Note: This is the sixth in a series of quarterly reports produced by Good Jobs First that look at the relationship between race, ethnicity, and economic development.
Summary
Despite having the same amount of funding per student as brick-and-mortar schools, Pennsylvania’s all-online cyber charter schools have lower graduation rates and performance measures across most subjects. The discrepancies are especially severe for Black and Brown students.
These fully online schools, which are publicly funded and privately owned and managed by non-profit corporations, are hoarding assets, especially real estate not used for classrooms.
During the 2022-23 school year, Pennsylvania cyber charters spent more than $21 million on advertising and gift cards. One particularly poor-performing school owns more than 40 buildings with assessed values of over $43 million.
Even though cyber charter schools don’t have the same costs associated with brick-and-mortar schools – like physical classrooms, energy costs, food service, maintenance, or other infrastructure needs—they get paid the same per-student tuition from the local public school district’s budget.
Students enrolled in Pennsylvania cyber charter schools, however, are less likely to graduate high school. In 2022, the state’s cyber charter schools had an overall graduation rate of 65% compared to 88% across all traditional school districts. Measures of student performance also follow this trend: students at public schools are more proficient in math and science than those at cyber charters.
Black and Hispanic students at public schools are 3 and 4 times as likely to be proficient in math, respectively, and 1.5 times as proficient in science.
The Problem: Excessive Funding of Cyber Charter Schools
Pennsylvania has the largest number of students enrolled in public cyber charter schools in the country: 60,000. And that number keeps increasing; enrollment surged by 59% since 2020 following the COVID-19 pandemic.[1] Even since quarantine restrictions were lifted, these figures have not fallen and currently 4% of Pennsylvania K-12 students get their public education virtually.
Cyber charters do not charge their students tuition, but instead receive funding from their students’ resident school districts.[2] An amended law in the early 2000’s gave cyber charters the same annual funding per student as those received by brick-and-mortar charter schools despite having lower cost structures without the need for classrooms or other infrastructure.[3]
Watchdog groups such as Education Voters of Pennsylvania (EdVotersPA), which has documented cash and real estate hoards by the cybers, allege that the one-size-fits-all funding formula results in large overpayments to cyber charters.
The excessive funding of these schools is of particular concern when looking at student performance and achievement. In 2022, cyber charter schools had an overall graduation rate of 65% compared to 88% across all traditional school districts.[4] Online learning has proven to be less effective than face-to-face courses, especially for students that are already struggling.[5]
Shares of students’ proficient rates in math and science were on average 40% higher in school districts than at cybers for the 2022-23 school year.
These disparities are even greater by race. Despite having larger shares of Black and Hispanic students, students of color at Pennsylvania cybers perform far more poorly than those at public schools.
Figure 1. Racial distribution of Pennsylvania cyber charter schools and school districts
Source: PA Department of Education Public School Enrollment Report 2023-24
Key Findings
We collected student proficiency data from all 13 public cyber charter companies and compared this to the largest 13 public school districts in Pennsylvania for the 2022-23 school year. We collected proficiency data across two subjects: Math/Algebra and Science/Biology.[6]
Math/Algebra Proficiency
Nearly four times as many Black students in public schools are proficient in math and algebra compared to cyber charter schools; three times as many Hispanic students are proficient.
Figure 2. Math and algebra proficiency rates for public school districts and cyber charter schools broken down by race (2023-24)
Source: Future Ready PA Index, compiled by Good Jobs First
Science/Biology Proficiency
Black and Hispanic students are 1.5 times as likely to be proficient in science and biology at brick-and-mortar public schools compared to cyber charter schools.
Figure 3. Science and biology proficiency rates for school districts and cyber charter schools broken down by race (2023-24)
Source: Future Ready PA Index, compiled by Good Jobs First
General
School districts tend to be more consistent in their academic proficiency rates overall when compared to cyber charter schools. Across all subjects and races, the average range between the highest and lowest scores was 34% higher for cyber charters (18.5%) compared to school districts (14%).
Hispanic students’ proficiency rates across math and science were consistently 10 points higher than Black students in cyber charter schools. School districts revealed a much more even distribution of proficiency rates between Black and Hispanic students (within 0.1%).
