BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1084|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1084
Author: Bonilla (D)
Amended: 6/6/16 in Senate
Vote: 21
SENATE EDUCATION COMMITTEE: 6-2, 6/29/16
AYES: Block, Hancock, Leyva, Mendoza, Monning, Pan
NOES: Huff, Vidak
NO VOTE RECORDED: Liu
ASSEMBLY FLOOR: 78-0, 1/27/16 (Consent) - See last page for
vote
SUBJECT: Charter schools: for-profit entities
SOURCE: Author
DIGEST: 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.
ANALYSIS:
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,
AB 1084
Page 2
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.
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)
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.
Comments
Need for the bill. According to the author's office, "there
AB 1084
Page 3
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."
Premature due to current efforts to address charter oversight
issues? The Senate Education 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.
Is advancing this bill premature since the Legislature could
likely benefit from information that will be provided by the
Senate Education Committee's informational hearing in August as
well the findings and recommendations resulting from the related
audits?
AB 1084
Page 4
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?
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 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.
It does not appear that this 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
AB 1084
Page 5
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."
Clarification is necessary. Similar to the concern raised in
the Governor's veto message, can the terms regarding this 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, this 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 this 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 as this bill moves forward.
Impact on students. Notwithstanding the issues regarding the
appropriateness of using taxpayer dollars for charter schools
operating as for-profit corporations, what would happen to
students attending these schools if this 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?
This 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 required to
close? Additionally, as this 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.
AB 1084
Page 6
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 this 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?
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 and provide an annual update to
their LCAPs. 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 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 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
AB 1084
Page 7
effective means to promote change?
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?
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 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
AB 1084
Page 8
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.
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 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
AB 1084
Page 9
districts or county offices of education?
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified7/5/16)
California State PTA
California Teachers Association
Letters from individuals
OPPOSITION: (Verified7/5/16)
California Charter Schools Association
California Connections Academy
California Parents for Public Virtual Education
Charter School Capital
Charter Schools Development Center
K-12, Inc.
Learn4Life
ASSEMBLY FLOOR: 78-0, 1/27/16
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez,
Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Mathis
AB 1084
Page 10
Prepared by:Lenin DelCastillo / ED. / (916) 651-4105
7/29/16 10:50:12
**** END ****