BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: AB 1950
AUTHOR: Brownley
AMENDED: April 28, 2010
FISCAL COMM: Yes HEARING DATE: June 30, 2010
URGENCY: No CONSULTANT:Beth Graybill
SUBJECT : Charter schools: accountability.
SUMMARY
This bill establishes various academic and fiscal
accountability standards related to charter schools.
BACKGROUND
Existing law, the Charter Schools Act of 1992, provides for
the establishment of Charter schools in California for the
purpose, among other things, of improving student learning
and expanding learning experiences for pupils who are
identified as academically low achieving. (Education Code
47601 et. seq.)
Existing law authorizes anyone to develop, circulate, and
submit a petition to establish a charter school and requires
charter developers to collect certain signatures in support
of the petition, as specified. Current law requires
governing boards to grant a charter unless the petition fails
to meet one or more of the following: (Education Code
47605)
1) The charter school presents an unsound educational
program;
2) The petitioners are demonstrably unlikely to
successfully implement the program described in the
petition;
3) The petition does not contain the number of required
signatures;
4) The petition does not contain an affirmation that it
will be nonsectarian in its programs and policies, shall
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not charge tuition, shall not discriminate, and other
affirmations, as specified.
5) The petition does not contain reasonably comprehensive
descriptions of, among other things:
The educational program, including educational
goals, students to be served, measurable outcomes
and methods by which the school will determine that
pupils have met educational goals.
School operations and procedures, including
governance structure of the school, qualifications
of staff, health and safety procedures, student
admission and discipline procedures, the manner by
which annual, independent financial audits will be
conducted, employee personnel rights and retirement
system, and procedures to be followed if the
charter school closes.
Existing law requires a charter school to annually prepare
specified financial reports to its chartering authority, and
requires the chartering authority to use any financial
information to assess the fiscal condition of the charter
school. (EC 47604.33)
Existing law requires the State Controller, in consultation
with specified stakeholders, to recommend statements and
other information to be included a school district audit
guide. The guide and any supplements are to be adopted by
the Education Audits Appeal Panel pursuant to rulemaking
procedures of the Administrative Procedures Act. (EC
14502.1)
Existing law authorizes a charter to be granted for not more
than five years and specifies that each renewal shall be for
five years. Existing law requires the renewal and any
material revision of the provisions of the charter to be made
only with the approval of the authority that granted the
charter and be based on the same standards as the original
charter. (EC 47607)
Existing law requires a charter school to meet at least one
of the following performance standards in order to be
renewed: (1) attainment of the school's Academic Performance
Index (API) growth target in two of the last three years or
in the aggregate last three years; (2) an API decile ranking
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of four or better in the prior year or in two of the last
three years; (3) a Similar Schools API ranking of four or
better in two of the last three years; (4) academic
performance that is at least equal to the academic
performance of the public schools that the charter school
pupils would otherwise been required to attend; or (5)
qualification for participation in the Alternative School
Accountability Model. (EC 47607)
Existing law requires the Superintendent of Public
Instruction and the State Board of Education to establish a
list of Persistently Lowest Achieving Schools and requires
the governing board to implement for any school so identified
one of four school intervention models beginning in the
2010-11 school year. (EC 53202)
The four models are:
Turnaround model in which the Local Education Agency
(LEA) undertakes a series of major school improvement
actions including replacing the principal and rehiring
no more than half of the staff.
Restart model in which the LEA converts a school or
closes and reopens a school as a charter school.
School closure model in which the LEA closes a school
and enrolls students in another school.
Transformation model in which the LEA implements a
series of required school improvement strategies,
including replacing the principal and increasing
instructional time.
ANALYSIS
This bill :
Fiscal and operational accountability
1) Requires the State Controller (Controller) to propose
and the Education Audits Appeal Panel to adopt a charter
school supplement to the audit guide in consultation
with the California Charter Schools Association;
requires charter schools to complete annual audits
consistent with the audit guide;
2) Prohibits a charter school from being operated as or by
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a for-profit corporation.
