BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: AB 1084
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|Author: |Bonilla |
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|Version: |June 6, 2016 Hearing |
| |Date: June 29, 2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Lenin Del Castillo |
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Subject: Charter schools: for-profit entities
NOTE: This bill has been amended to replace its contents and
this is the first time the bill is being heard in its current
form.
SUMMARY
This bill prohibits an online charter school from being owned or
operated by, or operated as, a for-profit entity, and also
prohibits a nonprofit charter virtual academy or a nonprofit
online charter school from contracting with a for-profit entity
for the provision of instructional services.
BACKGROUND
Existing law:
1) Establishes the Charter Schools Act of 1992 which
provides for the establishment of charter schools in
California for the purpose, among other things, to improve
student learning and expand learning experiences for pupils
who are identified as academically low achieving. A
charter school may be authorized by a school district, a
county board of education, or the State Board of Education,
as specified. Except where specifically noted otherwise,
California law exempts charter schools from many of the
statutes and regulations that apply to schools and school
districts.
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2) 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.
3) 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.
4) 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 § 47604.32
and 47605(m).
(Education Code § 47604)
ANALYSIS
This bill:
1) Provides that a virtual or online charter school shall not
be owned or operated by, or operated as, a for-profit
entity.
2) Provides that a nonprofit online charter school, nonprofit
charter virtual academy, or a nonprofit entity that
operates an online or virtual charter school shall not
contract with a for-profit entity for the provision of
instructional services.
3) Defines virtual or online charter school as a charter
school in which at least 80 percent of teaching and pupil
interaction occurs via the Internet.
STAFF COMMENTS
1) Need for the bill. According to the author's office,
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"there have been troubling examples of for profit online
charter schools in California that are not serving the
academic needs of their students. Some are structured as
nonprofit entities, but contract with for-profit entities
to provide all services, including instructional services.
Charter schools receive funding from the State of
California to educate their students. It is an inherent
conflict-of-interest for a charter school to be operated as
a for-profit entity or solely contract with for-profit
entities for instructional services. Taxpayer dollars
should be spent on academic services and improving the
educational experience of California students, not on
paying shareholders or enriching a company."
2) Premature due to current efforts to address charter
oversight issues? This Committee will have an
informational hearing on August 3, 2016 to investigate the
charter school petition process, the role of charter school
authorizers and their specific oversight responsibilities
in current law, and whether there are sufficient mechanisms
in place to ensure adequate oversight and accountability.
The objective of the hearing will be to identify
opportunities for improvement and reform with respect to
charter school oversight. Additionally, the Superintendent
of Public Instruction recently announced that it has
contracted with the State Controller's Office to conduct an
audit of the California Virtual Academies and related
charter schools because of serious questions raised about a
number of their practices. Specifically, "the goal of the
audit is to make sure these schools are spending public
education funds properly and serving their students well."
Further, the Joint Legislative Audit Committee recently
approved a request for an audit of the Alliance
College-Ready Public Schools charter management
organization and the charter schools under their
operational jurisdiction within the Los Angeles Unified
School District. Similarly, the audit is intended to
address, in part, whether the resources provided to these
schools are being used appropriately.
The Committee may wish to consider whether advancing this
bill is premature at this point since it could likely
benefit from information that will be provided by the
Committee's informational hearing in August as well the
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findings and recommendations resulting from the related
audits.
3) 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 the
state. California Virtual Academies (CAVA) is California's
largest provider of online public K-12 education and a
public charter school network that may exist entirely
online, serving approximately 15,000 students. Students
take classes from home, primarily communicating with
teachers via computer. CAVA's primary vendor and manager
is K-12, Inc., a for-profit corporation that operates
virtual schools nationwide.
Is it an appropriate use of state taxpayer dollars
for-profit corporations to operate public schools?
Specifically, does this model provide a perverse incentive
for these charter schools to limit services for students in
order to increase profits?
