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Act 1 Index Cap on Charter Tuition Growth

Another way to revise the charter school tuition calculation would be to cap the rate of annual growth in the regular education charter school tuition rate and the special education charter school tuition rate for each individual school district at the district’s adjusted Act 1 index, saving school districts approximately $96 million. Click here to see how your school districts benefit under these amendments.

The policy behind this change is to better align charter school tuition rate increases with the school district’s capacity to raise revenue to cover cost increases. These amendments remain generous to charter tuition in that the index is applied to 100% of their tuition, while school districts can only apply the Act 1 index against their property tax portion of their entire budget.
 
This change allows for annual growth in the charter school tuition rates for each school district; it just caps the growth at the district’s adjusted Act 1 index. This proposal will have no impact on the charter school tuition rates in some school districts and will slow the increase in the rate from year to year in others.
 
For example, if a school district’s regular education charter school tuition rate calculated pursuant to the charter school law grew from $10,000 to $10,500 per student from one year to the next, it would be a 5.0% increase in the charter school tuition rate. If the school district’s adjusted Act 1 index was 3.2%, the amendments would limit the growth of the regular education charter school tuition rate to 3.2%, meaning that the rate would go from $10,000 one year to $10,320 the following year. That becomes the base rate for the following year and so on. The same limitation would apply to the special education charter school tuition rate.
 
Statewide, over the past 5 years, the median annual growth in school districts’ regular education charter school tuition rate was 4.37%, while the median annual growth in school districts’ special education charter school tuition rate was 5.70%. During the same timeframe, the median adjusted Act 1 index was 2.65%.
 
Limiting the growth of charter school tuition rate increases to a school district’s Act 1 index would save taxpayers approximately $96.1 million during the 2019-20 fiscal year, comprised of $23.9 million savings from the regular education tuition rate and $72.2 million from special education tuition rate. This savings is based on 2016-17 charter school tuition rates and total charter school tuition costs, each school district’s 4-year median trended growth in the tuition rate and their 2017-18, 2018-19 and 2019-20 adjusted Act 1 indices.