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A Critical Look at Pennsylvania Charter Schools

October 18, 2016

As state budget governments become strained, education is often the first to go - and in recent years, legislatures across the country have turned to charter schools as a substitute. But are these publicly funded, privately managed education systems really such a bargain?

A History of Pennsylvania Charter Schools

Charter schools originated in 1992, with an experimental education system in Minnesota that began as a hopeful alternative to traditional public schooling. Since then, they have exploded into popularity, with more than 700 schools in 25 states by 1996. In Pennsylvania, the first charter schools were established in 1997. And now, in 2016, they represent 176 of the state’s 676 school districts.

Obviously, this does not represent a majority of the school systems in Pennsylvania, but even these charter schools have had a significant effect on public school districts. With the expansion of charter schools, the state government has diverted funds away from public districts to these alternative education systems, but the transition has been less than smooth. Indeed, the basic method of financing these schools is in some ways unfair to the public schools. When students are transferred away from public districts, state funding follows them to the charter schools. But the actual cost incurred by the public districts does not fall by the same amount as the funding lost due to fixed costs, such as busing and utilities. For example, even though it may cost $8000 per student in a hypothetical school district, when these students get transferred to a charter school, the public school’s costs may only fall $6000 even though the state retracts $8000 worth of funds to send the student to a different school.

Even beyond these subtle inequities, charter schools consistently receive more transparent subsidies. They benefit from a loophole that allows them to “double-dip” into the state pension fund. They can also use the state special education fund more because the law allows charter schools to receive two to three times more funding per special needs student than public schools. Indeed, in 2013, charters in Philadelphia alone received $100 million more in special education funding than they necessarily needed to run their schools.

An Evaluation of Charters

A critical evaluation reveals that a number of problems exist in the charter school industry as well as in their management and quality of education. Below are three critiques of charter schools:

1. Ineffective regulation has led to lack of transparency, fraud, and corrupt profit-minded interests.

In Pennsylvania, charter schools are categorized as non-profits even though schools are often profit opportunities for their parent companies. Although the schools are legally required to be set up as non-profits, charter companies use a loophole by creating a foundation to file the initial application when the companies actually run the school. In Pennsylvania, Mastery Charter Schools is an example of a parent corporation that runs over 15 different schools. Some charter school corporations such as Charter Schools USA are able to make over $300 million in annual profits.

Critics accuse charter school companies of making profits through skimping on education costs, such as through hiring inexperienced teachers. A report by the Center for Education Reform of Charter Schools USA found that the company took over a twelve percent cut of the school’s budget and spent $2000 less per student than traditional public schools. However, in-depth analyses of the profit margin of charter school companies are difficult because they are not subject to financial transparency laws as traditional public schools are.

Although they are publicly funded, the lack of transparency such as in the analyses mentioned and general lack of accountability allow charter schools to act like private entities. In 2012, former Pennsylvanian Republican Governor Tom Corbett attempted to introduce Senate Bill 1115, a bill that would have exempted all charter schools from the state’s public accountability laws. Charter schools’ unique legal protections allowed Vahan Gureghian, founder of Charter School Management Inc. in Chester, PA, to not have to reveal his publicly funded salary for years. Meanwhile, this data is available to anyone for traditional public schools.

In Philadelphia alone, eight charter school officials have plead guilty to federal fraud charges: two at Philadelphia Academy Charter School, two at Raising Horizons Quest Center School, one at the Center for Economics and Law, , one at Harambee Institute of Science and Technology and two at New Media Technology Charter School. A notable scheme occurred in Beaver County PA, in which PA Cyber Charter founder planned to steal $1 million in public dollars. It’s clear that the unregulated, private/public nature of charter school systems has allowed an unprecedented level of fraud to occur.

2. In Pennsylvania, charter schools have not been proven to provide a higher level quality of education than traditional public schools.

An April 2014 report released by Rep. James Roebuck, chairman of the Pennsylvania House Education Committee found that only one in six of the state’s 176 charter schools is considered “high-performing”. His report directly lead to House Bill 350, which introduced $27 million cuts to Pennsylvania charter schools. In his report, he noted that, the “average SPP [School Performance Profile] score for traditional public schools was 77.1 but for charter schools it was 66.4, while charter-cyber schools came in at a low 46.8”. A score of 70 is considered a minimum level of academic success–and not a single cyber charter school had a score over 70. As mentioned in the Wall Street Journal coverage of his report, the latest national research sourced found that charter schools in Pennsylvania cover 29 fewer days of reading material on average and 50 fewer days of math than traditional public schools.

However, the problem regarding the quality of education isn’t just charter schools’ low performance as a whole: it’s that the higher performing schools also offer fewer special education programs. An Education Law Center Study of Pennsylvania charter schools found a “nearly $200 million gap between what Pennsylvania school districts paid and what the charter schools actually spent in services for special-needs students.” Of the 28 out of 176 charter schools total that were considered high performing, only two had a high school population and most had fewer than 1,000 students.

3. Charter schools have economic and racial implications

As described in another Wonk Tank article, since the late 1980s, researchers have noted a troubling trend towards resegregation in public schools. Scholars are now warning that charter schools play a large role in that process, as a recent academic study warns “the proliferation of charter schools risks increasing current levels of segregation based on race, ethnicity, and income.” Charter schools are not necessarily causing the trend toward resegregation, but as described in the Jacobin, are used as a “cop-out” instead of attempting real integration: “advocating charter schools to boost academic outcomes for poor, minority kids presumes that we can provide equal educational opportunity and simultaneously maintain a status quo of segregated housing and schooling.”

In addition to the trend of racial segregation, the unstable financing of some charter schools is rooted in unsustainable financial schemes. The Philadelphia Inquirer highlighted a specific example of such a scheme: String Theory Charter School. In 2013, the school acquired a building worth nearly $500 million as part of a $55 million tax-exempt bond deal with the city. It now has to spend nearly a third of its $16 million budget every year just to occupy the huge 228,000 square foot space – more than it spends on teachers’ wages.


Charter School FY2014 Expenses


Final Thoughts

In Pennsylvania as elsewhere, charter schools can be critiqued. However, they also represent a significant effort on the part of the states and the educational establishment to provide quality schools in areas that traditionally have had low-performing schools. They leave something to be desired in their execution, but will hopefully lead the way for a redoubled effort by policymakers to provide quality educational opportunities fairly to all students.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


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