Enrollment in cyber charter schools grew faster in Pennsylvania last year than in any other state — and how they’re funded results in big costs for local school districts, according to a new report.

Pennsylvania is the “cyber charter capital of the nation,” the report released Thursday by the PA Charter Performance Center said. It describes Pennsylvania as standing apart not just for its large number of students attending its 14 cyber charters — 61,000 in 2020-21, up from 38,000 the year before — but also for insufficient oversight and funding provisions that haven’t been updated since the virtual schools were first permitted in 2002.

Other states, meanwhile, have made changes to how they regulate cyber charters — which, like their brick-and-mortar counterparts, are publicly funded but independently operated. In Pennsylvania, the virtual schools have long been in tension with traditional public schools, which pay cyber charters based on enrollment. Cybers also have come under scrutiny for poor academic performance and management scandals.

That funding mechanism isn’t the same in every state — and neither are the steps other legislatures have taken to reform their systems, according to the report by the Charter Performance Center, which is affiliated with Children First, a group that advocates for more funding for traditional public schools. The report compares Pennsylvania with 26 other states with cyber charter schools, and proposes changes based on some of those states’ efforts.

How does Pennsylvania’s cyber charter funding differ from other states?

Most states with cyber charter schools fund them directly, according to the report. Pennsylvania, however, is one of four states where school districts fund the charters, though the virtual schools are authorized by the state and the district has no role in regulating them or deciding whether they open.

In Pennsylvania, the funding works like this: For each student from a district that enrolls in a cyber charter, the district pays the cyber a rate based on what the district spends per pupil. Payment rates can vary greatly, because Pennsylvania school districts spend widely different amounts due to disparities among low- and high-wealth districts.

Those payments came to an estimated $980 million last year, up from $684 million in 2019-20 — almost a $300 million increase as enrollment grew to encompass 3.5% of the public school population. In comparison, the increase in the main form of state aid to school districts this year was $272 million.

Cyber charters in Pennsylvania are paid at the same rate as brick-and-mortar charter schools — similar to most states. But 11 states don’t — instead funding cyber charters at lower levels, according to the report. It points to analyses describing cyber charter cost structures as 25% to 30% lower than brick-and-mortar schools, and calls by national charter school organizations for states to align cyber charter funding with actual costs.

The report proposes that Pennsylvania set a statewide tuition rate for cyber charters that reflects lower costs of virtual education. Gov. Tom Wolf has made a similar proposal that, while garnering some bipartisan support, has been opposed by cyber charter leaders and hasn’t gotten a hearing in the Republican-controlled legislature.

It also calls for the state to “stop paying twice” for virtual education — so that if a school district offers an online learning program “whose educational track record is as good or better than” a particular cyber charter, the district wouldn’t be required to fund the charter. That, too, has come up in the legislature before: A bill by House Education Committee Chair Curt Sonney (R., Erie) would have required parents who send their child to a cyber charter to pay tuition if a home district offered one.

“Singling out public charter schools when we have experienced shortcomings within public education for decades — especially when concerning the families that disproportionally flock to charter schools — is myopic,” said Lenny McAllister, CEO of the Pennsylvania Coalition for Public Charter Schools. He said the new report’s recommendations “follow the typical narrative: ‘We must fix (i.e., decrease) funding for charter schools.’”

What are ways other states fund their cyber charters?

The report describes efforts to fund cyber charter schools based on student mastery of a subject or course completion — rather than Pennsylvania’s method, which funds the schools based on enrollment.

Florida, Minnesota, New Hampshire, Texas, and Utah have some form of performance-based funding for cyber charters, while Ohio and Arizona fund the online schools based on “documented learning opportunities,” according to the report. Parents or students log work completed each day — providing a measure of engagement that goes beyond whether a student has logged in.

“Across the board, cybers are not performing well,” said ML Wernecke, the Charter Performance Center’s executive director, who added that Pennsylvania’s 14 cyber charter schools have all scored below average on English and math standardized assessments and been flagged by the state as needing support. “We know there’s a problem here that needs to be addressed.”

» READ MORE: Pa. charter-school students lag in math, with cyber results ‘overwhelmingly negative,’ study says

To better track how cyber charter students are being counted — and how much funding the schools should receive — the charters should be audited each year by the state, the report said. It notes an enrollment scandal in Ohio, where the state sought to recover $80 million from a virtual school after an audit found it had inflated attendance by 9,000 students.

Pennsylvania charter schools are required to provide audits to the Department of Education annually. “It’s a lot different to do your own audit ... than to open your books for the state auditor general,” Wernecke said. She said traditional public schools face routine state audits.

McAllister, of the charter school coalition, said many of the report’s accountability proposals “are also ones that anti-school choice proponents do not want to apply to school district schools that have failed communities for generations.”

What else does the report suggest as solutions?

The report suggests Pennsylvania create a statewide virtual school — a model in place in 21 states that could serve as a centralized source of curriculum and resources for both school district virtual programs and cyber charters, “wringing costs out of the system in the process.” The school would differ from a charter in that it would be created by legislation or a state agency, though a variety of entities — including a charter school operator — could administer it.

It could also compete with for-profit education management service companies that contract with cyber charters to provide curriculum, according to the report.

And Pennsylvania could also move to a requests-for-proposal process when opening a new virtual school, the report said — allowing it to weigh proposals against each other. Under the current process, applicants submit proposals to open new cyber charter schools to the state Department of Education, which is tasked with evaluating each on an individual basis.