The most intriguing items addressed in the budget summary deal with a change in the basic state funding structure for school districts, the relief of some administrative reporting, and increased accountability. State funding for districts is currently broken into many divisions that are calculated in an isolated manner. Corbett is proposing a consolidation of funding to provide a single subsidy for the general purpose of education, providing districts with flexibility in discharging state funds. Corbett also hints at eliminating  ”certain categorical reporting”. Strategic plans, currently required by the state, are the only reports specifically mentioned.  An investment of state and federal funds in teacher and principal evaluation tools seems to be the only area of new spending.

A small, two sentence paragraph in the press release stands out to me as particularly interesting and mysterious:

“In addition, the governor’s budget commits $1.7 million in state and federal funds to improve data collection. A more accurate accounting of student attendance will help the state’s education financing.”

This vague statement may indicate a movement toward funding based on student attendance instead of student enrollment.

In Pennsylvania, there is a mixed reaction to the proposed regulation. Charter operators in favor of remaining in the PSERS (Pennsylvania State Employee Retirement System) fear that vested employee’s will flee charters and return to traditional district employement. They believe that recruiting and retention obstacles will outweigh the benefits of being released from mandatory PSERS particiaption.

Those in favor of opting out of PSERS are looking for relief from rising employer contributions. The employer rate for PSERS contributions in 2012-2013 will be 12.36%. Some charter’s belive that they can offer a more competitive and efficient retirement savings option than PSERS affords while maintaining a quality staff.

Which side of this debate are you on? 

As Charter School advocates, our biggest area of concern is focused on the School District of Philadelphia’s ability to meet its fiscal obligation to the city’s charter school students and their families. At Charter Choices, we are following the School District of Philadelphia’s financial crisis closely, offering guidance and analysis for our charter clients. With the recent news of the additional 60+ million dollars the district is looking to cut in this fiscal year, we anticipate that next year’s charter school per pupil allocation could arrive at 12% less than this year’s rate. This potential reality is not new, however, we are now being made aware of potential cash flow concerns for the district that could impact their ability to meet charter school obligations. We will monitor the district’s problems and their solutions as we assist charter school’s in becoming models of financial stability and responsibility in public education.

Guidance on the Anticipated Revenue Modifications For Charter Schools in Pennsylvania

Purpose of the Guidance

The purpose of this guidance is to provide comprehensive, timely information on funding issues that, in our opinion, will affect charter schools in the Commonwealth. In anticipation of decreases in charter school funding, we feel that this communication is important as we think about organizational priorities and potential cost cutting measures that will not weaken entire educational programs. Clearly, every school will need to meet the impending funding challenges in different ways. Charter Choices is not suggesting that significant changes are necessary for all schools.

Charter Choices will provide additional or updated guidance as necessary.  Please share your thoughts and solutions with us and let us know how and when/if we can assist with making the difficult adjustments that the future requires. If you are interested in commenting on this guidance, please send your comments to: mwhisman@charterchoices.com.

There is no doubt that charter schools in the Commonwealth can expect profound revenue modifications in the coming years. Charter Choices is recommending that schools begin planning and preparing for reduced revenue streams immediately.

Before exploring strategies for success, let’s take a closer look at what the future of charter school funding could look like.

We will begin with the known.

We know that the state has eliminated long-standing subsidy programs and that no existing state subsidy should be considered secure.

Charter Schools in Pennsylvania saw the elimination of a significant state funding source this year. By way of adopting the state budget, Harrisburg removed the Social Security reimbursement for charter schools. This subsidy had been a staple in budgets since charters were established in 1997. There was some discussion of this program elimination in the spring of 2011; however, most charters were caught off guard by the elimination of this program. The “double-dipping” logic that justified the Social Security cut could easily be
applied to another state funding source, the PSERS reimbursement. If this subsidy is eliminated, the impact of rising employer contribution rates for PSERS will be twice as profound: charter schools will lose the reimbursement revenue and feel the full effect of higher contribution rates (projected to reach over 20% in the next 5 years!).

We know that the Charter Schools are funded based on the district’s prior year budget and that the 2011/2012 district budgets have been significantly reduced.

