Philly schools gets tough with two charters over money dispute

Philadelphia School District officials are recommending that Discovery Charter School in West Philadelphia be shut down, due to a high-stakes dispute over enrollment caps and $406,000.

Confronted with a similar threat, Mariana Bracetti Academy Charter in Kensington last month repaid the district more than $435,000.

The School Reform Commission could vote on the school’s future later this week.

With Superintendent William Hite pushing a freeze on charter expansion due to the district’s budget crisis, charter operators around the city will be watching the stand-off with Discovery closely as they consider their own plans to grow.

Charters are independently managed, but receive public funds from the home districts of the students they teach.

Enrollment caps the issue

The district’s squabbles with Discovery and Bracetti center on the two charters’ decision to enroll more students than the limits set in contracts they signed with the district.

District officials have refused to pay Discovery and Mariana Bracetti for those students, prompting the charters to petition the Pennsylvania Department of Education for the money. Over the past ten months, state officials, saying they have no choice under the law, have withheld a total of $842,009 from the cash-strapped district and given the funds to the two charter schools.

Details of the disputes are contained in documents obtained by WHYY/NewsWorks and the Public School Notebook under Pennsylvania’s Right to Know law.

District officials declined to comment on the documents.

Sean Stevens, the chair of Discovery’s board of directors, issued a statement:

“Discovery Charter School is an unqualified success story, as evidenced by the great demand by parents seeking a high quality education for their children. There is considerable public and political support for the renewal of our charter, and we expect this minor financial dispute to be resolved shortly.”

Angela Villani , the CEO of Bracetti Charter, did not respond to a request for comment.

In separate letters dated April 10, Sophie Bryan, the director of the district’s Office of Charter, Partnership, and New Schools, demanded that the two charters pay the disputed amounts. If the schools failed to comply, warned Bryan, the district would withhold per pupil payments and recommend that the School Reform Commission “commence revocation proceeding” against the schools.

Bracetti quickly capitulated, writing a check to the district for $435,617.90 less then two weeks later.

Discovery’s position

But Discovery is pressing its case.

In a letter dated May 7, Discovery founder and CEO Jacquelyn Kelley blasted the district for threatening her school with non-renewal, writing that “such an action is inconsistent with the Charter School Law” and ignores the school’s solid ratings for academics and customer satisfaction.

In the letter, Kelley calls on the SRC to not only renew Discovery’s charter, but to grant the school an additional 135 seats in order to help satisfy strong parental demand and prevent Discovery from defaulting on its bond debt for a new facility scheduled to open next month.

“Such a default will give a needless black eye to high-achieving charter schools accessing the capital markets to finance safe facilities for their students,” wrote Kelley.

The district, facing a $304 million budget shortfall next year that could mean the end of art, music, sports, guidance counselors, librarians, and support staff in its own schools, has been seeking to manage the growth of charters.

Under Pennsylvania law, traditional school districts are required to pay charters a set per-pupil amount for each student from their jurisdiction that the charters enroll. Philadelphia district officials say they suffer a net loss of about $7,000 per pupil, per year every time a city student enrolls in a charter.

State courts have repeatedly ruled that Pennsylvania districts may not unilaterally impose enrollment limits on charters. While continuing to appeal those rulings, the district has sought to negotiate mutually agreed upon “caps” with its charters.

That’s apparently what happened with Discovery and Bracetti.

Discovery’s charter, signed by school officials in September 2008, calls for “a maximum of 620 students.”

Bracetti’s charter, signed in November 2011, calls for a “maximum of 1,155 students.”

In the first few months of this school year, however, Discovery enrolled 73 students over that limit while Bracetti exceeded its cap by 96 students.

Both schools then successfully petitioned the Pennsylvania Department of Education (PDE) to pay for those students.

Department officials previously pointed to the state’s charter school law, as well as a 2010 Commonwealth Court ruling, to explain their rationale for making the payments.

“The department’s role is to work to make that charter school whole, and then have the district object to that ruling,” Tim Eller, the department’s press secretary, said in February.

The state has yet to grant the district’s requests for administrative hearings on these and other disputes with charters.

As a result, “the School District was left with no choice but [to] recommend commencement of revocation of the charters of both schools and seek reimbursement of these funds,” wrote district Open Records Officer Jessica Diaz in response to the Right to Know request submitted by NewsWorks and the Notebook.

Charter renewal votes slated

The School Reform Commission is tentatively scheduled to vote on the renewals of 16 city charters, including Discovery, on Wednesday. All but two of those schools are seeking to expand, and seven additional charters are seeking mid-term modifications.

All told, 21 charters want 15,000 new seats, which the district estimates would cost it about $500 million over five years.

Late last month, Superintendent William Hite recommended that no such expansion take place, citing the district’s budget woes.

Charters hoping to expand could decide to add students without the reform commission’s approval, then seek reimbursement from the state. Officials at those schools are likely to pay close attention to how the district’s disputes with Discovery and Bracetti play out.

In order to close its budget gap for next year, the district is seeking $60 million from the city, $120 million from the state, and $133 million from labor.

This story was reported through a partnership in education coverage between WHYY/NewsWorks and the Public School Notebook.

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