Antonia Pantoja Charter School v. Com. of PA, Dept. of Ed. ( 2019 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Antonia Pantoja Charter School, :
Esperanza Academy Charter High :
School, Eugenio Maria de Hostos :
Charter School, John B. Stetson :
Charter School, Olney Charter High :
School, Aspira Bilingual Cyber :
Charter School, Esperanza Cyber :
Charter School, Pennsylvania Cyber :
Charter School, :
Petitioners :
:
v. : No. 289 M.D. 2017
: Argued: June 6, 2019
Commonwealth of Pennsylvania, :
Department of Education, :
The Secretary of Education, Pedro A. :
Rivera (In His Official Capacity); :
Philadelphia City School District, and :
School Reform Commission, :
Respondents :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE MICHAEL H. WOJCIK, Judge (P.)
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COHN JUBELIRER FILED: August 5, 2019
Before this Court in its original jurisdiction are three Applications for
Summary Relief arising out of a Second Amended Petition for Review (Petition)
1
filed by five brick-and-mortar charter schools and three cyber charter schools1
(collectively, Charter Schools). Charter Schools filed the Petition seeking
declaratory judgments, writs of mandamus, and injunctive relief against the
Commonwealth of Pennsylvania, Department of Education (PDE), and The
Secretary of Education, Pedro A. Rivera (In His Official Capacity) (Secretary)
(together, Department), and the Philadelphia City School District (SDP) and the
School Reform Commission2 (Commission) (together, District). Charter Schools,
Department, and District have each filed an Application for Summary Relief, which
are ready for disposition.
I. Background
Charter Schools allege that District underpaid them for the 2015-2016 school
year (SY) because District followed guidance materials (Guidelines) for student
reimbursement prepared by PDE, which PDE ultimately rescinded after this Court
found they were not in accordance with the Charter School Law3 (CSL). First Phila.
Preparatory Charter Sch. v. Dep’t of Educ., 179 A.3d 128, 138 (Pa. Cmwlth. 2018)
(First Philadelphia I). For this reason, in April 2017, Charter Schools filed
“reconciliation requests” and reports with PDE (Petition at 4, ¶ 43, Ex. A), asking
PDE to withhold and redirect the underpayments from SDP’s state funding pursuant
1
The five brick-and-mortar charter schools are Antonia Pantoja Charter School, Esperanza
Academy Charter High School, Eugenio Maria de Hostos Charter School, John B. Stetson Charter
School, and Olney Charter High School. The three cyber charter schools are Aspira Bilingual
Cyber Charter School, Esperanza Cyber Charter School, and Pennsylvania Cyber Charter School.
2
The Commission’s governance of SDP has ended, and a local Board of Education
assumed the Commission’s responsibilities on June 30, 2018. See Section 696(n) of the School
Code of 1949, Act of March 10, 1949, P.L. 30, as amended, 24 P.S. § 6-696(n) (authorizing the
Secretary to dissolve the Commission based upon the recommendation of a majority of the
Commission).
3
Act of March 10, 1949, P.L. 30, as amended, added by Section 1 of the Act of June 19,
1997, 24 P.S. §§ 17-1701-A—17-1751-A.
2
to Section 1725-A(a) of the CSL, 24 P.S. § 17-1725-A(a). PDE would not do so,
interpreting Section 1725-A(a)(5) as requiring Charter Schools to have submitted
documentation setting forth the amount they were underpaid to SDP by October 1,
2016, in order for that provision to apply to the 2015-2016 SY. At issue is the
interpretation of the amendment to Section 1725-A(a)(5), which applies after July
2016 (2016 Amendment), and provides that “no later than October 1 . . . a charter
school shall submit . . . final documentation” of payment due to a school district. 24
P.S. § 17-1725-A(a)(5). Charter Schools argue it is undisputed SDP underpaid
Charter Schools based on the Guidelines, but the case definitively establishing that
the Guidelines were impermissible was not decided until after October 1, 2016.
First Phila. I, 179 A.3d at 138. We must determine if Charter Schools had to submit
“final documentation” setting forth what they claim remained owing for the 2015-
2016 SY with the SDP by October 1, 2016, in order for PDE to withhold funding
from SDP and redirect it to Charter Schools for the underpayment. We must also
determine whether the October 1 provision affects Charter Schools’ request for
payment of the underpayment directly from SDP.
A. Petition and Answers with New Matter
Charter Schools allege that PDE prepared improper Guidelines that allowed
school districts to pay charter schools less than the amount per student required by
Section 1725-A(a)(2) of the CSL4 (statutory amount). Charter Schools aver SDP
4
Section 1725-A(a)(2) describes the amount school districts must fund charter schools and
provides, in relevant part, as follows:
(a) Funding for a charter school shall be provided in the following manner:
....
(2) For non-special education students, the charter school shall receive for each
student enrolled no less than the budgeted total expenditure per average daily
3
considered the Guidelines mandatory and, using the adjusted per student amount
calculated by PDE on its behalf, decreased the amounts it paid to Charter Schools
mid-year. According to Charter Schools, SDP underpaid the Charter Schools for the
2015-2016 SY by approximately $1.8 million. Charter Schools allege that SDP
represented to them that these Guidelines were mandatory, when Charter Schools
assert they were not. When Charter Schools requested in April 2017 that PDE
withhold the funds from SDP’s state funding necessary to address the underpayment
and redirect those amounts to Charter Schools, Charter Schools aver that PDE would
not do so in contravention of its mandatory statutory duties. PDE stated Charter
Schools failed to submit to SDP “final documentation of payment to be made based
on the average daily membership for the students enrolled in the charter school from
the [school district] for the previous school year” by October 1, 2016, which PDE
contended is required by Section 1725-A(a)(5) of the CSL. 24 P.S. § 17-1725-
A(a)(5). PDE reasoned that, because Charter Schools did not timely provide that
final documentation to SDP, Charter Schools had not established their right to the
requested immediate relief. PDE advised Charter Schools to proceed through the
administrative process to challenge the underpayment. Charter Schools sought
reconsideration, which was denied. That administrative process is underway for at
least some, if not all, of the Charter Schools, although this process has been stayed
membership of the prior school year, as defined in section 2501(20), minus the
budgeted expenditures of the district of residence for nonpublic school programs;
adult education programs; community/junior college programs; student
transportation services; for special education programs; facilities acquisition,
construction and improvement services; and other financing uses, including debt
service and fund transfers as provided in the Manual of Accounting and Related
Financial Procedures for Pennsylvania School Systems established by the
department. This amount shall be paid by the district of residence of each student.
