Philly schools revise cost of charter expansion after NewsWorks analysis

Fact checking by WHYY/NewsWorks found that this cost was actually overinflated by almost double.

We went down the rabbit hole on this one.

And in the end, the Philadelphia School District revised its own math.

After the Philadelphia School Reform Commission voted Wednesday night to approve five new charter schools, SRC chairman Bill Green said the decision would have a “very minimal” impact on the school district’s budget.

The commission granted conditional three-year charters to: Independence Charter School West, KIPP DuBois, MaST-Roosevelt, Mastery Gillespie and Tech Freire.

In fact, the SRC’s action does not drive up the district’s $80 million budget gap for next year.

Over five years, the district said Thursday that the decision to create these 2,684 new seats would cost $13 million.

Fact checking by WHYY/NewsWorks found that this cost estimate was actually overinflated by almost double.

Matt Stanski, the district’s chief financial officer, verified this oversight Friday, saying the true cumulative cost of expanding these charters is $6.8 million.

The discrepancy comes from the fact that the district forgot to account for the 280 seats it authorized for KIPP’s DuBois application. (More on this later).

But even this accounting hides the actual cost of those additional seats.

Assuming, as the district does, that each new seat costs the district an average of $7,000 in stranded costs, the four-year cost is actually $40.6 million.

This figure doesn’t count the 280 seats of KIPP’s granted charter — which may grow to 500 seats.

The district has already been paying for these 280 seats, so it’s not a “new” cost.  I’ll explain this further below.

First, here’s a breakdown of the $40.6 million.

2015-16: 0 “new” seats = $02016-17: 1446 seats = $10.1M2017-18: 1962 seats = $13.7M2018-19 2404 seats = $16.8M

Total cumulative cost = $40.6M

Many have challenged this $7,000 stranded cost figure, which comes from the report done by the Boston Consulting Group in 2012.

When the Philadelphia School Partnership made its $35 million offer, it assumed stranded costs at $2,000 per student.

Even accepting the district’s figure, it would be expected that the added costs of charter migration would diminish over time through school closures and layoffs. But the district doesn’t account for this.

Asked about the challenges to the $7,000 figure, Stanski repeated: “It’s the number we’re currently using right now.”

At Thursday night’s SRC meeting, the commission approved a contract with the Aston Group to analyze and updated its stranded cost estimates.

Savings from closing charters

OK, so how does a $40.6 million added cost become $6.8 million?

This requires a whole second set of calculations.

The district expects to defray the $40.6 million by counting the savings it hopes to actualize based on closing low-performing charters.

Under this logic, although new charters add 2,684 new seats, the net number of seats created is much smaller.

The district had originally counted 784 net added seats when it did its calculations Thursday.

After conversations with WHYY/NewsWorks, this number was revised to 504.

Here’s the math that gets you there:

1) The district had already been paying for the 280 “new” seats granted to KIPP for its Dubois application.

According to Stanski, KIPP had essentially expanded into serving high school students beyond its agreed-to enrollment cap. KIPP had been billing the Pennsylvania Department of Education for these students. The new charter gives those seats the district’s formal blessing.

Long story short: 2,684 – 280 = 2,404

2) The district is also accounting for the savings associated with the shuttering of charters the SRC has closed or is in the process of closing.

Walter Palmer and Wakisha charters, which had enrolled a combined 1,510 students, closed earlier this year.

The district is counting on five more charters currently in the non-renewal processes to close soon. These schools enroll 2,642 students.

1. Arise Academy High Charter – enrollment: 972. Community Academy of Philadelphia – enrollment: 1,2063. Imani Education Circle – enrollment: 4644. New Media Technology – enrollment: 5265. Truebright Science Academy – enrollment: 349

In total, these closures, in combination with Walter Palmer and Wakisha, would affect 4,152 students.

But because the district believes that many of these students will enroll in other charter schools, it expects these closures will only reduce the city’s charter population by 1,900 students.

Subtract 1,900 (charter seats lost to closures) from 2,404 (new seats minus KIPP’s 280) to get 504.

504 x $7,000 in stranded costs = $3.5 million

Here’s the same chart as from above, with reductions based on the savings realized from closing low-performing charters.

2015-16: $02016-17: $728,0002017-18: $2.6M2018-19: $3.5M

Total: $6.8 M

Others costs

One could argue that the savings from charter closures could be plowed back into the district’s own under-resourced schools.

Instead of supporting the stranded costs of charter expansion, the savings could help ensure that more students in district schools have access to guidance counselors, nurses and any number of other needed supports.

But here the SRC says it was compelled to hear and grant new charters following the strictures of the Pennsylvania charter law.

The Education Law Center disagrees with this reading of the law.

That disagreement aside, district believes the charter expansion will yield better overall results for the city’s children.

The other thing to consider here is that the district will incur additional charter costs aside from the new seats it granted on Wednesday night.

Each year, without any new school openings, the district sees more students enroll in charters.

Despite publicity about the number of students on wait lists, many city charters do not enroll the maximum number of students allowed under their agreed-to caps.

This year, the district is planning for 1,300 students to migrate to charters (either from district schools or other) through this natural growth.

Based on the $7,000 stranded cost figure, the district expects to incur $9.1 million in added costs for these students.