BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: AB 787
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|Author: |Roger Hernández |
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|Version: |June 1, 2015 Hearing |
| |Date: July 1, 2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Lenin Del Castillo |
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Subject: Charter schools: operation: nonprofit public benefit
corporations
SUMMARY
This bill prohibits a charter school from operating as, or being
operated by, a for-profit corporation.
BACKGROUND
Existing law:
1)Authorizes a charter school to elect to operate as, or be
operated by, a nonprofit public benefit corporation, formed
and organized pursuant to the Nonprofit Public Benefit
Corporation Law.
2)Specifies that the governing board of a school district that
grants a charter for the establishment of a charter school
shall be entitled to a single representative on the board of
directors of the nonprofit public benefit corporation.
3)Specifies that an authority that grants a charter to a charter
school to be operated by, or as, a nonprofit public benefit
corporation is not liable for the debts or obligations of the
charter school, or for claims arising from the performance of
acts, errors, or omissions by the charter school, if the
authority has complied with all oversight responsibilities
required by law, including, but not limited to, those required
by Education Code Sections 47604.32 and 47605(m). (Education
AB 787 (Roger Hernández) Page 2
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Code § 47604)
ANALYSIS
This bill prohibits charter schools from being operated by a
for-profit corporation.
STAFF COMMENTS
1)Need for the bill. According to the author's office, "the
for-profit model is unsustainable for the long-term
development of California's public education system. As a
for-profit corporation their first priority is their
shareholders, not children or the public. These schools often
direct funds out of state to their national entities, and this
structure takes taxpayer dollars out of state and away from
the classroom. In the 21st century, online education will
only continue to grow. It is crucial that we protect all of
our public school students, whether their classroom is
physical or virtual."
2)Appropriate use of taxpayer dollars? While current law
explicitly authorizes a charter school to operate as a
nonprofit corporation, statute is silent on whether a charter
school is permitted to operate as a for-profit corporation.
Because of the permissive nature of the Education Code and
absent a clear prohibition, several charter schools are
currently operating as for-profit corporations. The
California Charter School Association indicates there are six
for-profit charter schools in California. According to the
author's office, "California Virtual Academies (CAVA) is
California's largest provider of online public K-12 education
and a public charter school network that exists entirely
online. Students take classes from home, communicating with
teachers via computer. CAVAs primary vendor and manager is
K12, Inc., a for-profit corporation." The author's office
further indicates that "K12, Inc. is the largest for-profit
operator of virtual schools nationwide and paid almost $11
million to its top six executives in 2011-12, while the
average CAVA teacher salary was $36,150, about half the
average teacher pay in California." The Committee may wish to
consider whether it is an appropriate use of state taxpayer
dollars for-profit corporations to operate public schools.
AB 787 (Roger Hernández) Page 3
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Additionally, does this model provide a perverse incentive for
these charter schools to limit services for students in order
to increase profits?
3)Impact on students. Notwithstanding the issues regarding the
appropriateness of using taxpayer dollars for charter schools
operating as a for-profit corporation, it does not appear that
the bill contemplates what would happen to students attending
these schools if the bill were to become law. Presumably, the
operating entities could restructure or reorganize themselves
as nonprofit corporations to comply. To the extent that these
entities are unable to do so, would the charter schools be
required to immediately shut down? Would there be a
transition period for them to find placement in a new school?
Some students may have unique learning needs which could
present logistical challenges in finding the appropriate
placement in a new school. To prevent the potential
disruption of educational services provided to students, staff
recommends that the bill be amended to become operative
beginning January 1, 2017..
4)Additional clarification may be needed. It is unclear if the
bill's prohibition would extend to contracts that charter
schools have in place with for-profit corporations for various
operations such as testing companies, test publishers, and
providers of instructional materials. Or is the bill limited
only to the for-profit entity that owns or manages the
day-to-day operations of the charter school? To prevent
differing practical interpretations, the author may wish to
consider clarifying which entities would be subject to the
bill's prohibition.
5)Arguments in support. Supporters of the bill indicate that
prohibiting charter schools from being run by for-profit
corporations would protect California taxpayers by ensuring
their money is not being taken out of the state and away from
classrooms. The bill would help charter schools focus on
students and not profits or pleasing investors.
6)Arguments in opposition. Opponents of the bill argue that
whether or not the school is "for-profit" should not be the
driver, and rather, we should be looking at what the program
has done to help students attain academic proficiency in an
alternative setting. They indicate the bill would prohibit
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successful arrangements with online programs that have
provided students with successful options.
SUPPORT
American Federation of State, County and Municipal Employees
Association of California School Administrators
California Federation of Teachers (co-sponsor)
California Labor Federation (co-sponsor)
California Professional Firefighters
California School Employees Association (co-sponsor)
California State PTA
California Teachers Association (co-sponsor)
Service Employees International Union
OPPOSITION
California Parents for Public Virtual Education
Charter Schools Development Center
EdVoice
K-12, Inc.
Letters from individuals
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