24 P.S. § 17-1725-A(a)(2) (emphasis added).
4
pending the outcome of this litigation. In addition, Charter Schools also challenge
the adequacy of the administrative process under these circumstances.
Charter Schools allege that, contrary to PDE’s conclusion, SDP possessed all
the necessary information within its existing records to calculate the required
statutory amount owed to them, prior to October 1, 2016. The brick-and-mortar
charter schools aver that the relevant information was timely submitted when they
placed that information in the “SDP database which [wa]s used by the SDP to
calculate the monthly payment to the [Charter Schools] and the SDP itself applie[d]
the rate to the data with no input from the [Charter Schools].” (Petition ¶ 37.) The
cyber charter schools aver that they met this requirement by submitting “invoicing
prior to October 1, 2016[,] to the SDP with all documentation required for the SDP
to make the calculation by applying the correct rate during the 2015-2016 [SY].”
(Id. ¶ 39.) Charter Schools allege:
The CSL does not require any separate or additional submission such
as a “reconciliation report” to constitute “final documentation” in order
to trigger PDE’s mandatory duty to redirect, where, as here, the student
count documentation required for the SDP to calculate and make the
statutory payment was previously submitted by the [Charter Schools]
to the SDP in the ordinary course . . . .
(Id. ¶ 44.)
Charter Schools assert five Counts in the Petition:
 Count I seeks declaratory judgment5 against Department declaring that the
Guidelines violate the CSL, all school districts must be told to pay the
5
Under the Declaratory Judgments Act, 42 Pa. C.S. §§ 7531-7541, “[c]ourts of record . . .
shall have [the] power to declare rights, status, and other legal relations whether or not further
relief is or could be claimed” with the purpose of settling and “afford[ing] relief from uncertainty
and insecurity with respect to rights, status, and other legal relations.” 42 Pa. C.S. §§ 7532,
7541(a). The Declaratory Judgments Act is to be liberally construed and administered. 42 Pa.
C.S. § 7541(a). Declaratory relief is appropriate when there exists an actual controversy, which is
5
statutory rate, Department cannot impose or create additional requirements
on a charter school’s right to redirection beyond those in the CSL,
Department does not have the discretion to evaluate whether a charter
school’s redirection request is “properly documented” before withholding
and redirecting the requested amounts, and Department must redirect all
amounts owed to Charter Schools by District and their refusal to do so
violates the CSL.
 Count II seeks declaratory relief against District declaring that they had no
legal basis for underpaying Charter Schools, their failure to pay Charter
Schools the statutory rate violated the CSL, they have no authority to rely
on some other entity, like PDE, to avoid their mandatory duty to pay the
statutory rate, they cannot transfer their duty to make these required
payments to Department, and their duty to calculate and pay Charter
Schools the statutory rate is independent of any action by Department.
 Count III requests a writ of mandamus6 against Department directing them
to withhold all state payments to SDP and redirect the appropriate amounts
to the Charter Schools. Counts III(A) through III(H) set forth the relevant
amounts claimed to be due each of the Charter Schools.
 Count IV requests a writ of mandamus against District requiring them to
pay Charter Schools the statutory amount for the 2015-2016 SY. Counts
IV(A) through IV(H) set forth the relevant amounts claimed to be due to
each of the Charter Schools.
“when litigation is both imminent and inevitable and the declaration sought will practically help
to end the controversy between the parties.” Richard Allen Preparatory Charter Sch. v. Dep’t of
Educ., 161 A.3d 415, 422 (Pa. Cmwlth. 2017) (citation omitted), aff’d, 185 A.3d 984 (Pa. 2018)
(per curiam).
6
“A writ of mandamus compels the performance of a ministerial and mandatory duty.”
Chester Cmty. Charter Sch. v. Dep’t of Educ., 996 A.2d 68, 75 (Pa. Cmwlth. 2010) (Chester I).
To establish the right to mandamus, the moving party “must demonstrate: a clear legal right for
performance of an act by the government; a corresponding duty in the government to perform the
ministerial act and mandatory duty; and the absence of any other appropriate or adequate remedy.”
Id. A duty is mandatory if it is “one which a public officer is required to perform upon a given
state of facts and in a prescribed manner in obedience to the mandate of legal authority.” Id.
(quoting Filippi v. Kwitowski, 880 A.2d 711, 713 (Pa. Cmwlth. 2005)). If the public official has
the “discretion in how to perform the act, mandamus may compel the exercise of discretion, but it
may not interfere with the manner in which the discretion is exercised.” Id. at 75 (emphasis and
citation omitted).
6
 Count V seeks injunctive relief against all of the Respondents enjoining
the SDP from relying on the Guidelines and PDE from delaying and
refusing to withhold and redirect funds to Charter Schools.
As additional relief in Counts III and IV, Charter Schools request an award of
attorneys’ fees and costs pursuant to Section 1726 of the Judicial Code, 42 Pa. C.S.
§ 1726, compensatory and punitive damages, and consequential losses.
Department and District filed Answers and New Matter to the Petition
wherein they contend Charter Schools had not submitted final documentation of the
amount of payment to be made for the 2015-2016 SY to SDP by October 1, 2016,
which is required by Section 1725-A(a)(5) to trigger Department’s withholding and
redirection obligation. Department further avers facts regarding the calculation of
the per student rates beginning in the 2012-2013 SY. Under those calculations, in
prior school years, SDP’s initial per student rates and its final per student rates
reflected minor decreases for nonspecial education rates and increases in special
education rates. It was only in the 2015-2016 SY that the final rates decreased for
both student categories. Department avers that, prior to the April 2017 withholding
requests, Charter Schools accepted the use of the Guidelines without objection,
which renders Charter Schools’ current challenge barred by a six-month statute of
limitations or laches. District also asserts Charter Schools’ claims are barred by the
statute of limitations. Department and District further assert that Charter Schools’
claims should be dismissed for failure to exhaust the available statutory remedy.
