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Pennsylvania Supreme Court Decision Leaves Charter Schools Wondering – What Now?

By Mark Seiberling

In a bipartisan decision last week, the Pennsylvania Supreme Court ruled in West Philadelphia Achievement Charter Elementary School v. School District of Philadelphia, No. 31 EM 2014, 2016 WL 616748 (Pa. Feb. 16, 2016), that the School Reform Commission overstepped its bounds in attempting to suspend provisions of the state’s Charter School Law for purposes of unilaterally imposing enrollment caps on charter schools in the School District of Philadelphia (the “District”). Although thorough in its analysis, this groundbreaking decision has left many charter schools and charter operators in the District wondering—can we now begin enrolling students over and above any District-imposed cap and seek tuition payments from the state if the District refuses to pay?

For those limited number of charter schools that chose not to sign the charters presented to them by the District with mandated enrollment caps, the answer to this question is a simple yes. The Charter School Law is clear that enrollment caps are not enforceable unless they are expressly agreed to by the charter school as part of the written charter. See 24 P.S. § 17-1723-A(d)(1). Following the Supreme Court’s ruling, this provision of the Charter School Law is again in full force and effect, thereby barring the District from unilaterally imposing any enrollment caps against charter schools that refused to sign written charters containing any such caps. Thus, if you are a charter school or charter operator that refused to sign a written charter containing an enrollment cap, you can begin enrolling students over and above any District-imposed cap and seek tuition payments from the state if the District refuses to pay. Going forward, the District cannot unilaterally impose any enrollment caps on charter schools coming up for renewal of their charters, and instead must negotiate in good faith with the charter school or charter operator to reach an agreed upon enrollment cap in order for the cap to be enforceable.

The answer to the question becomes more complicated, however, for those charter schools that did sign charters presented to them by the District with mandated enrollment caps. Again, in light of the Supreme Court’s decision, the default rule under the Charter School Law is in full force and effect again, meaning that enrollment caps that are not expressly agreed to by the charter school as part of the written charter are unenforceable. See 24 P.S. § 17-1723-A(d)(1). To this end, it is highly likely and anticipated that the District will take the firm position that any charter schools that signed their written charters containing enrollment caps are bound by those caps, at least for the remaining duration of the charter.

But that should not deter charter schools or charter operators from challenging the District’s position and seeking to enroll students over and above any District-imposed enrollment cap. A strong argument could be made that many of the written charters signed by schools that contained enrollment caps were not actually voluntarily agreed to by the charter school as required by the Charter School Law, but were presented to the charter school as a Hobson’s choice of either sign the written charter containing the enrollment cap or else the charter will not be granted or renewed. To the extent that this may be the case for your charter school, an argument could be made that the enrollment cap forced upon you by the District in the written charter is unenforceable under the Charter School Law and that your charter school may enroll over the District’s unilaterally imposed cap and seek tuition payments from the state if the District refuses to pay.

Seeking to enroll students over a cap contained in a signed, written charter, however, would come with considerable risk for the charter school or charter operator. First, in order to overcome the legal enforceability of the enrollment cap, it must be well-established in the record that the cap was not voluntarily agreed to by the charter school, even though the school signed the written charter. This would likely entail the establishment of some type of duress, coercion or undue influence by the District in the execution of the charter, such as a verbal or written threat during negotiations that the charter will only be granted or renewed under the terms of an enrollment cap set by the District. This very argument was raised by the charter school in Sch. Dist. of Philadelphia v. Dep’t of Educ., 92 A.3d 746, 752-53 (Pa. 2014), but the Supreme Court rejected any argument of duress because the record established that the charter school had, in fact, agreed to all of the terms of the charter, including the enrollment cap.

Second, in order to obtain tuition payments from the state if the District refuses to pay for students enrolled over the cap, the charter school or charter operator likely will have to endure a challenge by the District to direct payment from the state. The Charter School Law provides that a charter school can seek tuition payments directly from the state if the District refuses to pay for students enrolled at the school. See 24 P.S. § 17-1725-A(a)(5). The District, however, has the opportunity to be heard and contest the direct payment from the state, and almost certainly will if it believes that the enrollment caps contained in the signed, written charters are enforceable. See 24 P.S. § 17-1725-A(a)(6); Boyertown Area Sch. Dist. v. Dep’t of Educ., 861 A.2d 418, 421 (Pa. Cmwlth. 2004). Thus, if a charter school chooses to seek direct payment from the state, the charter school or charter operator should be prepared for and anticipate a potentially long, drawn out litigation with the District over the enforceability of the enrollment cap before, if ultimately successful, receiving any direct tuition payments from the state.

Based on the above, the Supreme Court’s decision has created two classes of charter schools in the District. The first class of charter schools are those that did not sign the charter presented to them by the District with mandated enrollment caps and, therefore, can immediately begin enrolling students over and above any District-imposed cap and seek tuition payments from the state if the District refuses to pay. The second class of charter schools are those that did sign the charters presented to them by the District with mandated enrollment caps. This second class of charter schools are arguably bound by the enrollment caps contained in their signed, written charters, and the District almost certainly will seek to enforce the caps. Nevertheless, many of these same charter schools can, and probably should, seek to enroll students over any District-imposed enrollment caps based on the argument that the caps contained in the written charters were never voluntarily agreed to as required by the Charter School Law, but instead were the product of duress, coercion or undue influence by the District. If your charter school falls into this second class of charter schools, it may be worth your time and effort to obtain additional guidance and consultation from our firm moving forward, particularly given the fact-specific nature of any proposed challenge to an enrollment cap contained in your signed, written charter.