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In-Depth: Are public schools paying out for charter students out of district?

November 12, 2015 08:19 PM

Local school districts are losing millions of dollars every year because of charter school students who don’t live where they claim to live. It’s your money, but the state is not helping schools solve the problem.

Since charter schools started in the Capital District in 1999, local school districts have paid hundreds of millions of dollars for their students to attend. A majority of that money is paid for students who live in the district.

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But since 2011, three local school districts, Albany, Lansingburgh, and Troy, say they have lost millions of dollars paying for children they shouldn’t have.

When there is a dispute between a public school and a charter school over how much money is owed, the state Education Department steps in. “The charter schools, then, whatever the difference was, goes to SED and asks for the money. That’s called an intercept,” said John Carmello, Superintendent of the Troy Enlarged City School District. “And SED takes our money and gives it to the charter schools, without any further proof.”

“We’re not even told who these kids are, or what the addresses are, or which kids are even being disputed,” said William Hogan, Assistant Superintendent for Business Affairs at the Albany City School District. “We’re just given a piece of paper with a deduct that can be tens of thousands or hundreds of thousands of dollars.”

The Albany City School District has seen the state take over $5 million dollars since the intercepts started in 2011. The Troy Enlarged City School District says it lost nearly $2 million last school year alone.

“$1.8 million could go a long way in a combination of added programs to support our kids and to help the taxpayers,” said Carmello.

And when the money is taken, schools say they are given very little notice. “We don’t know which students it is for,” said Lisa Kyer, Business Administrator for the Lansingburgh Central School District. “We just have a dollar amount that we find out they’re taking approximately two to three days before it is taken.”

Public schools say they can’t knowingly pay charter schools for kids who are not living in the district. “We can’t legitimately process those payments if we don’t have proof of residency,” said Hogan. “This is taxpayer’s money. And we are not allowed, by law, to pay for out of resident kids.”

School districts also say the rules for intercepts are not being followed. Intercepts for funding are supposed to be filed by May 31 of that school year. So an intercept for the 2014-2015 school year would have to be filed by May 31, 2015. But districts are finding that is not the case.

“What’s occurring is that the charter school is intercepting well beyond that deadline, up to the tune of two to three years after,” said Kyer.

“That creates havoc in the school district because we’re into one or two budget cycles later,” said Hogan. “We don’t have that money. That budget was gone two years ago.”

There is an appeals process for districts to go through to try and get their money back, but public schools are finding it expensive and rarely successful. “We haven’t been able to get any of our funding back,” said Kyer.

Lansingburgh filed an appeal under the old state guidelines. Under that process, schools first appeal to the charter school itself, then to whoever gave the charter school its license if the first appeal fails. Lansingburgh has been stuck on the second stage of that appeal for over a year.

If that second phase of the appeal fails, they can appeal to the state Education Department commissioner herself. But remember, the commissioner is one of the people who already approved the intercept in the first place.

The districts say they then got the state Education Department to agree to use the same process for residency that it uses for disputes between public schools. That process involves providing a current proof of residency, such as an electric or cable bill. But when Lansingburgh provided that, they say the state Education Department suddenly said it wanted more proof.

“We just continue to try and follow the process as we are told that we need to,” said Lansingburgh Central School District Superintendent Cynthia DeDominick. “And each time, there’s a new hurdle for us to jump.”

If you’d like to look at the documents for Lansingburgh’s appeal, we’ve provided the documents here for you.

Lansingburgh Charter School Appeal by WNYT13

So what are your tax dollars paying for? In May 2014, Albany taxpayers paid for a kid to go to a charter school who supposedly lived in an empty lot on Livingston Avenue. In Albany, the district pays over $14,000 for each student who goes to a charter school. And in October of 2014, Albany taxpayers doled out another $14,000 for a child who supposedly lived in a boarded up home on 3rd Street. The Albany City School District knew that no one lived there, but the state took the money anyway.

Districts say the intercept process needs to change, something they’ve expressed to the state Education Department during multiple meetings over the past few years. “The process, it was just too easy, as it’s designed, for the charter schools to just say, “Well, we don’t have to do any paperwork. We’ll just file with the state, and we’ll get our money,”” said Hogan.

The districts say that the state Education Department can fix this problem very easily by implementing some common sense solutions they’ve suggested to the intercept process. “A real simple solution is, if there is an intercept filed by a charter school, that the charter schools are required to provide proof of residency, of those students, that’s current,” emphasized Hogan.

All three districts NewsChannel 13 spoke with say they will follow the law when it comes to charter schools, but also say they want to do right by their own students, and taxpayers. “What we want, the ideal solution is, to only pay for those students that actually live in Troy,” said Carmello. “And that should be what everybody wants. It’s what’s fair to the taxpayers, it’s what’s fair to the school districts, it’s what’s fair to the charter schools.”

NewsChannel 13 reached out to the state Education Department on Oct. 14 to let them know we were looking into this story. We sent three questions for comment to the state Education Department on Oct. 29, giving them two weeks to respond. We sent a follow-up e-mail on Friday, Nov. 6, again informing them of the deadline. Both times, we were told that we would have the responses to our questions by the requested date, which was Nov. 11, the close of business. The state Education Department did not reply before the deadline. Their responses were received Thursday morning, hours after the first piece aired. Here are the questions we requested comment to, and their answers:

  1. What process does SED have for verifying student addresses in the Charter School/intercept process? If the state does not verify student addresses, why not?

    Residency needs to be determined locally because it involves intensely factual information and involves case –by—case determinations of physical presence and intent to remain, custody arrangements, support and other factors.  The State does not have access to the records needed to determine residency and the charter school intercept process is not a dispute resolution mechanism.  Because residency determinations impact parent rights, in addition to the charter school’s interest in receiving tuition, disputes need to be resolved in a process that establishes a full record, includes input from the parent, and can lead to an appeal.   School districts have the right to make residency determinations for charter school students pursuant to section 100.2(y) of the Commissioner’s Regulations, and the school district’s decision can be appealed to the Commissioner.  A charter school’s determination of residency can be challenged by a school district through the charter school complaint process pursuant to Education Law section 2855(4), and the decision of the charter school board of trustees can be appealed to the charter entity and then to the Commissioner on behalf of the Regents where the Regents are not the charter entity.  Those are the appropriate dispute resolution processes for charter school residency disputes, not the intercept process (see the response to Question 2 below).

  2. In the intercept process, why is money taken from public school districts after an intercept request is made and before the school district has a chance to appeal?

    In Matter of Board of Education of the Schenectady City School v. Mills, Sup. Ct. Albany County, Devine, J., Decision/Order 9/25/2008, the Court rejected a challenge to the Department’s intercept process, determining that the intercept process is an expedited process intended to ensure that monies flow to charter schools, and is not a dispute resolution process intended to resolve residency issues.  Disputes relating to residency are handled separately,  either through traditional school district residency determinations or through complaints by the school district from actions of the charter school brought under the Charter School law (see Education Law §2855[4]).

  3. Statewide, how much money was given to charter schools through intercepts last year? How much in the Capital Region?

    School District Amount Intercepted ('14-'15 school year)
    Albany CSD $379,959
    Lansingburgh CSD $33,140
    Rensselaer CSD $20,138
    Troy CSD $1,635,980
    Schenectady CSD $27,709
    Capital Region Total $2,096,926

    Statewide total intercepted for the 2014-15 school year: $3,334,745

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Ben Amey

Copyright 2017 - WNYT-TV, LLC A Hubbard Broadcasting Company

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