BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 572
                                                                  Page  1

          Date of Hearing:   April 29, 2009

                           ASSEMBLY COMMITTEE ON EDUCATION
                                Julia Brownley, Chair
                   AB 572 (Brownley) - As Amended:  April 13, 2009
           
          SUBJECT  :   Charter schools: governing boards.

           SUMMARY  :   Requires charter schools to adopt and comply with a  
          conflict of interest policy that requires its governing board  
          members to abide by substantially similar conflict of interest  
          requirements as local education agency (LEA) governing board  
          members.  Specifically,  this bill  : 


          1)Requires the governing board of a charter school to adopt and  
            comply with a conflict-of-interest policy and requires the  
            policy to include, but is not necessarily limited to, the  
            requirement that members of the governing board of the charter  
            school abide by Article 4 (commencing with Section 1090) of  
            Chapter 1 of Division 4 of Title 1 of the Government Code and  
            Chapter 7 (commencing with Section 87100) of Title 9 of the  
            Government Code within the Political Reform Act.


          2)Requires the governing board of a charter school to comply  
            with the Ralph M. Brown Act; and, requires the governing board  
            of a charter school operated by a state agency to comply with  
            the Bagley-Keene Open Meeting Act.


          3)Requires a charter school to comply with the California Public  
            Records Act.


          4)Specifies that a member of the governing board of a charter  
            school shall abstain from voting on all matters affecting his  
            or her own employment and shall abstain from voting on  
            personnel matters that uniquely affect a relative of the  
            member but may vote on collective bargaining agreements and  
            personnel matters that affect a class of employees to which  
            the relative belongs; and, specifies for purposes of this  
            section, "relative" means an adult who is related to the  
            person by blood or affinity within the third degree, as  
            determined by the common law, or an individual in an adoptive  








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            relationship within the third degree.


          5)Specifies that a person shall be disqualified from serving on  
            the governing board of a charter school if the person is  
            disqualified by the California Constitution or laws of the  
            state from holding a civil office.


          6)Declares Legislative intent to provide transparency in the  
            operations of the many charter schools that are providing  
            quality educational options for parents and pupils and renew  
            the faith of parents and the community that their local  
            charter school is acting in the best interests of pupils by  
            establishing conflict-of-interest policies for charter school  
            governing boards that mirror existing conflict-of-interest  
            policies followed by school district governing boards.


           EXISTING LAW  pertaining to charter schools: 

          1)Provides no specific requirement for charter school governing  
            board conflict of interest policies.

          2)Deems charter schools as school districts for the purposes of  
            receiving state education funds.  
           
          EXISTING LAW  pertaining to school districts: 

          1)Specifies that Members of the Legislature, state, county,  
            district, and city officers or employees shall not be  
            financially interested in any contract made by them in their  
            official capacity, or by any body or board of which they are  
            members.  (Government Code 1090)

          2)Specifies that an employee of a school district (or local  
            agency) may not be sworn into office as an elected or  
            appointed member of that school district's (or local agency's)  
            governing board unless and until he/she resigns as an  
            employee.  (Education Code 35107)

          3)Requires members of school district governing boards and  
            designated employees of the school district to file statements  
            of financial interest according to the Political Reform Act.   
            (Government Code 87100 et. seq.)








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          4)Requires a county, city, whether general law or chartered,  
            city and county, town, school district, municipal corporation,  
            district, political subdivision, or any board, commission or  
            agency thereof, or other local public agency to comply with  
            the Brown Act.  (Government Code 54950 et. seq.)

          5)Requires a county; city; city and county; school district;  
            municipal corporation; district; political subdivision; or any  
            board, commission or agency thereof; other local public  
            agency; or a board, commission, committee, or other  
            multimember body that governs a private corporation, limited  
            liability company, or other entity that either is created by  
            the elected legislative body in order to exercise authority  
            that may lawfully be delegated by the elected governing body  
            to a private corporation, limited liability company, or other  
            entity; or, receives funds from a local agency and the  
            membership of whose governing body includes a member of the  
            legislative body of the local agency appointed to that  
            governing body as a full voting member by the legislative body  
            of the local agency to comply with the California Public  
            Records Act. (Government Code 6250 et. seq.)

           FISCAL EFFECT  :   Unknown

           COMMENTS  :  This bill requires charter school governing board  
          members to comply with substantially similar conflict of  
          interest policies by which school district governing board  
          members currently abide.  Recent news reports of charter school  
          board members engaging in inappropriate financial mismanagement  
          have highlighted the need for charter school conflict of  
          interest laws to be clarified.  While charter schools are given  
          more autonomy than public schools, their governing boards have  
          authority over public funds to be used for the educational  
          benefit of their students.  Charter school governing boards  
          should be held to the same standards as school district  
          governing boards.  

