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Yahoo
5 days ago
- Politics
- Yahoo
Cyber charter reform that could save public schools $616M advances with unclear future in Pennsylvania Senate
Spotlight PA is an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania. Sign up for our free newsletters. HARRISBURG — Public school districts in Pennsylvania could save more than $600 million annually under a bill that the state House passed Wednesday to cap the tuition they pay to cyber charters. The bill is part of a several-year effort to boost oversight and cut spending on cyber charter schools. At least some of its concepts have support in both chambers, but the issue has always been complicated by the commonwealth's tricky education politics. Democrats, who control the state House, have championed increased spending for poor public schools, while Republicans, who control the state Senate, favor funding alternatives including charter schools, though the issue doesn't break neatly down party lines. Senate Majority Leader Joe Pittman (R, Indiana) reflected that dynamic in a statement Wednesday, saying 'certain aspects' of the bill advanced by the state House 'could be beneficial.' That includes the measure's requirements that cyber schools do wellness checks on students and that public districts get proof of residency for students for whom they pay tuition. But, Pittman added, there needs to be recognition that the proposal would save school districts money, which he believes should count as the legislature giving public schools increased support as required by a 2022 court ruling. Democrats, meanwhile, are casting this issue as an administrative necessity. 'This bill is the result of repeated and urgent calls to update our commonwealth's outdated charter school law,' state Rep. Mary Isaacson (D., Philadelphia), the bill sponsor, said on the House floor Wednesday. 'This proposal is about fiscal responsibilities and aligning tuition to the actual cost.' The measure made it through the lower chamber 104-98, with two moderate Republicans voting in favor. It now goes to the state Senate Education Committee. Its chair, Sen. Lynda Schlegel Culver (R., Columbia), said in a statement, 'We will thoroughly review the legislation as we do for all bills given to the committee.' Pennsylvania school districts must pay tuition for any students who live within their borders and opt to attend a charter school. These tuition rates are calculated based on the district's per-student spending using a formula that has changed little over the past several decades. Currently, the state uses nearly the same formula to fund online-only cyber charter schools as it does for brick-and-mortar charters, despite the former's relatively lower overhead costs. That would change under this bill. It would instead set a base tuition rate of $8,000 per student. That rate would be increased for students who have extra needs, such as disabilities. This mirrors a proposal that Gov. Josh Shapiro has made in his last two budgets, and of which Democrats have long been supportive. The measure would also make several other changes. A number focus on transparency, such as the wellness checks and residency requirements Pittman cited. Other provisions include requirements that cyber charters post annual performance assessments online and inform students if they are found to be low-performing, as well as an enrollment cap on cyber charters found to be low-performing. Cyber charters would also be required to disclose any 'entities' helping to finance their capital projects. Along with the flat tuition rate, there are also other financial components. By the end of this year, cyber charters would have to pay back a significant portion of their unspent surplus dollars from the 2024-25 fiscal year to the state. That money would go into a state fund for public schools' facility improvement projects, and would newly make charter schools eligible for those funds. The bill would additionally bar cyber charters from accumulating large surpluses in the future. Starting at the end of the next fiscal year — June 2026 — any surplus dollars in excess of 12% of the school's total expenditures that aren't earmarked would have to be sent back to public districts. Plus, it would require that any revenue cyber charters generate via property be paid back to the school districts they receive money from. According to the bill's fiscal note, lower cyber charter tuition payments would save districts an aggregate of $616 million, half of what they currently spend. Each district's specific savings would vary based on how many students they have enrolled in cyber charters. The shaky bipartisan agreement that Pennsylvania's cyber charter law needs to be updated didn't come out of nowhere. Cyber charter enrollment has risen significantly in recent years — by nearly 57% across the state since 2020, when the pandemic began pushing more families to explore the option. Nearly 60,000 Pennsylvania students now attend cyber charters, which means a growing number of school districts and lawmakers are affected. A review earlier this year from Republican Auditor General Tim DeFoor solidified members' opinion that something had to change. DeFoor audited five of the commonwealth's 14 cyber charters and found that the revenue they were taking in nearly doubled from 2020 to 2023, from $473 million to $898 million, and also that the schools' financial reserves had increased by nearly 150% in that period. In addition, he found cyber charters had been spending funds on 'unusual' things like gift cards and vehicle payments. Still, division remains. During the floor debate Wednesday, several Republicans slammed the bill as unfair to cyber charter schools. 