The Bethlehem school board has never been soft spoken on the tremendous financial burden associated with charter schools, and the April 30 budget workshop was no exception. BASD has been working for months to put together a comprehensive budget for the 2018-19 school year. The board took months to create a budget that assess cost saving initiatives, fairly balances education initiatives, building maintenance, increasing retirement costs, and charter school tuition. The results of this work can be seen in energy reduction efforts that PPL recently assessed at an annual savings of $48,000 district-wide.

Outside control

As much as the board would love to have complete control of the entire budget, a large portion is outside of their control. This includes items such as the cost of pensions and benefits, determined by PSERS, and the calculation of charter school tuition. A number of years ago, Pennsylvania decided that the best method to calculate the per student tuition rate for a charter school was a complex formula based upon the proposed district budget minus certain expenses. As the formula began to be applied, charter schools noticed that a few districts were cheating. Around the state, allegations were that some schools were intentionally setting low proposed budgets, paying charter tuition based on that figure, and overspending their budget to meet actual need. To try and alleviate this burden The Pennsylvania Department of Education enacted a new guideline in 2012, forcing districts to calculate their charter tuition based off of the actual budget dollars spent. This closed the loophole on the few poorly budgeted schools, to allow charters to get a fairer per student amount.

In Philadelphia, a group of charter schools challenged this guideline, and the Commonwealth Court agreed. A decision was made that the language of the legislation was never to capture actual expense, but rather the proposed budget, and the 2012 guidelines were disposed of.

Budget research

The BASD board prides themselves on the amount of research and precision that goes into their budget process, but also in the fact that every year, the final expenditures wrap up under budget. The district operates with a threshold for the unexpected, but always comes out ahead. So based off of this court decision Bethlehem’s 2018-19 was very suddenly turned upside-down.

BASD was forced to recalculate charter school tuition, and this has placed an additional half-million dollar expense to the new budget, pushing the district back to a nearly $3.9 million deficit in their budget. Chief Financial Officer Stacy Gober pointed out that the district has no choice but to pay the increase, as failure to pay is deducted from money received by the state. Superintendent Dr. Joseph Roy said “as soon as the decision came out, we started receiving bills from charter schools left and right.” He went on further to say that the law needs to be changed.

Law not fair

Dr. Dean Donaher agreed that the law simply is not fair, and that it is the duty of the state to step in, and they are not doing their job. There are approximately 25 districts in the state that fund nearly 75 percent of charter schools, and it is those districts specifically that need relief. Dr. Donaher went on to suggest that perhaps charter funding could be partially offset by the large private donations that charters sometimes receive, so that the entire BASD community could share in the celebration of those financial accomplishments.

After reviewing the figures again, board member Angela Sinkler spoke briefly, but passionately, “it is horrible that we now pay charters more than the teachers that keep our school district running. They (teachers) are our most valuable asset.” Board President Michael Faccinetto added that at this stage, there is no real savings without some pain, and directed the board to go back to the budget and see if anything else could be reduced to close the deficit.

Looking for savings

The first area reviewed was extracurricular activities and athletics, Dr. Roy immediately pointed out that those activities currently account for less than one percent of the district budget, and Dr. Donaher added that removing any of those programs would only make charter schools more appealing.

Ms. Gober then discussed the option of increasing the withdrawal from the district’s financial reserves, which is currently proposed at three million dollars of the 2018-19 budget. The board immediately agreed that as trustees of that district money, they could not suggest tapping any further into that fund balance, and risk driving the district towards significant financial peril. Finally, Dr. Donaher put the idea on the table, that as much as he does not want to support a tax increase of 2.495 percent, he simply cannot find any alternative.

The proposed tax increase, coming in around $87 for Lehigh County residents, and $47 for Northampton County, would provide an additional 3.8 million dollars of revenue to the district, and erase the entire deficit. Under Pennsylvania law, the district is given a set percentage of property taxation which they are not allowed to exceed, and this proposed increase is within the permitted amounts. It is unfortunate that the burden for the 2018-19 school budget will fall on the backs of the taxpayers, but the decision puts BASD in better financial wellbeing for years to come, without requiring additional sacrifice from students. With a board compromised of members that are extremely active in Pennsylvania educational politics, BASD is expected to continue to push legislators to reconsider a more equitable solution to charter funding.