The size of your future property tax bill and the quality of your local schools will be impacted by secret negotiations being held in Harrisburg between Gov. Shapiro and legislative leaders.
That’s because one of the most prominent proposals to find savings during a tight budget is to reform how Pennsylvania’s cyber charter schools are paid. Right now the cyber schools are funded by local and state tax dollars routed through local school district budgets.
The Democratic-led House passed a bill in June that would cap tuition at $8,000 per student, which would keep about a quarter billion dollars from being transferred to cyber charters from local districts. The measure received the support of only two Republicans, and it’s far from clear what parts of the bill could pass the Republican-led Senate or what parts are being debated during budget negotiations.
Some Democrats argue cyber charters are awash in funding, spending carelessly and saving excessively. During three House Education Committee hearings in the spring Rob Gleason, the president of the Westmont Hilltop School Board, said cyber schools should receive less money because they don’t pay much for things like school lunches or nurses.
“Their excess of revenue over expenses is criminal,” Gleason said. “It’s criminal.”
Many Republicans, however, argued this proposed 20 percent cut is a backdoor way to eliminate school choice for 70,000 students. Cyber schools have their own unique costs, testified Republican Rep. Roman Kozak of Beaver, the only member of Pennsylvania’s legislature to have worked as a teacher at a cyber school, PA Cyber.
“It’s not just jump on Zoom and have a class. There are cybersecurity measures that need to be taken. There’s student record security measures that need to be taken.” Kozak said. “All of this costs significant money.”
“It’s just a false narrative,” said Republican Rep. Marc Anderson of York County. “I think if we’re going to talk about how cybers are spending their money, we really should do an apples to apples (comparison)."
So that’s what PennLive did. We analyzed detailed financial data from the Pennsylvania Department of Education for every school district and cyber charter school in the commonwealth. We used the most recent available data from the 2023-2024 school year.
The analysis shows some of the key arguments for and against cyber charter funding reform are based on myths and misunderstandings. Namely:
- Cyber critics often overstate how cheaply cyber schools can operate and underplay the role special pandemic-funding played in how much money has accumulated in their savings accounts.
- Cyber advocates rarely acknowledge the disproportionate funding they receive for special education students — or the implications of how much less they spend on buildings and transportation.
“All the ESSER dollars are terribly skewing per-student spend numbers across the state because one school district spends its million dollars in ESSER money in one school year and they spend it all in instructional areas, or for after-school activities or additional salary,” Shrom said.
FUNDING GAP EXAGGERATED
At one of the cyber hearings, Rep. Kozak made a point that is widely repeated among parents and cyber charter school advocates — cyber schools only get 70-75 percent of the funding per student that traditional public schools get.
“Do you think 70 percent is equitable?” Kozak asked during the hearings.
Cyber charter experts have given slightly different rates. Jonathan Shiota, the business manager for 21st Century Cyber Charter School, testified the figure was between 75 percent and 85 percent.
But those rates are incomplete. They only take into account the amount cyber charter schools get for regular education students, not the additional money for special education students, which exceeds the cost to educate those students. When payments for all students are considered, the disparity is smaller: 93 percent, according to PennLive’s calculations.
The Pennsylvania School Board Association found charter schools received about 91 percent as much as local school districts, using enrollment data that was adjusted for fluctuations throughout the year.
SCHOOL DISTRICT DEDUCTIONS
Every local district is required to take the amount they spend educating students and divide it by the number of students to determine how much to pay charter schools per student. That results in 500 different rates of charter school tuition across Pennsylvania. (Or 1,000 if you count each district’s special education rate.)
But districts can deduct a handful of expenses that can lower the amount they pay charter schools. The biggest deductions are for building maintenance and transporting students.
Michael Whisman, the president of Vertex Education, does billing work for many cyber charter schools and said they also have building and transportation costs. He believes they should receive funding to pay for that. For example, he said, cyber schools have to reimburse parents for their Internet bills — the largest cyber school reimburses $675 per student per year.
“Transportation is what? It’s how a student gets to and from school,” Whisman said. “Well, how does a cyber student get to and from school? They use the computer.”
