Court: PA must rethink charter school payment reconciliation process

Harrisburg – In two decisions earlier this week, the Commonwealth Court found that the method the Pennsylvania Department of Education was using to conduct end-of-year charter school reconciliation payments was incorrect.

The two cases, KIPP Philadelphia Charter Schools v. Department of Education and Richard Allen Prep. Charter School v. Department of Education, concerned the method by which the Department of Education sorts out the appropriate payment that should have been made to a charter school after the school claims a traditional school district shortchanged them.

Prior to the court's decision in Chester Community Charter School v. Pennsylvania Department of Education – commonly referred to as Chester II – the department allowed charter schools to challenge payments made from any prior year; any determined underpayment would be deducted from the school’s state appropriation in the year of the final determination.

Following Chester II – and believing they were following the requirements of the decision – the department changed its policy to state that charter schools must bring their claims in the same school year in which the alleged underpayment was occurring and the department would then, upon the finding of an underpayment, withhold funding from that current year. No longer would they hold current year money from the past year’s claims.

Under this policy, if a charter school wanted to receive the money from an alleged underfunding, they would need to take up the matter with the district directly, not the department.

In the two decisions Monday, the Commonwealth Court held that process to be both outside the bounds of the Charter School Law, but also Chester II, a case they said was limited to its own facts – legal jargon for it only applies to itself – and found that the department failed to live up to the legal mandates enshrined in that decision.

The finding now requires the department to withhold a cumulative amount of over $500,000 from the School District of Philadelphia in future state appropriations in relation to the two cases and more than $19,000 from the William Penn School District in Delaware County.

Additionally, the department itself was ordered to pay the costs and attorney’s fees for the charter schools.

According to spokesperson Casey Smith, the department is currently reviewing the decisions and considering whether or not to appeal the decision.

While not commenting specifically on the decisions, Auditor General Eugene DePasquale last summer did release an audit on the department's charter payment reconciliation process in which he called Pennsylvania’s charter school law “the worst in the nation.”

The audit, triggered by confusion about charter school payments during the FY 2015-2016 budget impasse, found that over the period from January 2011 to December 2015, there were 857 charter school payment appeals filed, totaling $1 billion.

At that time, 374 appeals involving $30.5 million remained unresolved.

“The absolute, unmistakable, inexcusable delays by the department on these appeals…the consequences of that are disastrous,” DePasquale said last August.

DePasquale went on to point out the audit done by his office showed inconsistent and contradictory directions from the department to school districts regarding the appeals process, as well as delays in moving appeals along that possibly cost school districts money they’ll never see again – particularly if the charter school in dispute has closed down.

Last year, the Wolf administration established the Division of Charter Schools to provide technical support and guidance to charter schools to help them increase student performance, parent and community involvement, and ensure financial and academic responsibility.

“Charter schools play an important role in our education system, but that role must be accompanied by sufficient oversight,” Gov. Wolf said when the office was established last year. “Establishing this new division within the Department of Education will allow us to maximize our resources to not only ensure charters are being properly supported, but that they are being held accountable to taxpayers.”

Accountability measures will include providing comprehensive fiscal and educational programming reviews and paying particular attention to the reauthorization process of cyber charter schools, which are currently chartered by the department.