A Brave Judge Takes on State Mumbo Jumbo

Staff attorney Michael Churchill submitted an op-ed on the Chester Upland School District funding crisis. A version of this ran in the Delaware County Times

In 2012 the state took over the Chester Upland School District and had Delaware County Judge Chad Kenney appoint a receiver in order to resolve its financial problems. Nothing changed. Last week Judge Kenney asked the state what they were going to do to actually fix the financial problems so they would not recur year after year.

What was remarkable about the Judge’s request was that  it seemed to be the first time anyone had demanded that the state provide some real answers about what could and should be done with the perennial deficits.

To give the state some credit, it had recognized earlier this summer that nothing could be done without fixing the twisted formula which pays charter schools $40,000 for each special education student when the schools’ own numbers showed they had no students who cost even as much as $25,000, and where the state estimated that the average cost was $16,000. In August it asked Judge Kennedy to lower the special education tuition rate paid by the district to the charters to $16,000 per student, saving $22.4 million this year. Judge Kenney, however, said not until he had a comprehensive solution to Chester’s financial problems.

That has put the state on the hot seat about what a true solution would cost. Given how they stumbled for answers, it appears officials had been trying to avoid adding up the numbers. Unfortunately, everyone is still in denial about the scope of the state’s obligation to the students in Chester or any other recovery district.

As Judge Kenney pointed out, the Financial Recovery Act states that the “Commonwealth shall ensure the delivery of effective educational services to all students” in a recovery district. Effective educational services must mean ones which will enable students to meet state standards. Currently less than a third of Chester’s students meet state standards. Clearly substantial enhancement of services are necessary.

But when the parties answered Judge Kenney’s questions about how much more funding is needed by Chester, no one tried to estimate what would be the cost of such enhanced services. Instead all of the answers were premised on how much more funding would be needed just to deliver the current level of services—i.e. how much would it cost to close the current budget gap or the future cost of the same service level. That clearly will not solve the educational problems of Chester and is a misleading definition of “underfunding.”

Even in terms of the current budget gap, there was no plan yet developed about what needs to be done. According to the numbers reported by the District, the current level of services would cost $139 million this year if there were no change in the charter reimbursement, or $117 million if the $22 million savings in changing the charter special ed rate was implemented. The district’s problem is that it only has–if the Governor’s proposed $400 million statewide increase is approved–$112 million. And it has accumulated debts owed to charters and vendors from its deficits in the last two years of $24.4 million (assuming it gets $8 million in charter reimbursement in the legislative works). Representative Kirkland last week introduced a bill with the administration’s support to appropriate $25 million to the district to essentially wipe out the accumulated deficit. Even assuming that would get approved by the legislature, that leaves the district underfunded this year by about $5 million, and that is a recurring figure. Without fixing that shortfall, there is no real solution for the district, which will be unable to pay its teachers in April and which will be back with the same financial crisis next year.

The Judge did clarify one issue: the state no longer blames the financial problems on the district and its mismanagement. It has started a forensic audit which it expects will confirm that judgment.

With the myth of mismanagement gone, that leaves only one solution (in addition to the reduced charter special ed tuition payment), which is additional state funding at least at the level of a recurring $5 million, along with the one time $25 million to pay the old deficit. That would produce financial stability, but it is not the real measure of underfunding.

To measure the real shortfall of the district’s funding it is necessary to estimate what Chester should be spending given its high levels of students in poverty. The bi-partisan Basic Education Funding Commission this spring reported that districts with high levels of poverty needed greater funding than other districts. If you assumed Chester’s actual instructional cost to educate a student not in poverty should be the state median level, and then apply the extra funding for poverty students called for by the Commission, the total Basic Education funding cost for Chester according to the Commission’s formula would be $89.5 million. The state’s share based on the aid ratio traditionally used for that purpose would be $76.5 million which is an increase of $16 million. This figure is similar in range to the amount of additional funding called for by a formula adopted last winter by The Fair Education Funding Campaign, a coalition of business, unions and advocates of which we are a leading member.

So the answer to the Judge’s question of how much does the Chester School District need to end underfunding is a one time payment of $25 million to pay off past debts, reduction of special education tuition payments to actual costs of the charters, and for a total of $16 million new and recurring state dollars to bring spending in Chester to a level where students could begin to receive “effective educational services” as required by the Recovery Act. An amount this big would need to be phased in over a couple of years so the funds are efficiently used. But any amounts substantially smaller will perpetuate the current failures, not comply with the directive of the Recovery Act and deprive Chester students of the equal opportunity they are entitled to and have not received for far too long.