Auditor General Jack Wagner Says State Leadership Must Step Up, Fix Flawed Charter School Funding Formula

Oct 13, 2010, 16:25 ET from Pennsylvania Department of the Auditor General

HARRISBURG, Pa., Oct. 13 /PRNewswire-USNewswire/ -- Auditor General Jack Wagner said today that the state's flawed charter school funding formula is costing taxpayers hundreds of millions in additional tax dollars, at a time when the state is facing its toughest economic crisis since the Great Depression, and that there has been no leadership by the Department of Education, the general assembly or the governor to address this fiscal problem.

Wagner, a strong supporter of public education, was one of only two Democrats who voted for the charter school law in 1997.  He released a special report on charter school funding last week and called for a moratorium on the creation of new charter and cyber-charter schools until the General Assembly and the Rendell Administration fix the flawed funding formula to bring equity to school districts, charter and cyber-charter schools, and to taxpayers who paid an additional $225 million in tax dollars to school districts who lost students to charter and cyber-charter schools.

"As Auditor General, the independent fiscal watchdog of the commonwealth, I cannot turn a blind eye to the inefficiencies in the way charter and cyber-charter schools are funded in Pennsylvania, Wagner said  "My call for a moratorium signifies the importance of fixing a funding system that the state cannot afford to ignore, and it is my hope that the call will hasten the state leadership to address this problem sooner rather than later for the sake of students, school districts, charter and cyber-charter schools, and Pennsylvania taxpayers.  

Wagner's call for a moratorium does not restrict a family's ability to exercise its right to send its children to a charter or cyber-charter school.  Existing charter and cyber-charter schools would still accept students and also have the ability to expand their school.

Editorial boards across the commonwealth have opined and agreed with Wagner that the charter and cyber-charter school funding formula is flawed and needs to be fixed.

Wagner's report found that the funding problem was accelerating at an unaffordable rate, with taxpayers spending a total of about $1 billion a year during the 2008-09 school year.  In that school year, just over $700 million was spent on charter and cyber-charter schools and about $225 million in reimbursements went to school districts, for approximately 73,000 children enrolled in Pennsylvania charter and cyber-charter schools, without knowing what it actually cost to educate a child in a charter or cyber-charter school.  Consequently, taxpayers paid an additional premium payment of $3,122 per child to school districts for students who transferred to a charter or cyber-charter school.

In addition, Wagner's report found that 45 percent of charter and cyber-charter schools had a cumulative "reserve" fund balance exceeding 12 percent of their annual expenditures, the maximum allowable reserve percentage for school districts during the 2008-09 school year.  In fact, the review found that the reserve fund balance percentages for charter and cyber-charter schools exceeding the 12 percent ranged from 13 percent to 95 percent of their annual expenditures.  Moreover, Wagner's report found that based on state law, school districts paid different tuition rates for students attending the same charter/cyber-charter school, resulting in some school districts subsidizing others.

Everyone would agree that the cost of educating a child at a bricks and mortar charter school is different than educating a child at a cyber charter, but the funding formula is the same, said Wagner.

"Ensuring that Pennsylvania students have the opportunity to obtain a cost-effective quality education is of the highest importance," said Wagner.  "As auditor general, I have taken decisive action to make education a top priority in my administration by completing various education-related reports, and I will continue to do so in the years to come to improve Pennsylvania's educational system."

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly.  He is the Commonwealth's elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations.  The Department of the Auditor General conducts more than 5,000 audits per year.  To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department's Web site at

SOURCE Pennsylvania Department of the Auditor General