In their Answers to the New Matter, Charter Schools deny that Department
had the ability to force charter schools to accept or object to the Guidelines and aver
that they were told they had no choice but to accept the Guidelines. Charter Schools
contend there is no statute of limitations on their challenge to the Guidelines and, if
there was, it is tolled by the actions of Department and District. They further deny
that the 2016 Amendment was intended to provide a reconciliation process different
7
from the one that already existed or to restrict charter schools’ ability to challenge a
violation of the CSL. Charter Schools further aver that the reconciliation process
with SDP occurred prior to the 2016 Amendment’s effective date. According to
Charter Schools, they exhausted their administrative remedy when they submitted
their withholding and redirection requests to Department and those requests were
denied.
B. Applications for Summary Relief
After limited discovery, the parties filed their respective Applications for
Summary Relief with this Court.7 The respective opposing parties filed
answers/responses to the Applications and briefs in support of or in opposition to the
Applications. In their briefs in opposition, Charter Schools indicated that they were
underpaid not $1.8 million, as initially pled, but $10.7 million due to SDP’s use of
“fifteen non-statutory deductions.” (Charter Schools’ Brief (Br.) in Opposition to
Department’s Application at 12-13; Charter Schools’ Br. in Opposition to District’s
Application at 25-26.) Department and District sought to strike this alleged attempt
to amend the Petition, which was denied. The order denying the application to strike
explained “Petitioners’ damages, if any, are dependent on a determination as to the
proper application of Section 1725-A of the [CSL] and evidence in support thereof.”
(Order, Feb. 25, 2019.) The three Applications are now ready for this Court’s
consideration.
7
Pennsylvania Rule of Appellate Procedure 1532(b) permits a party to file an application
for summary relief “if the right of the applicant thereto is clear.” Pa.R.A.P. 1532(b). A court may
grant summary relief when the moving party’s right to judgment is clear and no material facts of
issue are in dispute. Eleven Eleven Pa., LLC v. Com., 169 A.3d 141, 145 (Pa. Cmwlth. 2017). In
considering an application for summary relief, the court “must view the record in a light most
favorable to the non-moving party and enter judgment only if there is no genuine issue as to any
material facts and the right to judgment is clear as a matter of law.” Id.
8
1. Department’s Application
In the Application, Department seeks dismissal of Counts I, III, III(A)-III(H),
and V because Charter Schools did not submit their final documentation to SDP on
or before October 1 as required by Section 1725-A(a)(5).8 Department argues that
the 2016 Amendment expressly includes a reconciliation process that requires a
charter school to submit “final documentation of payment to be made” to the school
district no later than October 1 for the students enrolled during the prior school year
before filing a withholding request with PDE. 24 P.S. § 17-1725-A(a)(5). Under
the plain statutory language, Department asserts the mandatory and ministerial duty
to withhold payments from a school district and pay those funds to a charter school
8
Section 1725-A(a)(5) of the CSL states:
(5) Payments shall be made to the charter school in twelve (12) equal monthly
payments, by the fifth day of each month, within the operating school year. A
student enrolled in a charter school shall be included in the average daily
membership of the student’s district of residence for the purpose of providing basic
education funding payments and special education funding pursuant to Article
XXV. If a school district fails to make a payment to a charter school as prescribed
in this clause, the secretary shall deduct the estimated amount, as documented by
the charter school, from any and all State payments made to the district after receipt
of documentation from the charter school. No later than October 1 of each year,
a charter school shall submit to the school district of residence of each student
final documentation of payment to be made based on the average daily
membership for the students enrolled in the charter school from the school district
for the previous school year. If a school district fails to make payment to the
charter school, the secretary shall deduct and pay the amount as documented
by the charter school from any and all State payments made to the district
after receipt of documentation from the charter school from the
appropriations for the fiscal year in which the final documentation of payment
was submitted to the school district of residence.
24 P.S. § 17-1725-A(a)(5) (emphasis added). The provisions in subsection (5) beginning with
“[n]o later than October 1 of each year” were added on July 13, 2016, and were immediately
effective. Id.
9
is not implicated unless a charter school timely provides to a school district the
required final documentation and the school district denies payment. Here, Charter
Schools’ final documentation for the 2015-2016 SY was not submitted by October
1, 2016. Department contends Charter Schools’ argument that they had already
provided SDP with sufficient documentation, or were not required to provide any
additional documentation, does not give effect to the requirements added to Section
1725-A(a)(5), rendering those provisions surplusage. Thus, Charter Schools’ claims
that PDE erred in not automatically withholding monies from SDP and redirecting
them to Charter Schools must be dismissed. Department notes this interpretation
does not leave Charter Schools without relief because administrative proceedings to
determine how much Charter Schools were underpaid based on SDP’s reliance on
the Guidelines, which is an issue between Charter Schools and SDP, are ongoing.
As for the declaratory and injunctive relief Charter Schools’ request in Counts I and
V based on the Guidelines’ invalidity, Department observes that due to PDE’s
rescission of the Guidelines, those issues are now moot.
Department also asserts that Charter Schools’ request for damages, attorney’s
fees, and costs must be dismissed as they are barred by sovereign immunity and not
subject to an exception thereto. See Finn v. Rendell, 990 A.2d 100, 105 (Pa. Cmwlth.
2010) (emphasis omitted) (“[S]overeign immunity does apply to an action seeking
to compel state parties to act or seeking to obtain money damages or recover property
from the Commonwealth.”).
