James Hanak: Governor Shapiro and Pennsylvania Democrats are wrong about cyber charters

Gov. Josh Shapiro and Pennsylvania Democrats seem eager to cripple cyber charter schools.

In his 2025–26 budget proposal, the governor proposed a $8,000-per-student cap for cyber charters. Also, Pennsylvania House Democrats fast-tracked the passage of House Bill 1500, which would codify Shapiro’s radical cuts.

If adopted, this arbitrary cap will decimate one of the most innovative sectors in public education.

As the retired founder and CEO of a cyber charter school serving families across Pennsylvania for two decades, I have seen firsthand how cyber charters operate, why they matter, and the innovation it takes to run them. This funding cap isn’t just misguided; it’s a direct threat to educational equity and choice.

The governor’s proposal hinges on two assumptions: First, cyber charter schools have hoarded $650 million in reserves; and second, since they don’t operate traditional buildings, cyber charters don’t require as much funding as traditional brick-and-mortar schools.

Let’s examine both fallacies.

The Fund Balance Myth

The $650 million surplus sounds alarming — until you consider it in context.

With more than 64,000 students enrolled in Pennsylvania’s thirteen cyber charter schools, that surplus amounts to about $10,000 per student. Last year, traditional brick-and-mortar schools spent $23,061 per student; cyber charters received about 75 percent of that amount. That “surplus” represents a little more than half of one year’s operating budget for cyber charters.

Why do cyber charter schools maintain such reserves? Two critical reasons.

First, the charter renewal process through the Pennsylvania Department of Education is notoriously slow. One school waited fourteen years for a five-year charter renewal. Without a valid charter, these schools can’t secure bank loans. Forced to safeguard their finances, cyber charters have built their own financial cushions — essentially, self-funded lines of credit.

Second, during the Covid-19 pandemic, a surge of students shifted from public schools that were ill-prepared to implement remote learning to already-established cyber charter schools.

However, despite their increased enrollment, cyber charters endured financial uncertainty because of structural obstacles. Cyber charters face payment delays that traditional districts don’t. Districts collect property taxes upfront — often securing 90 percent of their annual revenue before school begins. In contrast, cyber charters must bill individual districts for each student and then wait for their reimbursements — sometimes for months.

And let’s not forget Pennsylvania’s recurring state budget impasses. In past years, schools went months without receiving state funds due to political gridlock in Harrisburg. Cyber charters, which serve students in all of Pennsylvania’s 500 school districts, are acutely impacted when budget stalemates persist for months.

Cyber charter reserves are necessary for the schools’ survival.

Do Cyber Schools Cost Less?

While cyber charter schools don’t need fleets of buses or sprawling campuses, they do have unique and significant expenses. Every cyber student receives a state-of-the-art laptop, printer, software, and around-the-clock tech support. This digital infrastructure is the cyber school equivalent of a district’s buildings and buses.

Moreover, live instruction plays an essential role. Teachers may work remotely or report to centralized facilities. Cyber charters, like all public schools, require students to attend in-person standardized testing sessions, often in hotels or rented spaces. These logistics come with real costs.

Some cyber charter schools offer blended learning centers, allowing students to receive in-person support while also learning online.

The Real Motivation Behind Attacks

Let’s be honest about who benefits from cutting cyber charter school funding. Traditional school districts would see students — and dollars — return if cyber charters began to shutter operations. Teacher unions, which have struggled to organize cyber school faculty, stand to gain both power and revenue. Unlike brick-and-mortar schools, cyber charters are immune to union strikes. If cyber teachers walk out, families can unenroll, leaving striking teachers without jobs. That makes organizing and collecting union dues difficult.

At $800 in annual dues per teacher, unions lose $800,000 for every 1,000 cyber charter educators they don’t represent. That’s a lucrative incentive to dismantle the cyber charter model.

Parents fund public schools through their taxes long after their children graduate. They deserve a choice in how the commonwealth spends those dollars. Cyber charter schools are public schools. If Pennsylvania is committed to investing in kids, it must fund all public schools equitably.

Governor Shapiro’s proposed $8,000 cap won’t save money. Instead, it will slowly suffocate cyber education and force students back to more expensive traditional schools.

We should support innovation in public education, not tear it down. Most importantly, we should empower students and families with genuine educational choice, not force them back into a school system they were trying to escape in the first place.

Shapiro and his fellow lawmakers must fund students — not the broken systems.

Dr. James Hanak is the founder and former CEO of PA Leadership Charter School.