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Court Rules Against Piscataway in Charter-School Tuition Challenge

School district argued -- unsuccessfully -- that large budget surpluses at public charter schools should mean lower tuition for enrolled students

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For the past several years, Piscataway public school district has stepped out alone in taking on the Christie administration over how local districts pay for their students in charter schools.

Last week, a state appellate court dealt the district a setback.

The appellate court ruled in favor of the state in a challenge by Piscataway that it should not have to pay for what it termed inordinately high budget surpluses kept by the charter schools that served its students.

Piscataway sends students to five different charter schools, and in turn is required to pay the schools 90 percent of its per-pupil costs for each of those students.

The challenge -- Piscataway v. David Hespe, which dates back to 2012 -- claimed the tuitions should be adjusted for surpluses at the charter schools that amounted to hundreds of thousands of dollars.

As it wound its way through the courts, the case was closely watched by districts sending students to charter schools, as well as by the Education Law Center, the advocacy group that has led the Abbott v. Burke litigation on behalf of students in the state’s poorest districts.

The case has also led to some rule changes as to how much discretion the state commissioner had in setting charter school tuitions.

Nonetheless, the appellate court judges ended up siding with the state in a decision released on Thursday. The court said that the law and regulations were clear and that there was little discretion to adjust the tuitions based on surplus funds.

And in a boost for the alternative schools, it said charter schools should be given the flexibility to hold onto surplus funds to help address unexpected costs that are not covered elsewhere.

“There are countervailing policy arguments that weigh in favor of allowing charter schools to retain surplus funds, given their inability to incur long-term debt and the possibility that they may experience sudden drops in enrollment that might affect their ability to meet fixed expenses,“ the court said.

Piscataway’s lawyer, David Rubin, emailed the following response: “We are disappointed with the Court's ruling, and will be making a determination shortly about whether to seek further review by the New Jersey Supreme Court.”

Rubin pointed out an apparent error in the ruling that cited Piscataway as a district that fell under the Abbott school-equity decisions, a distinction that is not accurate.

Still, even if corrected, it is unlikely that would change the outcome of court’s decision.

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