PA: Why Commonwealth Charter Academy Is Bad News

The following post is addressed directly to my friends and neighbors in Venango County.

You may have heard over the last month that Commonwealth Charter Academy is planning to put up a building near Home Depot, and more recently, Cranberry Area School District officials expressing some concern over that development. Their concern is well-placed; CCA is bad news.

What is Commonwealth Charter Academy?

A charter school is a school that is privately owned and operated but which is funded by taxpayer dollars. CCA is a cyber charter (sometimes called a virtual charter) which means there is no actually school building; students attend school by logging on to their computer and getting their instruction on line.

With over 20,000 students, CCA is the largest cyber-school in Pennsylvania, the state with the largest number of cyber-students in the nation.

Pennsylvania and cyber charters

One might imagine that a school that has no physical building, that has no expenses like transportation and books, and which can assign hundreds of students to a single teacher would be able to operate for less money than a bricks-and-mortar school, thereby saving taxpayers money, and in some states that is true (sort of).

But Pennsylvania funds cyber charters differently than any other state in the nation. In any state, when a student switches from public school to a charter school, their public school is required to send the per-pupil cost to the charter. In all other cyber states, the formula is different for cyber charters than physical charters. But not in Pennsylvania. Pennsylvania school districts pay the full brick and mortar charter per pupil amount to cyber schools. One study from California found the cyber charters would be profitable if they charged as little as $5,000 per student. In 2022, the superintendent of Wattsburg schools said they were providing cyber school at a cost of about $3,000. Our local districts pay about $13K per student.

And the smaller the district, the bigger the hit. Forest, because it spreads its costs over fewer students pays cyber charters over $22K per student. Yes, because of the way the law works, students from different districts are charged wildly different amounts to attend exact same school.

Local taxpayers take a double hit. In theory, when a district loses a student, they lose the expenses associated with that student. In practice, the district carries "stranded costs." Cranberry sends 42 students to cyber-school, spread over K-12. Can they cut teaching positions, bus routes, building maintenance, or administrators for that small number of students? No--but last year they lost $676,425 of taxpayer dollars, which means they either cut services or get more taxpayer dollars to make up the difference.

(There is also a crazy wrinkle with special ed funding. If you want more info, here's the link)

Just how wealthy is CCA?

Cyber charters are hitting Pennsylvania taxpayers with a huge mark-up for services. What are they doing with all that money?

CCA HQ—What does your district’s main office look like?

A report from Education Voters of Pennsylvania shows that in 2022, the largest four cyber charters in the state had net assets and fund balances of $485.5 million. (Unlike public school districts, charter schools do not have a legal limit on how much unreserved fund balance they can sit on,) The Pennsylvania Cyber Charter School Association estimates the current price tag for all cybers in PA is $1.4 billion.

CCA was founded in 2003 (right after PA passed its charter school law) and owned by a group of investors. It was owned for a while by Pearson, the education book publisher that wanted to get into digital education. Nowadays, CCA is its own thing.

Cyber charters spend a great deal of money on marketing. In the 2019-20 and 2020-21 school years, CCA spent almost $19 million on marketing and advertising. That includes not just the ubiquitous online advertising, but items like a Jerold the Bookworm float in Philly's Thanksgiving parade, sponsorship of the Wilkes-Barre/Scranton hockey team, and gift cards that families can use at places like Dave and Busters and Kennywood.

CCA has amassed a huge real estate empire. In the past six years, CCA has paid a total of $88.7 million for properties; those properties have an assessed value of $43.1 million, according to the Ed Voters report.

In 2020, CCA purchased a redeveloped office complex that used to be the Macy’s at The Waterfront near Pittsburgh. CCA had previously leased the first floor of the complex (about 70,000 square feet); now they own the whole building, while the same company they previously leased from manages it for them.

That same month, they spent $15 million on a the former headquarters of Ricoh in the Greater Philly area. Back in 2016, CCA bought the former PA State Employees Credit Union headquarters in Harrisburg for $5 million to replace several leased offices.

In Johnstown, CCA purchased an office building and several nearby vacant lots. In Moosic, CCA purchased the former Cigna building for $17,788,381 (the previous owners had the assessed value dropped to under $300K). In Dubois, CCA is planning to build an office complex on the vacant lot they purchased. In Erie, CCA bought the former Erie Business Center. In West Manchester, CCA spent $4.4 million on a building with an assessed value of $314K.

All of this is paid for with taxpayer dollars--specifically taxpayer dollars that would have been used to fund local public schools. If a Venango County School District was buying up buildings, stockpiling hundreds of millions of dollars, sponsoring a minor league team, and handing out gift cards to parents, what do you suppose taxpayers would say about that. But county taxpayers are funding exactly those things--just for cyber charters instead of local schools.

If CCA is doing a good job, who cares about this other stuff.

It is important to note that for some students, cyber charters are an absolute life-saver, and it would be a mistake to outlaw them entirely.

However, the results for cybers are, overall, lousy.