'We still have some more work to do for our school districts complaining about equal funding. All they ask is to be treated the same, and I'm here to advocate for them,' said state Rep. Craig Williams (R., Chester). 'House Bill 1500 doesn't do that. House Bill 1500 puts us on a path to end cyber charters.' Cyber charter administrators and advocates are also uniformly against the measure. Marcus Hite, who heads the Pennsylvania Association of Public Cyber Charter Schools, called the $8,000 tuition cap 'arbitrary and unrealistic,' saying in a news release it 'doesn't reflect the real cost of educating students, especially those with disabilities or unique learning needs.' 'Cyber charters are already subject to some of the highest levels of oversight in the education system — audits, performance reviews, and public transparency,' he added. 'HB 1500 piles on duplicative and punitive rules.' In a joint statement, a group of administrators from five cyber charter schools said the bill would lead to closures. Jon Marsh of Philadelphia's Esperanza Cyber Charter School called it 'an attack on some of the most chronically disenfranchised and disadvantaged students in our Commonwealth.' Public education advocates support the measure. Susan Spicka of Education Voters of PA said it 'will save hundreds of millions of tax dollars annually and bring long-overdue accountability and transparency to Pennsylvania's billion dollar cyber charter industry.' The issue is heavily lobbied. Last year alone, Commonwealth Charter Academy, the state's biggest cyber charter, spent $202,500 on education-related lobbying. Other cyber charters typically spend at least tens of thousands of dollars annually. That doesn't touch the significant dollars that traditional brick-and-mortar charters and their advocates spend on lobbying. Public schools have their own lobbying presence, too. The Pennsylvania State Education Association, the union that represents teachers, spent nearly $178,000 on lobbying last year. If you learned something from this article, pay it forward and contribute to Spotlight PA at Spotlight PA is funded by foundations and readers like you who are committed to accountability journalism that gets results. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
02-06-2025
- Business
- Yahoo
Federal uncertainty complicates Pa. budget haggling over transit, education
Spotlight PA is an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania. Sign up for our free newsletters. HARRISBURG — Competing priorities and possible federal cuts to Medicaid are complicating negotiations as top Pennsylvania lawmakers attempt to hammer out a budget deal by the June 30 deadline. The Republicans who control the state Senate say their biggest concern is overspending. With the state facing a structural deficit, they see a need to pick priorities. 'Whether it's education, whether it's transit, whether it's Medicaid, whether it's transportation infrastructure, there's going to be a need for a ranking of those priorities,' Majority Leader Joe Pittman (R., Indiana) told Spotlight PA, 'because we're not going to be able to reach them all.' Democrats who control the state House say their counterparts haven't offered many solutions that could lead to a compromise on those issues in a divided Harrisburg. 'Whether it's our health system, the minimum wage, cannabis legislation — at some point, whether it's the public or the press, someone needs to say, 'When will the Senate be heard on these issues and what are they for?'' Majority Leader Matt Bradford (D., Montgomery) told Spotlight PA. Democratic Gov. Josh Shapiro's opening budget pitch in February called for spending $51 billion next fiscal year, and would require the state to use $4 billion from its cash reserves to balance the books. The state has about $11 billion in reserves it built up over the pandemic; at current spending rates, those dollars will run out sometime in 2026. Pennsylvania runs a structural deficit, spending more than it takes in year over year. Previous budgets approved by members of both parties have routinely increased spending and used accounting tricks to balance the books instead of making sustainable changes, like spending cuts or new taxes. But Pittman said his top priority this year is putting the books in order. 