PDE requested the Treasurer to stop payment of those allocations and instead pay them to charter schools claiming they had not been fully paid for tuition. The suit further asks the Court to order that the full amount of the property tax reduction allocations be paid to school districts as scheduled.
Joining PSBA as named Petitioners are the Phoenixville Area School District and the Eastern Lancaster County School District.
In separate correspondence, PSBA sent a formal request to indicted Attorney General Kathleen Kane and Auditor General Eugene DePasquale asking for a full investigation into the diversion.
Due to the cash flow crunch created by the current state budget impasse, many school districts have delayed paying that portion of charter school tuition which reflects the state revenue they have not received yet.
On October 15, PDE issued an email notification to school district superintendents and business officials that it intended to cause the October payment of property tax reduction allocations from the Gaming Fund/Property Tax Relief Fund to be intercepted for the purpose of paying amounts claimed by charter schools to be due from school districts that had paid less than the charter school believed to be owed.
In a statement issued the following day, PSBA staff attorneys said, “It is outrageous that the administration would resort to diversion of funds intended for taxpayers in order to immunize charter schools from the fiscal pain all other public schools are experiencing, and put charter schools in line ahead of other public schools for available state funds.”
In its lawsuit, PSBA contends that diversion of the property tax reduction allocations is unlawful, as it is held in trust in the Property Tax Relief Fund for the benefit of taxpayers and is not subject to the subsidy interception provisions of the Charter School Law.
The association further believes that PDE’s decision to apply the subsidy intercept provisions of the Charter School Law in this situation is the result of looking at that law in isolation, without regard to other statutory provisions, namely the Property Tax Relief Fund.
In this law it is abundantly clear that this is a restricted use fund that neither the Commonwealth nor local school districts have any discretion to spend otherwise, and must be treated in the nature of a trust.
In short, PSBA contends, this is a different kind of money. These are not funds that constitute “State payments made to the district” for purposes of Section 1725-A (a)(5) of the Charter School Law, because they are neither state payments nor payments being made to districts for their discretionary use in educating children. They are instead payments of gaming revenues being made for the benefit of taxpayers, for which no other use is permitted.
For more information, visit the PA School Boards Association website.
