BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-12 Regular Session
BILL NO: AB 440
AUTHOR: Brownley
INTRODUCED: February 14, 2011
FISCAL COMM: Yes HEARING DATE: June 22, 2011
URGENCY: No CONSULTANT:Beth Graybill
SUBJECT : Charter schools: accountability.
SUMMARY
This bill establishes various academic and fiscal
accountability standards related to charter schools.
BACKGROUND
Existing law, the Charter Schools Act of 1992, provides for
the establishment of Charter schools in California for the
purpose, among other things, of improving student learning
and expanding learning experiences for pupils who are
identified as academically low achieving. (Education Code �
47601 et. seq.)
Existing law authorizes anyone to develop, circulate, and
submit a petition to establish a charter school and requires
charter developers to collect certain signatures in support
of the petition, as specified. Current law requires
governing boards to grant a charter unless the petition fails
to meet one or more of the following: (EC � 47605)
1) The charter school presents an unsound educational
program;
2) The petitioners are demonstrably unlikely to
successfully implement the program described in the
petition;
3) The petition does not contain the number of required
signatures;
4) The petition does not contain an affirmation that it
will be nonsectarian in its programs and policies, shall
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not charge tuition, shall not discriminate, and other
affirmations, as specified.
5) The petition does not contain reasonably comprehensive
descriptions of, among other things:
The educational program, including educational
goals, students to be served, measurable outcomes
and methods by which the school will determine that
pupils have met educational goals.
School operations and procedures, including
governance structure of the school, qualifications
of staff, health and safety procedures, student
admission and discipline procedures, the manner by
which annual, independent financial audits will be
conducted, employee personnel rights and retirement
system, and procedures to be followed if the
charter school closes.
Existing law requires a charter school to annually prepare
specified financial reports to its chartering authority, and
requires the chartering authority to use any financial
information to assess the fiscal condition of the charter
school. (EC � 47604.33)
Existing law requires the State Controller, in consultation
with specified stakeholders, to recommend statements and
other information to be included in a school district audit
guide. The guide and any supplements are to be adopted by
the Education Audits Appeal Panel pursuant to rulemaking
procedures of the Administrative Procedures Act. (EC �
14502.1)
Existing law authorizes a charter to be granted for not more
than five years and specifies that each renewal shall be for
five years. Existing law requires the renewal and any
material revision of the provisions of the charter to be made
only with the approval of the authority that granted the
charter and be based on the same standards as the original
charter. (EC � 47607)
Existing law requires a charter school to meet at least one
of the following performance standards in order to be
renewed: (1) attainment of the school's Academic Performance
Index (API) growth target in two of the last three years or
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in the aggregate last three years; (2) an API decile ranking
of four or better in the prior year or in two of the last
three years; (3) a Similar Schools API ranking of four or
better in two of the last three years; (4) academic
performance that is at least equal to the academic
performance of the public schools that the charter school
pupils would otherwise been required to attend; or (5)
qualification for participation in the Alternative School
Accountability Model. (EC � 47607)
Existing law requires the Superintendent of Public
Instruction and the State Board of Education to establish a
list of Persistently Lowest Achieving Schools and requires
the governing board to implement for any school so identified
one of four school intervention models beginning in the
2010-11 school year. (EC � 53202)
The four models are:
Turnaround model in which the Local Education Agency
(LEA) undertakes a series of major school improvement
actions including replacing the principal and rehiring
no more than half of the staff.
Restart model in which the LEA converts a school or
closes and reopens a school as a charter school.
School closure model in which the LEA closes a school
and enrolls students in another school.
Transformation model in which the LEA implements a
series of required school improvement strategies,
including replacing the principal and increasing
instructional time.
ANALYSIS
This bill :
Fiscal and operational accountability
1) Requires the State Controller (Controller) to propose
and the Education Audits Appeal Panel to adopt a charter
school supplement to the audit guide in consultation
with the California Charter Schools Association and
other specified entities; requires charter schools to
complete annual audits consistent with the audit guide;
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2) Specifies a charter school operated by a for-profit
corporation to annually notify the SPI of that fact in
writing.
3) Allows a charter school authorizer, when authorizing a
new charter school, to consider whether the petitioner
has operated another charter school for at least three
consecutive years and any of the following has occurred:
a) The charter school demonstrated academic
achievement equivalent to a Persistently
lowest-achieving school;
b) The charter school completed its first cycle
and was not renewed by the authorizing entity, the
county board of education, or the SBE;
c) The school has ever had its charter revoked
and the charter was not restored by the county
board of education or the SBE.
