On Thursday night, the SRC will consider suspending Palmer's charter, the first step in a revocation process.
Walter D. Palmer, founder and board president of the school that bears his name, said Tuesday he was shocked by the district's announcement.
He said lawyers for the school and the district were negotiating to resolve the dispute over the billing for students no longer enrolled.
The district's aim to revoke his charter, he said, is a punitive response to his school's legal challenges to SRC efforts to cap charter enrollment.
"They say they want to suspend our charter," Palmer said. "We don't know what that means. There's nothing in state law that mentions suspending a charter."
For now, Palmer said, the school is pressing the SRC to pull the item from Thursday's agenda so both sides can discuss the issues the district has raised.
If the SRC begins efforts to revoke the charter, the school will fight, he said.
"We are trying to look at what our legal options are," he said.
The district said it was developing plans to help students find spots at higher-performing district and charter schools. Letters were distributed to parents Tuesday afternoon, the district said.
In the past, the SRC has voted not to renew schools' five-year operating charters, but it has never moved to suspend a charter or revoke one when a school is not up for renewal. The SRC renewed Palmer's charter in 2010. The school opened in 1999 under the name Leadership Learning Partners.
To deal with the district's financial crisis, the SRC voted in August and March to suspend parts of the state school code, including sections on its powers over charter schools. The district said those changes permit suspending charters and expediting revocations.
Among other things, the district's charter school office said Palmer Leadership failed to meet the state's academic benchmarks for the last six years, had not followed minimal financial standards, and had violated the terms of its operating agreement and the state's charter laws.
Under Pennsylvania's new school performance profile, Palmer Leadership ranked in the lowest 10 percent of low-income schools in the state in 2012-13.
The district also alleged that during the same school year, Palmer billed the district approximately $770,000 for students who were not enrolled at the school.
The district's charter office said Tuesday that since November, it had received calls from at least five families who had asked Palmer to drop their children from its rolls so the students could attend other schools, but the Palmer charter did not.
Palmer refused despite numerous calls and visits, the parents told the district. The charter office said it had to intervene to straighten things out.
In addition, the charter office said, it had received calls from parents in February who were concerned about safety at the school. They said two separate incidents of students and parents fighting were poorly handled.
The charter school's most recent nonprofit tax filings show it received $13.4 million in taxpayer funds for the year ending June 30, 2012. At that time, the school had a general-fund deficit of $2.8 million. The deficit was $2.1 million the prior year.
The district said the charter had not made a required payment of $133,641 to the state teachers pension system this year.
Records show that this month, TD Bank went to Common Pleas Court seeking a judgment against the charter and a related nonprofit totaling nearly $600,000. TD Bank alleged that the school and the Palmer Foundation were in default on a $580,000 loan due Dec. 11, 2012.
Hite's announcement comes as the state Supreme Court is mulling part of the district's long-standing dispute with Palmer over limiting the school's enrollment.
The district maintains that the Palmer charter is authorized to enroll 675 students. The charter has 1,302 students, and it argues that state law permits it to have the additional students.
As the district struggles to manage its finances, officials recently said it may spend nearly $700 million on charter payments by the end of the school year - $25 million more than budgeted.
One of the main reasons is that charters have enrolled 1,600 more students than permitted in their agreements. The Palmer charter accounts for more than a third of those students.
Two years ago, Commonwealth Court found that the district violated a 2008 state law barring enrollment caps when it included a limit of 675 students in Palmer's charter agreement.
Last month, the state's Supreme Court heard oral arguments on the narrow issue of whether Commonwealth Court had erred because Palmer had signed its charter with the limit.