A recent ruling by the Secretary of Education resolves, for the moment, a dispute between the Pennsylvania public school districts and charter schools over charter school tuition funding rates. More specifically, the decision is instructive regarding school district use of Pennsylvania Department of Education Form 363 when calculating these rates.
The case is School District of Philadelphia v. Antonia Pantoja Charter School et al., No. BBFM-00-2016-24 – BBFM-00-2016-31 (Pa. Cmwlth., Dept. of Ed. Nov. 21, 2022).
Below, we look at the ruling and offer some guidance for school officials grappling with this issue.
The Lawsuit
Five charter schools sued the School District of Philadelphia over requests for withholding that the schools had filed regarding charter school tuition rates the district had calculated for the 2015-16 and 2016-17 school years.
The lawsuit involves two questions:
1. Were the district’s charter school tuition rates calculated based on “budgeted total expenditures per average daily membership”?
2. Was the district’s deduction of federal expenditures, prekindergarten program expenditures, and part of the Ready to Learn Block Grant expenditures from the charter school tuition rates proper?
At the core of these two questions is the school district’s use of form PDE-363. Charter school tuition rates, also known as Selected Expenditures per Average Daily Membership, are calculated using this form.
The Secretary of Education’s Decision
In ruling in favor of the school district, the Secretary of Education found that the district properly used budgeted expenditures to calculate its per-pupil tuition rates for the years in question.
In addition, the deductions that the school district listed on PDE-363 “are necessary to give full effect to the funding formula in Section 1725-A,” he said. Section 1725-A of the Pennsylvania School Code, known as the Charter School Law (CSL), governs charter school funding.
The charter schools had argued that the district should have used the PDE-2028 format, which does not reference the district’s amended operating and capital budgets, to complete PDE-363.
However, the secretary explained that the CSL “does not specify which format or version of a budget a school district must use to calculate its charter school rates.” Instead, the law “sets forth the formula school districts must abide by but does not require the use of any specific budgetary form,” he said.
The secretary rejected the charter schools’ claim that the district lacked authority to deduct expenditures related to federal funds, prekindergarten programs, and a part of the Ready to Learn Block Grant in calculating charter school tuition rates.
The secretary concluded that “each deduction was proper and rooted in other legal authority where the CSL is silent.” He explained that, through these deductions, the school district “is giving effect to the CSL rather than altering it.”
“Including federal funds in the CSL would create a situation in which the charter schools double dip” because the schools “are also eligible to apply separately for such funds,” the opinion said.
As for prekindergarten funds, the secretary said “it would be absurd” for the charter schools to receive Headstart and prekindergarten funds as part of the CSL formula as they are not authorized to operate such programs.
Lastly, the secretary said the state’s Fiscal Code bars school districts from including a portion of the Ready to Learn Block Grant in determining charter school tuition rates.
Bottom Line for Schools
The calculation of charter school tuition reimbursement rates can be complicated. The Department of Education has several resources on its website that may be helpful for school officials grappling with this issue, and at least for now, form PDE-363, which includes deductions for certain federal fund and prekindergarten programs, is appropriate for use.
Our education attorneys will continue to monitor this area of litigation and keep you posted on new decisions that have the potential to affect how your school district calculates these rates.
School administrators with questions about tuition reimbursement rates should contact their school’s solicitor or one of the education attorneys at KingSpry.
School Law Bullets are a publication of KingSpry’s Education Law Practice Group. They are meant to be informational and do not constitute legal advice.
