The pandemic enrollment surge in cyber charters cost Pennsylvania districts hundreds of millions of dollars — costs that could be magnified by the inability to predict whether some of those students will remain in virtual schools after COVID-19 wanes, according to a new report.
The report, released Wednesday by Research for Action, a Philadelphia-based education research group, calculated the so-called stranded costs resulting from the more than 60% increase in Pennsylvania cyber charter enrollment last school year. Stranded costs are expenses that school districts can’t recoup when students leave for a charter, because they can’t evenly reduce teachers or building expenses, for instance.
Using calculations from a 2017 study RFA conducted analyzing the fiscal impact to districts from charter enrollment increases, the group found that while districts paid an added $335 million to send students to cyber charters in 2020-21, they could only save between $27 million and $45 million from no longer having to educate those students.
That left districts with between $290 million and $308 million in stranded costs, RFA said — and an average price tag of $12,819 to $13,613 per student lost to a cyber charter.
At the same time, the report said, cyber charters nearly doubled their fund balances — carrying balances last year of $5,724 per student, compared with $3,478 per student in school districts.
“The spending on cyber charters appears to be one of the biggest inefficiencies in our system of school finance,” David Lapp, RFA’s director of policy research, said Wednesday.
The report comes as traditional public school advocates have been pressing lawmakers to make changes to how charter schools — and cyber charters, in particular — are funded, citing mounting budget challenges.
In Pennsylvania, charters, which are publicly funded but independently managed, receive payment from school districts based on enrollment and what districts spend per pupil.
Cyber charters are paid in the same way as brick-and-mortar charter schools — though area districts that run their own online programs say it costs far less to educate a child virtually. And because cyber charters draw students from across the state, they receive different payments per pupil according to where the students come from — because the payments are based on what the sending school district spends, not what it specifically costs the charter.
The cost debate has drawn new attention as cyber charter enrollment soared during the pandemic — growing more in Pennsylvania than in any other state. The virtual schools, which have come under fire for poor performance and management issues, enrolled 61,000 students in 2020-21, up from 38,000 the year before.
Gov. Tom Wolf has called for a statewide cyber charter tuition rate, as well as changes to how all charters are funded for special education students — another area where districts say they are overpaying. Charters contend that the Democratic governor’s proposal would slash funding to their students, and Republican legislative leaders have not signed on to the plan.
Parents “should not be demonized for exercising educational choice for their children,” said Jean Morrow, a spokesperson for the Pennsylvania Coalition of Public Charter Schools, which has opposed Wolf’s proposal.
Asked about the new Research for Action report, Morrow said: “While education research is important, perhaps the more important questions to be looking at are: ‘Why was there a COVID-19 enrollment surge in the first place?’ and ‘What’s best for kids?’”
School districts face stranded costs whenever students leave for charters — costs that typically decline but still exist years later, according to Research for Action.
But the cyber-related costs pose specific concerns, Lapp said. Unlike districts observing a pattern or predictable growth in students leaving for charters before the pandemic, districts that recently lost students to cyber charters may be challenged to make cuts without knowing whether students will return as the pandemic wanes.
And while charter enrollment traditionally has been concentrated in Pennsylvania’s urban areas and a relatively small number of districts, the cyber surge last year occurred statewide, affecting districts of all sizes. For smaller districts, stranded costs are harder to reduce because they don’t have the same economies of scale as larger systems, Lapp said.