Local education officials and the state’s Auditor General are speaking out about the fairness and transparency of the funding structure for Pennsylvania’s cyber charter schools.

According to a recent audit released on Feb. 20 by Auditor General Timothy L. DeFoor, five cyber charter schools in Pennsylvania legally increased their revenues by $425 million between 2020 and 2023, while their reserve funds grew by 144%.

This increase, the audit states, is largely due to an outdated funding formula that does not account for actual instructional costs and lacks guidelines for spending or limits on reserve funds.

“I am now the third auditor general to look at this issue and the third to come to the same conclusion: the cyber charter funding formula needs to change to reflect what is actually being spent to educate students and set reasonable limits to the amount of money these schools can keep in reserve,” DeFoor said.

The audit examined financial data from Commonwealth Charter Academy, Pennsylvania Leadership Charter School, Insight PA Cyber Charter School, Pennsylvania Cyber Charter School, and Reach Cyber Charter School.

It found that these institutions legally increased their revenue from $473 million in the 2019-2020 fiscal year to $898 million in 2022-2023. Additionally, some cyber charter schools used taxpayer dollars for expenses such as staff bonuses, gift cards, vehicle payments, and fuel stipends. Commonwealth Charter Academy alone spent $196 million on the purchase and renovation of 21 buildings, despite being an online-based school.

“These schools continue to take taxpayers’ money to educate students in an environment that does not cost what we get charged currently,” Jim Thorpe Superintendent Robert Presley said.

A report from Education Voters Pennsylvania, compiled with information from Right-to-Know requests, detailed expenditures for the 2022-23 school year. The findings included $9 million spent on advertising and promotion, $1.4 million on dining, entertainment, and travel, and $220,000 on lodging. Additionally, nearly $630,000 in staff expenses and over $1.2 million in payments to student, caretaker, and family mentors were redacted, meaning the exact purposes of these expenditures remain unknown.

“There were just checks, all redacted, no idea where they went,” Presley said.

However, Commonwealth Charter Academy announced last week that a recent audit by the state found no financial mismanagement, waste, fraud, or abuse of taxpayer dollars.

DeFoor noted that the fund balance for four major cyber charter schools reached $486 million in 2022, a dramatic increase from just $566,858 in 2018. Commonwealth Charter Academy alone held a fund balance of $305 million in 2021-2022, which was 111% of its operating expenses. In comparison, Presley added, traditional school districts are only permitted to maintain an 8% unassigned fund balance.

“Our district currently spends about $4 million on cyber school costs,” Presley said. “Every student that leaves for a cyber charter school takes about $14,000 to $15,000 in funding with them, and for special education students, that number rises to around $36,000 to $38,000.”

Gov. Josh Shapiro’s proposed budget includes some changes to cyber school funding but eliminates a reimbursement line for cyber tuition costs that districts previously received.

As a result, Presley said, Jim Thorpe anticipates a net funding loss of approximately $280,000 in the next state budget.

“If the budget did go through as proposed, we would actually save $1.2 million in cyber costs,” Presley said. “But that budget is not going through as is.”

DeFoor’s audit recommends that the Governor appoint a task force within six months to review the cyber charter funding formula. The task force would then have nine months to issue a report proposing a more equitable and sustainable funding model, which the General Assembly would be urged to act upon within six months of its release.

“The most important thing we can do is to provide our children with a quality education, and as leaders, we need to set our personal agendas aside and fix how we fund education in this state,” DeFoor said.

Local officials are urging residents to contact state representatives in support of legislative reforms that would ensure cyber charter schools follow the same financial and accountability standards as traditional public schools.

“These are all just things that we have to fight against,” Presley said. “It’s not going well because they have too much money to fight, and it’s your taxpayer dollars being wasted.”