 75 cents of each dollar public school districts allocate per student. The public school district keeps a quarter of the spending yet is not required to educate the charter school student.
During the 2020-2021 school year, when brick-and-mortar public schools were intermittently closed or placed restrictions on student access due to health concerns, cyber charter enrollment boomed. The five schools in the audit grew enrollment from 27,450 in 2019 to 44,056 in 2022-2023, or an increase of about 60%. Enrollment in all cyber charter schools totaled 57,000 students in 2023.
The Auditor General report found that, despite the complications inherent in charging tuition rates across 500 different school districts and calculating both regular and special education rates in the midst of an enrollment surge due to the Covid-19 situation, each school correctly billed each district and collected tuition properly. The report repeatedly finds that the schools managed funds properly and within the law.
During the period of the audit, not only did student-driven revenue increase, but federal spending increased substantially as a result of acts of Congress. This one-time and time-limited funding stream inflates the revenue, expenditure, and fund balance (savings) categories of the school’s balance sheet over the time of the audit. On a per-pupil basis, the audited cyber charter schools spent about $20,000 in 2023, while the statewide average for public school districts was $22,000.
The Auditor’s report criticizes the increase in reserve funds held by these cyber charter schools, while recognizing that nothing illegal or against best practices was performed. Despite the lack of malfeasance, the Auditor General calls for reform of the Charter School Law and its formula for tuitioning to cyber charter schools, criticizing that the tuition rate sent by a student’s district is not always equal to the cyber charter’s cost to educate. One proposal from Governor Shapiro is to cap cyber charter tuition at $8,000, nearly one-third of the statewide average in public brick-and-mortar school districts.
While cyber enrollment made a significant upturn in the wake of school closures in 2020-21, it soon dipped but then leveled. Tens of thousands of families in Pennsylvania choose cyber charter schools each year, and the tax dollars spent at their local school district follow their child to the cyber school of their choice. Those schools, as audited by the Auditor General, manage those funds in accord with the law.
