BILL ANALYSIS Ó
AB 913
Page 1
Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON EDUCATION
Joan Buchanan, Chair
AB 913 (Chau) - As Amended: April 29, 2013
[Note: This bill was double referred from the Local Government
Committee and was heard by that committee as it relates to
issues under its jurisdiction.]
SUBJECT : Charter schools.
SUMMARY : Requires charter schools to comply with the same
conflict of interest requirements as school districts,
commencing July 1, 2014. Specifically, this bill :
1)Declares charter schools are subject to all of the following:
a) The Ralph M. Brown Act (Brown Act), except that a
charter school operated by an entity governed by the
Bagley-Keene Open Meeting Act (BKOMA) is subject to that
Act, and specifies a council or school site advisory
committee is subject to existing laws related to those
committees;
b) The California Public Records Act (CPRA);
c) Article 4 (commencing with Section 1090) of Chapter 1 of
Division 4 of Title 1 of the Government Code; and,
d) The Political Reform Act of 1974 (PRA).
2)Specifies a member of the governing body of a charter school
shall abstain from voting on all matters affecting his or her
own employment and personnel matters that uniquely affect a
member's relative; specifies a person who is disqualified by
the California Constitution or laws of the state from holding
a civil office shall not serve on the governing body of a
charter school; and, specifies this measure does not prohibit
an employee of a charter school from serving as a member of
the governing body of that charter school.
3)Specifies that a person who provides a loan to a charter
school due to a school fiscal emergency, or who leases, or
signs a guarantor agreement relative to the lease of, real
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property to be occupied by a charter school, is not
disqualified because of that loan, lease, or guarantor
agreement from also serving as a member of the governing body
of the charter school or being an employee of the charter
school; declares these instances as remote interests for
purposes of the Government Code; and, specifies that a member
of the governing body of a charter school who is a lessor or
guarantor shall abstain from voting on, or influencing or
attempting to influence another member of the governing body
regarding, all matters affecting the real property lease
agreement or loan.
4)Specifies that if a charter school governing body engages in
activities that are not related to the operation of the
charter school, this bill does not make those unrelated
activities subject to the Brown Act, the BKOMA, or the CPRA;
and, prohibits a meeting of the charter school governing body
to discuss items related to the charter school to also include
discussion of any item regarding an activity that is not
related to the charter school.
5)Specifies that a charter school governing body may meet within
the boundaries of the county or counties in which one or more
of the school's facilities are located provided that proper
notices pursuant to the Brown Act and the BKOMA are posted
within the boundaries of each of the counties in which any of
the school's facilities is located; specifies a charter school
may also meet in a county contiguous to the county where one
or more of the school's facilities are located, if at least
10% of the pupils who are enrolled in the school reside in
that contiguous county; and, specifies a nonclassroom based
charter school that does not have a facility may meet within
the boundaries of the county in which the greatest number of
pupils who are enrolled in the school reside.
6)Authorizes a charter school governing body to hold closed
sessions to consider a matter regarding pupil discipline.
7)Declares that a statement of economic interest that is filed
by a designated person at a charter school after the required
deadline pursuant to the PRA shall not be the sole basis for
revocation of a charter.
8)Defines for purposes of this measure, "facility" to mean a
charter school campus, resource center, meeting space, or
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satellite facility.
EXISTING LAW pertaining to charter schools:
1)Provides no specific requirement for charter school governing
board conflict of interest policies.
2)Deems charter schools as school districts for the purposes of
receiving state education funds.
EXISTING LAW pertaining to school districts:
1)Specifies that Members of the Legislature, state, county,
district, and city officers or employees shall not be
financially interested in any contract made by them in their
official capacity, or by any body or board of which they are
members. (Government Code 1090)
2)Specifies that an employee of a school district (or local
agency) may not be sworn into office as an elected or
appointed member of that school district's (or local agency's)
governing board unless and until he/she resigns as an
employee. (Education Code 35107)
3)Requires members of school district governing boards and
designated employees of the school district to file statements
of financial interest according to the Political Reform Act.
(Government Code 87100 et. seq.)
4)Requires a county, city, whether general law or chartered,
city and county, town, school district, municipal corporation,
district, political subdivision, or any board, commission or
agency thereof, or other local public agency to comply with
the Brown Act. (Government Code 54950 et. seq.)
