In a new report, Education Voters of Pennsylvania looks at “how an outdated law wastes public money, encourages gaming the system, and limits school choice.” Fixing the Flaws looks at how Pennsylvania’s two separate funding systems have made students with special needs a tool for charter gaming of the system, even as some of them are shut out of the system entirely.
The two-headed system looks like this. Public schools receive special education funding based on the actual costs of services, while charter schools are funded with a one-size-fits-all system that pays the same amount for all students with special needs, no matter what those special needs might be.
Pennsylvania’s Special Education Funding Formula recognizes three levels of cost. Tier 1 is minimal interventions (eg a student who needs one speech therapy session per week). Tier 2 students need larger interventions, such as a separate classroom or physical therapy. Tier 3 students may require interventions such as a full-time nurse or even out-placement at a special school (for which the sending district is still financially liable).
Public schools receive state funding based on student tiers; charters get the same funding whether the student needs an hour of speech therapy a week or a separate classroom, teacher and aide.
This creates an obvious financial incentive for charter schools to cherry pick students who are considered special needs, but who need no costly adaptations or staffing to meet those needs, while at the same time incentivizing charters to avoid the more costly high needs students. Denial of those students does not require outright rejection of the students; charters can simply say, “You are welcome to enroll, but we do not provide any of the specialized programs that you want for your child.” Parents will simply walk away.
Examples of this technique are not hard to find in the state. Before they closed down in 2018, the Wonderland Charter School in State Collegel was caught over-identifying students with speech and language impairment, a low-cost Tier 1 need, by 1,000%.
The actual dollar amounts vary by sending districts, making some districts more attractive to charters than others. Chester Uplands has been so hard hit by charter operators that at one point its payment to charter schools was greater than its funding from the state. The district’s state-appointed receiver identified students with special needs as a major issue. He found that the public system had an enrollment for costly autism students of 8.4%, while the three charters had enrollments of 2.1%, 0% and 0%. Results are similar for other high-cost needs. However, when he looked at speech and language impaired students, he found the public school with 2.4% enrollment, while the three charters enrolled 27.4%, 20.3%, and 29.8%. It costs pennies to meet those special needs, but in Chester Uplands, each student with special needs, regardless of what those needs might be, brought $40,000 into charter bank accounts, far more than the reimbursement for a student with no special needs at all.
This matches the pattern that the report found. In Philadelphia, twenty-four charter schools enroll no Tier 2 or 3 students. In Pittsburgh, while some charters such as Environmental Charter and City High Charter enroll numbers from each tier that match the city, twenty-two charters enroll no Tier 2 or 3 students. In nine Pennsylvania counties, not a single one of the charter schools enrolls Tier 2 or 3 students.
Across the state, the report finds roughly 10% of public school enrollment is students with special needs; for charters, the percentage across the state is about half that.
The result is that taxpayers, through their local districts, are overpaying charters for the services provided. If a student with a language impairment moves to a charter, the funding doesn’t just follow her—it increases by thousands of dollars. A student who cost the taxpayers $15,000 to educate in a public school now costs taxpayers $27,000, though no more money is being actually spent on that student’s education.
The other result pointed out by the report is that high-needs students do not have access to the same school choices that others have. Realistically, some students need highly specialized services available from limited providers. But parents of other Tier 2 and 3 students were promised all sorts of options when school choice laws were passed, and that turns out to be false.
Charter schools are businesses, and a basic decision in any business is which customers are too much trouble or expense to serve, and which are more profitable. And so charters make a basic business calculation. Meanwhile, the public school system is still required to make good on the promise of a free and appropriate education for every single student.
The Pennsylvania legislature could fix the problem pretty simply; just apply the same funding system to both public and charter schools. The report shows that this would save taxpayers roughly $100 million. We’ll see if charter schools are willing to let that kind of income go quietly.
