Pennsylvania's Largest Charter School May Close as Nearby School District Steals Its Funds

CHESTER, Pa. – Three thousand students at Pennsylvania’s largest charter school face the imminent risk of having their school year cancelled in the coming days or weeks, and seeing their school “stop operations” entirely due to a lack of funds.

That grim reality is a direct result of decisions by officials in the nearby Chester Upland School District to keep state funds legally owed to the Chester Community Charter School, and to use them instead to bail the district out of its “self-inflicted budgetary crisis.”

That’s according to a legal brief filed by attorneys representing the Chester Community Charter School in response to last month’s judicial ruling that gave the Chester Upland School District a $3.2 million state bailout, and left the charter school holding almost $7 million in I.O.U. notes.

Attorneys for the Chester Community Charter School (CCCS) say the school faces a very real risk of shutting down because it cannot pay its bills.

As a result, it is “extremely likely that Chester Community Charter will have to stop operations, turning in excess of 3,000 students, nearly 700 with disabilities, out on the streets in the middle of the school year.”

Jeff Dailey, an attorney who represents the families of 10 Chester Community Charter students in the ongoing legal dispute, told EAG that his clients “include children with cerebral palsy, dyslexia, reading issues and others, all of whom are in jeopardy of having their school shut down.”

The charter school is facing insolvency because of the school district’s “theft of money that should have gone to educate kids attending non-profit publicly established charter schools, like CCCS,” Dailey wrote in an email.

Several of his special needs clients chose to attend the charter school because of its successful track record of serving special needs students.

These students have blossomed academically and socially since attending the charter school, Dailey said. If CCCS is forced into bankruptcy, those special needs students would be forced to attend the traditional school district (CUSD), which is unable to sufficiently meet their needs.

The students’ continued success is very much in jeopardy, Dailey said.

Bailouts for school district, I.O.U.s for charter school

In Pennsylvania, school funding occurs on a monthly basis. The state government gives money to each school district, based on the number of students within that district.

From those funds, the school district is legally obligated to pass along the per-pupil amount it owes to the local charter schools, as determined by the number of students attending each charter. The traditional school districts act as the middle man in funding charter schools.

If a school district fails to pay the charter as required by law, the state is to deduct the amount owed to the charter school from “any and all state payments made to the district,” according to the Pennsylvania charter school law.

The Chester Upland School District has not made its full monthly payments to Chester Community Charter Schools since March 2011. Beginning in April 2011, the state took over the payments and has sent $23.5 million to the charter school, but still owes it about $6.8 million.

Last December, the Chester Community Charter School filed a lawsuit against the state of Pennsylvania to recover the almost $7 million it’s owed by the Chester Upland School District and – indirectly – the Pennsylvania Department of Education.

The charter school needs the $6.8 million – and the $3 million it’s legally entitled to receive every month – to pay employees, vendors, and its building leases. If no action is taken, CCCS faces a total deficit of $21.8 million.

It now appears the charter school may not be receiving any money from the state until CUSD’s lawsuit against the state is resolved in the spring. The school district is suing the state for extra funding to make up for its ballooning budget problems.

As part of last month’s $3.2 million temporary bailout given to the Chester Upland School District, U.S. District Judge Michael M. Baylson prohibited the Pennsylvania Department of Education “from withholding subsidies to the Chester Upland School District until further order of the court.”

Baylson ordered that the $3.2 million be given to CUSD “for the payment of salaries and compensation to school district employees and to the vendors of the school district.”

That’s fine for the school district, but what about the charter school?

“The recent temporary deal between the Department of Education and the Chester Upland School District does not provide any money for the charter schools, and effectively closes off funding for the rest of the year,” Dailey said.

On Monday, the Commonwealth Court denied the charter school’s request for immediate payment from the state, and effectively said the school will have to make do until the scheduled hearing in April.

The court’s decision means the charter school’s deficit will be “$10 million on February 5 and over $13 million on March 5,” an amount that “imperils CCCS and its students,” charter school officials said in a press release.

“The implication of the ruling is that the charter school – and its three thousand Chester students – should suffer the negative effects of program reductions and layoffs in order to establish credibility for our reasonable efforts to obtain funding required to continue to provide high quality education to the children of the City of Chester,” the release reads.

Charter suffers due to district mismanagement

Chester Community Charter School is not only the largest charter school in Pennsylvania, but it educates 60 percent of all K-8 students in the city of Chester.

Charter school officials note that the school has functioned within its financial means, and is only facing a financial crisis because CUSD officials have illegally withheld funding.

While the charter school receives less than the state’s $13,700 per pupil average, its students have achieved Annual Yearly Progress (as defined by the No Child Left Behind law) for three consecutive years, according to the press release.

In contrast, the Chester Upland district “spends more than $17,000 to educate each student enrolled in a district school,” Pennsylvania Education Secretary Ronald Tomalis recently wrote in a letter to state Sen. Andrew Dinniman.

“Moreover, CUSD has been the beneficiary of extraordinary state assistance for years,” Tomalis writes, including “$9.5 million in special appropriations over and above those provided through the traditional means of funding all Pennsylvania’s school districts.”

“The District knows that it budgeted improperly, and it knows that it overspent available revenues,” Tomalis writes.

While the Chester Upland district has mismanaged its resources and illegally spent the charter schools’ resources, it is Chester Community Charter students who stand to suffer the consequences.

The charter school has taken out loans to meet its payroll, rent payments and daily expenses. The interest charged on these loans means the charter school will have less money to spend on students in the future.

“If CCCS is unable to make these payments, it will have catastrophic effects on CCCS’s ability to continue operations,” CCCS Chief Financial Officer Robert Olivo wrote in an affidavit.

Pennsylvania taxpayers are left to wonder why state officials are letting one of the state’s most effective and fiscally responsible charter schools twist in the wind, even while more money is being poured into an ineffective and irresponsible government-run school district.

If Pennsylvania citizens want to understand what’s wrong with their state’s public education system, the case of Chester Community Charter School versus the Commonwealth of Pennsylvania’s Department of Education is a good place to start.


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