3) Allows a charter school authorizer, when authorizing a
new charter school, to consider whether the petitioner
has operated another charter school for at least three
consecutive years and any of the following has occurred:
a) The charter school demonstrated academic
achievement equivalent to a PLAS;
b) The charter school completed its first cycle
and was not renewed by the authorizing entity, the
county board of education, or the SBE;
c) The school has ever had its charter revoked
and the charter was not restored by the county
board of education or the SBE.
4) Requires the State Controller to publish a directory of
certified public accountants as specified, deemed by the
Controller to be qualified to conduct audits of the
charter schools; requires charter school audits to be
conducted by a certified public accountant (CPA) or
public accountant selected by the charter school from
the directory published by the Controller; and requires
the regular rotation of public accounting firms used to
complete these audits consistent with the federal
Sarbanes-Oxley Act of 2002.
5) Makes it unlawful for a public accounting firm to
provide audit services to a charter school if the lead
audit partner or coordinating audit partner having
responsibility for the audit has performed audit
services for that charter school in each of the six
previous fiscal years.
Academic accountability and renewals
6) Requires a chartering authority to consider, as one
factor in determining whether to grant a renewal, the
degree to which a charter school serves student
populations that are similar to local district student
populations, especially related to high-need students,
including, but not limited to, students with
disabilities, students living in poverty and English
learners.
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7) Changes the charter school renewal process as follows:
a) Allows an authorizer to renew a charter school
for a period of one to five years;
b) Requires a charter school to attain its
Academic Performance Index schoolwide and subgroup
growth targets in the prior year or in two of the
last three years;
c) Specifies that a charter school in program
improvement (PI) not be renewed for more than three
years; and
d) Prohibits the renewal of a charter school in
PI year five if the school has not exited PI and
did not meet adequate yearly progress (AYP) in the
year prior to renewal.
8) Deletes the authorization for a chartering entity to
renew a charter petition if the academic performance is
equal to the academic performance of the public schools
that the charter school students would otherwise have
been required to attend.
9) Makes Legislative findings and declarations regarding
the importance of establishing academic performance
targets and sound fiscal management practices in charter
schools.
STAFF COMMENTS
1) Need for the bill . According to the author's office,
the purpose of this bill is to encourage high levels of
academic performance and sound fiscal management
practices among charter schools. The fiscal
accountability standards are intended to ensure that
charter schools receive thorough audits conducted by the
same auditors that conduct school district audits and
clarify that for-profit corporations are prohibited from
operating charter schools. The academic accountability
standards are intended to ensure that charter schools
are not simply demonstrating student achievement that is
equal to neighborhood schools, but are demonstrating
improved student achievement compared to their
neighborhood schools.
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2) Charter schools . Charter schools are public schools
that provide instruction in any combination of grades,
kindergarten through grade 12. According to the
California Department of Education (CDE), there are 870
active and pending charter schools (fifty-one of these
schools are "pending" because they will not claim
funding until the 2010-11 school year). Of the 870
charter schools, 25 currently operate based on SBE
approval.
Parents, teachers, or community members may initiate a
charter petition, which is typically presented to and
approved by a local school district governing board.
The law also allows, under certain circumstances, for
county boards of education and the State board of
Education to authorize charter schools. The specific
goals and operating procedures for a charter school are
detailed in the agreement (charter) between the
authorizing entity and the charter developer. Current
law establishes 16 different operational and educational
quality indicators that need to be included in a charter
school petition. A governing board may deny a charter
school proposal that does not comprehensively address
each of those 16 elements.
Charter schools are exempt from most laws governing school
districts and schools in order to allow the charter
school the flexibility to innovate and be responsive to
the educational needs of the student population served.
Charter schools are required however, to have
credentialed teachers in core and college preparatory
courses, meet statewide standards, participate in state
testing programs required for the Academic Performance
Index (API), and consult with parents, guardians, and
teachers regarding the school's programs.
3) Fiscal accountability . This bill focuses on two primary
areas of fiscal accountability for charter schools: (1)
establishes new audit practices for charter schools, and
(2) it prohibits a charter school from being operated as
or by a for-profit corporations.
