Pennsylvania Lawsuit Raises New Issues

Last Updated: July 27, 2012

This article appeared in the July 2012 Rural Policy Matters.

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A Pennsylvania district has brought a rather unusual, but potentially far-reaching, school finance lawsuit in federal court. The 6,600-student Chester-Upland district, which owes some $30 million dollars, is charging that the state mismanaged the district between 1994 and 2010 when the district was under state control and that the state is failing its constitutional mandate to provide a thorough and efficient system of public education. The district lost $23 million in state funding in 2011–12. A charter school in the district has also sued asking for payments the district is unable to make.

The fact that Chester-Upland filed in federal court is also noteworthy. In 1973 in the landmark Rodriguez case, the federal court found that school finance is a state and local issue. However, the rights of students with disabilities are protected by federal law, and Chester-Upland claims that the underfunding means they cannot provide special education services as required by that law. The shortfall was made worse because Pennsylvania charter law requires districts to provide twice as much funding for each special education student in charter schools as it does for each special education student in regular schools. 

Half of students in the Chester-Upland district attend a charter school.

The state is denying the district’s claims and saying that the federal court has no right to rule in the case.

The case reached a tentative settlement with hearings scheduled to finalize details. Nevertheless, it has significant ramifications within and beyond Pennsylvania. Within the state, budget cuts — including the elimination of $130 million in reimbursements to districts for charter school costs — have forced serious financial problems on a number of districts. Notably, many of these districts are also underfunded by the federal Title I formula, meant to mitigate the effects of poverty on students.

Earlier this month, Governor Tom Corbett signed a bill identifying and making provisions for financially troubled districts, including Chester-Upland. That legislation requres districts to work with a state "chief recovery office" and includes options such as closing schools and converting schools to charters.

The lawsuit has drawn attention to issues with the charter funding formula as well. According to reports, the formula not only over funds special education in charters at the expense of regular schools, it requires districts to pay twice what it should for pensions for charter employees, and requires districts to make allocations to charters from all non-federal revenue sources, including grants.

Critics say the charter formula harms traditional schools and can put the financial viability of districts, especially smaller districts in jeopardy. Charter supporters also have issues with the formula, which they say underfunds them in other ways. Charter enrollment in Pennsylvania has risen from 67,000 students statewide in 2007–08 to 105,000 in 2011–12.

Many in the state are calling for the development of a new finance formula.

Beyond Pennsylvania, the Chester-Upland case raises new issues related to the role of federal courts in education funding when special education and when charter schools are involved.

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