Whisman also argues some small deductions that districts take are unfair. For example, districts are allowed to deduct money they spend on Pre-K instruction because cyber schools don’t do that. But those same districts count Pre-K students in their total school population — and that lowers how much they pay to cyber schools.
Cyber critics say the deductions are unfair for the opposite reason — there are not enough of them. Lawrence Feinberg, the former director of the Keystone Center for Charter Change, for example, doesn’t think cyber schools should receive a portion of the money schools spend on things such as security guards or after-school activities.
“Why should Pennsylvania taxpayers fund cyber charter schools at the same tuition rates that they pay for brick-and-mortar charter school tuition?” Feinberg said recently on X.
CYBER CHARTERS GET MORE MONEY FOR SPECIAL EDUCATION STUDENTS
Cyber charters receive about twice as much for each special education student as they do for a regular education student. And cyber charter schools enroll a disproportionate number of special education students.
This additional revenue is required by law because it costs more to educate students with disabilities.
The current funding formula assumes 16 percent of all students need a special education plan. But it hasn’t been updated to reflect the increasing percentage of special education students in local schools, giving a disproportionately large amount to cybers, critics say.
That means cyber schools have been receiving more money for special education students than local districts were spending. Lawmakers fixed the discrepancy as of Jan. 1, reducing total revenues to cybers by about $64 million, or 5 percent, this year.
Local school leaders are now focused on changing another part of the funding formula. Cyber charters get a flat rate for each special education student, no matter how severe their disability. Cyber charters that enroll more special education students with less severe disabilities can pocket the difference.
“This leads to an incentive for cyber charters to serve students who are less costly,” said McKinnery, the legal director for the Education Law Center, at the spring’s House Education Committee hearings.
In 2023-2024, around 2.4 percent of students in the commonwealth were classified as having one of the three most expensive forms of disability, which cost schools at least $56,000 per student and often much more. Many of these students have physical disabilities that can only be addressed in-person. At cyber schools only about 0.8 percent of the students are classified as having one of the most expensive forms of disability.
That’s one-third as many as the statewide average. This saves cyber schools $10s of millions in additional special education costs every year.
Cyber schools don’t have to spend all of the additional money they receive for special education students to educate those same students, according to Maurice Flurie, the former CEO of Commonwealth Charter Academy.
“It was my experience when, for several years when I was CEO, that the total money coming in, if we separated those two out, there was actually a few dollars of special education money would have had to fund the regular education system,” Flurie testified at the House Hearings in May.
Critics say this gives cyber charter schools incentives to diagnose students with lower cost disabilities.
“You send a student [to a cyber school] and all of a sudden you get a letter from them that says he has a speech impediment. ‘We’re making him special education. Send us another $25,000.’” said Gleason, a local school board president, at the House Education Committee hearings.
Cyber charter leaders dispute this. They say the reason parents enroll special education children in cyber schools is because their local school districts aren’t addressing those special needs as specified in their Individualized Education Plans (IEPs). PennLive has spoken to a number of parents of cyber school students who say their dissatisfaction with special education accommodations at their home school was one of the reasons that drove them to a cyber school.
Brian Hayden, the CEO of PA Cyber, echoed this point in testimony to the legislature in 2023. “The vast majority of students who come to PA Cyber already have an IEP developed by their previous public school; in fact, over the past fourteen years, we have only identified an average of sixty-five students a year as qualifying for an IEP.”
House lawmakers have proposed eliminating the additional revenue cyber charters receive for special educations with less severe disabilities. The plan is to tie the amount cyber schools receive to the severity of the disabilities that need to be accommodated, rather than using a flat rate.
A group of 12 educational advocacy organizations sent a letter to lawmakers last week urging them to make this change as part of the ongoing budget negotiations.
“These overpayments are especially pronounced and egregious with respect to special education,” the letter reads, “where the tuition paid to cyber charters does not match the actual cost of services for the students with disabilities they serve.”
PennLive Editor’s Note: The second part of this series will publish Wednesday, Aug. 13, focused on the unique ways cyber charter schools spend their money — and how much they stash away for a rainy day.
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