Audit practices: According to the author's office, existing
law requires charter schools to have annual audits, but
does not provide for an appropriate audit guide
supplement specific to charter schools and does not
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require charter schools to hire qualified auditors
approved by the State Controller. The measure requires
charter school audits to be conducted by
Controller-approved auditors and requires audits to
follow the supplemental audit guide that would be
developed pursuant to this measure. The supplement
could provide schools and authorizers with uniform
guidance relative to appropriate fiscal management
practices.
For-profit prohibition: Since nonprofit firms can also
misuse public funds, the primary issue in this
prohibition appears to be preventing a for-profit
corporation from making a profit off of state funded
public schools. One opponent notes that many school
districts contract with for-profit firms for data
management support, transportation, food services, or
professional development. Arguably, some of these firms
exist for the sole purpose of providing goods and
services to public schools and are not, just because
they receive state funds, expected to provide those
services to the schools "at cost." At the same time, an
argument can be made that as part of the public school
system, it may be reasonable to require charter school
operators to reinvest any net revenue into the
California school or schools it operates. With
appropriate disclosures, is this a decision that could
be left to the authorizing body? Staff recommends that
the Committee discuss this.
4) Academic accountability . According to the author,
various studies indicate that while there are many
outstanding and diverse charter schools, there are also
charter schools that are not "living up to the promise"
to improve student learning and expand learning
experiences for academically low-achieving pupils. A
July 2003 RAND study concluded that charter and
noncharter students generally performed similarly on
statewide achievement tests, with differences in some
grades and subject areas. A 2009 EdSource report
concluded that after "adjusting for differences in
student demographics, charter high schools scored
modestly higher than noncharter schools in English, but
lagged in mathematics." This bill addresses some of the
issues identified in these reports.
Performance record: Under current law, an authorizer may
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only consider the extent to which a petitioner has
provided comprehensive responses to each of the 16
elements required in a charter school application.
While some authorizers may consider past performance in
evaluating the soundness of the petitioner's educational
program, it is not clear that a governing board could
deny a charter on the basis of known information about
the quality of other charter schools operated by the
petitioner. This measure provides explicit authority
for governing boards to consider a petitioner's track
record in granting the initial charter. While opponents
contend that each petition should be evaluated on its
own merits, this information could help governing boards
determine the capacity of the developer to deliver on
the promises made in the charter petition and wider
latitude to consider the quality of a petitioner's
previous or concurrent charter school efforts.
High-needs students: A 2009 EdSource report found that
California charter high schools serve 13% fewer students
who are either English learners or redesignated as
fluent English proficient (RFEP) compared to noncharter
schools, and found that charter schools serve lower
proportions of students with disabilities compared to
noncharter schools at all grade levels. The EdSource
study also found that charter schools serve fewer
students that participate in the federal Free and
Reduced-Price Meal Program in both elementary and middle
school compared to noncharter schools.
This bill requires the chartering authority to consider, as
one factor in determining whether to grant a renewal,
the degree to which a charter school serves pupil
populations that are similar to local district pupil
populations, especially high-needs students. Opponents
contend that this requirement is contradictory to the
requirement that charter schools admit all pupils who
wish to attend and conduct admission lotteries if they
are oversubscribed. Further, some opponents have
indicated that AB 1950 could unintentionally impede
access to up to $50 million in federal start-up funds
because the rules that govern those funds explicitly
prohibit charter school enrollment to be determined by
type of students. Since the enrollment requirement
proposed by this bill is one that applies to a renewal
petition, it is not clear that this requirement would
make a school ineligible for those funds. Given that
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some charters are established for to provide specific
educational programs or to serve underserved or high
need student groups (such as those normally served by a
county office of education), this measure appears to
provide authorizers with sufficient flexibility to
evaluate a charter school's enrollment balance in light
of the educational program and student population
described in the charter agreement and the extent to
which the charter school to met those goals.
Student performance: This bill changes existing law
regarding student performance criteria a charter school
must meet prior to renewal. Under current law, charter
schools can demonstrate attainment of API growth target
in the prior year or in two of the last three years, or
in the aggregate for the prior three years. This bill
would instead require the charter school to meet API
schoolwide and subgroup targets. Under this bill,
charter schools would no longer be able to demonstrate
performance that is at least equal to the schools the
students would otherwise attend. Opponents argue that
the criteria to include subgroup growth targets could
place a charter school in a "potentially precarious
position" if one of the subgroups does not achieve its
target but the other subgroups and school wide targets
are met. Do the changes in student performance criteria
impose an unreasonable burden on charter schools? Staff
recommends the Committee discuss this.
