On May 27, 2014, the Pennsylvania Supreme Court held that an enrollment cap on a charter school is valid if agreed to by the parties as part of a written charter.
In arriving at its holding in The School District of Philadelphia v. Department of Education and The Walter D. Palmer Leadership Partners Charter School, the Supreme Court interpreted the applicability of a 2008 revision to the Charter School Law.
Facts Of The Case
In 2005, the Walter D. Palmer Leadership Learning Partners Charter School (“Palmer”) and the School Reform Commission of the School District of Philadelphia (“SRC”) entered into an agreement that renewed the School’s charter for five years. Incorporated into the agreement was an SRC resolution which denied the School’s request for expansion of enrollment and granted approval to enroll a maximum of 675 students.
In 2008, the Charter School Law was amended to state that enrollment caps are unenforceable unless included in a charter by agreement. Following the revisions to the CSL, Palmer asked for revisions to its charter, including removal of the enrollment cap. SRC refused the requested revisions. Nonetheless, Palmer consistently enrolled more than the 675 students permitted by its charter. Enrollment ranged from 729 to 765 students. In each school year, the Philadelphia School District provided funding for 675 students.
In 2010, claiming that it had been underpaid by the District, the Charter School asked PDE to withhold $1,678,579 from the District’s basic education subsidy as payment to the Charter School for the students it had educated above the 675 permitted in the enrollment cap. PDE complied, the District objected, and asked for a hearing before the Secretary of Education. The Secretary determined that the cap applied until 2008 when the charter school law was amended to forbid a cap unless agreed-to by the Charter School. The Secretary interpreted the amendment to mean that the District had to re-obtain the Charter School’s assent to the cap in 2008 As a result, the District was obligated to pay the Charter School $1,253,225 to cover the cost of students in school years 2008-2009 and 2009-2010 who had been enrolled over the cap agreed to in 2005.
The District appealed to the Commonwealth Court. As we discussed in SLB 87 (April 10, 2012), the Commonwealth Court determined that a school district’s issuance of a charter is only a legal authorization for the establishment of a charter school. Any conditions included in the charter are imposed by the chartering district and are not presumed to be agreed to by the charter school. As a result, the Commonwealth Court concluded, Palmer’s enrollment could not be limited by a cap imposed on it in 2005 to which it had not agreed in 2008.
The District appealed to the PA Supreme Court.
The Court’s Holding
The PA Supreme Court reversed the Commonwealth Court, and held that the enrollment caps agreement was valid and enforceable. Charters approved before and after the amendment are to be treated the same. The Court concluded that the plain language of the statute has at all times provided that the number of students enrolled in a charter school may be subject to a cap both before and after the amendment if the cap is included in the written charter agreed to by the charter school.
Furthermore, the Court found nothing in the language of the 2008 amendment to support the views of the Secretary and the Commonwealth Court: “The court and the Secretary have imposed a requirement that has no basis in the statute; in fact, the plain language of [the amendment] is directly contrary to their construction.” The “crucial requirement remains the same: the Charter School must have agreed to the enrollment cap ‘as part of its written charter’.”
The Bottom Line
The case emphasizes the need for a written charter which incorporates clearly all terms to which the parties have agreed, signed by appropriately authorized personnel and supported with clearly written, appropriate resolutions overtly incorporated into the charter.
The case raises questions:
- Are the terms agreed to in a first charter also agreed to in the next one, or must they be renegotiated each time?
- What does the case mean, if anything, for the enforceability of other conditions in the charter?
It is important for charter schools and school districts to negotiate and be clear about the terms of the agreement between them that is incorporated into the approved charter. All parties are encouraged to involve their solicitor when negotiating and reviewing charter terms.
School Law Bullets are a publication of the KingSpry Education Law Practice Group. John E. Freund, III, is our editor. The article is meant to be informational and does not constitute legal advice.
