House Ed Committee Amends, Approves Charter Reform Bill
June 3, 2013
More Info
Today the House Education Committee inserted a comprehensive amendment to charter funding reform
legislation under HB 618, which eliminates the pension double dip for cyber charters only. The bill will
now move to the House floor.
The committee also reported out HB 980, which places a three-year moratorium on the consideration and
approval of new cyber charter schools and places limits on the unassigned fund balance reserves of charter
schools similar to the limits placed on school districts. In addition, the committee reported out HB 1207,
which amends the Tax Reform Code to increase the amount of funding for the Educational Improvement
Tax Credit (EITC) program from $100 million to $125 million and increases the amounts that may be used
under the credit.
HB 618: Charter Reform Amendment
The committee’s amendment to HB 618 was drafted by the House Republican Caucus following weeks of
negotiations with PSBA and other key stakeholders, representing both school districts and charter schools.
The amendment represents a compromise and addresses various concerns that have been raised regarding
charter school reform. As with any compromise, mutual concessions were made in the drafting. Additional
amendments are likely to be offered on the House floor.
However, many of PSBA’s major concerns are incorporated into the amendment:
* The pension double dip is eliminated for cyber schools and deductions are allowed for food service
costs. This is effective during the 2013-14 and 2014-15 school years. The change is effective for two years
pending the recommendations of the Charter School Funding Advisory Commission and does not include
brick-and-mortar charter schools. However, according to estimates, these changes will provide over $40
million dollars in savings to school districts in next year alone.
* Direct pay requirements mandate documentation from the charter school to PDE and school district
30 days before any payment will be made. Further, a charter may make only one payment request per
month. Payments to charter schools will flow directly from the Department of Education (PDE). Prior to
payment, charter schools must give PDE and a student’s school district of residence documentation of the
student’s residence and enrollment, on a form to be developed by PDE, including copies of the actual
documents used by the charter school to verify the student’s residence. No payments will be made until the
documentation is provided to both the department and the school district.
* A process and timeframe is created for a school district to raise concerns regarding an inaccurate
deduction by PDE. A district has 30 days after a payment is made to notify PDE of inaccuracies and to
request a hearing. The hearing must happen 30 days from the notice; and 30 days from the hearing date the
secretary must make a decision regarding the accuracy of the deduction and make an appropriate adjustment.
The decision may be appealed to Commonwealth Court.
* Provisions for multiple charter school organizations are limited. Provisions here are targeted to
address specific situations and are intended to allow two or more high-performing charter schools to
consolidate into an organization for the purpose of allowing it to be managed by a single board of trustees
and a single administrator, rather than having a board at each school. This requires the approval of PDE
and each school district that granted the initial charter of any charter school included in the proposed
consolidation. The provisions do not affect the terms or conditions of individual charters and the
ability of local school districts to approve or deny individual charters. Each charter school remains under
the oversight of its initial authorizing board of school directors.
* Truancy provisions of the School Code will apply to charters. All initial and renewal charter school
applicants must address how the prosecution of truancy will be handled. The charter school must
demonstrate within 60 days, to the satisfaction of their authorizer that it is in compliance with the truancy
laws of the School Code.
* Performance matrix will be created and used to assess renewal terms. The language requires the State
Board of Education to create a performance matrix to measure and assess the academic performance of
charter school entities. In developing the matrix, the State Board must determine an academic quality
benchmark which will qualify a charter school entity for longer charter terms. The matrix developed by the
State Board is the only matrix that may be used for evaluating a charter school entity.
Here is a brief description of some of the other key provisions under the amended HB 618:
Charter terms. Charters will be granted for an initial term of 5 years, followed by 10-year renewal terms
for those entities that satisfy the academic performance benchmark established by the State Board, and 5year renewal terms for those charter school entities that do not satisfy the benchmark.
Charter School Funding Advisory Commission. An 18-member statewide funding advisory commission is
created to explore funding issues related to charter school entities and make recommendations by March 31,
2014. Changes from previous versions of such proposals now place two school board members to be
seated on the commission. Also representing the interests of school districts will be one school
administrator, one business manager, and one teacher in a public school that is not a charter school.
Debt payment. The charter school must supply its authorizer with an annual list of building debt or other
bonds coming due during the fiscal year and the amount paid on each item of indebtedness. The charter
school must hold in escrow an amount sufficient to pay the annual amount due. If the charter fails to pay the
principal or interest due, PDE will withhold payment due to the charter in the amount necessary to pay the
bank.
Fund balance limits; return of excess. Limits are placed on the unassigned fund balance reserves of charter
schools similar to the limits placed on school districts. Any excess over the established limit must be
returned by the charter to school districts within 45 days after June 30. Charter schools must document
annually to PDE and all school districts that paid tuition to the charter school information certifying
compliance with these requirements by Sept. 30, 2013 and Aug. 15 of each year thereafter.
Access to information. Charter schools must provide their local school boards with access to records such
as budgets, financial reports, financial audits, annual federal and state tax filings, aggregate standardized test
scores without student-identifying information and teacher certification and personnel records. They also
must identify the source of funding for all expenditures, the amount of funds received from a foundation and
a description of the use of such funds, administrator salaries and expenses for an educational management
service provider.
Audits. Charter schools are required to have an audit of the charter school entity’s operations conducted
annually by a qualified independent certified public accountant.
Conflicts of interest. A charter school trustee or administrator may not participate in the selection, award or
administration of a contract if he or she has a conflict of interest, subject to penalties imposed by the Ethics
Commission. An administrator must be immediately dismissed upon conviction for a felony or offense
pertaining to fraud, theft or mismanagement of public funds or any crime involving moral turpitude.
Members of the board of trustees for their duties as trustees are prohibited from being compensated.
Charter terms. Charters may be granted for an initial term of 5 years, followed by 10-year renewal terms
for those charter school entities that satisfy an academic performance benchmark established by the State
Board of Education, and 5-year renewal terms for those charter school entities that do not satisfy the
benchmark.
Teacher evaluation. Requires all initial and renewal charter school applicants to include a teacher
evaluation system that includes at least four rating categories of educator performance and multiple measures
of student performance which must include, but may not be limited to, value-added assessment system data
and student performance on the most recent assessments for which results have been released to the public
and may include goals specific to the mission of the charter school entity’s charter.
Effect on existing charter schools. Existing charter schools must amend their current charter within one
year as needed to reflect the requirements of the new provisions. The charters must demonstrate within 60
days, to the satisfaction of their authorizer, that the charter school is in compliance with the truancy laws of
the School Code.
Establishment of cyber charter schools. School districts and intermediate units may establish cyber
charter schools pursuant to the Charter School Law. It does not preclude school districts and intermediate
units from offering online instruction that is not recognized as a cyber charter school.
PSBA continues to be actively involved as HB 618 moves to the House floor.