4) Similar bill vetoed. This bill is similar to AB 787
(Hernandez, 2015) from last year which would have
prohibited a charter school from operating as, or being
operated by, a for-profit corporation. AB 787 passed this
Committee but was eventually vetoed by the Governor with
the following message:
Under this bill, beginning January 1, 2017, a
charter school could not "operate as" or be
"operated by" a for-profit corporation.
I don't believe the case has been made to
eliminate for-profit charter schools in
California. Moreover, the somewhat ambiguous
terms used in this bill could be interpreted to
restrict the ability of non-profit charter
schools to continue using for-profit vendors.
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It does not appear that the bill addresses the concerns raised
in the Governor's veto message. However, the author's office
indicates that "AB 1084 is different in that its language is
much more specific about what an online charter school cannot
contract with a for-profit to provide-instructional services.
Online schools should not be having a for-profit employ its
teachers."
5) Clarification is necessary. Similar to the concern raised
in the Governor's veto message, can the terms regarding the
bill's prohibition on online charters being owned or
operated by, or operated as, a for-profit entity be
interpreted to limit their ability to contract with a
for-profit entity, even for day-to-day operations such as
payroll, human resources or janitorial services? Further,
the bill prohibits nonprofit online charter schools from
contracting with a for-profit entity for the provision of
instructional services. It is unclear if this prohibition
would extend to contracts in place for other instructional
related operations such as the provision of assessments,
instructional materials, classroom learning tools,
professional development, or more importantly, services
required as part of a special education student's
individualized education plan? Or is the bill limited only
to the actual instructors employed by for-profit entities?
To prevent differing practical interpretations, the author
may wish to consider clarifying amendments if the bill
moves forward.
6) Impact on students. Notwithstanding the issues regarding
the appropriateness of using taxpayer dollars for charter
schools operating as for-profit corporations, the Committee
may wish to consider whether 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. If not, would a charter
school need to shut down its operations? The bill also
extends to nonprofit online charter schools that contract
with for-profit entities for the provision of instructional
services. To the extent that these entities are unable to
enter into new contracts exclusively with nonprofit
entities, similarly, would these charter schools be
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required to close? Additionally, as the bill would become
operative commencing with the 2017-18 school year, it is
not clear if this allows for a sufficient transition period
for students that are displaced to find placement in a new
school, particularly students that are disabled or have
unique learning needs.
Currently, there are virtual schools which identify special
education or at-risk children and youth as their target
student populations. These include students in the
juvenile justice system and students who are at risk of
dropping out. Virtual charter schools may also be a more
viable option among non-traditional students, including
exceptional athletes, actors, and high-mobility students,
such as children from military families. On the other
hand, there are charter schools and school districts that
currently contract with for-profit entities to offer online
curriculum for advanced courses that they are unable to
provide. Could the bill potentially lead to a disruption
in the educational services provided to these students?
Could it also limit local discretion and prohibit
arrangements with online programs that have provided
students with successful options?
7) Local control and accountability plan (LCAP) process.
Implementing Local Control Funding Formula (LCFF) statutes
include the requirement that all school districts and
county offices of education complete LCAPs and an annual
update to an local control and accountability plan (LCAP).
While the various statutes governing charter school
authorizations only reference the annual update section of
the LCAP, the regulations adopted by the State Board of
Education in 2015 regarding the LCAP template reflect the
requirement that all local educational agencies, including
charter schools, complete an LCAP each year. Further, the
current education trailer bill for the 2016-17 budget
includes a provision specifying that charter schools must
complete an LCAP.
Current statute requires an LCAP to include both of the
following, a description of the annual goals (for all
students and each subgroup of students) to be achieved for
each of the state priorities and for any additional local
priorities identified by the governing board, and a
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description of the specific actions the school district
will take during each year of the LCAP to achieve these
goals, including the enumeration of any specific actions
necessary for that year to correct any deficiencies in
regard to the state priorities. To the extent there are
concerns from parents, students, or the local community
regarding the delivery of instruction or the outcomes of
students attending a particular online charter school, does
the local control and accountability plan process provide
an effective means to promote change?
