That decision is final, Gallard said, declining to elaborate.
Delaware Valley's records have been subpoenaed by a federal grand jury, and last month the organization laid off 50 teachers and administrative staffers. Those staffers say they are owed back pay for work performed during the 2011-12 school year.
Lawyer Alan E. Casnoff, who represents Delaware Valley, disputed the district's claim and said negotiations were ongoing.
"There are some very open legal issues due to the timing of the notice and the appropriateness of the notice," Casnoff said. "Their position may be that it's closed. Mine is that it's not."
Casnoff has said the school is prepared for students despite the layoff notices and contract turmoil. He said the schools were "open and ready to go."
The School Reform Commission approved contracts with Delaware Valley and other alternative service providers this year, but those deals have not been signed.
Delaware Valley's contract called for it to be paid $3.6 million to run a disciplinary school on Kelly Drive for 300 students and an accelerated program in Southwest Philadelphia for 200 students.
To fill the gap left by Delaware Valley's absence, Gallard said, "we'll be working with other providers within our network."
Three Delaware Valley staffers have a suit pending against the law firm of David T. Shulick, Delaware Valley's chief executive officer. They say they are owed a total of $20,000 in back pay from the 2010-11 school year.
Last month, another teacher filed suit against Delaware Valley. She said her contract was breached and the company owes her $5,100.
Delaware Valley still has contracts with other districts in the area and campuses in Reading and Warminster. The company was founded in 1969.
The FBI in February raided Shulick's Philadelphia law office, looking for documents related to Delaware Valley's relationship with Chaka "Chip" Fattah Jr., whose father is U.S. Rep. Chaka Fattah (D., Pa.)
Delaware Valley paid 10 percent of its School District contract to 259 Strategies L.L.C., a firm owned by Chip Fattah, who had an office at Shulick's firm.
Shulick had fired Chip Fattah and rehired him in December, but did not renew his subcontract.
Federal authorities are investigating whether political influence helped Delaware Valley obtain contracts, according to sources familiar with the probe, and whether Chip Fattah's involvement shielded the school from deeper cuts during a time of fiscal crisis for the district.
Sources said the district had received a sweeping subpoena for five years' worth of documents, contracts, and communications - including e-mails - related to Shulick and Delaware Valley.
The federal investigation is ongoing, sources said.
Contact Kristen Graham at 215-854-5146, email@example.com, or follow on Twitter @newskag. Read her blog, "Philly School Files," at www.philly.com/schoolfiles.
Inquirer staff writer Martha Woodall contributed to this article.