4) Requires the State Controller to annually publish a
directory of public accountants as specified, deemed by
the Controller to be qualified to conduct audits of the
charter schools; requires charter school audits to be
conducted by a certified public accountant (CPA) or
public accountant selected by the charter school from
the directory published by the Controller; and expresses
Legislative intent that the regular rotation of public
accounting firms used to complete these audits
consistent with the federal Sarbanes-Oxley Act of 2002.
5) Makes it unlawful for a public accounting firm to
provide audit services to a charter school if the lead
audit partner or coordinating audit partner having
responsibility for the audit has performed audit
services for that charter school in each of the six
previous fiscal years.
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Academic accountability and renewals
6) Requires a chartering authority to consider, as one
factor in determining whether to grant a renewal, the
degree to which a charter school serves student
populations that are similar to local district student
populations, or similar to pupil populations identified
in the charter petition as the target pupil population
to be served, especially related to high-need students,
including, but not limited to, students with
disabilities, students living in poverty, and English
learners.
7) Changes the charter school renewal process as follows:
a) Allows an authorizer to renew a charter school
for a period of one to five years;
b) Requires a charter school to attain its
Academic Performance Index (API) school wide and
subgroup growth targets in the prior year or in two
of the last three years;
c) Specifies that a charter school in program
improvement (PI) not be renewed for more than three
years; and
d) Prohibits the renewal of a charter school that
is in PI year five if the school has not exited PI
and did not meet adequate yearly progress (AYP) in
the year prior to renewal.
8) Deletes the authorization for a chartering entity to
renew a charter petition if the academic performance is
equal to the academic performance of the public schools
that the charter school students would otherwise have
been required to attend.
9) Authorizes renewal if the charter school has met or
exceeded the API of the local district.
10) Makes Legislative findings and declarations regarding
the importance of establishing academic performance
targets and sound fiscal management practices in charter
schools.
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11) Provides for local educational agencies to be reimbursed
for costs associated with complying with the
requirements of this act if the Commission on State
Mandates determines that the act contains mandated
costs.
STAFF COMMENTS
1) Need for the bill : According to the author's office,
the purpose of this bill is to encourage high levels of
academic performance and sound fiscal management
practices among charter schools. The fiscal
accountability standards are intended to ensure that
charter schools receive thorough audits conducted by the
same auditors that conduct school district audits. The
academic accountability standards are intended to ensure
that charter schools are not simply demonstrating
student achievement that is equal to neighborhood
schools, but are demonstrating improved student
achievement compared to their neighborhood schools.
2) Charter schools . Charter schools are public schools
that provide instruction in any combination of grades,
kindergarten through grade 12. 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 and operating procedures
for a charter school are detailed in the agreement
(charter) between the authorizing entity and the charter
developer. Current law establishes 16 different
operational and educational quality indicators that need
to be included in a charter school petition. A
governing board may deny a charter school proposal that
does not comprehensively address each of those 16
elements. According to the California Department of
Education (CDE), there are currently 910 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
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credentialed teachers in core and college preparatory
courses, meet statewide standards, participate in state
testing programs required for the Academic Performance
Index (API), and consult with parents, guardians, and
teachers regarding the school's programs.
3) Academic Performance Index . The Academic Performance
Index (API) is single number on a scale of 200 to 1,000
that is an annual measure of test score performance in
schools. The API is used to summarize the performance
of students and a school, and is based on results of the
Standardized Testing and Reporting (STAR) program and
the California High School Exit Examination (CAHSEE).
The system is based on a two-year cycle that gives a
"base" score for the first year and a "growth" score in
the second year. The Base API is released in the spring
and is derived from the previous spring's test scores.
The Growth API, which is released in the fall, comes
from the previous spring's test scores. The SBE has
established a statewide target of 800 for the API.
Schools with API scores below 800 are expected to
improve and are given a "growth target" that is 5
percent of the difference between their API score and
800, with a minimum target of 5 points. (Schools with
an API above the statewide target are expected to stay
above 800.) A school's Base API score plus its growth
target becomes that school's goal for its next Growth
API. For example, a school with a Base API of 320 would
be expected to improve its performance by 24 points in
the next cycle, or attain an API of 344.
4) Hoover Commission findings and recommendations . In
November 2010, the Little Hoover Commission released a
report "Smarter Choices, Better Education: Improving
California Charter Schools" that contained findings and
recommendations regarding the charter school
authorization, renewal, and appeal process. The
Commission found that there was broad agreement that the
current renewal criteria for charter schools must be
improved. During the study, the Commission was told
"repeatedly that the state's renewal criteria are too
vague and the bar is set too low, making it difficult
for authorizers to close down poor performing schools."
