Can Philadelphia Afford to Expand Charter Schools? Professors of Accounting Say Yes

No one debates whether there’s demand for more charter schools in Philadelphia. The best charter schools have waiting lists that stretch well into the hundreds. Instead, the debate at the bankrupt School District of Philadelphia has focused on costs. Can the city afford the number of charter schools to meet the parental demand? Many have said “no.”

The question may seem strange, since charter schools spend less per student than the district schools. How could expansion of the cheaper option represent the course that’s been called unaffordable?

In the past, members of the School Reform Commission (SRC), which runs the district, explain it’s because of the district’s millions of dollars of annual fixed costs. The fixed costs are underwritten by tuition dollars tied to the district school enrollment. SRC members have made the case that if enrollment falls much more, the district will be forced to default on its fixed cost bills.

Late last year, the district released a Five-Year Financial Plan which referred to the “grim reality” of the district needing hundreds of millions of dollars of new revenues every year by the end of the term. Specifically, for just the 2018-19 school year, the plan said the School District of Philadelphia would need $152 million of additional revenues to provide a “minimal level” of school funding, and an additional $913 million if the district wanted to deliver a “quality education” to all its students.  This past November, the Philadelphia School District borrowed $500 million in order to keep schools open, costing the district an additional $2.5 million in interest payments.  Last school year the district paid $277 million in interest payments related to previous borrowing, which represents approximately ten percent of the school district’s budget.

The deepening financial troubles of the School District of Philadelphia led three professors of accounting at the University of Scranton to study the problem and author a report. In it, they dispute the prevailing narrative of the SRC that charter school expansion must be held hostage to the legacy of fixed costs.

The professors conclude that “Increasing the number of charter schools while decreasing the number of District schools offers substantial benefits, but such benefits will be manifested only if the SDP’s [School District of Philadelphia’s] leadership is willing to adopt a significant and permanent paradigm shift.”

The report’s authors are:

  • Douglas M. Boyle, DBA, CPA, CMA, 
Department Chair and Associate Professor; The University of Scranton
  • James F. Boyle, DBA, CPA, Assistant Professor; University of Scranton
  • Daniel P. Mahoney, Ph.D., CFE, 
Professor of Accounting; The University of Scranton

View the report here.

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