BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-14 Regular Session
BILL NO: AB 913
AUTHOR: Chau
AMENDED: June 3, 2014
FISCAL COMM: No HEARING DATE: June 18, 2014
URGENCY: No CONSULTANT:Lenin Del Castillo
SUBJECT : Charter Schools: conflict of interest.
SUMMARY
This bill requires that charter schools be subject to a variety
of the same open meeting, conflict of interest, and disclosure
laws as school districts, including the Ralph M. Brown Act and
the Political Reform Act of 1974.
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. Existing law declares that charter
schools are part of the public school system as defined in
Article IX of the California Constitution and are "under the
exclusive control of the officers of the public schools." A
charter school is required to comply with statutes governing
charter schools and all of the provisions set forth in its
charter, but is otherwise exempt from most laws governing school
districts except where specifically noted. (Education Code §
47601 et. seq.)
Existing law requires state and local agencies to conduct
business in meetings that are open to the public:
The Brown Act requires meetings of a local agency's
board of directors to be open to the public. (Government
Code § 54950 et seq.)
The Bagley-Keene Open Meeting Act requires meetings of
state bodies to be open to the public. (Government Code §
11120)
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The California Public Records Act (CPRA) declares that the
public has a right to access information that concerns the
people's business and provides that public records shall be
available for inspection, except as provided by an express
provision of law.
(Government Code § 6250 and § 6253)
Existing law prohibits members of the Legislature, state,
county, district, judicial district, and city officers or
employees from being 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 et seq.)
The Political Reform Act of 1974 (Act), established by the
voters through Proposition 9 in June 1974, requires public
officials to carry out their duties in an unbiased manner, free
from influence by outside interests, and to follow regulations
during elections, as defined. The Act also requires government
agencies to adopt a conflict of interest code that requires
designated employees of the agency to file an annual statement
of economic interest disclosing any investments, business
positions, interests in real property, or sources of income that
may be affected materially by a decision made, or participated
in, by the designated employee by virtue of his or her position.
(Government Code § 81000 et seq.)
ANALYSIS
This bill :
1) Expresses the intent of the Legislature to do all of the
following:
a) Establish conflict of interest policies for
governing boards of charter schools that mirror
existing conflict of interest policies followed by the
governing boards of school districts.
b) Provide transparency in the operations of the
many charter schools that are providing quality
educational options for parents and pupils and renew
the faith of parents and the community that their
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local charter school is acting in the best interest of
pupils.
c) Continue to provide greater autonomy to charter
schools than traditional public schools and provide
greater transparency to parents and the public with
regard to the use of public funds by the governing
body of charter schools for the educational benefit of
their pupils.
d) Establish standards and procedures consistent
with the Charter Schools Act of 1992 to avoid
conflicts of interest in charter schools.
2) Provides that a charter school is subject to all of the
following:
a) The Ralph M. Brown Act, except that a charter
school operated by
an entity governed by the Bagley-Keene Open Meeting
Act is subject to that Act regardless of the
authorizing entity.
b) The California Public Records Act.
c) Provisions of the Government Code that prohibit
government officers or employees from being
financially interested in contracts or purchases made
by them in their official capacity.
d) The Political Reform Act of 1974. For purposes
of Government Code
§ 81000, a charter school shall be considered an agency.
3) Provides that an employee of a charter school is not
disqualified because of that employment status from also
serving as a member of the governing body of the charter
school. A member of the governing body of a charter
school shall abstain from voting on, or influencing or
attempting to influence another member of the governing
body regarding all matters uniquely affecting his or her
own employment.
4) Provides that a person who is disqualified by law from
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holding a civil office may not serve on the governing body
of a charter school.
5) Specifies that the governing board of a charter school is
not subject to open meeting or conflict of interest laws or
the Public Records Act when conducting activities unrelated
to the school's operation and prohibits the discussion of
unrelated activities in meetings held to discuss operations
of the charter school.
6) Authorizes the governing body of a charter school to meet
within the physical boundaries of the county or counties in
which one or more of the school's facilities are located
provided that proper notices, as specified, are posted
within the physical boundaries of each of the counties in
which any of the school's facilities are located. A
charter school may meet in a county contiguous to the
county where one or more of the school's facilities are
located if at least 10 percent of the pupils who are
enrolled in the school reside in that contiguous county. 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, as specified.
7) Provides that a statement of economic interest that is
filed by a designated person at a charter school after the
required deadline pursuant to the Political Reform Act of
1974 shall not be the sole basis for revocation of a
charter, as specified.
8) Defines facility as a charter school campus, resource
center, meeting space, or satellite facility.
9) Provides that this section shall not apply to actions taken
before the operative date of this section and shall become
operative on July 1, 2015.
STAFF COMMENTS
1) Need for the bill : According to the author's office,
"recent news reports of charter school board members
engaging in inappropriate financial mismanagement have
highlighted the need for charter school conflict of
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interest laws to be clarified." Currently, these
investigations can take many months to resolve, partly due
to the fact that charter school governing board members and
designated employees do not consistently file an annual
statement of economic interest, making it difficult to
discern any potential conflicts of interest that individual
board members may have." While the state gives public
charter schools significant autonomy in order to encourage
innovation, the author argues that because charter school
governing boards have authority over public funds to be
used for the educational benefit of their students, they
should be held to the same conflict of interest
standards as the governing boards of other public schools.
The bill is intended to promote transparency and
accountability to parents and the public in the operation
of all public schools and the expenditure of public funds.
