Last year’s new charter school approvals set to cost Philly district more than expected
Feb. 16, 2016 – NEWSWORKS WHYY – by Kevin McCorry
On Tuesday, the Philadelphia School Reform Commission will vote on 12 applications to create new city charter schools.
This is the second vote since the 2014 state cigarette tax legislation mandated the SRC end its moratorium on new charter applications.
Again, a debate has arisen between those who argue that additional charter seats will improve educational opportunities in the city, and those who argue that the fiscal cost of charter expansion will take too much of a toll on existing schools.
In the wake of last year’s new charter school approvals, School District of Philadelphia officials minimized the long term costs associated with the openings.
According to the district’s current projections, there’s reason to believe that view was shortsighted by millions of dollars.
In February 2015, when the School Reform Commission voted to greenlight five of the 40 charters schools that had applied, superintendent William Hite stressed that the new charters would not be a fiscal drain on existing district schools.
“We can not have a situation where any of our children are receiving less as a result of this,” Hite said after the SRC’s vote.
District leaders operated under the rationale that new charter seats would not add costs because they would replace those seats shed due to the closure of other charter schools.
The SRC approved each of the new charters with one year delays, so there has been no fiscal impact this school year.
Beyond that, then-SRC chairman Bill Green said added costs would be “very limited” as a consequence of the “continued closure of non-performing charter schools.”
“It’s a limited impact on the five year plan,” he said.
Hite and Green, though, were banking on a historically unreliable prospect. That is: the ability for the district to shutter charter schools in a timely manner.
A year later, some of last year’s hoped-for closures have not occurred.
Based on the district’s numbers and projections, Newsworks estimates that the added costs of last year’s new charters could reach $10.8 million by 2019-20.
How many seats have been shed?
At the time last year’s charter decisions were made, Wakisha and Walter D. Palmer charters had recently closed – affecting 1,510 students.
The district had been pursuing closure at five other charters: New Media Technology, Imani Education Circle, Truebright Science Academy, Arise Academy, and Community Academy of Philadelphia.
In total, these school closures would erase 5,662 charter seats from the city – a number much higher than the amount of new seats approved.
But all the closures haven’t proceeded as quickly as planned, and unlike closing district schools, the process for shuttering charters is often a long and litigious one.
Last Spring – in a serious blow to the district’s projections – the state Charter Appeals Board rejected the SRC’s bid to close Community Academy of Philadelphia. The district began the closure process for Community Academy in 2011.
In the wake of the board’s decision, the charter – which enrolls 1,206 students – was awarded a new agreement through 2020.
In November, the SRC voted against renewing New Media’s charter. The school can now appeal to the state board – which as the above example illustrates – can foil the district’s plans.
In December, the charter appeals board indicated that it would uphold the SRC’s vote to close Imani. School officials say they will appeal the decision in Commonwealth Court, and plan to open for classes next fall.
Between these three schools, more than 2,000 of the seats the district had expected to trim remain filled.
“It’s one of the biggest problems with the Pennsylvania Charter School Law. It sets a very low bar for opening a charter – for someone to get granted a charter – but then it sets a very high bar for shutting one down,” said David Lapp, staff attorney at the Education Law Center.
As a result, Lapp says very few charters have been shuttered “even when it’s clear that there’s a number of them that probably shouldn’t be permitted to continue operating.”
The National Association of Charter School Authorizers urges Pennsylvania to adopt a default closure provision – where charters would be shuttered automatically if they didn’t meet certain prescribed quality thresholds.
The District agrees.
“It is much cleaner and much more timely and it lets staff and the school community – parents and families – know with a high degree of certainty what to expect,” said Dawnlynne Kacer, the executive director of the district’s charter school office.
Truebright and Arise, though, have closed, and, unexpectedly, so did Education Plus Academy Cyber Charter – which served 290 students in Philadelphia.
All told, charter schools serving 2,246 students have come offline – a number slightly less than the new charter seats added.
But it gets more complicated.
The district does not assume that all of these students will leave the charter sector. Based on what occurred in the wake of the Wakisha and Walter Palmer closures, the district estimates that 26 percent of students will enroll in another charter after a closure.
