ALLOCATUR WATCH

The state Supreme Court has agreed to hear a case on whether an enrollment cap imposed by a Philadelphia charter school was valid before state law on the issue changed, but not afterward, as the Commonwealth Court has held.

In taking up the case of School District of Philadelphia v. Department of Education, the justices directed the parties to brief the court on whether a charter school's signing of a charter that features a unilaterally imposed enrollment cap can be considered an "implied acquiescence" to that cap under Section 1723-A(d)(1) of the state's Charter School Law.

The CSL underwent several changes in 2008, the most pertinent to the instant case being Section 1723-A(d)(1)'s invalidation of enrollment caps on charter schools absent the school's agreeing to it.

The Walter D. Palmer Leadership Learning Partners Charter School first received its charter in 2000. In March 2005, the School Reform Commission adopted a resolution granting the school's charter renewal for September 1, 2005, through August 2010. The 2005 charter made reference to and incorporated the enrollment cap and both the school and district signed the 2005 charter.

In May 2008, the school requested to amend its charter to increase its enrollment by 40 to accommodate a kindergarten program. The SRC did not act on this request. In 2009, the SRC adopted a resolution approving a change in the school's name and authorizing it to serve grades kindergarten through 11 for the 2009-2010 school year. The resolution left the cap in place.

Between 2007 and 2010, the school's average daily enrollment increasingly exceeded the amount of students for which the district funded it.

In July 2010, after the 2009-10 school year, the charter school wrote to the Department of Education and asked it to withhold $1.7 million from the Philadelphia School District's subsidy allocation for students the school educated above its enrollment cap between the 2007-08 and the 2009-10 academic years.

In September, the department notified the school it would comply and further notified the district that it could challenge the deduction if it disagreed. Three days later, the district objected to the withholding by letter and requested a hearing on the accuracy of the deduction, said Judge Anne E. Covey, who authored the Commonwealth Court's majority opinion.

A hearing was held in March 2011 and the secretary of the Department of Education filed an opinion and order stating the following: the school agreed to the cap on student enrollment for the school years of 2005-06, 2006-07 and 2007-08 when it signed the charter agreement; the school was not entitled to payment for students above the cap for the 2007-08 school year; the cap the was not valid for 2008-09 and 2009-10, the remainder of the charter; the charter school was entitled to payment for students above the cap for the 2008-09 and 2009-10 school years. That sum amounted to about $1.3 million of the near-$1.7 million it asked for.

Both parties appealed to the Commonwealth Court.

The Philadelphia School District first argued that the department lacked jurisdiction over an alleged violation of the charter agreement, claiming such was in the purview of the local court of common pleas under the Local Agency Law. The district also argued the department did not have authority to withhold its subsidy or to pay whatever it withheld to a charter school for students attending the school in violation of the charter's terms — in this case, the enrollment cap.

Since the appeal was from the department's funding decision and controlled by the CSL, the department had jurisdiction to hear the matter. 
The district next argued to the Commonwealth Court that the secretary properly decided the cap was valid for the 2007-08 year, a proposition the school contested under the grounds of Act 61, which included the amendments to the CSL.

Covey began a brief analysis by noting that only Section 1720-A(a) of the CSL was in place when the charter school renewed its charter in 2005. Section 1720-A(a) states that signing a charter is a "legal authorization for the establishment of a charter school."

The Commonwealth Court, Covey added, had previously opined that a charter was the same as a regulatory permit where the government directs how an entity is to operate. And the Walter D. Palmer Leadership Learning Partners Charter School received its charter conditional on its terms, including the enrollment cap.

Act 61, with its mandate that the parties to a charter must agree to an enrollment cap, was prospective from its July 1, 2008, enactment, Covey said.

Therefore, Act 61 did not apply to the 2007-08 school, which ended before July 2008, and the secretary properly concluded the enrollment was valid and enforceable for the 2007-08 year, Covey said.

As for the school's right to appeal the enrollment cap, Covey deferred to the state Supreme Court's holding in Mosaica Academy Charter School v. Department of Education, in which a majority of the court ruled there is no appeal from a grant of charter. She said the Walter D. Palmer school had no mechanism to challenge the charter once it was granted.

Covey lastly rejected the district's arguments that the secretary did not properly conclude the enrollment cap was invalid for the 2008-09 and 2009-10 school years.

The court disagreed, pointing to Section 1723(d)(1) of the CSL, an Act 61 provision that invalidated capping enrollment in a Pennsylvania charter school unless the school agrees to it. A subsection of the law expressly says its provisions shall apply to a charter school regardless of whether the charter was approved prior to or subsequent to the law's effective date, Covey pointed out.

In dissent, President Judge Dan Pellegrini said he would have applied the enrollment cap to the years post-Act 61 because the school agreed to the enrollment cap and nothing in the law requires such an agreement to take place after its effective date.

He said Mosaica did not apply because that case addressed whether a third party, in that case the Philadelphia School District, may appeal another district's grant of a charter school's application.

Ben Present can be contacted at 215-557-2315 or bpresent@alm.com. Follow him on Twitter @BPresentTLI.