'If we don't make some changes soon, in a few years, we're going to have some very unpleasant conversations in this building,' Pittman said. He pitched cuts to Medical Assistance, the state's health insurance program for low-income individuals, noting that the cost has rapidly ballooned. He specifically wanted to reduce eligibility and expand cost sharing for weight-loss drugs like Ozempic. While members have proposed new sources of revenue, the biggest ones — the legalization of recreational marijuana and the regulation and taxation of skill games — are politically complicated, and getting just one into a budget deal this year would be a major achievement. Instead, most of Harrisburg's biggest debates involve various factions of lawmakers competing for a slice of the budgetary pie. Public transit agencies are facing budget deficits due to a rise in remote work and an end to pandemic-era federal aid. These agencies range from rural services that bring aging customers to grocery stores, to sprawling, intercounty bus and rail systems. SEPTA, the transit agency that serves Philadelphia and its suburbs, faces the worst fiscal headwinds. That has made its financial plight a big political issue for Democrats, who overwhelmingly represent SEPTA's service area. If it doesn't get more state funding, SEPTA says it will cut its current service levels in half starting in late August. Such cuts would lead to longer commutes, could hurt property values, and would end game-night subway service to Philadelphia's sports stadiums. Shapiro wants to send an additional $292 million in sales tax revenue to these agencies. State Senate Republicans have so far rejected the call, saying they'll only agree to a funding boost if it comes with a new, dedicated source of state revenue and more money for roads and bridges. Pittman told Spotlight PA that SEPTA and transit allies' public warnings of the potential impact of cuts for the city and region appear to be 'a way to try to manufacture a crisis.' 'I think the state taxpayer has been quite generous so far,' Pittman said, adding that he was 'very open to giving the counties that use the service more flexibility to manage this issue on their own.' While it is a major issue for many of their constituents, Democrats have so far refrained from making transit the centerpiece of their comments about the budget. State Rep. Ben Waxman (D., Philadelphia) described that as a political tactic, saying Democrats 'cannot forget that there's a lot of other things that will be talked about … Would I vote for a budget that included SEPTA, but defunded Philadelphia public schools? No.' 'Senate Republicans want to back us into a corner and give themselves more power, and I don't want to give them that,' he said. In 2023, a state court ruled the commonwealth's public education funding system was so inequitable that it violated some students' constitutional rights. Lawmakers agreed on a fix the following year. They adopted a formula that routes extra money to 348 schools with 'adequacy gaps' — defined as the difference between the amount a district spends per student and the amount that district would need to spend to serve each child at an acceptable level. Last year's budget put $500 million toward these poor schools, and estimated that nine years of these payments would be necessary to close the gap. If lawmakers don't continue making this kind of investment, the plaintiffs who brought the original school funding case say they'll go back to court. This year, Shapiro again called for about $500 million in adequacy payments, though he asked for significantly smaller increases for K-12 and special education than last year's budget included. State House Democrats are on board with that approach, though many public education advocates have said more funding is necessary. State Senate Republicans say they have reservations, though their precise vision for how the education funding scheme should change remains unclear. Pittman told Spotlight PA that he thinks the state is spending too much money on public education, period. 'We have invested historic levels of funding in public education,' he said. 'We continue to spend more money to educate fewer students. We cannot sustain, in my opinion, the level of growth that has occurred over the last three or four years now, and we have to take a hard look at figuring out how we can contain those costs overall.' State Rep. Pete Schweyer (D., Lehigh), who chairs his chamber's Education Committee, said his caucus just introduced a bill that would make a slate of changes to Pennsylvania's much-scrutinized cyber charter schools, including a flat tuition rate, which would reduce the amount public schools must pay to cybers for students who opt to attend them. That, he noted, would bring 'significant savings for our school districts.' Schweyer said he is 'smart enough to know that budget season is budget season, anything can happen.' But he said he doesn't plan to compromise on adequacy funding. 'I'll just point to how we got here in the first place — 30 years of chronically underfunding the poorest school districts,' he said. 'If we change the formula, we're going right back into court, and we all know it.' So-called sin taxes are the only major sources of new revenue lawmakers have pitched for this budget, but the path to a compromise requires crossing political minefields. The question of how to tax skill games, for instance, is one of Harrisburg's longest-running special interest wars. It remains heated. These slot-like terminals have sprung up, unregulated, in bars and convenience stores across the state. Through years of court fights that have ultimately allowed them to keep operating, supporters have argued the devices help small businesses stay afloat, while opponents say skill games cut into the state's regulated gaming revenue and open a door to problem gambling. Brick-and-mortar casino owners are among skill games' staunchest opponents. Both they, and skill games operators, have spent hundreds of thousands on lobbyists and campaign donations to protect their share of the multibillion-dollar industry. Riven by internal differences over the debate, state Senate Republicans were relatively slow