Derry Area school board members were presented with a deep dive into the state’s cyber charter school system — and its negative effects on public school district budgets across Pennsylvania — during Thursday’s regular board meeting.

Using state and district data, Derry Area Business Administrator Scott Chappell showed how rising cyber school costs have helped shape the district’s budget over the past five years and he stressed how statewide cyber charter reform — be it big or small — is badly needed.

During the 2020-21 school year, Pennsylvania had 14 cyber schools in operation. These schools, which operate under an agreement between the Pennsylvania Department of Education and the cyber school, use technology outside of a school setting and have no face-to-face learning.

Additionally, there were approximately 165 brick-and-mortar charter schools in operation in the state, including Dr. Robert Ketterer Charter School in Unity Township. These schools, which are authorized by a local school board, include in-person instruction.

All charges for students to attend a cyber school are the responsibility of local school districts. At Derry Area, there are 97 students enrolled in online-only cyber school for the 2021-22 school year.

While Derry Area’s regular education ($13,011.78) and special education ($28,447.66) cyber costs are slightly under the average state tuition rates for the 2021-22 school year, the rates were the third-highest in each category among Westmoreland County districts the previous school year. Chappell said Derry Area currently has 15 special education students in cyber school.

Yet despite being a mid-sized school district with a lower tax base, Derry Area incurred higher regular education ($12,663.49) and special education ($27,018.22) rates than nearby Greater Latrobe School District ($10,562.68 regular education) and ($19,914.64 special education) during the 2020-21 school year. Additionally, Ligonier Valley paid the second highest rate for special education costs in the county — $28.160.75, behind only Jeannette — along with $11,509.92 in regular education costs last year.

“We’re all getting the exact same education for our cyber students, yet we’re all paying different rates,” Chappell said during the presentation. “... Five hundred districts across the state and not one has the same rates.”

Cyber/charter school rates are calculated each year using a form provided by the state Department of Education. The form, to be completed by each school district, is based on district expenditures, average daily membership and other factors.

The lack of a statewide cyber charter tuition rate has created a massive divide in terms of what districts are paying for the same instruction, according to state data provided in the presentation.

During the current school year, the school with the state’s lowest cyber tuition rate for regular education pays just over $8.900 per student while the highest pays nearly $24,000.

The difference is even more staggering for cyber special education costs, as the lowest rate is nearly $18,600 per student and a high rate of more than $57,000.

At Derry Area, cyber school rates have risen by more than $4,700 per student for special education and more than $1,600 for regular education since the 2017-18 school year. In all, the district’s cyber school costs have increased in the past five years from nearly $723,000 to $1.49 million.

That total, Chappell noted, does not include children attending E-Academy at a cost of $3,200 per student.

“If we would add E-Academy into this, you’re approaching $1.8 or $1.9 million in kids who are not attending our district but are attending a cyber school,” he said.

During that five-year span, Derry Area’s taxpayers have had to bear the brunt of the cost, as the district’s millage rate has increased by 11.8 mills. Currently, cyber school costs take up 29.9% of the district budget.

The Pennsylvania Association of School Business Officials, using a nine-year period through 2019-20 and each district’s annual financial reports, reported last fall that school district property taxes in the state increased $3.12 billion, including natural assessed value growth plus millage increases, with 87.2% of those costs the result of mandated cyber school payments and districts’ portion of mandated pension costs.

“Thirteen percent we have to work with after mandated costs,” Chappell said of Derry Area’s limited budget flexibility.

In all, state revenues for cyber schools account for fewer than 1% of total revenues while local revenues from school districts account for more than 95%.

According to 2018-19 financial data from the state Department of Education, Derry Area had a general fund budget of $36.2 million while three main cyber charter schools — PA Cyber Charter, Commonwealth Charter Academy and PA Leadership Cyber Charter School — amassed combined revenues of more than $359 million during the same fiscal year. The continued revenue stream over the years has allowed these cyber schools to build large fund balances in the tens of millions; conversely, Derry Area’s fund balance at the end of the 2018-19 school year was just over $4 million.

“We’re paying 97% of their operating costs and fund balance increases year after year since 2002. It’s why they’ve amassed the fund balances that they have,” Chappell said, adding that the only operating costs for cyber schools are tied to technology.

In his presentation, Chappell said cyber schools are “only tuition free in a sense that families are not paying directly out-of-pocket to the cyber schools. However, your tax dollars are being used to pay for nearly all of the costs associated with cyber schools.”

Added Derry Area Superintendent Eric Curry: “I think the numbers show we do it better with less than the cyber charter schools do, and have been doing it for quite some time.”

After the presentation, school director Kevin Liberoni asked Curry why 97 students are attending cyber schools as opposed to learning in a traditional district setting.

“There are a variety of reasons,” Curry said. “A lot are upset with the (state) mask mandate and there are some children who learn better in that environment, but I think that number is quite small.”

Curry said some families that went the cyber route became upset with district for a number of reasons, such as not being pleased with the outcome of certain disciplinary actions.

Chappell encouraged district residents to contact local lawmakers about potential cyber charter reform, including state Rep. Jason Silvis and Senate Majority Leader Kim Ward.

“They’re the best people to get to,” he said of local lawmakers. “Cyber charter reform, even minimal, would help us tremendously. .... Some of the data I unearthed in this (research) was truly eye-opening.”

Last month, Gov. Tom Wolf proposed regulations with new standards for charter schools aimed at holding charter school applicants accountable for academic performance and ensuring that fiscal and administrative standards are followed. There has also been a recent push for proposed bipartisan legislation to establish a statewide cyber charter school tuition rate.

All told, more than 80% of Pennsylvania’s 500 school boards have passed resolutions calling for charter school reform.

Charter schools and school-choice organizations are against the legislation.

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