As a result, Charter Schools will see a reduction in per pupil allotments from school districts in 2012/2013.  In Philadelphia, the district is warning that they expect a 12% reduction to
charter schools next year.  Under the current charter school funding formula, districts are required to pass along a per pupil allotment based on the districts’ prior year expenditures. As a result, the impact of funding cuts to districts for the 2011-2012 fiscal year will be realized by charters in 2012-2013. The amount will vary from district to district. Charter Choices recommends a budget projection for 2012-2013 with an 8%-12% reduction in per pupil funding.

The current version of the revised charter school law does not directly address school funding. It is likely that this issue will be addressed outside of the charter reform law in the near future by an independent commission.

We anticipate that there could be additional changes that will affect Charter Schools

The idea of a weighted special education funding model has again surfaced.  Special Education funding would be based on a specific need.  For example, a student who requires speech services might receive an allocation that is less than the current rate for a Special Education student. Students with severe and profound disabilities might receive more than the current rate for a Special Education student.

In addition, the talks have again started over the possibility that the Cyber School per pupil allotments will be reduced on a statewide basis.

Now what?

Now is the time to plan for the future and build contingencies. Charter schools have an opportunity to be industry leaders in implementing fiscal efficiencies in
public education. We can lead the way and demonstrate to advocates and opponents alike that there are many ways to do public education and that innovation can trump budget cuts. The reality of the new fiscal landscape will be painfully different from the one that charters are currently living in, and each school will need to make unique, difficult, and radical changes to survive. In most cases, smaller schools will need to compensate the most in order to maintain operations, while larger schools will be better positioned to retain current programs with a less dramatic impact. Please do not hesitate to contact us to further discuss the new funding realities and the expense reducing suggestions below. Charter Choices staff members can be available to meet with school leaders and school boards as needed.

Options, Strategies, Solutions

· Build contingencies and fund balance reserves into 2012 and 2013 budgets (save as much as possible in anticipation of several waves of cuts)

· Explore savings on Health Insurance Expense

Change to a high deductible plan and fund all or most of the deductible expense for employees

Increase the amount of employee contributions towards premiums

Reduce the quality of benefits

· Utilize emerging technologies for virtual instruction

Enhance current programs or replace underutilized staff with virtual courses

Offer AP, summer school, credit recovery, or entire content areas with virtual courses

· Adjust student\staff ratios

Gradually increase student\teacher ratios to levels that are sustainable with reduced revenues

Increase Teacher Aide\student ratios and\or eliminate TA’s

Eliminate grades with unfavorable student\teacher ratios

· Eliminate or modify food service programs

Brown Bag Friday’s

Outsource food service, repurpose food prep areas

We look forward to being a partner with your school in navigating the uncertain and less favorable fiscal waters that are ahead.

15 project no increase in property taxes
18 project increases below the Act 1 Index
26 project increases at the Act 1 Index
39 are applying for an exemption to increase taxes above the Act 1 Index

Do you know what your district intends to do?

Charter Choices is pleased to announce that they now provide comprehensive PIMS reporting services to our clients. We are excited to expand our scope of back office support services with this increasingly unpopular reporting requirement. Charter Choices will manage all aspects of reporting and ensuring compliance with the full spectrum of required PIMS submissions throughout the year. Contact Ryan@charterchoices.com for more information.

Charter School tools is a highly recommended resource

The Charter Choices team is always looking for the best resources to recommend to our clients. We recently found a site we think offers a range of helpful resources for charter school boards and administrators as well as those that are in the process of developing a new charter school application and we are proud to add this well sourced web asset to our list of helpful charter school resources. Charter School Tools for Pennsylvania is part of a larger site called Charter School Tools. It offers everything from charter school financial management forms and charter school business management forms but lots of seldom used forms that can help a charter school keep track of everything from field trip requests and petty cash receipts to hiring sequences and student withdrawal. The page also offers  links to recent reporting on educational technology and policy updates of interest to PA charter schools. For those considering starting a charter school, the site offers a charter school start-up spreadsheet among other good downloadable resources. We highly recommend it.

If you have found other good charter school resources that you think we ought to include on our Helpful Charter School Resources page, let us know in the comments.