Pennsylvania auditor general: PA Charter School part of 'broken system'

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The Pennsylvania Cyber Charter School built a savings account of $13 million by mid-2010, despite spending about $2 million a year on advertising, state Auditor General Jack Wagner announced today as his office prepared to release a review it said highlighted problems in the state's education funding system.

The online education giant, with about 11,000 students statewide, amassed the largest budget surplus of any charter school in the state, according to a summary of the audit, expected to appear on the auditor's website today.

"While I have long supported alternative forms of education, as the state's independent fiscal watchdog, I cannot look the other way and ignore a broken system in which charter and cyber charter schools are being funded at significantly higher levels than their actual cost of educating students," Mr. Wagner said in a press release. "It is time for the Pennsylvania Department of Education, along with the General Assembly and the Corbett administration, to fix Pennsylvania's flawed funding formula for charter and cyber charter schools and restore fairness to the system."

The audit found that tuition payments by school districts for regular education provided by PA Cyber ranged from $6,414 for each student from the Altoona Area School District to $17,755 per student from the affluent Lower Merion School District outside Philadelphia.

Those payments are determined by a formula meant to reflect the home district's per-pupil costs. Payments for special education students who chose charter schools are generally much higher.

In recent years, districts' payments to PA Cyber have totaled about $100 million.

Former executives and vendors of the school are the subject of an ongoing federal grand jury probe.

An earlier report by Mr. Wagner's office found that nationally, it costs an average of around $6,600 to educate a student through online courses. PA Cyber, the audit summary indicates, is getting much more than it should need to educate students.

PA Cyber's total administrative expenses during the 2008-09 school year, according to the summary, were $12.6 million, the third-highest among the 501 districts and 127 charter schools operating that year.

Business expenses, it said, have included about $2 million a year in advertising spending.

"These are taxpayer dollars that were allocated specifically for funding public education," Mr. Wagner said in the release. "Pennsylvania Cyber Charter School should stop spending taxpayer funds for advertising and should allocate them to additional student education services."

PA Cyber released a response emphasizing that the audit found that the school "complied, in all significant respects, with applicable state laws, contracts, grant requirements, and administrative procedures."

"We strive every day to give Pennsylvania's children unique, innovative educational opportunities that will help them excel," PA Cyber chief executive officer Michael Conti said in the statement. "That we fulfilled our obligation to a thorough and efficient system of public education -- well, that's just great news."

The release added that "the additional observations in the final audit are outside the scope of the law" and expressed hope that the General Assembly will complete a long-discussed overhaul of the 1997 law governing most aspects of charter schools.

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Rich Lord:, 412-263-1542 and on Twitter: @richelord. First Published December 6, 2012 12:45 AM


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