Charter Schools respond that Department is not entitled to summary relief
based on the 2016 Amendment. They argue the 2016 Amendment to Section 1725-
A(a)(5) is inapplicable here because: (1) that amendment, effective July 13, 2016,
is not retroactive, KIPP Philadelphia Charter School v. Department of Education,
10
161 A.3d 430, 441 (Pa. Cmwlth. 2017), and Charter Schools’ reconciliation process
with SDP was completed before July 13, 2016; and (2) this matter does not involve
reconciliation but a challenge to the per student rate SDP used to calculate its 2015-
2016 SY payments to Charter Schools. Charter Schools’ request to PDE was filed
in April 2017 because that is when Charter Schools discovered that the Guidelines
were not mandatory, as SDP had represented to them. If the 2016 Amendment does
apply, Charter Schools assert they had already provided SDP with the information
necessary to properly calculate the amount SDP owed Charter Schools and,
therefore, no additional or “final documentation” was necessary. They further argue
that the 2016 Amendment does not require Charter Schools to assert a claim by
October 1, but to document or provide proof of a claim to SDP by October 1. Charter
Schools assert the information they previously provided to SDP was the same
information as was in the reconciliation report filed with PDE in April 2017 and was
sufficient to allow SDP to object. Accepting this factual averment as true, Charter
Schools argue Department’s Application must be dismissed because the CSL’s
funding provisions are intended to protect charter schools, as the legislature has
determined that more harm would befall a charter school that is not timely or
accurately paid than the school district that would experience only a delay in receipt
of its state subsidy if it is determined that the school district is correct. Chester Cmty.
Charter Sch. v. Dep’t of Educ., 996 A.2d 68, 78 (Pa. Cmwlth. 2010) (Chester I). As
for attorneys’ fees and costs, Charter Schools note the claims here are based on
similar conduct as in KIPP, for which the Court sanctioned PDE for its arbitrary
conduct and awarded damages. 161 A.3d at 443-45.
11
2. District’s Application
In District’s Application, District argues Charter Schools’ Petition should be
dismissed and District’s Application granted because Charter Schools have failed to
state a claim. District adopts Department’s interpretation of Section 1725-A(a)(5)
regarding Department’s obligation to automatically withhold and redirect SDP’s
state funds. District also argues that because Charter Schools did not timely comply
with Section 1725-A(a)(5)’s final documentation requirement, Charter Schools
cannot assert their underpayment claims directly against SDP at all. District argues
Charter Schools’ interpretation of Section 1725-A(a)(5) in which “final
documentation” includes the information a charter school previously provided to a
school district prior to October 1 is inconsistent with the remainder of the section
and renders the October 1 deadline meaningless. District asserts that requiring a
charter school to provide final documentation by a time certain provides financial
certainty to school districts, which will be able to better budget if they do not receive
documentation of alleged underpayments by October 1 and know no such claims are
outstanding. District also contends that SDP’s per student rate adjustments were in
accordance with the Guidelines and PDE’s directives issued to all school districts in
the Commonwealth. In light of these directives, which District had no reason to
believe were invalid at the time, District maintains SDP acted properly in adjusting
its payments to Charter Schools. Therefore, according to District, Charter Schools’
claims that SDP is required to reimburse them the amount underpaid are without
merit.
Charter Schools respond to District’s Application that, notwithstanding
PDE’s obligations regarding withholding and redirecting a school district’s state
funding, SDP has an independent duty to make timely and proper payments to
12
charter schools. Charter Schools argue Department’s interpretation of the statutory
language is incorrect and the 2016 Amendment does not apply to their request.
Charter Schools note that PDE has no authority under the CSL to prescreen
withholding and redirection requests and, even if it did, this does not alter SDP’s
duty to timely pay Charter Schools the appropriate statutory amounts. Charter
Schools observe that the brick-and-mortar schools do not submit anything to SDP
for payment because that information is electronically contained within SDP’s
database. Thus, there was no additional documentation Charter Schools had to
submit to SDP in order for SDP to make the correct payments. Charter Schools also
argue that the Guidelines upon which SDP based its mid-year reduction of per
student rate have already been found to be a violation of the CSL. First Phila. I, 179
A.3d at 138. Accordingly, Charter Schools assert District’s claim that they are
excused from having to correct the underpayment must be rejected.
3. Charter Schools’ Application
Finally, in their Application, Charter Schools argue that all Respondents’
positions regarding the 2016 Amendment would prevent a charter school from
obtaining relief for an underpayment if a claim for underpayment is not submitted
to the school district of residence by October 1. They maintain this interpretation is
not supported by the plain language of Section 1725-A(a)(5), which does not say a
claim is barred if not presented to a school district prior to October 1. Even if the
language did suggest a cutoff, Charter Schools argue, the trigger would be the
submission of “final documentation” not the submission of a claim. Charter Schools
submitted their documentation regarding the 2015-2016 SY enrollment and special
education status of their students to SDP during the school year and, therefore, prior
to October 1, 2016 – that is all that is required. They assert that the contrary position
13
would preclude a charter school from raising a challenge to the rate used to calculate
the per student payments unless it is discovered and submitted by October 1, an
absurd result that must be avoided. Charter Schools maintain their interpretation of
Section 1725-A does not render the October 1 date meaningless, as the continued
failure of a charter school to comply with the deadline could be used as grounds to
close a charter school. Alternatively, if there was a cutoff where a reconciliation
claim is not made by October 1, Charter Schools are entitled to a declaration that
PDE should withhold funds from SDP under Section 1725-A, because “[n]othing in
the language added . . . in 2016 indicates that it was intended to address the situation
where a charter school is underpaid because a school district has improperly
calculated the amount it owes per student under Section 1725-A.” (Charter Schools’
Application ¶ 26.)
Charter Schools also argue Department’s obligation to withhold state
subsidies from a school district and redirect them to a charter school is mandatory
and ministerial. Chester I, 996 A.2d at 77. They maintain the administrative process
set forth in Section 1725-A(a) is an inadequate remedy, as explained in First
Philadelphia I, because Department refuses to make the required withholdings and
cannot address Charter Schools’ claims that the Guidelines violate Section 1725-
A(a). In addition, Charter Schools argue SDP’s obligation to pay Charter Schools
the amount required by the CSL is equally mandatory, which the 2016 Amendment
did not alter.9 Thus, Charter Schools assert all of the elements of mandamus are
9
Charter Schools also appear to assert that the written charters required SDP to pay them
in accordance with Section 1725-A(a), thereby potentially raising a contractual claim. (Charter
Schools’ Application ¶ 33.) Department replies that, to the extent Charter Schools attempt to assert
a contract claim, charters are not contracts but a government license. Cmty. Acad. of Phila. Charter
Sch. v. Phila. Sch. Dist. Sch. Reform Comm’n, 65 A.3d 1023, 1029 (Pa. Cmwlth. 2013).