Based on that assumption – an admittedly fragile one – the closures actually only shed 1,662 city charter seats.
Subtracting these 1,662 seats from the new seats coming online based on last year’s new approvals, yields an added cost estimate.
2017 new seats
In 2015, the SRC originally approved five new charters: TECH Freire, Independence Charter West, MaST Community Charter, Mastery Gillespie, and KIPP Dubois.
The KIPP Dubois approval was an odd one. At first, the SRC said approving it wouldn’t actually add any seats because they were merely giving a formal blessing to 280 seats that KIPP had been over-enrolling.
At some point after the official announcement, things changed. The charter agreement was upped to 520 students after KIPP agreed to trim seats elsewhere within its chain of Philadelphia schools. But even with those trims, the KIPP Dubois charter adds 190 new seats to the city.
After the initial vote last February, KIPP re-submitted an application for KIPP West, which the SRC approved.
In total, based on these numbers and projections, last year’s new charter openings will not stress the district’s budget for fiscal year 2017.
TECH Freire: 300
Independence Charter West: 300
MaST Community Charter: 400
Mastery Gillespie: 0 (Mastery has postponed this opening until FY18)
KIPP Dubois: 130
KIPP West: 200
New seats (1,330) – shed through closures (1,662) = assumption of net loss of 332 seats charter seats.
2018 new seats
The district begins to incur costs in fiscal year 2018:
TECH Freire: 450
Independence Charter West: 400
MaST Community Charter: 500
Mastery Gillespie: 365
KIPP Dubois: 190
KIPP West: 300
New seats (2,205) – shed through closures (1,662) = total remaining charter seats 543.
With net additions in charter seats, the district realizes so-called “stranded costs,” which it estimates at $7,000 per new charter student.
Stakeholders often debate this figure, which has roots in a 2012 report performed for the district by the Boston Consulting Group.
Pro-charter advocates believe the rate is inflated. The district contracted with an outside group last year to reassess the projection.
Last February, then-district chief financial officer Matt Stanski said: “It is the number we’re currently using right now.”
Asked for an update, district spokesman Fernando Gallard said: “That review is still ongoing.”
Using that figure, based on 543 new seats, the district will see $3.8 million in added costs in 2018-19.
In 2019-20, the costs grow.
TECH Freire: 580
Independence Charter West: 500
MaST Community Charter: 600
Mastery Gillespie: 421
KIPP Dubois: 190
KIPP West: 375
New seats (2,666) – shed through closures (1,662) = total remaining charter seats 1,004.
1,004 x 7,000 (stranded cost figure) = $7 million in added costs in FY 19.
FY18: $3.8 million
FY19: $7 million
Total: $10.8 million
Charter reimbursement? More closures?
In the midst of last year’s debate – a particularly fractious and political one – the Philadelphia School Partnership offered to defray some of the added costs of charter expansion with a $35 million donation.
The district did not accept the funding, and stands behind its choice.
“Although the SRC appreciated PSP’s offer in 2015, the grant funds offered by PSP were tied to considerations outside the charter application review process mandated by Charter School Law,” said spokesman Fernando Gallard. “In regards to future PSP grants, the School District welcomes grants that would allow us to continue to improve our schools and it is grateful to PSP for the grants it has already provided to a number of schools.”
The $10.8 million price tag is a particularly tough pill to swallow especially since 2011 – when the state cut the funding designed to help districts deal with the added costs of charters.
Republican legislative leaders are not in a hurry, though, to bring that funding back.
Some, including Speaker of the House Mike Turzai (R-Allegheny), said that prospect actually became less likely because the SRC didn’t approve even more charters last year.
“By not granting the charters, I think it makes the discussion a lot tougher,” Turzai said in a February 2015 interview.
On Tuesday, if the SRC approves new schools, in addition to whatever fiscal toll the system will absorb, there will be other effects.
Public school population has been roughly level at 200,000 students in recent years. So opening a new school in one part of the city typically means that, somewhere down the line, another school will become more empty – again pitting the potential good of new schools, against the pain of more potential closures.