to stake out a position on regulation. Leadership released a proposal in May that pitches a 35% tax on the machines alongside an unspecified assessment — to be set by the state Department of Revenue — to cover the cost of regulating them. In a letter to lawmakers last week, representatives for Pennsylvania's 17 casinos said they welcomed the measure as a starting point for negotiations. But a spokesperson for Pace-O-Matic, a Georgia-based firm that makes skill games machines, said in a statement soon after the bill's release that it 'intentionally imposes an unreasonably high, anti-business tax rate that could devastate small businesses and organizations that count on the supplemental revenue the games provide.' The industry's favored bill proposes a levy of 16%. The casino representatives, who pay a 54% rate on their slot machines, called Pace-O-Matic's ideal rate 'miserly.' State House Democratic leaders haven't united behind a skill games proposal, deferring to Senate Republicans to start talks on the issue. Still, members of the lower chamber's majority caucus also have a wide range of opinions on the best approach — from high taxes on the machines to stricter crackdowns aimed at limiting their use. Legalizing recreational marijuana would require navigating a similarly treacherous political path. State House Democrats launched an opening salvo in that negotiation, passing a bill to legalize adult-use cannabis and sell it through state-run stores, similar to Pennsylvania's liquor model. The bill was summarily rejected in the state Senate, failing to pass its first committee vote. Bradford, the state House majority leader, said any further action will need to originate in the Senate. Bradford specifically urged state Sen. Dan Laughlin (R., Erie) — a longtime legalization advocate and chair of the committee that would handle the bill — to advance his own proposal. 'He has the opportunity now to immediately and expeditiously move a marijuana legalization bill,' Bradford told reporters after a state Senate panel rejected the House's preferred approach. 'I look forward to him getting those votes … and sending something over.' Laughlin has been noncommittal about when he and state Sen. Sharif Street (D., Philadelphia) will introduce their bill, saying the two have been 'making tweaks and going back and forth with the Legislative Reference Bureau' on language. State Sen. Marty Flynn (D., Lackawanna) said he plans to introduce a bill designed to be more appealing to existing medical marijuana companies than the doomed state store bill was. Flynn said he wanted to give the state Senate a concrete option and 'have a vehicle in place' in case the legislature decides to act before the June 30 budget deadline. 'They can't say that no one introduced anything,' Flynn told Spotlight PA. Pittman has not signaled that cannabis legalization is a priority in upcoming budget negotiations. He declined to say whether the issue is on the table, instead dismissing the state House bill as a 'completely unserious proposal.' Pennsylvania's budget is undergirded by a lot of federal money. By June 30, the commonwealth is projected to receive $50 billion in federal funding for the current fiscal year, accounting for 40% of the state's operating expenses. These dollars flow to things like education and transportation. But human services line items, which include programs like SNAP and Medicaid, are by far the biggest recipient category, accounting for 70 cents of every federal dollar received by the state government. This money could be at risk. While the details are in flux, President Donald Trump and congressional Republicans have indicated that they plan to cut Medicaid, a low-income health insurance program administered by the states and funded partially with federal dollars. If they move forward with such a plan, Pennsylvania would need to make corresponding cuts or fill the hole with state revenue. And the price tag may be hefty. According to a rough analysis that the progressive Pennsylvania Policy Center conducted before federal Republicans formally passed their sweeping tax plan, the state would be on the hook for at least $133 million more in costs in 2026 if the federal cuts were enacted. That total, the center noted, would only grow in the coming years. The GOP tax plan hasn't passed the U.S. Senate, and could change significantly before becoming law. But financial uncertainty remains in Pennsylvania, and one option for dealing with it would be passing a short-term budget to keep the state government's lights on until Trump signs a spending bill. The legislature made a similar move in 2020 due to the COVID-19 pandemic. State Senate Appropriations Chair Scott Martin (R., Lancaster) told Spotlight PA that a partial budget might make sense. 'I will never shut the door on that,' Martin added. However, such a move would only delay big decisions on the state's finances, not eliminate them. Bradford told reporters in May that any talk of temporary budgets is 'premature.' 'I think we have an obligation to pass a budget,' Bradford said, adding: 'I think we should do that by June 30 or shortly thereafter.' If you learned something from this article, pay it forward and contribute to Spotlight PA at Spotlight PA is funded by foundations and readers like you who are committed to accountability journalism that gets results. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