5)Requires a county; city; city and county; school district;
municipal corporation; district; political subdivision; or any
board, commission or agency thereof; other local public
agency; or a board, commission, committee, or other
multimember body that governs a private corporation, limited
liability company, or other entity that either is created by
the elected legislative body in order to exercise authority
that may lawfully be delegated by the elected governing body
to a private corporation, limited liability company, or other
entity; or, receives funds from a local agency and the
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membership of whose governing body includes a member of the
legislative body of the local agency appointed to that
governing body as a full voting member by the legislative body
of the local agency to comply with the California Public
Records Act. (Government Code 6250 et. seq.)
FISCAL EFFECT : This bill is keyed non-fiscal, however the
Assembly Appropriations Committee has requested that this
measure be referred to them if it is passed out of this
Committee.
COMMENTS : This bill requires charter school governing body
members to comply with substantially similar conflict of
interest policies by which school district governing board
members currently abide. Recent news reports of charter school
governing body members engaging in inappropriate financial
mismanagement have highlighted the need for charter school
conflict of interest laws to be clarified. Currently, these
investigations can take many months to resolve partly due to the
fact that charter school governing body members and designated
employees do not consistently file an annual statement of
economic interest, which makes public any potential conflicts of
interest that individual may have in their official capacity.
While charter schools are given more autonomy than public
schools, their governing bodies have authority over public funds
to be used for the educational benefit of their students.
Charter school governing bodies should be held to the same
conflict of interest standards as school district governing
boards.
This bill requires charter school governing bodies to file
statements of economic interest according to the Political
Reform Act; specifies that charter school governing body members
may not be financially interested in any decision made by the
governing body; requires charter schools to comply with the
California Public Records Act; and, requires charter school
governing bodies to abide by the Brown Act or the Bagley-Keene
Open Meetings Act. The bill also expressly authorizes charter
school employees to serve on a charter school governing body.
Charter Schools and Pension Programs . According to the author,
under the US Internal Revenue Service (IRS) proposed
regulations, all individuals who benefit from a state retirement
system must be employed by a governmental entity, such as the
state, an elected school board, or the federal government. No
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private interests may be involved. California State Teachers
Retirement System (CalSTRS) has been monitoring the development
of the IRS proposal and recently became aware that public
charter schools in California operated by non-profit
organizations probably would not be considered agencies or
instrumentalities of the state or a political subdivision.
CalSTRS could be forced to prohibit the participation of charter
schools in its benefit program, so that CalSTRS does not lose
their governmental plan status under Internal Revenue Code
section 414(d). California law must be amended in order to
clarify that charter schools are public schools that abide by
public conflict of interest laws even though they are privately
governed.
AB 913 will align conflict of interest standards for charter
school governing bodies with those of school district boards to
minimize the IRS's uncertainty with regard to charter schools
eligibility for a governmental pension plan. Both traditional
public school governing boards and charter school governing
bodies manage state taxpayer dollars to run educational programs
for children, and must be held to the same standard. It is not
appropriate for boards that govern state dollars to be
financially interested in the decisions made by the board.
Overall, the goal of AB 913 is to have charter schools operate
with integrity and transparency, and to ensure that their
employees are not deemed ineligible to participate in
governmental pension plans. Charter school employees are part
of the public education system and should be treated equitably
by receiving the protections and benefit plans afforded to all
public educational employees, including participation in CalSTRS
and CalPERS. Currently, approximately 88% of California's
charter schools participate in CalSTRS. Unless we take
immediate action, the retirement benefits of these employees is
in jeopardy.
The Brown Act . The Brown Act governs meetings conducted by
local legislative bodies, such as boards of supervisors, city
councils and school boards. The Brown Act represents the
Legislature's determination of how the balance should be struck
between public access to meetings of multi-member public bodies
and the need for confidential candor, debate, and information
gathering. The Brown Act requires meetings of the board to be
publicly noticed 72 hours before their meetings, among other
requirements.
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California Public Records Act (CPRA) . The CPRA was enacted in
1968 and according to the Attorney General, in enacting the
CRPA, the Legislature stated that access to information
concerning the conduct of the public's business is a fundamental
and necessary right for every person in the state. Cases
interpreting the CRPA also have emphasized that its primary
purpose is to give the public an opportunity to monitor the
functioning of their government. The greater and more
unfettered the public official's power, the greater the public's
interest in monitoring the governmental action. The fundamental
precept of CPRA is that governmental records shall be disclosed
to the public, upon request, unless there is a specific reason
not to do so. Most of the reasons for withholding disclosure of
a record are set forth in specific exemptions contained in the
CPRA. Several CPRA exemptions are based on a recognition of the
individual's right to privacy. If a record contains exempt
information, the agency generally must segregate or redact the
exempt information and disclose the remainder of the record.