State Subsidization of Racial Inequality and Poor Performance
Pennsylvania public schools, including school districts and cyber charters, have seen a substantial increase in state funding over the last decade. Per-pupil public school funding increased to $21,985 in the 2022-23 school year, an increase of 38% since 2015.[7]
At the same time, reserve funds for these schools are growing, especially for cyber charter schools. Last year, the overall school district unassigned reserve balance represented 9% of expenditures compared to 21% at cyber charters.[8]
Those large unassigned funds at cyber charters is especially concerning because the money could be spent instead on instructional enrichment to address big shortfalls in graduation rates and learning proficiencies, especially the racial disparities.
But the funds are instead going to gift cards, advertising, reserve funds and to inexplicably buy real estate — the antithesis of an online business model.[9] During the 2022-23 school year, Pennsylvania cyber charters spent more than $21 million on advertising and gift cards, including to minor league sports promotors and museum benefactors.[10]
Commonwealth Charter Academy (CCA), whose students do among the worst academically, owns or rents more than 40 buildings with assessed values of over $43 million. As title holder, if CCA ever sells these properties, it would presumably keep the proceeds rather than return them to those who actually paid for it—taxpayers.
Policy Recommendations
- The Pennsylvania Department of Education should investigate why Black and Brown students are so much less likely to be proficient in biology, math and science when they attend cyber charter schools;
- Public payment rates for cyber charter schools need to be reevaluated to acknowledge the cheaper cost of educating students virtually and to reflect the actual cost of operations;
- The state should perform a forensic audit of the cyber charter companies to determine what they actually spend their public funding on and specifically what they are doing with their physical-plant savings to address their students’ poor achievement rates;
- The state should investigate the real estate holdings of the cyber charter companies to determine if such assets are consistent with their stated tax-exempt missions.
Methodology
Proficiency data was collected from Future Ready PA Index which is sponsored by the Pennsylvania Department of Education (PDE). The data reflects the State Assessment Measures and includes the percentage of students who are proficient or advanced in a particular subject. No concrete student numbers were provided, only relative percentages. Subjects included are: mathematics/algebra and science/biology. Data was collected from all 13 cyber charters schools and the largest 13 school districts in Pennsylvania for the 2022-23 school year (representing 20% of students enrolled in school districts).
We collected data by race and ethnicity from the PDE’s Student Group Breakdown. American Indian/Alaskan Native, Asian, and Hawaiian/Pacific Islander groups were not included in this report because they either comprised less than 2% of the student population or information was missing completely. Proficiency rates were in particular limited for Asian students at cyber charter schools, so it did not seem like a reliable comparison.
All the calculations are weighted to take into consideration the performance of white students as a benchmark because in every category, their scores are the highest. This was done by finding the relative Black and Hispanic proficiency rates as a proportion of white student rates. The comparison between cyber charter schools and school districts was then based off the weighted number.
Endnotes
[1] https://www.childrenfirstpa.org/wp-content/uploads/2022/01/PA-Disconnect-in-Cyber-Charter-Oversight-and-Funding-Children-First-2022.pdf
[2] https://www.education.pa.gov/K-12/Charter%20Schools/Pages/Charter-School-Funding.aspx
[3] https://www.psba.org/legislators-and-education-leaders-gather-to-call-for-cyber-charter-reform/#:~:text=In%202002%2C%20Pennsylvania’s%20Charter%20School,%2Dand%2Dmortar%20charter%20schools.
[4] https://www.pacharterchange.org/performance-comparison/
[5] https://www.edweek.org/technology/opinion-how-effective-is-online-learning-what-the-research-does-and-doesnt-tell-us/2020/03
[6] English Language/Literature was not included because cyber charter schools have only half as many English learners on average as public schools. The share of English learner population is inversely correlated with literature proficiency rates regardless of other demographics or school type, making a direct comparison difficult.
[7] https://www.commonwealthfoundation.org/research/pa-school-funding-22000-student-2023/
[8] Pennsylvania Department of Education Expenditure Details and General Fund Balance Sheets
[9] Education Voters of PA. May 16, 2024. https://drive.google.com/file/d/1Xz4Nbvsv9cr3G8Auwp6XPCFyEQD4pInR/view
[10] Education Voters of PA. May 16, 2024. https://drive.google.com/file/d/1Xz4Nbvsv9cr3G8Auwp6XPCFyEQD4pInR/view