BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 440 (Brownley)
Hearing Date: 08/15/2011 Amended: 07/12/2011
Consultant: Jacqueline Wong-HernandezPolicy Vote: Education 7-3
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BILL SUMMARY: AB 440 establishes new criteria for charter school
renewal and authorizes a charter school not meeting the renewal
criteria to apply to the State Board of Education (SBE) for a
determination of academic eligibility for the renewal of its
charter by submitting evidence of the school's academic success,
as specified. This bill places new fiscal accountability
requirements on charter schools, as specified. This bill
requires the State Controller (SCO) to propose, and the
Education Audits Appeal Panel (EAAP) to adopt, a charter school
audit guide to provide specific guidance on the unique nature of
charter schools, as specified. This bill makes various
legislative finding and declarations.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14
Fund
SBE eligibility determination Potentially
significant ongoing costs General
New renewal criteria and process Potential savings/costs in
future years General
Charter schools audit guide Likely minor
one-time costs General
Enforcement Significant ongoing
costs and workload General
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law provides that in order to be renewed, a charter
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school must meet at least one of the following criteria: 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) a ranking in deciles 4 to 10, inclusive, on
the API in the prior year or in two of the last three years; 3)
a ranking in deciles 4 to 10, inclusive, on the API for a
demographically comparable school 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 (ASAM). (EC § 47607)
This bill makes changes to various academic requirements for
establishment and renewal of charter schools. Specifically, this
bill modifies existing requirements for charter school petitions
with regard to pupils to be served by the charter school. For
initial approval of a charter, petitioners must include
information on how school will serve pupil populations that are
similar to the local school district populations or local
community, or similar to the pupil populations identified as the
target pupil population to be served, as specified. For
renewal, 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 student
populations that are similar to local district or community
student populations, as specified. This provision could result
in minor additional mandated reimbursements to districts who
receive (and must evaluate) charter petitions for authorization.
Charter school petitioners would not be eligible for any mandate
reimbursement for additional workload.
This bill also makes the academic performance criteria for
charter renewal more stringent. Specifically, this bill
prohibits an authorizer of a charter school from considering or
granting the renewal of the school's charter unless the school,
based on data available as of October 1 of the fiscal year of
renewal, meets one of the following criteria before having its
charter renewed: 1) An API score of at least 700 in the most
recent year; 2) a cumulative API growth of at least 50 points
over the last three API cycles; 3) a ranking in deciles 6 to 10,
inclusive, on the API for a demographically comparable school in
the prior year or in two of the last three years: as specified;
4) participation in an alternative accountability system (ASAM),
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as specified; 5) determination of academic eligibility for
renewal from the SBE within the prior 12 months. If a charter
school fails to meet one of these criteria, it cannot be renewed
by the authorizing agency.
Under this bill, if a charter is not otherwise eligible to be
considered, the charter school may ask for a determination of
academic eligibility for renewal by the SBE; this is
functionally an appeal from being automatically disqualified.
This bill provides that a charter school may apply to the SBE by
submitting evidence of the school's academic success which may
include, but is not limited to, information on individual pupil
achievement, including longitudinal data that demonstrate
individual pupil progress, analysis of similar pupil
populations, or other relevant data as determined by the school.
This bill requires the SPI to make a recommendation to the SBE
on the application for a determination of academic eligibility
for the renewal of the charter, and that the SPI's
recommendation include an analysis of the validity and
reliability of the evidence of academic success submitted by the
charter school. This process would also have to occur for any
charter school in year 5 Program Improvement that does not meet
at least two of the above criteria, in order to be eligible to
seek charter renewal from its authorizing agency.
In order to implement this process, CDE staff would need to
develop a procedure for receiving and evaluating materials
submitted by charter schools not deemed eligible to apply to
their authorizing agencies for renewal, as well as for producing
a formal analysis of the findings for the SPI to present to the
SBE. Moreover, to the extent that the CDE has to review the
academic eligibility application packages and make preliminary
recommendations to the SPI, there would be costs to the CDE. In
addition to the initial costs for creating an evaluation and
reporting process, the CDE would incur ongoing workload costs
which will vary by the number of charter schools in a given year
that would request a determination by the SBE.
If a charter is determined by the SBE to be academically
ineligible, the process ends and the charter cannot be renewed
nor offered any future appeal. To the extent that this is the
case, there will likely be state and local administrative
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savings, and the process will be streamlined. To the extent that
the new criteria for eligibility result in denying more charter
renewals, however, there may be additional costs to the state if
the students attending those charters transfer to traditional
district schools. Charter schools receive less funding than
district schools (they receive less categorical funding and are
not eligible for mandate reimbursements) and, while funding for
district school varies by district, charter schools are
typically funded at approximately $275 less per pupil than
district schools.
If the SBE determines a charter school to be academically
eligible to apply for renewal, the process goes back to the
local level; the authorizing agency can then consider renewing
the charter. If the charter renewal is then denied, it would
still be eligible for appeal to the SBE, as under existing law.
With regard to fiscal accountability, this bill requires a
charter school petition to specify the manner in which annual,
independent financial and compliance audits will be conducted;
requires charter school audits to conform to government auditing
standards, and specifies that audits are to be conducted in a
manner consistent with the SCO charter school audit guide. Any
costs related to these provisions would generally be borne by
the charter school petitioners.
This bill requires the SCO to propose, and the EAAP to adopt, a
charter school audit guide to provide "specific guidance on the
unique nature of charter schools." This bill specifically
requires the SCO to develop the guide in consultation with the
Department of Finance (DOF), the CDE, the Association of
California School Administrators, the California Charter Schools
Association and other charter school organizations as
appropriate. The SCO has indicated its existing K-12 audit guide
has sections that apply to charter schools, and could be updated
to reflect new requirements and provisions of this bill. The
existing audit guide directs auditors on how to conduct and
report the audit, and is only available online; this is not a
document for charter schools, but for the auditing entities.
Staff notes, however, that this bill calls for a separate guide,
and that the specificity of the requirements for developing a
charter school audit guide implies that the requirement is to
produce a new, distinct charter audits guide. Depending on the
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scope of the guide, and the process for development, this
requirement could result in significant costs to the SCO and the
EAAP.
The EAAP has indicated that in order to implement the provisions
of this bill, it would have to establish a parallel process for
adopting regulations and making changes to a distinct charter
schools audit guide, as separate from the existing guide. In
addition to the cost of adopting new regulations for the guide
(even if they are identical to the existing regulations, they
must go out for public comment and be discussed in required
meetings), this bill creates a duplicative process for every
change to the audit guide. Every year the SCO makes changes to
the audit guide, and the EAAP creates an audit guide supplement.
This bill would result in the EAAP having to create a second
supplement, and a parallel change process resulting in
significant and redundant ongoing workload.