BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON EDUCATION
                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:             SB 329              
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          |Author:    |Mendoza                                              |
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          |Version:   |March 26, 2015                          Hearing      |
          |           |Date:    April 22, 2015                              |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Lenin Del Castillo                                   |
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          Subject:  Charter schools:  petition denials:  competitive  
          bidding

            SUMMARY
          
          This bill would authorize a school district and county office of  
          education to deny a petition for the establishment of a charter  
          school if it finds the charter school would have a negative  
          fiscal impact on the school district (or a district within the  
          county), as specified.  Additionally, the bill would require a  
          school district or county office of education, as part of its  
          review of a charter petition, to consider 1) a report assessing  
          its capacity to conduct oversight of the charter school and 2) a  
          report of the anticipated financial and educational impact on  
          the other schools that the school district has oversight  
          obligations for.  

            BACKGROUND
          
          Charter Schools
          
          Under existing law, the Charter Schools Act of 1992 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.  Some charter schools are new  
          while others are conversions from existing schools.  Except  
          where specifically noted otherwise, California law exempts  







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          charter schools from many of the statutes and regulations that  
          apply to schools and school districts.  

          Current law requires that charter schools:  1) are nonsectarian  
          in their programs, admission policies, employment practices, and  
          all other operations; 2) not charge tuition; and 3) not  
          discriminate against any pupil on the basis of the  
          characteristics, as specified.  Admission to a charter school  
          may not be determined according to the place of residence of the  
          pupil, or of his or her parent or legal guardian, within the  
          state, except that an existing public school converting to a  
          charter school must adopt and maintain a policy giving  
          admissions preference to pupils who reside within the former  
          attendance area of that public school.  (Education Code § 47605,  
          et. seq.)  

          According to the State Department of Education, there were over  
          1,100 charter schools with an enrollment of approximately  
          514,000 pupils operating in the state in 2013-14.

          Parents, teachers, or community members may initiate a charter  
          petition, which is typically presented to and approved by a  
          local school district governing board.  The law also allows,  
          under certain circumstances, for county boards of education and  
          the State Board of Education to authorize charter schools.  The  
          specific goals for a charter school are detailed in the  
          agreement (charter) between the authorizing entity and the  
          charter developer.  The charter petition is also required to  
          include a description of the educational program of the school  
          and several other policies and procedures relating to employees,  
          pupils, and finances.  Current law establishes procedures for  
          the renewal of charter schools, not to exceed five years.

          If a pupil is expelled or leaves the charter school without  
          graduating or completing the school year for any reason, the  
          charter school is required to notify the superintendent of the  
          school district of the pupil's last known address within 30  
          days, and shall upon request provide that school district with a  
          copy of the cumulative record of the pupil, including a  
          transcript of grades or report card, and health information.   
          This provision applies only to pupils subject to compulsory  
          full-time education.  

            ANALYSIS








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          This bill:

          1.   Requires a school district governing board or county board  
               of education, as part of its review of a charter school  
               petition, to consider a report assessing whether school  
               district staff has the capacity to conduct oversight of the  
               charter school and a report of the anticipated financial  
               and educational impact on the other schools that the  
               governing board of the school district has oversight  
               obligations for.  

          2.   Adds the finding that "the charter school would have a  
               negative fiscal impact on the school district" to the  
               findings upon which a district may base denial of a  
               petition for the establishment of a charter school.  

                    A.             Provides that a negative fiscal impact  
                    on the school district may only be established, and is  
                    deemed to be established, if any one of the following  
                    conditions is met: 
                
                              (1)                      The school district  
                         has received a negative financial certification 
                         pursuant to § 42131.  

                              (2)                      The school district  
                         has received an emergency apportionment or 
                         loan and is operating under the oversight of a  
                    state administrator or 
                         trustee, as specified.  

                              (3)                      The school  
                         district, due to the declining enrollment of  
                         pupils, is in 
                         the process of closing a school that a charter  
                    school petition has 
                         identified as the proposed site for its charter  
                    school and has 
                         received a qualified               financial  
                    certification pursuant to § 42131, or 
                         would receive a qualified certification if the  
                    charter school petition is 
                         approved.  








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          3.   Adds the finding that "the charter school would have a  
               negative fiscal impact on a school district" to the  
               findings upon which a county office of education may base  
               denial of a petition for the establishment of a charter  
               school.  

               A.        Provides that a negative fiscal impact on a  
               school district may only be 
                    established, and is deemed to be established, if any  
               one of the following 
                    conditions is met:  

                              (4)                      The school district  
                         has received a negative financial certification  
                         pursuant to § 42131.  

                              (5)                      The school district  
                         has received an emergency apportionment or loan  
                         and is operating under the oversight of a state  
                         administrator or trustee, as specified.  