Under current law, a school can be renewed if the
school's performance is comparable to that of district
schools its students would otherwise attend. If all
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schools within a neighborhood are performing poorly but
the charter school provides a safe haven for students,
parents and students may pressure the local school board
to keep the school open even if it is not meeting its
academic goals. Since achievement test scores may not
provide a complete picture of student learning, the
Commission recommended that the state expand the renewal
criteria to include other factors, such as graduation
rates, employment readiness, as well as college
attendance and completion rates. The Commission urged
the state to "raise the bar for charter school renewal
while still maintaining options for certain charter
schools serving the most difficult student populations."
5) Academic accountability . According to the author,
various studies indicate that while there are many
outstanding and diverse charter schools, there are also
charter schools that are not "living up to the promise"
to improve student learning and expand learning
experiences for academically low-achieving pupils. A
July 2003 RAND study concluded that charter and
noncharter students generally performed similarly on
statewide achievement tests, with differences in some
grades and subject areas. A 2009 EdSource report
concluded that after "adjusting for differences in
student demographics, charter high schools scored
modestly higher than noncharter schools in English, but
lagged in mathematics." This bill addresses some of the
issues identified in these reports.
Performance record: Under current law, an authorizer may
only consider the extent to which a petitioner has
provided comprehensive responses to each of the 16
elements required in a charter school application.
While some authorizers may consider past performance in
evaluating the soundness of the petitioner's educational
program, it is not clear that a governing board could
deny a charter on the basis of known information about
the quality of other charter schools operated by the
petitioner. This bill provides explicit authority for
governing boards to consider a petitioner's track record
before granting the initial charter. While an argument
could be made that each petition should be evaluated on
its own merits, the past-performance information could
help governing boards determine the capacity of the
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developer to deliver on the promises made in the charter
petition and could give authorizers wider latitude to
consider the quality of a petitioner's previous or
concurrent charter school efforts.
High-needs students: A 2009 EdSource report found that
California charter high schools serve 13% fewer students
who are either English learners or redesignated as
fluent English proficient (RFEP) compared to noncharter
schools, and found that charter schools serve lower
proportions of students with disabilities compared to
noncharter schools at all grade levels. The EdSource
study also found that charter schools serve fewer
students that participate in the federal Free and
Reduced-Price Meal Program in both elementary and middle
school compared to noncharter schools.
This bill requires the chartering authority to consider, as
one factor in determining whether to grant a renewal,
the degree to which a charter school serves pupil
populations that are similar to local district pupil
populations, especially high-needs students, or serves
the population described in the charter petition. Given
that some charters are established to provide specific
educational programs or to serve underserved or high
need student groups (such as those normally served by a
county office of education), this measure appears to
provide authorizers with sufficient flexibility to
evaluate a charter school's enrollment balance in light
of the educational program and student population
described in the charter agreement and the extent to
which the charter school has met those goals.
Student performance: Like SB 645 (Simitian), which was
passed by this Committee on May 4, 2011, this bill
changes existing law regarding student performance
criteria a charter school must meet prior to renewal.
Under current law, charter schools can demonstrate
attainment of API growth target in the prior year or in
two of the last three years, or in the aggregate for the
prior three years. This bill would instead require the
charter school to meet API school wide and subgroup
targets. Under this bill and SB 645, charter schools
could no longer be renewed if their performance is at
least equal to the schools the students would otherwise
attend.
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Some have expressed concern that the criteria to include
subgroup growth targets could place a charter school in
a "potentially precarious position" if one of the
subgroups does not achieve its target but the other
subgroups and school wide targets are met. Some concern
has also been expressed that by deleting the provision
that allows performance that is at least equal to
neighboring schools, reduces the flexibility of
authorizers to consider unique circumstances that may
apply to individual schools, such as nonclassroom-based
charters or a multi-grade K-12 charter school. While
there seems to be an agreement that persistently
low-achieving and failing charter schools should not be
allowed to continue to operate, some have expressed
concern about using the federal No Child Left Behind
Program Improvement status as the metric. There is some
expectation that the number of traditional and charter
public schools that enter program improvement will
increase over the next few year as a result of the
escalating federal yearly progress benchmark. If the
federal goal increases at a faster rate than a school's
yearly progress, it may be difficult for the school to
exit program
improvement. These concerns suggest the need for
authorizers to have some flexibility to consider unique
circumstances or for an alternative review process, as
proposed by SB 645.