Students typically average about two years in cyber charters. The Center for Research on Education Outcomes (CREDO) at Stanford University (a group that supports charter schools in general) found that cybers have an “overwhelmingly negative impact” and that a year at a cyber charter left students a half year behind in English, and a full year behind in math. The Thomas Fordham Institute, a group that promotes charter schools, issued a report highly critical of Ohio cyber charters. Pennsylvania’s cyber charters have not outperformed other schools in the state — not public schools, not brick and mortar charter schools, not even high poverty schools.

The report “The PA Disconnect in Cyber Charter Oversight and Funding” from the PA Charter Performance Center of Children First shows our oversight compares poorly to that of other states. Meanwhile, Pennsylvania charters may go years without a state audit. In 2019, Maddie Hanna at the Philadelphia Inquirer found that many cybers were operating years after their charter had expired. The cyber charter graduation rate is about 65%. When it comes to proficiency scores on the PSSA and Keystone exams, cyber charters have never met the state averages. The wrinkle there is that cyber students aren't required to take those tests. Only about 20% of CCA students took the test (despite CCA's many field offices). But if the state only counted the CCA students who tested, the proficiency rate would still be below state average.

Cyber schools will argue that they are dealing mostly with students who have trouble with the whole school thing. That may or may not be true, but even if it is, if their business model is to deal with those challenging students, after over twenty years, shouldn't they be better at it?

It's not hard to see where some problems originate. Cyber teachers are asked to handle hundreds and hundreds of students at a time. Student attendance is a matter of occasional log-ins to the computer platform. Their CEO, Thomas Longenecker, is a business guy; his second-in-command is a lawyer. Longenecker makes a $268,000 salary.

So why is this still going on?

There has been little real revision of the charter law passed in 2002. There have been proposals to bring our charter funding in line with what other states do; most recently, Governor Tom Wolf proposed that cyber charters be reimbursed at a flat rate of $8,000. In 2019, a lawmaker proposed a bill saying that if a district had its own inhouse cyber school (as many do, including our local districts), the district didn't have to pay for an outside charter.

But cyber charters have money to spend lobbying, and any time someone proposes a funding system more in line with what other states do, cyber charter advocates complain that it will be a hardship and limit student choices. And so simple reforms, reforms that would require the same accountability for charter schools as for public schools, and which would create some sensible funding policies--none of the gets adopted.

Meanwhile, more than 450 of Pennsylvania's 500 school boards-- boards representing a full political spectrum--have passed resolutions calling for funding reform, and that includes Venango County districts. Legislators have continued to ignore them.

Local consequences

This year, Oil City has 84 cyber charter students, and that costs the taxpayers of the district $1.4 million dollars. Franklin has 106 cyber students, costing taxpayers of the district more than $2.1 million. Cranberry has a modest 42 cyber students, costing over $626,000.

You can argue that the school district should try to hold onto those students or win them back, but experience and the data tell us that many of those students will be back--and they will be academically behind when they return.

So Venango County taxpayers are sending millions of dollars to companies that do a poor job of providing education, but make enough money to hand out gift cards and buy up millions of dollars' worth of real estate.

Cranberry Superintendent Bill Vonada told his board, "They are ion our community to take our students and teachers." That's not exactly true-- what CCA is here to take is local taxpayer money.

What can be done?

Cyber charters are approved or not approved in Harrisburg; local taxpayers have no say. Regulations are also set in Harrisburg. So if anything is going to be done, it will need to be done by legislators who have, for twenty years, refused to take any action. School boards have been begging for action for years to no avail. There's not much left to do except for taxpayers to call or write their elected representatives

What's the ask?

Accountability and oversight. Ed Voters of Pennsylvania had to drag CCA to court to get it to honor Right To Know requests that any taxpayer-funded school should honor. Cyber charters can never be as transparent as public schools, because they have no elected board and you will never be able to attend meetings by their operators. But at least they can approach a public school's level of transparency.

Fair funding. A flat fee would make far more sense than the current system. Right now every school in the region pays a different amount to send students to the exact same cyber charter. Cranberry pays $12K per regular student; Forest pays $22K. Oil City pays $28K per special ed student; Forst pays $45K. With flat fee of $8K per regular student and $12K per special ed, taxpayers would save and hold on to $308K in Cranberry, $359K in Forest, $676K in Oil City, and $1.1 million in Franklin.

Bottom line

CCA was already in Cranberry and the rest of Venango County already. A physical presence just means more opportunity to recruit and market. But local taxpayers should remember that every brick of that building, every chirpy as they see, every salary for someone working in that building represents taxpayer money that didn't make it to their own local public school. When you are complaining that your school board doesn't do a good enough job shepherding your tax dollars, that new CCA building should be a reminder that your school board never had a say in what happened to those dollars which were hoovered up by an organization that can afford to build in county after county across the state while your own district has to struggle over how much to spend n playgrounds and has to ask parents to send in boxes of tissue just to make it through the year.