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Pennsylvania Cyber Charter Schools See Double-Digit Growth

A study by the Pennsylvania Charter Performance Center found enrollment in online charter schools surged 59 percent in the 2020-21 school year. Boyertown School District estimated this exodus added $5.4 million to its costs.

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(TNS) — Boyertown School District saw the region's most explosive one-year exodus of students moving to cyber charter schools during the COVID-19 pandemic, according to state enrollment tuition figures assembled and analyzed in a report by an advocacy group.

And that exodus added $5.4 million to the district's costs between the 2019-2020 and the 2020-2021 school year, a remarkable 270 percent increase over a single year, according to a study put together by Research for Action.

A query on the matter emailed to Boyertown Schools Superintendent MaryBeth Torchia on June 22 had still not generated a response from her office as of June 28.

Nevertheless, Boyertown is certainly not alone in this trend.

During the pandemic, Pennsylvania's cyber charter schools saw double-digit growth in tuition payments, which resulted in a corresponding increase in costs paid by school districts across the Commonwealth.

In the Tri-County area, all but two school districts saw double-digit growth in their cyber charter tuition bills, with four, including Boyertown, seeing increases over 100 percent.

In dollar terms, Boyertown was trailed by Upper Perkiomen, which saw its cyber charter tuition bill jump by $1.5 million. Owen J. Roberts saw its bill go up by $1,049,945 and at Daniel Boone, the cyber charter tuition bill jumped by $1,014,860 in just one year.

In that same year, Pottstown School District lost the least number of students, with a tuition hike of only $139,643, a 6 percent rise.

Pottstown Schools Superintendent Stephen Rodriguez chalked his district's low loss rate to several factors, not the least of which was "by the time COVID hit, we had already lost a number of students to charters and cyber charters. Our tuition rates are already high."

Pottstown also put a lot of effort into communicating with parents about what steps it was taking and what options it offered families that were uncomfortable with a regular classroom setting during the pandemic, he said.

"With a cyber charter, it's their way or nothing," said Rodriguez. "Pottstown offered blended options, a mix of its own cyber program and in-class sessions. There were a lot of options, so as we moved through the pandemic, I think our community felt like they knew what they were getting and they were not so inclined to jump ship."

Rodriguez also said he thought Pottstown lost fewer students "than our suburban cousins because parents in our community were less 'mask averse.'"

It is unknown what Phoenixville School District's cost increases were because Research for Action found the district was among six, including Cheltenham, that reported only how many students it lost, but not the impact on its cyber charter tuition budget.

This tuition windfall comes on top of a steady accumulation of surpluses enjoyed by Pennsylvania's 14 cyber charter schools, which took a sharp uptick in the past two years, according to a study by the Pennsylvania Charter Performance Center, an arm of the advocacy group Children First.

Although certainly helped by the one-year surge in enrollment, the accumulation of surpluses, called "unassigned fund balance" by school finance officials, has been going on for years, according to the Children First report.

"In 2019-20, cyber enrollment grew modestly (2.4 percent) yet there was a huge (241 percent) increase in surplus. In 2020-21 during the first full year of the pandemic, enrollment surged 59 percent and the surplus grew by twice that amount (119 percent)," according to ML Wernecke, director of the Pennsylvania Charter School Performance Center.

"Looking at the two-year period between the school year that began in 2019 and the one that began in 2021, cyber enrollment rose 63 percent and cyber surplus rose by 647 percent — or over 10 times the rate of enrollment," according to Wernecke.

There are, of course, exceptions, such as Montgomery County's Lower Merion School District which this month agreed to return $27 million to taxpayers to settle a long-running lawsuit that accused the district of hiding surpluses while it was raising taxes.

James Hanak is the president of the board of the Public Cyber Charter School Association as well as CEO of PA Leadership Charter School. He defended cyber charter schools as having higher surpluses because, he said, their finances operate differently than traditional school districts.

"We have unique needs," Hanak said during an interview. "When a school district starts its school year, it has already sent out its tax bills to residents and they have 90 percent of their budget in the bank. When we are enrolling students in September, we generally don't get paid until two months later."

Due to the statewide teacher shortage, made worse by mass retirements during the pandemic, cyber charter schools cannot wait until September to see how many students have enrolled and how many teachers they will need because by then, most of the available teachers will have been hired. So cyber charters need a larger surplus to carry their up-front costs until school districts pay their tuition bills, he said.

Further, said Hanak, cyber charter school enrollment fluctuates much more than a traditional school and even more than "brick-and-mortar" charter schools. Sudden drops or increases in student enrollment, such as when the COVID-19 pandemic sent families flocking to cyber charter schools, require more of a financial cushion to accommodate flexibility.

And banks are not always an option.

"We've been waiting for 10 years for a five-year charter renewal," said Hanak. Charter renewals for cyber charter schools are handled by the state, which is way behind schedule. "Banks don't want to lend money to a charter school that hasn't renewed its charter," he said.

But the amount of money cyber charter schools have stashed in their budgets exceeds any of those needs, according to Wernecke. The numbers are "more evidence that the cyber charter sector is banking funds away instead of spending more to raise student outcomes. In short, cybers should either spend their surplus balances on student improvement or return the money to contributing school districts," Wernecke wrote.

Hanak countered that cyber charter schools are not the only education entities sitting on large surpluses. "School districts across the state have close to $5 billion in fund balances, when they give that back to the taxpayers, maybe we'll look at doing the same."

©2022 The Mercury, Pottstown, Pa. Distributed by Tribune Content Agency, LLC.