14
satisfied, and their right to relief against Department and District on those claims is
clear.
Department responds that Charter Schools are not entitled to relief, mandamus
or otherwise, because its duty to withhold and redirect SDP’s funds was not
implicated due to Charter Schools’ failure to submit final documentation to SDP by
October 1. Thus, they argue, mandamus cannot lie under these circumstances. The
remainder of Department’s arguments are the same as those in favor of their own
Application. District asserts that Charter Schools are not entitled to summary relief,
a declaratory judgment, or a writ of mandamus as a matter of law if the Court agrees
with the interpretation of the 2016 Amendment offered by District and Department.
If a declaration is warranted, it is in favor of Department and District for the reasons
set forth in their own Applications.
II. Discussion
A. Preliminary Considerations
1. Invalidity of Guidelines
We have previously addressed the validity of the Guidelines established by
PDE for use by school districts to calculate the amounts owed to charter schools,
and, ultimately, found that those Guidelines violated the CSL. First Phila. I, 179
A.3d at 138. In First Philadelphia I, a different group of charter schools challenged,
during the 2016-2017 SY, SDP’s reliance on the Guidelines to pay those schools
less than the statutory rate in that school year. Those charter schools argued that the
Guidelines violated the plain language of the CSL and sought declaratory,
mandamus, and injunctive relief against SDP, Department, and others. After
concluding that the statutory remedy available was inadequate, we held “that PDE
exceeded its authority in developing and applying Guidelines, for the stated purpose
15
of implementing Section 1725-A(a) of the CSL, that are in flagrant derogation of
that statutory provision and further by instructing every school district in the
Commonwealth to adhere to those guidelines.” Id. Subsequently, PDE rescinded
the Guidelines. See First Phila. Preparatory Charter Sch. v. Com. (Pa. Cmwlth.,
No. 159 M.D. 2017, filed Jan. 9, 2019) (First Philadelphia II).
In light of this determination, we preliminarily address Charter Schools’
requested injunctive and declaratory relief asserting the invalidity of the Guidelines
and the continued use of the Guidelines as a basis for school districts to pay charter
schools less than the statutory amount. Because the Court already has held that the
Guidelines violate the CSL and the Guidelines have been rescinded by PDE, Charter
Schools’ requests that Department and District be enjoined from using the
Guidelines to pay less than the statutory amount, and a declaration that the
Guidelines violate the CSL, are moot. See First Phila. II, slip op. at 13-15 (holding
that claim for declaratory relief finding the Guidelines violated the CSL was moot
after First Philadelphia I and PDE’s rescission of the Guidelines). Following First
Philadelphia I and II, it is clear that school districts must use the statutory amount
to calculate the amounts owed to charter schools, not the amounts calculated under
the Guidelines. There is no need for another determination addressing issues that
have already been resolved, and, therefore, Counts I and V are dismissed as moot to
the extent they requested such relief.
2. Statutory Construction
Because the Guidelines violated the CSL, there are school districts that paid
charter schools less than the statutory amount based on those Guidelines creating an
underpayment. This is the first case in which charter schools’ efforts to recover
those alleged underpaid amounts through the withholding and redirection process
16
set forth in Section 1725-A(a)(5) occurred after the 2016 Amendment, raising the
interpretation of the October 1 deadline.10 We review the statutory language to
ascertain the legislature’s intent regarding the applicability and effect of the 2016
Amendment on Department’s withholding and redirection duties and SDP’s
obligation to properly pay Charter Schools.
As always, when we interpret a statute we are guided by the principles of
Section 1921 of the Statutory Construction Act of 1972, including that the object of
statutory construction is to ascertain and effectuate legislative intent. 1 Pa. C.S.
§ 1921(a). Thus, “[w]hen the words of a statute are clear and free from all ambiguity,
the letter of it is not to be disregarded under the pretext of pursuing its spirit.” 1 Pa.
C.S. § 1921(b). “The best indication of legislative intent is the plain language of the
statute.” Slippery Rock Area Sch. Dist. v. Pa. Cyber Charter Sch., 31 A.3d 657, 663
(Pa. 2011). We are to construe the statutory language, if possible, to give effect to
all of its provisions. 1 Pa. C.S. § 1921(a). It is “[o]nly when the words of the statute
are not explicit” that the court should resort to statutory construction to ascertain the
legislature’s intent. 1 Pa. C.S. § 1921(c). However, courts should not, under the
guise of statutory construction, rewrite or augment a statute’s terms. Discovery
Charter Sch. v. Sch. Dist. of Phila., 166 A.3d 304, 318 (Pa. 2017).
The statutory language at issue provides:
(5) . . . . No later than October 1 of each year, a charter school shall
submit to the school district of residence of each student final
documentation of payment to be made based on the average daily
membership for the students enrolled in the charter school from the
school district for the previous school year. If a school district fails
to make payment to the charter school, the secretary shall deduct
and pay the amount as documented by the charter school from any
10
The claims of underpayment in First Philadelphia I were filed during the school year in
which the underpayments were made.
17
and all State payments made to the district after receipt of
documentation from the charter school from the appropriations for
the fiscal year in which the final documentation of payment was
submitted to the school district of residence.
24 P.S. § 17-1725-A(a)(5) (emphasis added).
B. Department’s Application
Department argues the 2016 Amendment applies, and pursuant thereto, the
duty to withhold and redirect is not implicated unless a charter school submits final
documentation of the amount to be paid for the previous school year to the school
district by October 1. Charter Schools argue the 2016 Amendment does not apply
to them because they had already completed their reconciliation with SDP by July
13, 2016, and if it does, the documentation they provided meets the requirement.
