Budget impasse squeezes some school districts’ payments to charters

By Christen Smith, Staff Reporter,
Capitolwire Reposted with permission

As of Thursday more than two dozen school districts have shortchanged or suspended tuition payments to charter schools amid the ongoing budget stalemate.

While the decision isn’t unexpected, a charter school advocate and former Corbett administration spokesman says it is, in fact, illegal.

“The Charter School Law does not permit school districts to withhold funding from charter schools in the absence of a state budget,” said Tim Eller, executive director of the Keystone Alliance for Public Charter Schools. “The bulk of funding for charter schools is funneled through school districts, and with many of them refusing to pay, charter schools are being financially strangled. This is affecting thousands of students who attend charter schools across the state.”

Current state law requires districts to funnel 12 equal monthly tuition payments to charters by the fifth day of each month, however, no provisions exist for how to proceed during a budget impasse.

Typically, if districts don’t pay, the charters can petition the state Department of Education to subtract tuition payments from a district’s subsidy.

“In this situation, the department would be unable to do that because the budget is not enacted,” Eller said.

With the latest Republican attempt to send emergency funding to schools and human service agencies awaiting the governor’s veto, however, Eller says the problem will only intensify.

“If this budget impasse continues into the fall and on into the winter, I think the number of districts who will decide to delay payments will vastly increase,” he said.

The Pennsylvania School Boards Association agrees with Eller on one point only: the number of districts who use the loophole will increase, but there is nothing in state law preventing them from doing so.

“At some point the local revenue won’t be enough or fund balances will be depleted,” PSBA spokesman Steve Robinson said. “Schools are making difficult decisions on what bills to pay and what can be delayed until state money comes in. Just like public schools aren’t getting all of their revenue as a result of the budget impasse, charters likewise can’t expect they will get all of their funding.”

Robinson clarified some districts have chosen to reduce charter school payments relative to local revenue.

“For example, if 60 percent of a school’s budget is from local revenue, they would pay 60 percent of their charter bill,” he said. “The rationale is that the other 40 percent of what they would pay is from the state and they don’t have that yet.”

In a legal opinion issued last month, PSBA General Counsel Stuart Knade says “until the amount of state and federal subsidy allocations for each school district is known for certain and authorized for payment, it is entirely consistent with the intended operation of the Charter School Law and other statutory provisions governing public school finances and budgets that the amounts of any budgeted expenditures dependent on those revenues be regarded as purely hypothetical and properly excluded from the calculation of amounts paid to charter schools until resolution of the Commonwealth’s budget impasse.”

“Paying only that percentage of charter school tuition equaling the percentage of total estimated revenues derived from purely local sources, and delaying payment of the remainder until the budget impasse is resolved is a fair, reasonable and lawful stop-gap cash flow management measure in this time of abnormal fiscal constraints,” he writes. “Charter schools payments would be merely delayed, and when paid will be in amounts that accurately reflect what is allocated in the Commonwealth’s budget. Charter school advocates are fond of defending the current charter school funding mechanism with the dubious catch-phrase, ‘the money follows the child.’ Dubious or not, if the money hasn’t arrived, it most certainly cannot follow.”

PDE spokeswoman Jessica Hickernell said Thursday the department was “unaware of individual school districts’ plans regarding the payments they aren’t paying due to the budget impasse.”

“According to the state’s Charter School law, school districts are responsible for paying charter schools,” she said. “If a school district does not pay, a charter school can ask the Department of Education to deduct funds from the state payments to the district. However if there are no state payments being made to the school district, then the Department would not have funds from which to make deductions.”

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