With 3,700 students enrolled and one of the lowest tax bases in the state, CUSD relies on state financing for around 70 percent of its budget. The district has struggled since 1994, when the state labeled it as “financially distressed,” and management passed from the state to for-profit companies, before returning in 2010 to a locally elected school board.
In Chester Upland School District v. Pennsylvania, plaintiffs argued that this year’s insolvency threat stemmed from chronic funding deficiencies, including the loss of $23 million from Governor Tom Corbett’s 2011-2012 spending cuts, as well as from a 1997 law that forces districts to split funds with charter schools. The state law requires districts to provide charter schools substantial per student funding, especially for special education students; for each special education student the district is required by state law to pay charter schools about $24,000. In 2012, the district owed Chester Community Charter School $43 million, almost half of its budget.
The state department blamed CUSD for mismanagement, but district officials pointed out that the current school board inherited a large amount of unpaid expenses when it assumed control from the state two years ago. Faced with financial constraints, the district cut art and music classes, language and advanced placement courses, and extracurricular activities such as band and chorus. It reduced kindergarten from a full to a half-day program and closed two school buildings. And in addition to reducing its staff by 30 percent, which increased class sizes up to 40 students in a class, the district froze the salaries of remaining staff. Former superintendent Thomas Persing responded to accusations of failing to downsize by saying, “if anything, we’ve cut the education that these kids deserve.”
After a 10-day trial in May, before closing arguments, the parties announced they had reached an agreement on the claims, and the court granted approval for the settlement terms on August 15th. U.S. District Judge Michael Baylson described the settlement as “constructive,” with the “potential of giving thousands of school children a quality education.” The settlement ensures that the state will give CUSD $20.5 million to repay past debt and $9.7 million for the 2012-2013 school year. In return for these funds, the district will implement reforms to improve special education, including hiring new guidance counselors and a Director of Special Education.
Pennsylvania Governor Tom Corbett recently appointed Joe Watkins as chief recovery officer to run CUSD, who, as a result of a state law passed this summer, will have broad powers to recommend school closures, renegotiate teachers’ contracts, and enact budget cuts. Watkins was formerly head of Students First, a pro-vouchers and pro-charter-school committee. He will also have the power to hand schools over to private management. Despite Watkins’ reassurances that he has no “preconceived notions about what to do” in CUSD because “every school district is unique,” Diane Ravitch, former U.S. assistant secretary of education, viewed his appointment as an attack on the public school system, calling it “unconscionable.”
While CUSD has secured additional funds, every district in Pennsylvania is dealing with budget cuts, according to William Hartman, a professor of education at Pennsylvania State University. The state decreased its education aid for the years that the federal government provided stimulus funding, but has since not restored funding to pre-stimulus levels, meaning school districts had $900 million less for their 2012 budgets than the prior year. Since Pennsylvania’s school funding system places the burden primarily on local property taxes, children from poorer districts are bearing the weight of state funding cuts to education.
Michael Churchill, attorney for the Public Interest Law Center of Philadelphia, notes that fortunately for residents of Chester-Upland, “parents can rest assured that next year they will not have to watch the paper daily to find out if there will be school in Chester.”
 The district has a total of 6,626 students enrolled, but almost half of the students attend charter schools.
 The state agreed earlier in the spring to provide enough funds to keep the schools open through June.