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Philly School District savings means headaches for charter schools

The School District of Philadelphia has warned the 86 charter schools in the city to brace for less funding this spring.

Uri Monson, the district's chief finance officer, told charter officials he anticipates that the state soon will conclude that the district has been overpaying charters this academic year and certify lower rates.

Monson estimates that charter schools will be asked to repay the district more than $300 per student in regular classes and more than $1,000 for every special education student.

In an interview, he said he had not calculated the total that the district would save in charter expenses. But with nearly 65,000 students in charters, it could save a minimum of $19.5 million through June 30.

"I recognize that the estimated rate reduction is substantial and could have significant impacts on your end-of-year fiscal planning," Monson wrote on Feb. 17 to charter officials.

"It is very distressing," said Laurada Byers, founder of the Russell Byers Charter School in Center City and chair of Philadelphia Charters for Excellence. "Do we have to lay people off? What is it we could cut?"

Members of her organization said the change could result in the loss of 5 percent to 10 percent of their expected revenue.

"The vast majority of us work so hard to wring every dollar that we get, and our budgets are really tight," she said.

Byers said her organization is trying to work with the district to make sure charter operators are not put in the position again of having rates change in the fourth quarter.

"It is a very painful cut to be making this late in the year across the Mastery schools," said Scott Gordon, founder of Mastery Schools.

He said the new rates are projected to cut $5 million from Mastery's 14 city charters with 11,000 students. He said Mastery was still working on its plan for dealing with the funding loss but expected to draw on a fund accumulated over the years for emergencies.

Gordon said Mastery's chief financial officer participated in a Philadelphia Charters for Excellence meeting with Monson last week to try to understand what happened and make sure that it does not recur.

"Charters and the School District need to be working together to serve all kids," Gordon said, so that when there's a change, it's communicated quickly. "That did not happen here," he said.

The district's $2.8 billion budget includes $875 million for charters, including transportation.

State law contains a formula that determines the charter rate for every district based on how much the district spent to educate its students the prior year.

Among other things, Monson said, the district did not spend $30 million it had budgeted for new teacher and principal contracts in 2015-16, because there were no labor agreements.

The district had been making monthly payments using a preliminary rate of $8,487 per student receiving regular classes, $25,624 for each in special education.

The state Department of Education does not set a final rate until a school district's financial statements have been audited. Some years, Monson said, the district owes the charter schools money.

Once the state certifies new rates, Monson said, the district will reduce the amount sent to charters in the months that remain in the current academic year to recoup the funds.

He said the district was willing to discuss financial options with charters, including adding two months to the repayment period.

"As you are aware," Monson wrote, "the School District is reliant on the commonwealth for the issuance of the final charter school per-pupil rates and the timing of the issuance of the rate."

Last year, the state did not set final charter rates until the third full week in April, causing charter schools to scramble to cover $15.9 million they had to return to the district.

Monson had pledged to give the charters more warning.

"We reached out to the charters to give our initial estimates so they could plan," Monson said Monday. "We are all victims of a challenging charter school law and a challenging charter formula."