                              (6)                      The school  
                         district, due to the declining enrollment of  
                         pupils, is in the process of closing a school  
                         that a charter school petition has identified as  
                         the proposed site for its charter school and has  
                         received a qualified financial certification  
                         pursuant to § 42131, or would receive a qualified  
                         certification if the charter school petition is  
                         approved.  

          4.   Applies the competitive bidding provisions regarding  
               contracts specified in 
               § 20110 of the Public Contract Code to contracts awarded by  
               a charter school and for purposes of that part of the  
               Public Contract Code, provides that a charter school shall  
               be deemed a school district and the governing body of a  
               charter school shall be deemed the governing body of a  
               school district.  Provides that a reference to a school  
               district or the governing board of a school district shall  
               be deemed to also reference a charter school or the  
               governing body of a charter school.  









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          STAFF COMMENTS
          
          1.   Need for the bill.  According to the author's office,  
               California's charter school law was established in 1992  
               when these schools were expected to be only a small  
               component of state systems of public education.  A cap was  
               established to limit charter schools to only 100 throughout  
               the state.  Although there are many charter schools that  
               greatly benefit communities, the exponential growth of the  
               charter school industry over the last twenty years has not  
               coincided with increased oversight, and there is a need to  
               revisit the impact of charter schools on neighborhood  
               schools.  The author's office indicates that although  
               charter schools contribute to our state's public education  
               and bring a different approach that benefits many students,  
               there must still be oversight to ensure that children are  
               receiving the best education possible.  There are cases  
               where small school districts, with only 30 students,  
               authorize a charter school that enrolls up to 3,000  
               students, making it difficult for staff that oversees 30  
               students to conduct oversight of a school that serves 100  
               times its size.  Additionally, the author's office  
               indicates there are still some charter schools that do not  
               operate with the student's best interests in mind.  This  
               bill seeks to bring accountability and transparency to  
               those institutions.

          2.   Charter schools.  Charter schools are exempt from most laws  
               governing school districts and schools in order to allow  
               the charter school the flexibility to innovate and be  
               responsive to the educational needs of the student  
               population served.  Charter schools are required, however,  
               to have credentialed teachers in core and college  
               preparatory courses, meet statewide standards, and consult  
               with parents, guardians, and teachers regarding the  
               school's programs.  

          The legislative intent of the Charter Schools Act was to provide  
               opportunities for teachers, parents, pupils, and community  
               members to establish and maintain schools that operate  
               independently from a school district structure that would  
               afford parents and pupils with expanded educational  
               choices, offer new professional opportunities for teachers  
               to be responsible for the learning program at the school  








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               site, and create competition within the public school  
               system to stimulate continual improvements in all public  
               schools.  

          3.   Fiscal issues as a basis for denying charter petitions.   
               While this bill specifies criteria for how negative fiscal  
               impact would be defined, it does not require a school  
               district to make a factual finding about the extent of the  
               negative impact.  Conceivably, a district could deny a  
               charter petition for any negative impact, even a relatively  
               small one.  Opponents argue that allowing school districts  
               to use fiscal issues as a basis for denying charter school  
               petitions is counter to the Legislature's intent for  
               charter schools and shifts the focus from the educational  
               program to be offered by the charter school to the fiscal  
               condition of the school district.  Opponents also argue  
               that authorizing governing boards to deny charters on the  
               basis of the fiscal impact to the district would have the  
               effect of restricting parental choice in choosing schools  
               that best meet their pupil's needs.  For these reasons,  
               staff recommends that the bill be amended to remove the  
               provisions authorizing a school district and county office  
               of education to deny a charter petition if it finds the  
               charter school would have a negative fiscal impact on the  
               school district.  

          4.   Limits the establishment of charter schools?  Twice a year,  
               the California Department of Education (CDE) receives  
               Notice of Interim Certifications on the financial status of  
               the state's approximately 1,100 local educational agencies  
               (LEAs).  Based on the first interim report that was  
               published by the CDE in February 2015, 43 LEAs are either  
               in negative or qualified financial status.  Of these, 5  
               LEAs have a negative certification which means they will  
               not be able to meet their financial obligations for 2014-15  
               or 2015-16 and 38 LEAs have a qualified certification and  
               may not be able to meet their financial obligations for  
               2014-15, 2015-16, or 2016-17.

          This bill could give governing boards a basis to deny charter  
               school renewals, because renewals must include a  
               comprehensive description of any new requirement of charter  
               schools enacted into law after the charter was originally  
               granted or last renewed.  It is unclear how many existing  








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               charter schools could be denied renewal because the  
               authorizing school district could meet the definition of  
               negative fiscal impact.  It also seems unlikely that  
               denying the renewal of these schools would solve the fiscal  
               problems of these districts.  

