We Need a Smart Charter Compromise

Here’s how we can approve high-quality charters without harming District schools

We Need a Smart Charter Compromise

Here’s how we can approve high-quality charters without harming District schools



Governor Wolf wants the School Reform Commission to not authorize new charters at this time.  The SRC prefers to hold off on approvals until their financial picture is clearer. State Representative Mike Turzai favors approving additional charters now.

How this gets resolved will have implications for education policy and our city over the next several years. We need a smart compromise that adds to the long-term sustainability of the District and the city, while building on the success of the best charter operators.

The debate over approving new charters pits charter advocates and parents that want more choices against the teacher’s union and anti-charter parent and civic groups. Some argue that the problem is a matter of dollars and cents: the District cannot afford the cost of new approvals. Two days ago, the Philadelphia School Partnership offered to put up $35 million to help with those costs.

Under Governor Rendell, the District received about 25 cents in reimbursement from the state for every dollar it had to send to charter schools. At the peak, this amounted to $125 million annually. This financial compensation was intended to offset so-called “stranded costs”: as more of its students went to independently managed charters, the District’s central overhead was spread out over fewer and fewer of its students.  It was a good policy but it only worked if the District used the offset from the state to make some necessary adjustments.

But during that period, despite the offset, the SRC failed to wind down its fixed costs. As the district’s enrollment was shrinking by 40,000 students, it was increasing staffing and overhead costs. Moreover, it did not close any schools until after the charter reimbursement went away. In other words: the reimbursement took away the incentive to act.  As is too common, the District waited for the crisis to reach its door. That crisis hit hard in 2011 and 2012 and we have cobbled together inadequate budgets ever since.

The District has to pursue four options: 1) increase revenue from the State, City, or Federal government; 2) manage its own schools more effectively, thus decreasing the demand for charters, 3) manage the charter process in ways that meet demand but limit financial impact; and 4) decrease its cost structure to accommodate lost revenue.

The District has not been able to acquire substantial new revenue from the state during  the past several years. That may change but we do not know when and how. Despite the promises of the new Governor, it will take time to work out the budget, change tax rates, adopt a new funding formula, and develop the compromises needed in Harrisburg.

Moreover, there are other costs that have nothing to do with charters (e.g. pension fund costs) that continue to rise, and if they are not addressed, even a $2,000 per child increase will be devoured outside the classroom within the next five years.

To manage its own schools more effectively the District has to adopt many of the practices of the best charters related to hiring and firing, the use of value added assessment data to improve performance by students and teachers, the maintenance of a school culture conducive to learning, substantive mentoring in support of teacher training (the kind they often did not receive at university teaching programs), and inclusion of social and emotional support for students. District schools often resist change due to labor contracts, poor leadership at the school level, and bureaucratic lethargy.

As for new charters, the best approach is to seek a compromise by approving high-quality charters and offsetting the cost in three ways: 1) by fixing flaws in charter-school funding (including some restoration of charter reimbursement and rethinking the special education formula); 2) shrinking the cost base of the District to match declining district enrollment; and 3) closing low-performing charter schools so those dollars cover the cost of new, higher-performing charters.

All three issues have to be on the table to achieve longer-term fiscal sustainability while expanding options for parents.  Approving new schools now but phasing in expansions will give the District time to plan where and how to reduce costs in the wake of further student attrition to charters.  This strategy will also help to build momentum for the political compromises that have to be achieved in Harrisburg in order to deliver more resources to the District overall.

To be sure, Dr. Hite and the current SRC deserve credit for getting serious about central administration costs. They have closed underutilized schools, closed several poorly performing charters, favored the less expensive turnaround school strategy, cut central office staff, and put forward important ideas in collective bargaining.

But the District will have to do even more in order to push needed resources to the schools and classrooms. Even today the District has a hard time managing inventory, understanding its variable costs, and building effective information systems.

In choosing what appears to be the immediate lower cost option of not granting new charters, we are not solving the problem of parents wanting to flee traditional District schools.  Today Philadelphians attend a diversity of school types: traditional district schools, special admittance district schools, charters, and schools managed under contract by outside entities. Charters are subdivided into traditional charters that draw citywide by lottery and those that take over management of existing neighborhood schools (Renaissance charters) with neighborhood preference.

Thousands of students are on charter waiting lists; most want out of bad district schools but some also want out of bad charters.  Three out of four students that leave District schools go to charters. In the case of the best Renaissance charters, such as Mastery Gratz, those schools are becoming more neighborhood-connected over time, as parents from the community that once looked for non-neighborhood alternatives are considering a resurrected Gratz.

Meanwhile, the District rates 60 of its schools—nearly one third of its total—in the lowest tier of performance on its School Progress Reports. By contrast, fourteen of the charter applications are from operators that run schools that by any measure outperform the district average. By not going forward with the strong charters, the District is inadvertently  giving preference to 60 failing schools over higher quality school options.

Charters have been a disruptive force for close to two decades. And like any disruptive force they lead to system confusion and inefficiencies during the early period of development. Viewing them as a competitive adversary has always been the wrong perspective. At the same time there are many charters that should never have been approved or should have been shut down more quickly.  The strong charters need to comply with all public regulations and the best management and educational practices available. Ultimately they will also need to engage in greater self-regulation, as some are talking about today.

Because strong charters deliver better outcomes for so many families, especially low-income families, they are a disruption we need to encourage. But we have to figure out a path to make the disruption more efficient and sustainable.

The SRC should approve high-quality charters, and then join with those charters to advocate for a weighted student funding formula and improvements to the policies that govern charter funding, while doing more to push centralized resources[LP1]  into the classroom of District schools.

Approving charters without an eye toward proven quality and overall fiscal capacity would not be wise. Deciding against all applications would send the wrong signal to thousands of people looking for options. Lets get the right compromise and figure out how to move the health of the District, the vibrancy of the charter movement, and the fortune of the city forward.

To view the charter school applicants’ presentations, click here.

To see the Charter Schools Office’s evaluation reports on each applicant, click here.

Read the debate over one school, MaST Center City here.

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