The 2016 Amendment, enacted on July 13, 2016, reflected that it was effective
immediately. In KIPP, we held that the 2016 Amendment “was not expressly made
retroactive” and “controls all reconciliation requests submitted as of July 13,
2016.” 161 A.3d at 441 & n.13 (emphasis added). Although Charter Schools’ 2015-
2016 SY reconciliation process with SDP was completed by July 13, 2016, at issue
here is Charter Schools’ claim in April 2017 that they were still owed money for the
2015-2016 SY. It was because they believed they were underpaid that Charter
Schools filed reconciliation requests and reports with PDE in April 2017 seeking
relief in the form of withholding the underpaid amount from SDP’s state subsidy and
redirecting this amount to Charter Schools. As Charter Schools’ reconciliation
requests with PDE were submitted after July 13, 2016, the 2016 Amendment is
applicable to their underpayment claims.
Charter Schools contend that the documentation they provided to SDP prior
to October 1 was sufficient to meet the “final documentation” requirement. Charter
18
Schools assert that, even if additional documentation was required, the submission
of that documentation after October 1 should not preclude their ability to obtain
relief. They stress that they did not learn that the Guidelines were not applicable
until after October 1.
The 2016 Amendment was enacted in response to this Court’s decision in
Chester Community Charter School v. Pennsylvania Department of Education, 44
A.3d 715 (Pa. Cmwlth. 2012) (Chester II), and the PDE’s subsequent application of
that case. In Chester II, we recognized that a charter school could file a request for
withholding and redirection, in that case based on an underpayment due to the school
district’s failure to use the correct per student rate, and that the Department had a
mandatory duty to comply with that request. Id. at 720. However, we held that the
requested funds could only be withheld from the subsidies for the school year in
which the underpayment occurred. Thus, funds could not be withheld from the
following school year, requiring any underpayment to be challenged within the
current school year in order for a charter school to obtain relief. Notwithstanding
Chester II, PDE continued, until 2016, to allow charter schools to file reconciliation
requests seeking withholding and redirection outside the fiscal school year in which
the underpayment was made. KIPP, 161 A.3d at 433-34. In 2016, PDE effectively
“declared it would only redirect delinquent school districts’ funding . . . during the
current fiscal year and a school district’s failure to pay outstanding prior-year
balances [was] a matter for the charter schools and the school districts to resolve.”
Id. at 434.
At the change in PDE’s practice, the General Assembly enacted the 2016
Amendment. In KIPP, we explained:
The . . . 2016 [A]mendment . . . reflects the General Assembly’s
intent that [Department] should not be involved in the
19
reconciliation process unless and until a dispute arises between the
charter school and a school district. See Act of July 13, 2016, P.L.
716 (Act 86). Notably, however, in sharp contrast to [Department’s]
attempts to limit reconciliation to the current school year, the General
Assembly memorialized [Department’s] historical practice and
declared in Act 86 that a charter school has until October 1st
following the applicable school year to submit final reconciliation
documents to a school district and, if the school district fails to pay
the charter school, “the [S]ecretary shall deduct and pay” the
charter school from the school district’s subsidies “for the fiscal year
in which the final documentation of payment was submitted to the
school district . . . .” 24 P.S. § 17–1725–A(a)(5).
KIPP, 161 A.3d at 436 n.6 (emphasis added). The Court, in KIPP, reiterated that
the 2016 Amendment was to “remove [Department] from the reconciliation
process, unless and until a school district fails to pay a charter school . . . .” Id.
at 441 & n.12 (emphasis added).
The 2016 Amendment directs charter schools to submit “final documentation”
to the school district reflecting the amount that remains to be paid for the previous
school year no later than October 1. 24 P.S. § 17-1725-A(a)(5). The second sentence
of the 2016 Amendment, which sets forth the Secretary’s mandatory and ministerial
duty to withhold and redirect state payments to the charter school, connects that duty
to the school district’s receipt of the documentation by October 1 and the school
district’s failure to pay based on that final documentation. Id. This connecting
language supports Department’s position that their duty to withhold and redirect
funds is not implicated unless the “final documentation” is timely submitted to a
school district and the school district does not pay. Charter Schools argue that the
documentation required relates to the number of students, and not the per student
rates, which are not known by charter schools. However, to the extent the 2016
Amendment was enacted in response to Chester II, we note that case did not involve
a charter school’s challenge based on an underpayment due to an incorrect number
20
or misclassification of students, but on a school district’s use of the wrong rate per
student. More importantly, the statutory language does not include the limitation
asserted by Charter Schools, but uses the phrase “final documentation of payment to
be made,” which is broad enough to encompass both types of challenges. 24 P.S.
§ 17-1725-A(a)(5). Accordingly, the language added by the 2016 Amendment
covers reconciliation requests based on the number and classification of students or
the rate per student paid, and Department did not violate the mandatory and
ministerial duty by first reviewing whether the final documentation prerequisite was
satisfied.
Here, Charter Schools did not present “final documentation” to SDP by
October 1, 2016, setting forth the amounts they claimed to have been underpaid for
the entire 2015-2016 SY; this information was in their reconciliation reports filed
with PDE in April 2017. Charter Schools argue no additional documentation was
required because SDP already had all of the information necessary to determine the
amounts remaining to be paid to Charter Schools for the 2015-2016 SY. However,
the 2016 Amendment does contain the word “final,” as descriptive of the required
“documentation.” The CSL does not define “final,” but it is generally understood as
“relating to or occurring at the end or conclusion” or “conclusive, decisive.”
Webster’s Third New International Dictionary 851 (2002). Interpreting the phrase
“final documentation of payment to be made,” 24 P.S. § 17-1725-A(a)(5) (emphasis
added), to refer to documentation that is already in a school district’s possession as
a result of the normal monthly reporting/payment process does not give effect to the
word “final.” The 2016 Amendment places the burden on charter schools to submit
final documentation to the school district reflecting what payment is to be made, not
on the school district to search its databases to calculate what amounts may remain
21
outstanding. These monthly reports filed during the school year, which per the
Petition and Charter Schools’ Application relate to the number and special education
status of students enrolled in Charter Schools in a particular month (Petition ¶¶ 37,
39, 44; Charter Schools’ Application ¶ 21), do not “relat[e] to . . . the end or
conclusion” of that school year, and would not be “conclusive, decisive” as the entire
amount that would remain to be paid for the previous school year. Webster’s Third
New International Dictionary at 851. Notably, in this case, the documents already
in SDP’s possession would not have reflected the amount Charter Schools now claim
they should be paid because those documents would have included the per student
amount Charter Schools now assert was not correct.
