One line item in school district budgets across Butler County and the state has administrators and school directors calling for reform.

Officials say funds budgeted for cyber charter schools students’ tuition are crippling financially strapped districts. At the same time, reports on cyber charter school spending and large fund balances are criticizing the formula used to determine how much money the schools are paid, as hundreds of millions of dollars are directed away from public schools.

An audit of five Pennsylvania cyber charter schools showing hundreds of thousands of dollars in revenue and reserves has added fuel to the fire.

“I think we’re very frustrated with the funding mechanisms with cyber charter schools,” said Brian White, Butler Area School District superintendent. “This is not to say we want to take choice away from parents … (but) the reality is the way the funding formula is set up, cyber schools have more per child to spend — even though they don’t have a physical building.”

During the 2023–24 school year, the district paid $4,794,875 in tuition for 254 cyber charter students, which amounts to $18,877.46 per student. In contrast, the total per pupil expenditure for students educated in the public school district was $15,783.45 — a difference of $3,094 per student.

Cyber charter schools do not maintain physical facilities, transportation services, or the same level of direct services, such as food service or in-person support staff, White added.

If another $3,094 were allocated for each of the approximately 5,800 students Butler Area School District serves, the district would have an additional $17.9 million in funding. The financial adjustment would be a potentially game-changing figure across the board for Butler County public school districts mulling and often implementing tax increases and budget cuts alike.

“The current disparity highlights a structural funding inequity that not only overcompensates cyber charter providers but also places a financial strain on public school districts,” White said.

Public school funding has been directed to cyber charter schools for student tuition since the charters were created in 2002, but with a recent state audit showing exorbitant spending — such as on real estate acquisitions, capital projects, staff bonuses, vehicle payments and advertising — public school leaders are sounding the alarm.

A resolution approved unanimously by the Moniteau school board earlier this year indicates district taxpayers bear a burden of more than $700,000 annually in cyber charter tuition costs, resulting in the average homeowner within the district paying $291.67 each year in taxes.

Sixty students from Moniteau School District were enrolled in cyber schools for 2024-25. The district paid $881,447 toward cyber charter tuition, bringing the average per student cost to $14,690.

The board’s resolution formally denounced the current cyber charter school funding system in Pennsylvania, calling it a “misuse of taxpayer funds.”

It also claimed the state Department of Education has failed to provide “adequate regulatory oversight,” and has allowed charter schools to operate without financial or academic accountability.

The resolution continued to call upon Gov. Josh Shapiro and Pennsylvania legislators to enact reforms that align cyber charter school rates with the cost of delivering online education; implement stricter financial oversight; and even return excess reserves to the local school districts — many of which have approved 2025-26 budgets with tax increases leading up to their July 1 deadline.

The push for cyber charter reform, along with comments from local public districts, comes as Slippery Rock Area, Allegheny-Clarion Valley, Karns City Area, Seneca Valley, Mars Area and Freeport school districts have all approved tax increases for the coming school year.

The increases are allocated for a number of reasons, such as school renovations, but they highlight how schools can be strapped for cash. And while construction projects also put a strain on district budgets and contribute to increases in expenditures, leaders at area school districts have led their sometimes lengthy list of financial concerns with what’s funneled to cyber charter schools.

Twenty-three students from Karns City, another rural district with an enrollment of about 1,300, are set to attend cyber charters this upcoming year, as of July 17. The district will foot the cost at $13,956.88 per regular education student and $19,995.22 per special education student.

Superintendent Eric Ritzert anticipates spending $19,800 per in-person public school student in the coming school year. The cost, as at Butler Area School District, supports the same services as cyber charter schools provide, plus a slew of in-person student needs.

The district’s leadership recently took a close look at its budget before implementing a tax increase for its residents. The board raised its 2025-26 millage rate to 105.64 mills, up from 102.98 mills, for Butler County residents. Clarion County residents will face a 40.14 millage rate, up from 39.09 mills, and Armstrong County residents will see 39.30 mills, up from 38.53 mills.

In February, state Auditor General Tim DeFoor announced the completion of an audit, honing in on five charter schools in Pennsylvania. The audit, which covers the fiscal years 2021 through 2023, found the five schools used loopholes in the funding formula to increase revenues by $425 million, and existing fund balances by $365 million — causing reserves to go up by 144%.

They spent the money on various items such as staff bonuses, gift cards and capital projects, the audit showed.

“They have revenue of $898 million (and) their fund balance is $618 million, so that caught a lot of people’s attention with enrollment at that size and revenue at that size,” Kari Zimmer, a Seneca Valley school board member, said at a board meeting. A fund balance functions as a savings account for the district.

