BILL ANALYSIS Ó AB 709 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 709 (Gipson) As Amended September 1, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |47-27 |(June 3, 2015) |SENATE: |21-13 |(August 19, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: ED. SUMMARY: Requires charter schools to comply with the same conflict of interest requirements as school districts. 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 the Brown Act; 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, AB 709 Page 2 d) The Political Reform Act of 1974 (PRA). Specifies that a charter school shall be considered an agency as it relates to this Act. 2)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; and, specifies such a member of the governing body of a charter school shall abstain from voting on all matters affecting his or her own employment. The Senate amendments specify that notwithstanding any other law, a public records request made to a charter school that meets the criteria specified in (a) and (b) shall be executed by the chartering authority. In order for the chartering authority to meet the public records request, the charter school shall provide all relevant documentation to the chartering authority for the purpose of meeting the public records request. 1)The charter school is located on a federally recognized California Indian reservation or rancheria. 2)The charter school is operated by a nonprofit public benefit corporation that was formed on or before May 31, 2002, and is currently operated by a federally recognized California Indian tribe. 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. FISCAL EFFECT: According to the Senate Appropriations AB 709 Page 3 Committee: 1)Mandate: Unknown, potentially significant reimbursable state mandate costs for school districts and county offices of education due to increased oversight responsibilities. If determined to be a mandate, this would create pressure to increase the K-12 Mandate Block Grant. (Proposition 98 of 1988) 2)Costs to charter schools: Unknown, potentially significant local costs to the extent charter schools do not already comply with the four areas of law. Charter schools have been determined to be ineligible to submit claims for mandate reimbursements. 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 AB 709 Page 4 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. This bill also expressly authorizes charter school employees to serve on a charter school governing body. According to the author, this bill seeks to clarify current law and explicitly require California's charter schools to be more transparent and accountable to the public. Specifically, this bill will require that charter school meetings are open to the public and allow for public records requests. In addition, this bill seeks to provide that charter schools comply with conflict of interest provisions of the Political Reform Act and prohibits officers or employees from engaging in contracts where they have a financial interest. 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. 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 AB 709 Page 5 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 Section 1090. Government Code Section 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 (including charter schools operated by non-profit or for-profit 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: 1) 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, 2) 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 schools are operated by non-profit corporations. The committee should consider whether it is appropriate to have public taxpayer funded charter schools abide by the corporations code rather than the government code with regard to conflict of interest policies. AB 709 Page 6 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. Analysis Prepared by: Chelsea Kelley / ED. / (916) 319-2087 FN: 0002018