          5.   Current oversight for charter authorizers.  Existing law  
               requires a charter school to promptly respond to all  
               reasonable inquiries, including, but not limited to,  
               inquiries regarding its financial records, from its  
               chartering authority, the county office of education that  
               has jurisdiction over the school's chartering authority, or  
               from the Superintendent of Public Instruction and to  
               consult with these entities regarding any inquiries.  Each  
               chartering authority is also required to do all of the  
               following with respect to a charter school under its  
               authority:

               A.        Identify at least one staff member as a contact  
                    person for the charter school.

               B.        Visit each charter school annually.

               C.        Ensure that each charter school complies with all  
                    reports required of charter schools by law.

               D.        Monitor the fiscal condition of each charter  
                    school under its authority.

               E.        Provide timely notification to the State  
                    Department of Education if any of the following  
                    circumstances occur or will occur with regard to a  
                    charter school for which it is the chartering  
                    authority:

                    (1)            A renewal of the charter is granted or  
                         denied.

                    (2)            The charter is revoked.

                    (3)            The charter school will cease operation  
                         for any reason.

               Existing law requires each charter school to annually  








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               prepare and submit reports to its chartering authority and  
               county superintendent of schools or only to the county  
               superintendent of schools if the county board of education  
               is the chartering authority.  These reports include a  
               preliminary budget, interim financial reports, and audits.   
               Current law also requires the chartering authority to use  
               any financial information it obtains from the charter  
               school, including, but not limited to, the reports required  
               by this section, to assess the fiscal condition of the  
               charter school. 

               By requiring a school district to assess its capacity prior  
               to approving a charter petition, this bill could provide a  
               mechanism for a district in determining whether it has the  
               necessary capacity to provide effective oversight.  

          6.   Competitive bidding.  This bill would apply the competitive  
               bidding provisions specified in § 20110 of the Public  
               Contract Code to contracts awarded by a charter school.   
               This could affect how various equipment, materials, and  
               supplies are purchased or leased and according to opponents  
               of the bill, charter schools would be subject to a  
               time-consuming, labor-intensive process with no  
               justification.

          7.   Related and prior legislation.  
          
               AB 1172 (Mendoza, 2012), similar to this measure, would  
               have authorized a school district to deny a petition for  
               the establishment of a charter school if it finds the  
               charter school would have a negative fiscal impact on the  
               school district.  AB 1172 failed passage in this Committee.
          
               AB 86 (Mendoza, 2011) would have expanded signature  
               requirements for charter school petitions to include  
               classified employees.  This measure was passed by this  
               Committee and subsequently vetoed by Governor Brown with  
               the following message:  

                    Charter schools are a small but very important part of  
                    the California public school system.  They vary by  
                    size, mission, governing structure and educational  
                    philosophy.  Their purpose is to allow parents,  
                    teachers and other interested citizens to form public  








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                    schools outside the more detailed regulatory framework  
                    of the regular school system.  

                    They are profoundly difficult to establish and even  
                    more difficult to maintain and grow in excellence.   
                    Having started two myself, I know whereof I speak.  

                    Notwithstanding the important contributions classified  
                    staff make to the operation of a school, this bill  
                    would unnecessarily complicate an already difficult  
                    charter school petition process.  

                    I believe the existing law is tough enough.  

               AB 2954 (Liu, 2006) would have added "negative fiscal  
               impact" to the reasons a governing board could deny a  
               charter school petition and required petitions to describe  
               how the charter school would provide free and  
               reduced-priced meals to eligible students.  That measure  
               was passed by this Committee and subsequently vetoed by  
               Governor Schwarzenegger, whose veto message read, in part:   


                    While I understand the plight of school districts  
                    faced with fiscal challenges of declining enrollment  
                    and other management issues, I cannot condone allowing  
                    them to deny parents and students their rights to  
                    petition for the establishment of a charter school.   
                    In essence, this bill would grant school districts the  
                    authority to punish charter petitioners because of  
                    problems caused by their own fiscal management issues  
                    or their unwillingness to make tough decisions, or  
                    both.  

                    In sum, this bill runs counter to the intent of  
                    charter schools, which is to provide parents and  
                    students with other options within the public school  
                    system and to stimulate competition that improves the  
                    quality not only of charter schools, but of  
                    non-charter schools as well.  
            SUPPORT
          
          California School Boards Association
          California Teachers Association (sponsor)








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            OPPOSITION
           
           California Center for Parent Empowerment
          California Charter Schools Association
          Camino Nuevo Charter Academy
          Charter Schools Development Center
          EdVoice
          StudentsFirst
          Letters from individuals

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