Cyber School Students Deserve Adequate Funding

Thank you, Chairman Roebuck and members of this committee for inviting us to speak today. My name is Nathan Benefield, I am the Director of Policy Research with the Commonwealth Foundation, a public policy research and educational organization based in Harrisburg. I am joined today by Robert Maranto, a professor of Political Science at Villanova University and an adjunct scholar with the Commonwealth Foundation. We will briefly present some of our research on school spending and offer some thoughts on the regarding public cyber schools.

The legislation being discussed today are in response to several criticisms of cyber schools by school districts. Critics of cyber schools claim that these schools are unaccountable to taxpayers and parents, that they do not provide quality education, and that they take “more money than they need” from school districts.

I will address the first two criticisms briefly. Cyber schools typically provide a quality education, while serving many of the hardest-to-educate students. The Commonwealth Foundation analyzed the enrollment and performance trends at public cyber schools. We found that cyber schools met 67 of the 78 academic requirements for AYP in 2006-07—i.e. the percent of students in all age and demographic subgroups reaching proficiency on PSSA test results. We found that cyber school students are disproportionately low-income; come disproportionately from school districts with low academic performance; and often have special needs. Thus, cyber schools are taking many of the most difficult to educate students from districts and helping those students improve academically. This success is due in part to cyber schools’ matching the curriculum to the individual needs of students and offering personal communication between teachers, students and parents.

Cyber schools also meet every accountability measure that district schools do, and more. They are required to report the same information to the state, they are subject to the same audits, and they are measured by the same criteria. Cyber students must take the PSSA, just like district students, and public cyber schools are measured against identical AYP standards. These results are made available online for the public to view.

Furthermore, cyber schools are subjected to a state review in addition to what traditional schools face. Like all charter schools, cyber schools must renew their charter every 3-5 years, and they can lose their charter if they fail to measure up. Cyber schools also face the highest accountability standard—parental choice. Cyber schools get no funding unless parents choose them. Unlike district schools, cybers compete with each other. If parents feel their child isn’t getting a quality education, they not only have the choice between their local district school and a cyber school, but among all 11 public cyber schools. Thus, cyber schools must satisfy the needs of students and the demands of parents to survive.

I have been brief in my discussion of cyber schools’ accountability and performance because none of the bills before the committee seek to improve accountability or performance—they simply seek to reduce funding for students in cyber schools.

Several school districts and their representatives, such as the PSBA, claim that cyber schools take “too much money” from school districts—despite the fact that less than 1% of all public school expenditures statewide go to cyber schools. And even if cyber schools were eliminated, taxpayers wouldn’t save money. In fact, taxpayers would likely spend more.

Each student leaving a district school for a public cyber schools receives only a fraction of the total per-pupil spending of the school district—about 73% on average. The funding formula excludes what districts spend on construction, debt, transportation, and certain other costs—thus cyber schools receive no funding for facilities. Even looking at instruction and student services, cyber schools receive less than 80% of what school districts spend.

Thus, cyber schools help alleviate over-crowding and the need for new construction, they lower class size, and they increase per-pupil spending in district schools. If all cyber school students returned to district schools, I have little doubt it would cost taxpayers substantially more, not less, to educate those children.

If the goal of this committee is to reduce the burden on taxpayers, and to make educational spending “more accountable,” then we need to look more closely at the spending of school districts. The Commonwealth Foundation recently released a report titled Edifice Complex which does just that. Your offices have all received a copy of that report, but it is also available on our website and we are happy to provide additional copies on request.

Among our more troubling findings was the amount of money being spend on new construction for public school facilities. Our analysis found that over the last 10 years, school district spending on instructional costs increased by 51%, spending on administration by 60%, but spending on construction and debt increased by a whopping 103%.

We explored this trend further, to try to determine the cause of higher construction spending. It was not related to district size. Nor was it correlated to enrollment growth. The percent of spending and per-pupil spending on construction were relatively constant relative to district size and growth.

What we found was that the percentage spent on construction correlated to total spending per-pupil. In other words, as districts had more money to spend, they spent a relatively higher percentage on construction. The opposite is true of instruction—school districts with more revenues spent a lower percentage on instruction. Given more resources to spend on education, school boards put more of it towards new buildings, rather than towards classroom instruction.

