Charter and Cyber Charter Education Funding Reform Should Save Taxpayers $365 Million Annually

Pennsylvania Department of the Auditor General Bureau of School Audits
Jack Wagner, Auditor General
Special Report
Charter and Cyber Charter Education Funding Reform
Should Save Taxpayers $365 Million Annually

 Because of a flawed charter school funding formula, PA continues to pay excessive costs to fund charter and cyber charter schools.

 PA spends about $3,000 more per student to educate a child in a brick-and-mortar charter school and about $3,500 more per student to educate a child in a cyber charter school compared to the national average, which adds up to $315 million in annual savings.

 PA could save $50 million a year by eliminating a loophole, which allows a “double dipping” of retirement benefit payments.

 The PA Department of Education should take a leadership role and set charter and cyber charter school funding rates like those in AZ and MI.

Pennsylvania spends the most of the list of five states with the largest student enrollment in independently operated charter and cyber charter schools


For the past 15 years, the Commonwealth of Pennsylvania has funded its charter and cyber charter schools using an inefficient statutorily set formula.  Specifically, the formula establishes a per student tuition rate based on the cost to educate a student at his/her home district, and not on the actual costs at the charter or cyber charter school.  Without a statewide formula, all of Pennsylvania’s 500 school districts pay different tuition rates to the same charter or cyber charter school.  Moreover, the dollar amounts for these rates vary significantly, particularly for special education tuition.  This fact is especially concerning given that there are times when children enrolling in a charter school are reclassified as needing special education services even though they did not previously get those services from their home school district.

Despite the flaws in this funding mechanism, which have been discussed in a variety of reports, including the Department of the Auditor General’s October 2010 special report, The Commonwealth Should Revise Its Charter and Cyber Charter School Funding Mechanisms, the funding formula remains unchanged.  As a result, Pennsylvania’s funding model continues to inflict additional costs for taxpayers.  For example, taxpayers should only pay the actual cost of educating the student at the charter or cyber charter school, no more and no less.  

Given the fact that Pennsylvania’s charter and cyber charter school enrollment reached over 100,000 students during the 2011-12 school year, correcting the funding formula must be a priority.  New Department of the Auditor General research shows that other states are able to fund their charter and cyber charter schools for less than Pennsylvania.  Therefore, the Governor and the General Assembly, with leadership from the Pennsylvania Department of Education (PDE) regarding implementation, should use these other state charter and cyber charter funding methods as a potential model for fixing Pennsylvania’s broken funding system.

Taking this action will reward taxpayers with significant savings of $365 million annually.  With Pennsylvania continuing to face economic challenges, such a windfall could significantly assist in addressing the Commonwealth’s budgetary gaps and shortfalls in educational funding.  Continuing to ignore these long-standing and well-documented charter school funding inadequacies only exacerbates the funding problems.