Pa. cyber charter schools audit finds ‘flawed funding formula’
Pennsylvania Auditor General Timothy DeFoor announced his office has completed an audit of five cyber charter schools in the state — including Commonwealth Charter Academy, which has a branch in Cranberry Township — at a news conference on Thursday, Feb. 20.
The other four schools included in the audit are Pennsylvania Leadership Charter School, Insight PA Cyber Charter School, Pennsylvania Cyber Charter School and Reach Cyber Charter School.
The audit, which covers the fiscal years ending 2021 through 2023, found the five schools used loopholes in the charter school funding formula to increase their revenues by $425 million and their reserves by 144%, and spent the money on items such as staff bonuses and gift cards.
“Cyber charter schools were legally accruing millions of dollars in reserve, to excessive amounts,” DeFoor said. “Here's what we mean by excessive: putting money in the bank that goes above and beyond what is needed to keep schools running.
“Reserves are meant to cover unanticipated bills, so there's no interruption in that child's education. It isn’t money meant to sit in the bank of a cyber charter school, growing year after year. These are your tax dollars.”
In the audit for Commonwealth Charter Academy, the department noted the school spent $196 million on construction, acquisition and renovation costs for 21 buildings.
“It appears that CCA’s acquisitions and/or renovations of 21 buildings during the audit period and rapid expansion throughout the state is unusual and outside of the normal operating model of a cyber charter school, including the other cybers we audited in this report,” reads the audit.
Commonwealth Charter Academy did not respond to a request for comment from the Butler Eagle.
During the news conference, DeFoor pointed the finger at what he called an outdated formula for funding cyber charter schools in Pennsylvania, which has remained unchanged since the first cyber charter schools opened in the commonwealth in 2002.
In Pennsylvania, cyber charter schools are funded the same way as bricks-and-mortar charter schools. Funding is based on the student population of the school district where the charter school is built. The situation is complicated with cyber charter schools, which can take in students from hundreds of school districts across the state.
“This means that cyber charter schools get paid using 1,000 different tuition rates, based on a funding formula from 2002,” DeFoor said.
During the period for which the schools were audited, enrollment surged, as the COVID-19 pandemic pushed families away from traditional school environments toward online schools.
“It is important to note that these findings do not indicate any wrongdoing or noncompliance by the cyber charter schools themselves,” reads the audit. “Rather, the issues identified are largely a result of the flawed funding formula.”
DeFoor specifically called for Gov. Josh Shapiro and the General Assembly to take action on the matter.
“In the next six months, the governor should form a task force that includes the Department of Education, cyber charter schools, school districts, parents, stakeholders and the General Assembly,” DeFoor said. “The task force would have a deadline of nine months to develop a new funding formula that is equitable, reasonable and sustainable.
“Next, the General Assembly should enact this plan into a bill within six months of receiving it and sending it to the governor for his signature. It’s a tight time frame, but we really can’t delay any longer. It’s already been 23 years.”
DeFoor noted he is not the first Pennsylvania auditor general to call for a change to the cyber charter school funding structure.
“In 2010, former Auditor General Jack Wagner first highlighted the need to change the funding formula for cyber charter schools,” DeFoor said. “I am now the third consecutive auditor general to look at this issue. It’s frustrating.”