There are two possible explanations for the trend. The first is, as we suggested, that public school officials suffer from an Edifice Complex. Building new “Taj Majal” schools will satisfy their ego, make them look good, and help them “Keep up with the Joneses.” The second explanation is that school districts get “more money than they need” and need to find ways to spend excess tax revenue, so they pour it into new buildings.

If the latter is the case, then we should apply HB 446 or HB 738 to school districts. Since the average school district spends about $1,200 per-pupil on facilities, we should limit school district spending to the limits proposed on cyber schools, plus $1,200.

If this sounds absurd, it is no more absurd than HB 446. Why limit spending in cyber schools, but not in districts? Where did the limits come from? Setting arbitrary price controls for cyber schools—or for traditional public schools—will either lead to too much spending or (likely under the proposed legislation) shortages in the form of schools shutting down or reducing the quality of service.

HB 1655 is even more absurd. I don’t know what goals this legislation is intended to meet. It won’t save taxpayers any money, as there is no reason to think that district-run cyber schools would be more efficient than statewide charter cyber schools. Nor would it improve quality—there are plenty of reasons to think that creating local monopolies for public cyber schools will lead to lower quality.

The effect of this bill is to reduce the number of choices available to parents. I fail to understand why that is a worthy policy goal. Are parents calling legislator’s offices because they are worried about having too many choices among cyber schools?

Let me reiterate: Cyber schools save districts money. They spend money more efficiently. And they serve many individual students better.

Furthermore, competition from cyber schools is having a beneficial impact on traditional public schools. Recently, Beaver County launched an initiative that will allow students to take classes from any school in the county, if their local school doesn’t offer the class. This initiative is designed to curb students leaving for cyber schools, which offered programs not available in many traditional public schools. Thus, instead of using tax money to lobby the General Assembly to cut off competition from cyber schools, Beaver County schools met the challenge by improving their services to students.

There is a certain degree of hypocrisy in proposing limits on cyber school funding while encouraging increases to school districts.

Consider this: In the Allentown school district, 9 out of 20 schools failed adequate yearly progress, despite spending almost $1,000 more per-pupil than cyber schools. In Pittsburgh, 32 of 57 public schools failed to meet AYP—though Pittsburgh’s per-pupil funding is $9,000 more (more than twice) that of cyber schools. The Philadelphia school district gets $3,000 more per-pupil than cyber schools, yet 162 of 270 schools failed to make AYP. And here in Harrisburg, 12 of 15 district-run schools failed AYP, despite spending nearly $7,000 per-pupil more.

Yet no legislator has propose reduce funding for these failing schools. In fact, most lawmakers want to increase funding—at least to the schools in their district—and take credit when the state budget contains an increase for their local school district. Ironically, low test scores by a school district are frequently used as a reason to give more taxpayer funding to that district.

I am not suggesting that we need to increase funding for cyber schools to the level of failing school districts, nor am I suggesting that we place arbitrary limits on spending by district-run schools. But what lawmakers should do is apply the lessons and benefits of charters and cyber schools to district-run schools.

When a cyber schools is failing to provide a quality education, parents have the option of withdrawing their child, and entering them into any of the other 10 cyber schools. But students in failing school districts are not given a choice to leave the failing schools to attend other schools in the district or in a neighboring district—they are locked into their assigned school. While students have choices—cyber schools, brick-and-mortar charters schools, or private schools, if they can afford them—these choices are limited, and school district officials continue to fight to reduce these choices.

If a cyber school is failing to perform, it will likely lose its charter when it comes up for review. But there is no such penalty for failing schools operated by school districts. Instead the state essentially encourages failure by offering more money when school districts under-perform.

Instead of trying to cut off choices for parents by cutting cyber funding, we should apply the charter model to all public schools.

• All public schools should have charters that have to be renewed periodically. When schools fail to meet performance standards, they should have their charters revoked.
• State and local funding should follow the child—schools should only receive funding when families choose to send their children there.
• Families should be able to choose the public school—both inter- and intra- district—they send their children to, and schools should have to compete to attract students. We should end the “assignment system” whereby children’s schools are determined by where they live.

Cyber schools currently provide educational offerings to thousands of Pennsylvania students. That the traditional school districts view this competition as a threat is troubling. The truth, however, is that children benefit when parents have choices and schools compete.

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Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.