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Auditor general criticizes PA Cyber Charter School surplus, urges changes in state funding

| Thursday, Dec. 6, 2012, 2:20 p.m.

One of Gov. Tom Corbett's priorities early next year is to examine how the state funds charter and cyber charter schools, the Department of Education said Thursday, responding to Auditor General Jack Wagner, who said an “out of whack” formula left the Pennsylvania Cyber Charter school flush with cash.

Wagner said the audit shows that the Midland, Beaver County, cyber school, the largest in the state with 10,600 students, is receiving much more public funding than it needs, and he criticized how the school spends some of it. The audit showed that at the end of the 2009-10 school year, the cyber school had a $13.8 million surplus, and between 2008 and 2010, it spent at least $3.5 million in taxpayer money for print, TV and radio advertising.

PA Cyber did not directly address most of Wagner's criticisms but noted in a statement that the audit said the school “complied ... with applicable state laws, contracts, grant requirements and administrative procedures.”

Department spokesman Tim Eller said surpluses are not new in public education. “Charter schools are public schools just like the school down the road,” he said.

The audit said the cyber school, which received more than $102 million in public funding for the 2011-12 school year, gets “almost twice as much revenue as any other cyber charter school and nearly three times as much as any other bricks and mortar charter school.”

Under the current funding formula, each school district gets a set amount from the state for each student it educates. If a student goes to a charter school or cyber charter school, that money leaves the district and goes to the new school.

“The funding formula is out of whack and needs to be corrected legislatively,” said Wagner, a frequent critic of charter school funding.

Wagner said that districts pay $6,500 to $17,000 for each student attending a charter school, but other states spend no more than $6,000.

“Pennsylvania is out of step,” he said.

The audit occurs amid turmoil at PA Cyber. In July, federal agents served search warrants or subpoenas at the cyber school, the National Network of Digital Schools, which provides management services for PA Cyber, and at other agencies founded by former PA Cyber CEO Nick Trombetta, who stepped down on June 30. Federal authorities said the cyber school is not a target of the investigation.

The U.S. Attorney's office did not return a message seeking comment on the status of the investigation. The cyber school in September fired its four top administrators in what it said was a reorganization.

Wagner said his audit did not uncover any violations of the law, but that PA Cyber was “using taxpayer dollars in a manner never intended,” with regard to the advertising.

He recommended that Education Secretary Ron Tomalis and the General Assembly propose legislation to change how charter schools and cyber charter schools are funded and how they spend their money.

Michael J. Conti, interim CEO of PA Cyber, said in a prepared statement that the charter school favors an “overhaul.” The school said its surplus grew to $14 million for the 2010-11 school year.

“PA Cyber has been at the forefront of common-sense reform for the past several legislative sessions. “We are hopeful that the General Assembly will have more success in the new session in passing an overhaul.”

A bill that would have created a commission to study charter school funding passed the state Senate but stalled in the House this year.

Eller said the state has about 30,000 students enrolled in cyber schools, and another 75,000 in charter schools.

Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or bvidonic@tribweb.com.

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