BILL ANALYSIS Ó
AB 440
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Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 440 (Brownley) - As Introduced: February 14, 2011
Policy Committee: Education
Vote:6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill makes several statutory changes to charter school
accountability and financial compliance. Specifically, this
bill:
1)Requires the Education Audit Appeals Panel (EAAP) to adopt a
charter school supplement to the audit guide (as proposed by
the State Controller) to provide specific guidance on the
charter schools. This measure also requires the State
Controller (SC) to consult with charter school organizations
in developing the audit guide, as specified.
2)Requires a charter school operated as or by a for-profit
corporation to notify the SPI of this fact annually in
writing.
3)Allows a charter authorizer, as part of the petition review
process, to consider whether or not the charter petitioner has
operated another charter school for three consecutive years
and any of the following occurred: (a) the charter school
demonstrated academic achievement equivalent to a persistently
lowest-achieving school under the federal Race to the Top
program; (b) the charter school was not renewed (after its
first renewal cycle); or (c) the school's charter was revoked
and not restored.
4)Requires a chartering authority, as part of the renewal
process, to consider the degree to which a charter school
serves pupil populations that are similar to the local school
district or community pupil populations, especially high-need
pupils (i.e, English language learners, pupils with
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disabilities, and poor/needy pupils).
FISCAL EFFECT
1)Annual GF/98 state reimbursable mandated costs of $270,000 to
local education agencies (LEAs) to review and verify specified
petition and renewal information required under this bill. To
the extent that the information required for submission is
more readily available to an LEA than current law
requirements, this cost may be offset. For example, current
law, as part of the renewal process, authorizes a chartering
authority to grant a charter school renewal based on academic
performance equal to schools pupils would have otherwise
attended. Statute provides guidance on information the
chartering authority uses to make this determination. This
information may not be as easily available as the requirements
of this measure.
There is a current GF/98 state reimbursable mandate of $2.3
million annually paid to LEAs to review charter school
petitions and renewals, notify charter schools of reasons for
revocation, and administer facility rentals. The cost
associated with this measure will be added to the existing
mandate. According to a May 2006 decision by the Commission
on State Mandates (CSM), charter schools are not eligible to
claim mandate reimbursements. In denying charter schools'
mandate claims, the CSM repeatedly cites the fact that charter
schools are "voluntarily" created.
2)One-time GF administrative costs, likely less than $80,000, to
the SC to complete the development of a supplemental audit
guide for charter schools, as specified.
SUMMARY CONTINUED :
5)Changes the charter renewal requirements in the following
manner: (a) requires a charter school to meet Academic
Performance Index (API) schoolwide and subgroup targets; (b)
requires a determination that a charter school has qualified
for an alternative accountability system specified in current
law; and (c) deletes the authorization for a chartering
authority to renew a charter school if it has achieved "at
least equal to the API of the public schools" the pupils would
have otherwise attended and instead, requires the charter
school to have met or exceeded the API of the local district.
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6)Prohibits a chartering authority from doing either of the
following: (a) granting a charter renewal for a period longer
than three years if the school is in federal program
improvement (PI) under the No Child Left Behind Act (NCLB);
and (b) granting a charter renewal for a school that has
entered year five of federal PI under NCLB, has not exited PI,
and did not meet Adequate Yearly Progress (AYP) under NCLB in
the year prior to the renewal.
7)Requires the SC, by December 31 of each fiscal year, to
publish a directory of certified public accountants (deemed
qualified by the SC) to conduct audits of charter schools, as
specified.
8)Requires a charter school to select an accountant from the
SC's list to conduct the audit, as specified.
COMMENTS
1)Purpose. According to the author, "The measure ensures
successful conditions for high performing charter schools by
specifying how charter authorizers shall monitor and hold
charter schools accountable, especially with regard to student
achievement. The fiscal accountability standards will ensure
that charter schools receive thorough audits conducted by the
same high quality auditors that conduct school district audits
and clarify that for-profit corporations are prohibited from
operating charter schools. The academic accountability
standards proposed by this bill are directly aligned with the
original legislative intent in establishing charter schools,
which is improved student learning."
2)Existing law requires a potential charter school to submit a
petition to a LEA for approval to establish the school. The
petition is required to include a description of the
educational program of the school. In addition, the initial
petition is required to describe how the proposed charter
school will achieve racial and ethnic balance similar to the
neighboring school district.
This bill allows a charter authorizer, in reviewing the
petition, to consider the petitioner's track record in
operating a charter school, as specified. It also requires
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the chartering authority, as part of the charter renewal
process, to consider whether the school serves similar
populations, especially high need pupils, as specified.
Statute authorizes a charter school to be granted one or more
renewals for a five year period.
Current law further requires a charter school to meet one of
the following specified criteria (for the purposes of
renewal): (a) attained its API growth target in the prior year
or in two of the last three years; (b) ranked in deciles 4 to
10 on the API in the prior year or in two of the last three
years; (c) ranked in deciles 4 to 10 on the API for a
demographically comparable school in the prior year or in two
of the last three years; and (d) the entity that granted the
charter determines the academic performance of the charter
school is at least equal to the performance of the public
schools the charter pupils would have otherwise attended, as
specified.
This measure, with respect to API performance specified in (a)
above, requires a charter school to meet subgroup (i.e.,
poor/needy, special education, and ELL pupils) targets.
Likewise, this bill deletes the criteria that specifies
charter schools have to perform at least equal to schools
pupils would otherwise have attended (as specified in (d)
above). Instead, it requires a charter school to meet or
exceed the performance of these schools. The measure also
prohibits a charter school in federal PI under NCLB (i.e.,
failed to make academic progress) from being renewed for more
than three years. This bill also prohibits charter schools in
federal PI year five from being renewed.
All public schools in federal PI under NCLB are required to
implement certain stages of reform, depending on the PI year.
In PI year five, the local education agency governing the
school is required to implement restructuring/alternative
governance reforms, including converting the school to a
charter school. This bill prohibits a charter school at this
stage of PI from being renewed.
Current law requires charter schools to conduct annual
independent financial audits. This bill requires charter
schools to have the audit conducted by SC approved auditors
and requires the auditors to follow an audit guide developed
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by the SC for this purpose. The author contends these changes
are consistent with audits required by non-charter schools.
3)Number of charter schools . In 2009-10, there were 823 charter
schools enrolling 323,859 students. This number includes 13
charter schools approved by the State Board of Education.
4)Related legislation .
a) AB 86 (Mendoza), pending in this committee, amends the
charter school petition process to include permanent
classified employees.
b) AB 360 (Brownley), pending on the Assembly Floor,
requires charter schools to comply with the same conflict
of interest requirements as school districts.
c) AB 1034 (Gatto), pending in this committee, makes
changes to charter school requirements regarding student
demographic data and admissions requirements, as specified.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081