We acknowledge Charter Schools’ explanation that they did not know about
the underpayment until after October 1, 2016, and could not file their claims prior to
that date. But, based on the plain statutory language, the remedy of Department’s
withholding and redirecting the state funds in Section 1725-A(a)(5) is available only
when the amount of payment to be made is submitted to the school district by
October 1. Because Charter Schools did not provide SDP by October 1, 2016, with
final documentation of the amount of payment they subsequently requested from
PDE in April 2017, Department’s duty to withhold and redirect state funds to Charter
Schools was not implicated. Given that it was PDE’s Guidelines that were
responsible for the underpayment, and that Department acknowledges that Charter
Schools were underpaid, the application of this cutoff date may seem arbitrary;
however, we are bound by the statutory language. Accordingly, Department is
entitled to summary relief on these grounds. However, Department points out that
the administrative process, already underway but stayed, remains available to
Charter School to obtain a remedy for their alleged underpayment.
22
C. District’s Application
District’s Application claims that, because Charter Schools did not submit
final documentation to SDP by October 1, 2016, SDP is relieved of its entire
obligation to correct any underpayment for the 2015-2016 SY. At oral argument,
District further argued that the withholding and redirection process set forth in
Section 1725-A(a)(5) is the exclusive process and remedy for a charter school
asserting it was underfunded. See Vill. Charter Sch. v. Chester Upland Sch. Dist.,
813 A.2d 20, 26 (Pa. Cmwlth. 2002). District asserts that with this remedy
unavailable, Charter Schools have no other way of seeking repayment from SDP.
Thus, District disagrees with Department that the administrative process remains
available to Charter Schools through which they can challenge SDP’s underpayment
and obtain relief therefrom. Charter Schools reply that SDP has an independent
obligation to pay them the statutory amount that was not affected by the 2016
Amendment and that summary relief, therefore, should not be granted.
After review, we find that the statutory language and decisions of this Court
do not entitle District to summary relief. By its terms, the October 1 deadline set
forth in Section 1725-A(a)(5) applies to Department’s duty to withhold and redirect
payment, and not to a school district’s separate and distinct payment obligation
under the CSL. Rather, the CSL requires that school districts shall pay to charter
schools the statutory rate for the charter school’s students. 24 P.S. § 17-1725-
A(a)(2), (5). It is the school district that bears “the burden . . . to fund charter schools
in the correct amount.” Chester I, 996 A.2d at 78. The school districts’ obligation
to pay is not specifically limited by the October 1 deadline, which by its terms
applies only to Department’s withholding and redirection process. A charter school
retains its ability to seek resolution of the underpayment directly from the school
23
district via the general administrative hearing process, described in Chester II, as
recognized by Department. See Chester II, 44 A.3d at 722.
We recognize that, prior to Chester II and the 2016 Amendment, we stated
that Section 1725-A(a)(5) and (6) (relating to the hearing held following a school
district’s challenge to the withholding) provided the exclusive process for claims of
underpayment. However, after Chester II, in which we concluded that withholding
could only be taken from current school year funds, and the 2016 Amendment, which
codified Department’s pre-Chester II process of accepting underpayment claims
after the end of the relevant school year and by October 1, that statement is no longer
accurate. This Court in Chester II and, subsequently, in KIPP, recognized there may
be circumstances when withholding and redirection is unavailable and that, in those
circumstances, an alternative administrative hearing process should be used to
determine if an underpayment was made and, if so, the amount of the
underpayment.11 KIPP, 161 A.3d at 441; Chester II, 44 A.3d at 722. This process
requires the Secretary to acknowledge receipt of the underpayment claim, notify the
charter school that funds cannot be withheld and redirected, and direct the claim to
the administrative process for a hearing, at which “the school district . . . has the
burden to prove the claim is invalid.” Chester II, 44 A.3d at 722. In KIPP, we
explained that, under the facts in that case, Department had not complied with
Chester II because a hearing was never scheduled and there were “no
circumstance[s] presented . . . under which the Secretary could not withhold funds
from the [school d]istrict’s next fiscal year,” therefore, the Chester II hearing process
was “inapposite.” KIPP, 161 A.3d at 440-41. After the 2016 Amendment, there can
11
Nothing in the 2016 Amendment to Section 1725-A(a) altered the Court’s conclusion in
Chester II that an alternative administrative hearing process should be used in underpayment
claims where automatic withholding and redirection are not available.
24
be circumstances where Department is unable to withhold and redirect a school
district’s state funds, such as those presented here. Further, unlike in KIPP,
Department has complied with Chester II’s requirements, having acknowledged
Charter Schools’ reconciliation requests, advising them that withholding and
redirection was unavailable due to their not submitting final documentation to SDP
by October 1, 2016, and directing the claims to the administrative hearing process,
which has been stayed pending the outcome of this litigation. Accordingly, because
District’s duty to pay Charter Schools the statutory amount for the 2015-2016 SY is
unaffected by Charter Schools not submitting final documentation to SDP by
October 1, 2016, and there remains an administrative process through which Charter
Schools can seek repayment, District is not entitled to summary relief.
D. Charter Schools’ Application
Charter Schools’ Application contends that they were underpaid in the 2015-
2016 SY due to SDP’s use of the Guidelines and that SDP is not relieved of its
obligation to remedy that underpayment. However, while there is no dispute that
SDP paid Charter Schools according to the Guidelines for the 2015-2016 SY, the
precise amount of what may be owed remains a material question fact to be
determined. Charter Schools initially requested just over $1.8 million in the Petition,
but they now claim in briefs that their underpayment exceeds $10.7 million. As
represented by the parties at oral argument, the amount of SDP’s underpayment of
Charter Schools is at issue in the currently-stayed administrative proceedings. This
Court has held that the “administrative remedy is the exclusive remedy to hear
disputes regarding payments made to charter schools by school districts,” and has
denied summary relief on this basis. Chester II, 44 A.3d at 722-23.