8) Responsibility for charter authorizers. As part of the
process for considering petitions for the establishment or
renewal of a charter school, a description of the
educational program of the school is required. This should
include the mode of instruction and whether it is online,
blended, or classroom-based. Statute provides that a
school district shall grant a charter if it is satisfied
that granting the charter is consistent with sound
educational practice, and specifies that the districts
shall not deny the petition unless it makes specific
findings, including a finding that the charter school
present as unsound educational program or that the
petitioners are demonstrably unlikely to successfully
implement the program.
As part of the charter petition renewal process, the authorizer
is required to consider increases in pupil academic achievement
for all groups of pupils served by the charter school as the
most important factor in determining whether to grant a charter
renewal. To the extent there are concerns regarding the use of
online instruction provided by a for-profit entity, does the
existing petition process allow the opportunity for charter
authorizers to sufficiently address these concerns?
9) Nonclassroom-based instruction. Online or virtual charter
schools operate within the context of nonclassroom-based
instruction. A charter school that does not meet the
requirements to be a classroom-based instruction school is
considered to be nonclassroom-based and must have a funding
determination approved by the State Board of Education.
Classroom-based instruction occurs only when pupils are
under the immediate supervision and control of a
certificated teacher. Further, the charter school must
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offer at least 80 percent of its instructional time at the
school site (for classroom instruction) and attendance must
be required at the school site for at least 80 percent of
the minimum instructional time required to be offered.
Charter schools can only claim average daily attendance for
pupils who are residents of the county in which the charter
school is authorized, or who are residents of a county
immediately adjacent to that county.
Existing law defines a virtual or online charter school as
one in which at least 80 percent of teaching and student
interaction occurs via the Internet. In order for a
virtual or online charter school to be funded, it must
demonstrate specified conditions. For example, the online
charter school would need to demonstrate that instructional
expenditures are at least 85 percent of the overall school
budget and at least 25 percent is spent on technology that
directly benefits students and teachers and results in
improved student achievement.
10) Independent study. Independent study programs provide
school districts with the ability to offer alternative
education settings for students. These programs utilize
alternative instructional strategies that respond to
individual student needs and learning styles. The
flexibility afforded by these programs makes it possible to
serve a wide variety of students, including those who
otherwise may not be able to graduate from school.
Students who enroll in independent study include students
who have health problems, are parents, need to work, or are
child actors. Independent study may also serve students
who desire to accelerate more quickly or more slowly
through a course. Students may also utilize independent
study to make up a course that they may have missed or
failed in a traditional classroom. School districts may
offer independent study through a variety of formats,
including online courses, home-based formats, through
alternative schools, and as special or advanced courses.
According to information provided by the California
Department of Education, there were 1,418 schools that
reported students engaged in independent study with an
enrollment of more than 128,000 students in grades K-12 in
October 2008. For the 2007-08 school year, more than
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19,000 independent study students graduated from high
school or passed a high school equivalency exam.
It is unclear to what extent the existing independent study
programs utilize online instruction offered by for-profit
entities. K-12, Inc. indicates that it works with
approximately 60 traditional school districts in the state
serving just under 20,000 students. If part of the
rationale for introducing this measure is the concern over
the use of online instruction, why does it apply only to
charter schools and not traditional school districts or
county offices of education?
11) Related legislation.
AB 787 (Hernandez, 2015) would have prohibited a charter
school from operating as, or being operated by, a
for-profit corporation. This bill passed this Committee
but was vetoed by the Governor.
AB 2007 (Grove, Chapter 807, Statutes of 2014), until
January 1, 2018, authorizes a virtual or online charter
school to claim independent study average daily attendance
for a pupil who is enrolled in a virtual or online charter
school and moves to a residence outside of the geographic
boundaries in which the virtual or online charter school is
authorized to operate for the duration of the pupil's
courses or until the end of the school year, whichever
occurs first.
SUPPORT
California State PTA
California Teachers Association
Letters from individuals
OPPOSITION
California Connections Academy
California Parents for Public Virtual Education
Charter School Capital
Charter Schools Development Center
K-12, Inc.
Learn4Life
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