Government Code 1090 . Government Code 1090 states that members
of the Legislature, state, county, district, judicial district,
and city officers or employees shall not be financially
interested in any contract made by them in their official
capacity, or by any body or board of which they are members. In
a 1983 opinion the Attorney General stated, "Section 1090 of the
Government Code codifies the common law prohibition and the
general policy of this state against public officials having a
personal interest in contracts they make in their official
capacities. Mindful of the ancient adage, that 'no man can
serve two masters,' the section was enacted to ensure that
public officials 'making' official contracts not be distracted
by personal financial gain from exercising absolute loyalty and
undivided allegiance to the best interest of the entity which
they serve."
Corporations Code . Statute governing corporations requires not
more than 49% of persons serving on the board of any corporation
to be "interested persons." "Interested persons" is defined as
either of the following: a) any person currently compensated by
the corporation for services rendered to it within the previous
12 months (excluding any reasonable compensation paid to a
director); or, b) any relative, as specified, of any such
person. Advocates of charter schools contend they should abide
by conflict of interest provisions related to corporations not
local education agencies due to the fact that some charter
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schools are operated by non-profit corporations. The committee
should consider whether it is appropriate to have public funded
charter schools abide by the corporations code rather than the
government code with regard to conflict of interest policies.
Political Reform Act . The Fair Political Practices Commission
(FPPC) was created by the Political Reform Act of 1974, a ballot
initiative passed by California voters as Proposition 9. The
FPPC provides written and oral advice to public agencies and
officials; conducts seminars and training sessions; develops
forms, manuals and instructions; and receives and files
statements of economic interests from many state and local
officials. The FPPC investigates alleged violations of the
Political Reform Act, imposes penalties when appropriate, and
assists state and local agencies in developing and enforcing
conflict-of-interest codes. The FPPC regulates campaign
financing and spending; financial conflicts of interest;
lobbyist registration and reporting; post-governmental
employment; mass mailings at public expense; and, gifts and
honoraria given to public officials and candidates. School
board members are required to comply with the PRA, and in so,
must file a statement of economic interest, annually.
Previous legislation : AB 360 (Brownley) from 2011, which died
on the Assembly inactive file on concurrence, was substantially
similar to this measure.
AB 572 (Brownley) from 2010 required, commencing July 1, 2011,
charter schools to comply with the same conflict of interest
requirements as school districts by specifying that charter
schools are subject to the Brown Act, the CPRA; Article 4
(commencing with Section 1090) of Chapter 1 of Division 4 of
Title 1 of the Government Code; and, the PRA. The bill was
vetoed by the Governor with the following message:
"Charter school educators have proven that poverty is not
destiny for students that attend public schools in
California. Repeatedly, charter schools with high
proportions of disadvantaged students are among the highest
performing public schools in California. Any attempt to
regulate charter schools with incoherent and inconsistent
cross-references to other statutes is simply misguided.
Parents do not need renewed faith in charter schools as
suggested in this bill. On the contrary, tens of thousands
of parents in California have children on waiting lists to
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attend a public charter school. Legislation expressing
findings and intent to provide "greater autonomy to charter
schools" may be well intended at first glance. A careful
reading of the bill reveals that the proposed changes apply
new and contradictory requirements, which would put
hundreds of schools immediately out of compliance, making
it obvious that it is simply another veiled attempt to
discourage competition and stifle efforts to aid the
expansion of charter schools."
AB 2115 (Mullin) from 2008 required charter schools to adopt and
comply with a conflict of interest policy that requires its
governing board members to abide by the same conflict of
interest requirements as local education agency (LEA) governing
board members. The bill was vetoed by the Governor with the
following message:
"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 schools districts."
AB 1197 (Wiggins) of 2004, specified that individuals who govern
charter schools shall file statements of economic interest under
the PRA. The bill failed passage on the Senate Floor.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of California School Administrators
California Association of School Business Officials
California School Boards Association
California Teachers Association
Public Advocates
An Individual
Opposition
None on file.
Analysis Prepared by : Chelsea Kelley / ED. / (916) 319-2087
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