5) Renewals . This bill would allow governing boards to
renew a charter for less than five years. This practice
is similar to that used by various accrediting bodies,
which often use shorter accreditation periods along with
a process for requiring or "stipulating" changes to be
made within a specified period of time, to monitor
institutional quality and prompt improvement. While the
flexibility to grant a renewal for less than five years
could give authorizers greater ability to monitor school
quality and leverage change, opponents maintain that
this change could result in charter schools always being
in "renewal mode" rather than teaching students.
6) Fiscal impact . Although this bill is not flagged as
having mandated costs, the Assembly Appropriations
Committee analysis indicates that this measure could
result in reimbursable mandated costs, likely $100,000
to local education agencies (LEAs) for costs associated
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with reviewing and verifying specified petition and
renewal information required under this bill.
7) Related and prior legislation .
AB 1991 (Arambula) requires charter school petitions to be
granted for five years and authorizes charter school
renewals to be granted for five to ten years. This bill
was held in the Assembly Committee on Education.
AB 2320 (Swanson) adds new requirements to the charter school
petition process, deletes the authority of a charter
school petitioner to submit a petition to a County Board
of Education to serve pupils that would otherwise be
served by the County Office of Education, and eliminates
the ability of the State Board of Education to approve
charter school petition appeals. This bill is scheduled
to be heard by this Committee on June 30, 2010.
AB1982 (Ammiano), limits until January 1, 2017, the total
number of charter schools authorized to operate at 1450
and prohibits charter schools operated by a private
entity from employing relatives, as specified.
AB 1741 (Coto), requires charter schools that expect 15% of
their pupil population to be English learners to meet
additional petition requirements relating to the
education of those students. The Committee passed this
bill as amended on a 5-0 vote on June 23, 2010.
AB 2363 (Mendoza), requires charter school petitioners
to obtain the signatures of permanent classified
employees, as specified. The Committee was held in
Committee on June 16, 2010 and is scheduled for "vote
only" on June 30, 2010.
AB 572 (Brownley, 2009) makes a charter school board
subject to the Brown Act open meeting law, the
California Public Records Act, and the Political Reform
Act. This bill was passed by this Committee on a 6-1
vote is in the Senate inactive file.
ABX5 8 (Brownley, Fifth extraordinary session of 2009)
would have deleted the cap on charter schools and would
have made other changes to provisions governing audit
and fiscal standards, authorization, renewal and
revocation of charter schools. This bill was held in
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Committee.
AB 1772 (Garcia, 2008) would have established a conflict
of interest standard based on the Corporations Code for
school boards.
AB 2115 (Mullin, 2008) would have established a conflict
of interest standard and would have prohibited employees
from serving on governing boards of
charter schools. This measure was passed by this
Committee on a 6-2 vote and subsequently vetoed by the
Governor with the following statement:
"Not only would this bill create state mandated
costs for charter schools to comply with its
provisions, the measure runs counter to the intent
of charter schools, which were created to be free
from many of the laws governing school districts."
8) Policy arguments .
Proponents of this measure contend that AB 1950 will ensure
high levels of academic performance and prudent fiscal
management among charter schools, by specifying how
charter authorizers are to monitor and hold charter
schools accountable and by establishing fiscal
management standards for charter schools that are as
rigorous as those for other public schools and school
districts.
Opponents of this measure argue that while it is important to
have an accountability system that weeds out
poor-performing charter schools, AB 1950 does not
reflect the unique characteristics and challenges of
charter schools. In particular, they contend that
requiring a charter school to serve the same student
population that the local district serves is
inconsistent with existing law requiring lotteries and
could impede access to federal funds for start-up
charter schools. Finally, they note that the for-profit
prohibition would inappropriately limit the discretion
currently available to charter school governing boards.
SUPPORT
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California Federation of Teachers
California School Boards Association
California School Employees Association
California Teachers Association
OPPOSITION
Association of Personalized Learning Schools and Services
California Charter Schools Association
EdVoice
K12 Inc.