25
Although Charter Schools assert, citing First Philadelphia I, that this remedy
is inadequate to address their claims that the Guidelines conflict with Section 1725-
A(a) of the CSL and they were underpaid as a result, this is not the same situation as
in First Philadelphia I. In that case, the validity of the Guidelines was the issue, and
it was primarily on this basis that we held that the administrative remedy was
inadequate. In doing so, we explained that PDE, the entity responsible for the
Guidelines, would have simply applied those Guidelines to determine the adequacy
of the school district’s payments to the charter schools. First Phila. I, 179 A.3d at
137; see also First Phila. II, slip op. at 9. We stated “the adequacy of the statutory
remedy is intertwined with the legality of the Guidelines.” First Phila. I, 179 A.3d
at 137.12 The Guidelines have since been invalidated and rescinded; thus,
Department would not apply them to ascertain the adequacy of SDP’s payments to
Charter Schools for the 2015-2016 SY. Further, Department has acknowledged in
these proceedings that SDP remains obligated to pay Charter Schools the statutory
amount for the 2015-2016 SY and that Charter Schools were underpaid for that
school year. Under these circumstances, we disagree that Charter Schools are in the
same position as the charter schools in First Philadelphia and that the administrative
remedy is inadequate so as to allow for the grant of summary relief. Therefore,
Charter Schools’ Application is denied, and the remainder of the Petition is
dismissed to allow Charter Schools’ claims stayed in the administrative process to
12
Having already held that the administrative remedy was inadequate in First
Philadelphia I, the Court transferred the matter to the Court of Common Pleas of Philadelphia
County when it found it no longer had jurisdiction to consider the charter schools’ claims in that
case. First Phila. II, slip op. at 15-16, Order.
26
proceed on an expedited basis.13 During those proceedings, SDP will bear the burden
of proving that Charter Schools’ claims are invalid.14 Chester II, 44 A.3d at 722.
III. Conclusion
For the foregoing reasons, we hold the following. Charter Schools’ requests
for declaratory and injunctive relief based on the invalidity of the Guidelines and the
need for school districts to pay the statutory amount set forth in Counts I and V of
the Petition are dismissed as moot based on First Philadelphia I and II.
Department’s Application is granted, and Counts I, III, III(A)-III(H), and V are
dismissed as to them. Because Charter Schools did not submit final documentation
of the amount to be paid for the 2015-2016 SY to SDP by October 1, 2016, as
required by the 2016 Amendment to Section 1725-A(a)(5), Department did not have
a statutory duty to withhold state funds from SDP and redirect those funds to Charter
Schools. District’s Application is denied because the 2016 Amendment did not alter
or otherwise limit District’s obligation to pay Charter Schools the statutory amount
for the 2015-2016 SY notwithstanding that Charter Schools did not provide SDP
with final documentation of the amount to be paid by October 1, 2016. Finally,
Charter Schools’ Application is denied because, although we agree they were
underpaid due to SDP’s use of the Guidelines and District remains obligated to
13
It appears a similar issue of an alleged underpayment for the 2016-2017 SY between
these parties is before a PDE Hearing Officer in separate administrative proceedings. See Antonia
Pantoja Charter School v. Dep’t of Ed. (Pa. Cmwlth., No. 167 M.D. 2019) (Petition for Review
setting forth allegations regarding, inter alia, ongoing administrative proceedings related to
Charter Schools’ request for withholding and redirection for the 2016-2017 SY and their attempt
to increase the alleged amount of underpayment therein). As the claims regarding the 2015-2016
SY underpayment and the 2016-2017 SY underpayment appear to be related, it may be prudent
for them to be decided together on an expedited basis.
14
Because of our disposition, we will not address Charter Schools’ claims for attorney’s
fees, costs, punitive damages, and consequential losses.
27
resolve that underpayment, material facts remain outstanding and the administrative
remedy, already begun, is adequate to address those outstanding issues. The
remainder of Charter Schools’ Petition is dismissed to allow Charter Schools’ claims
pending in the administrative process to proceed on an expedited basis.
_____________________________________
RENÉE COHN JUBELIRER, Judge
28
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Antonia Pantoja Charter School, :
Esperanza Academy Charter High :
School, Eugenio Maria de Hostos :
Charter School, John B. Stetson :
Charter School, Olney Charter High :
School, Aspira Bilingual Cyber :
Charter School, Esperanza Cyber :
Charter School, Pennsylvania Cyber :
Charter School, :
Petitioners :
:
v. : No. 289 M.D. 2017
:
Commonwealth of Pennsylvania, :
Department of Education, :
The Secretary of Education, Pedro A. :
Rivera (In His Official Capacity); :
Philadelphia City School District, and :
School Reform Commission, :
Respondents :
ORDER
NOW, August 5, 2019, in accordance with the foregoing opinion, we hold the
following:
 Counts I and V of the Second Amended Petition for Review (Petition) filed
by Petitioner Charter Schools (Charter Schools) are DISMISSED AS
MOOT IN PART as set forth in the foregoing opinion;
 The Application for Summary Relief filed by Commonwealth of
Pennsylvania, Department of Education (PDE), and The Secretary of
Education, Pedro A. Rivera (In His Official Capacity) is GRANTED, and
Counts I, III, III(A)-III(H), and V of the Petition are DISMISSED as to
them;
 The Application for Summary Relief filed by the Philadelphia City School
District and School Reform Commission is DENIED;
 The Application for Summary Relief filed by Charter Schools is DENIED,
and the remainder of the Petition is DISMISSED to allow Charter Schools’
claims pending before PDE, which are currently stayed, to proceed on an
expedited basis.
Jurisdiction relinquished.
_____________________________________
RENÉE COHN JUBELIRER, Judge