In total, the money going toward cyber charter tuition supports 13 cyber charter schools made up of around 65,000 students in Pennsylvania — one of the highest in the nation. More than half the student population attend five schools — Commonwealth Charter Academy, Pennsylvania Leadership Charter School, Insight PA Cyber Charter School, Pennsylvania Cyber Charter School and Reach Cyber Charter School.

“The 65,000-plus students who attend public cyber charter schools deserve the same level of resources and support that their peers who attend a public school district receive,” said Jane Swan, CEO at Reach Cyber Charter School. “The 65,000-plus students in public cyber charter schools are not political pawns. Tax dollars should support all public school students, regardless of the school they attend.”

In the 213-page audit covering July 2020 through June 2023, DeFoor’s office said that, despite the five schools increasing revenues by $425 million — a 90% increase — the tuition rates charged by the schools were legal and pursuant to the Charter School Law’s formula.

Pennsylvania’s public school districts must pay tuition for any students who live within their boundaries and choose to attend a cyber charter school. The tuition rates — called too steep by the superintendents who are raising red flags — are calculated based on the district’s per-student spending, using a formula.

For a small school like A-C Valley, where superintendent David McDeavitt is focused on upcoming capital projects and the future of federal education funds, increasing cyber charter tuition costs add a financial strain to the budget.

“It’s difficult to operate public education right now with the concerns we have with federal money, some of the escalating cyber school costs that we have,” he said.

His district would have tackled its capital projects “a long time ago” had it not been required to pay as much to cyber charter schools, he said.

The budgets, revenues and reserves of the cyber charters named in the audit make those of all Butler County public school districts seem small.

Recently, all local districts have approved their budgets. A-C Valley’s is just over $20 million. Moniteau’s and Karns City’s are both about $26.5 million. Slippery Rock Area’s is around $39 million, and Knoch and Freeport are right around $40 million.

Some are bigger, with Mars at about $65.5 million, and Butler’s budget next year at $117 million. Seneca Valley’s is by far the biggest at almost $180 million.

The schools listed also had combined assigned and unassigned fund balances ranging from $3 million to $12 million.

Assigned fund balances contain funds meant for a specific purpose, while unassigned fund balances have not been designated for a specific use or purpose by a school board. For the 2025-26 school year, most districts in Pennsylvania are limited to increasing their unassigned fund balance by 8% at most.

These expenditure, revenue and reserve numbers are not close to what the cyber charters have.

The audit shows in the 2022-23 school year, Commonwealth Charter Academy had 20,358 students, with total budgeted expenditures of $441 million. It’s revenue that year was $421 million. It ended 2022-23 with a total governmental fund balance of $213 million.

Pennsylvania Cyber Charter School had 9,856 students enrolled, with $197 million in revenue. It had $175 million in expenditures and a balance of $218 million.

Pennsylvania Leadership Charter School had 3,284 students, with revenue and expenditures both around $63.5 million. It’s fund balance that year was $76 million.

Insight PA Cyber Charter School had 3,639 students enrolled for 2022-23 and $80 million in revenue, despite expenditures being only $69 million. It’s total fund balance was just over $50.5 million.

“We’ve seen the Auditor General’s audit of the cyber charter schools. We are only allowed to keep so much in reserve and their reserves are astronomically high, so that’s why we are praying there’s change at the state level,” Mark Gross, Mars Area superintendent, said at the school board’s May 6 meeting.

Similar to complaints from local public school officials, the audit suggests the formula should be tweaked.

It said while cyber charter schools should maintain an adequate fund balance, the amount received from public schools relying on taxpayer funds should be “reasonable.”

“We acknowledge that accumulating large fund balances is within legal bounds and not a reflection of mismanagement by the cyber charter schools,” the audit said. “Rather, we believe the fund issue is the outcome of the CSL’s funding formula, which raises important questions about the need for a more reasonable and logical approach to funding.”

The funding formula as it exists, Butler superintendent White argued, impacts resources across the board for all students.

White said he believes the state legislature last year took a good first step by passing a law that subjects cyber charter schools to state Sunshine Law regulations, which make board and committee meetings open to the public. But he thinks they need a cap on how much money they can retain and the governor and legislature need to come to a compromise on the tuition rate across the state.

Spotlight PA reported earlier in May on how cyber charter tuition has been eating into millions in state dollars meant for funding poorer schools, in an effort to address adequacy gaps.

“The Auditor General’s report is pretty scathing; the numbers are the numbers,” White said. “At the same time, it’s hard to be angry at the charter schools when that’s what the legislation allows.

“So it’s really a legislative matter to fix. The frustration shouldn’t be directed at charter school operators so much as legislation that should make it all clear.”

Related Article: What legislation is suggested to resolve concerns with cyber charter school funding