6) Fiscal accountability . Although existing law requires
charter schools to have annual audits, current law does
not provide for the establishment of an audit guide
supplement that is appropriate for and specific to
charter schools. The author's office also maintains
that current law does not require charter schools to
hire qualified auditors approved by the State
Controller. By requiring charter school audits to be
conducted by auditors approved by the State Controller
and requiring audits to follow the appropriate
supplemental audit guide, the author hopes this bill
will establish uniform audit and fiscal accountability
standards for all charter schools that could provide
both schools and authorizers with uniform guidance
relative to appropriate fiscal management practices.
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7) Fiscal impact . According to the Assembly Appropriations
Committee analysis, this bill could result in annual
General Fund/Proposition 98 state-reimbursable mandated
costs of $100,000 to local educational agencies to
review and verify specified petition and renewal
information required under this bill. To the extent
that the information required for submission is more
readily available to an LEA than current law
requirements, this cost may be offset. Additionally,
there would be one-time General Fund administrative
costs, likely less than $80,000 to the State Controller
to complete the development of a supplemental audit
guide for charter schools, as specified. Although the
Legislative Counsel's digest notes that this bill
contains mandated costs, staff notes that according to a
May 2006 decision by the Commission on State Mandates,
charter schools are not eligible to claim mandate
reimbursements because they are "voluntarily" created.
8) Related and prior legislation . This bill is
substantially similar to AB 1950 (Brownley, 2010), which
would have established new academic and fiscal
accountability standards for charter schools. This
measure was pulled from the Committee's agenda at the
request of the author.
SB 433 (Liu) would require charter schools to comply with
state statutes governing the suspension and expulsion of
pupils. This measure was heard in this Committee on May
4, 2011 and was held at the request of the author.
SB 645 (Simitian) establishes new academic criteria for
charter school renewal. This measure was passed as
amended by this Committee on May 4, 2011 on a 7-1 vote.
AB 86 (Mendoza) expands signature requirements for charter
school petitions to include classified employees. This
measure was passed by this Committee on a 6-2 vote on
June 15, 2011.
AB 360 (Brownley) makes charter schools subject to the
Ralph M. Brown Act or Bagley-Keene Open Meeting Act,
depending on the entity operating the school. Also
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subjects charters to the California Public Records Act
and the Political Reform Act. This measure is pending
in this Committee.
AB 925 (Lara) requires charter schools to provide
classified employees employment benefits and protections
that mirror those provided to classified employees in
school districts. This measure is pending in this
Committee.
AB 1034 (Gatto) requires charter schools to report
specified information relating to pupil demographics and
academic progress, requires charter schools to collect
data regarding pupils who transfer out of the school,
and modifies existing law regarding charter school
admissions. This measure is pending in this Committee.
AB 1741 (Coto, 2010), would have required charter
schools that expect 15% of their pupil population to be
English learners to meet additional petition
requirements relating to the education of those
students. This bill was heard and passed as amended by
the Senate Education Committee and was subsequently held
in the Senate Rules Committee.
AB 1991 (Arambula, 2010) would have authorized charter
school renewals to be granted for five to ten years.
This bill failed passage in the Assembly Education
Committee.
AB 2363 (Mendoza, 2010) would have required charter
school petitioners to obtain the signatures of half of
the number of teachers and half of the number of
classified employees, as specified. This bill was heard
by the Senate Education Committee and failed passage on
a 2-6 vote.
AB 2320 (Swanson, 2010) would have added new
requirements to the charter school petition process,
deletes the authority of a charter school petitioner to
submit a petition to a County Board of Education to
serve pupils that would otherwise be served by the
County Office of Education, and eliminates the ability
of the State Board of Education to approve charter
school petition appeals. This bill was heard by the
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Senate Education Committee and failed passage on a 2-3
vote.
AB 572 (Brownley, 2009) would have required charter
schools to comply with the Brown Act open meeting law,
the California Public Records Act, and the Political
Reform Act. This bill was passed by the Senate
Education Committee and subsequently vetoed by Governor
Schwarzenegger.
ABX5 8 (Brownley, Fifth extraordinary session of 2009)
would have deleted the cap on charter schools and would
have made other changes to provisions governing audit
and fiscal standards, and the authorization,
renewal and revocation of charter schools. The Senate
Education Committee hearing for this bill was canceled
at the request of the author and the bill was
subsequently held by the Committee.
SUPPORT
California Federation of Teachers
California School Boards Association
California School Employees Association
California Teachers Association
Californians Together
Public Advocates
San Bernardino County District Advocates for Better Schools
San Francisco Unified School District
United Teachers Los Angeles
OPPOSITION
Charter Schools Development Center