2) Public accountability laws . County boards of education and
school district governing boards are required to conduct
public meetings and make information available to the
public, upon request. Members of these boards are also
subject to conflict of interest statutes contained in
Government Code § 1090 and the Political Reform Act of
1974. This bill makes the governing boards of public
charter schools subject to these same requirements.
a) Open meeting laws - entitles the public to have
access to meetings of multi-member public bodies. The
Brown Act and the Bagley-Keene Act recognize the need
to balance the public's right to open government with
the need for boards, on occasion to have closed
session discussions in certain matters such as
personnel or litigation. By making charter schools
subject to open meeting laws, charter school boards
would need to provide advance notice of meetings and
conduct their meetings in public. However, because
many charter schools and charter management
organizations operate schools in multiple counties,
staff recommends an amendment providing the authority
for the governing body of a charter school to meet
within the physical boundaries of a charter school's
authorizing entity provided that proper notices are
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posted at all charter school facilities and that the
meeting location complies with the open, public, and
accessibility requirements pursuant to the Brown Act
and the Bagley-Keene Act.
b) Public records - The purpose of the California
Public Records Act (CPRA) is to give the public an
opportunity to monitor the functioning of their local
and state government. The fundamental precept of CPRA
is that governmental records are to be disclosed to
the public when requested, unless there is a specific
reason not to do so. The CPRA allows for certain
exemptions, such as matters that relating to
individual privacy. Under CPRA, agencies must
segregate or redact exempt information and disclose
the remainder of the record. Under the provisions of
this Act, charter schools would need to respond to
requests for information that is not private in
nature.
c) Government Code § 1090 - is the state's central
conflict of interest Act. It applies to public
officials from members of the Legislature to local
officials and employees, including those of school
districts. 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
capacity." In addition to prohibiting public
officials from having personal financial interest in a
contract made in an official capacity, this Act
specifies that such contracts are void and cannot be
enforced. Opponents have expressed concern that this
provision could make it more difficult for
philanthropic board members to provide low-interest or
no-interest loans or make facilities available to
charter schools, which often happens during the
start-up phase of a charter school. Staff recommends
amendments that would provide an exception to the
provisions of Article 4 of Chapter 1 of Division 4 of
the Government Code and allow a charter school board
member to provide a loan or line of credit to a
charter school if the following conditions are
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satisfied: 1) the governing body of the charter
school, before entering into the loan agreement or
signing a guarantor agreement relative to a line of
credit, adopts a resolution at a public meeting
declaring and describing the need for the loan or the
line of credit; 2) the governing body discloses and
approves the loan agreement or line of credit and
terms of the loan or line of credit during a public
meeting, including the assurance that the terms of the
loan or line of credit will not exceed market value
and result in profit; 3) the member abstains from
voting on, or influencing or attempting to influence
another member of the governing body regarding all
matters affecting the loan agreement or line of
credit, and 4) provides that the loan agreement or
line of credit will not disqualify the member from
serving on the governing body of the charter school or
from being an employee of the charter school.
The author also proposes clarifying amendments to
subsection (b) of Section 47601.1, as proposed to be
added, beginning on line 15 of page 4 of the bill,
regarding a charter board member's prohibitions if he
or she is also an employee of the charter school.
d) Political Reform Act . The Political Reform Act of
1974 established the Fair Political Practices
Commission (FPPC) to administer its requirements and
receive annual conflict of interest statements.
According to the FPPC, the CPRA is designed to assure
that public officials perform their duties impartially
without bias because of personal financial interests
or the interests of financial supporters; and that
public officials disclose income and assets that could
be affected by official actions and to assure that
public officials disqualify themselves from
participating in decisions when they have conflicts of
interest. This bill would result in charter school
board members and designated employees having to
disclose their financial interests in annual
statements filed with the FPPC. However, the bill is
silent on what entity would be a charter school's
conflict of interest code reviewing body. Therefore,
staff recommends an amendment requiring the county
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board of education in which the greatest number of
pupils who are enrolled in the charter school reside
to be the code reviewing body.
3) Related and prior legislation .
SB 1317 (Huff), similar to this bill, would require charter
schools to be subject to a variety of the same open meeting
and disclosure laws as school districts, including the
Ralph M. Brown Act, the California Public Records Act, and
the Political Reform Act of 1974, but proposed alternative
provisions regarding conflict of interest. This bill
passed this Committee on April 30, 2014, but failed passage
in the Senate Appropriations Committee.
AB 360 (Brownley, 2011), also similar to this bill,
required charter schools to comply with the same conflict
of interest requirements as school district governing board
members. AB 360 also passed this Committee but died on the
Assembly inactive file on concurrence.
AB 572 (Brownley, 2010) would have required charter schools
to comply with the Brown Act, the California Public Records
Act, and the Political Reform Act. AB 572 was passed by
the Senate Education Committee and subsequently vetoed by
Governor Schwarzenegger with the following veto 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 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
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compliance, making it obvious that it is simply
another veiled attempt to discourage competition and
stifle efforts to aid the expansion of charter
schools."
SUPPORT
American Federation of State, County, and Municipal Employees
Association of California School Administrators
California Association of School Business Officials
California Federation of Teachers
California School Boards Association (co-sponsor)
California School Employees Association
California State PTA
California Teachers Association (co-sponsor)
Fresno Unified School District
Los Angeles County District Attorney's Office
Letters from individuals
OPPOSITION
California Charter Schools Association
Charter Schools Development Center
Clayton Valley Charter High School
EdVoice
El Rancho Charter School
Environmental Charter High School
Inland Leaders Charter School
Journey School
Kid Street Charter School
Magnolia Science Academy-Bell
Pacific Charter Institute
Shasta Secondary Home School
Letters from individuals