          This bill requires charter school boards to file statements of  
          economic interest according to the Political Reform Act;  
          specifies that charter school board members may  not  be  
          financially interested in any decision made by the board;  
          requires charter schools to comply with the California Public  
          Records Act; and, requires charter school boards to abide by the  
          Brown Act or the Bagley-Keene Open Meetings Act.








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           The Brown Act  .  The Brown Act governs meetings conducted by  
          local legislative bodies, such as boards of supervisors, city  
          councils and school boards.  The Brown Act represents the  
          Legislature's determination of how the balance should be struck  
          between public access to meetings of multi-member public bodies  
          and the need for confidential candor, debate, and information  
          gathering.  The Brown Act requires meetings of the board to be  
          publicly noticed 72 hours before their meetings, among other  
          requirements.

           California Public Records Act (CPRA)  .  The CPRA was enacted in  
          1968 and according to the Attorney General, in enacting the  
          CRPA, the Legislature stated that access to information  
          concerning the conduct of the public's business is a fundamental  
          and necessary right for every person in the state.  Cases  
          interpreting the CRPA also have emphasized that its primary  
          purpose is to give the public an opportunity to monitor the  
          functioning of their government.  The greater and more  
          unfettered the public official's power, the greater the public's  
          interest in monitoring the governmental action.  The fundamental  
          precept of CPRA is that governmental records shall be disclosed  
          to the public, upon request, unless there is a specific reason  
          not to do so.  Most of the reasons for withholding disclosure of  
          a record are set forth in specific exemptions contained in the  
          CPRA.  Several CPRA exemptions are based on a recognition of the  
          individual's right to privacy.  If a record contains exempt  
          information, the agency generally must segregate or redact the  
          exempt information and disclose the remainder of the record.  
           
          Government Code 1090  .  Government Code 1090 states that members  
          of the Legislature, state, county, district, judicial district,  
          and city officers or employees shall not be financially  
          interested in any contract made by them in their official  
          capacity, or by any body or board of which they are members.  In  
          a 1983 opinion the Attorney General stated, "Section 1090 of the  
          Government Code codifies the common law prohibition and the  
          general policy of this state against public officials having a  
          personal interest in contracts they make in their official  
          capacities.  Mindful of the ancient adage, that 'no man can  
          serve two masters,' the section was enacted to ensure that  
          public officials 'making' official contracts not be distracted  
          by personal financial gain from exercising absolute loyalty and  
          undivided allegiance to the best interest of the entity which  
          they serve."








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           Political Reform Act  .  The Fair Political Practices Commission  
          (FPPC) was created by the Political Reform Act of 1974, a ballot  
          initiative passed by California voters as Proposition 9.  The  
          FPPC provides written and oral advice to public agencies and  
          officials; conducts seminars and training sessions; develops  
          forms, manuals and instructions; and receives and files  
          statements of economic interests from many state and local  
          officials.  The FPPC investigates alleged violations of the  
          Political Reform Act, imposes penalties when appropriate, and  
          assists state and local agencies in developing and enforcing  
          conflict-of-interest codes.  The FPPC regulates campaign  
          financing and spending; financial conflicts of interest;  
          lobbyist registration and reporting; post-governmental  
          employment; mass mailings at public expense; and, gifts and  
          honoraria given to public officials and candidates.  School  
          board members are required to comply with the Political Reform  
          Act, and in so, must file a statement of economic interest,  
          annually.


          Supporters of the bill, including the California School Boards  
          Association, the Association of California School  
          Administrators, the California Association of School Business  
          Officials, the California State PTA, the California Federation  
          of Teachers, Orange County Department of Education, San  
          Francisco Unified School District, and Antioch Unified School  
          District argue, this measure will strengthen efforts to end  
          financial abuse of public funds in charter schools, provide  
          transparency into the operations of the many charter schools  
          that are providing quality educational options for parents and  
          students, and renew the faith of parents and the community that  
          their local charter school is acting in the best interest of  
          students.  

          The California Teachers Association supports the bill and  
          argues, "CTA believes that all authorizing entities, including  
          school districts, county offices of education and the state  
          board of education, should be free of conflicts of interest in  
          the approval of charter schools.  CTA believes that all charter  
          school governing boards also should be free of conflicts of  
          interest in the operation of charter schools and that the Ralph  
          M. Brown Act (open meetings law) and the Public Records Act  
          should apply to the operation of these schools.  There is a role  








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          for charter schools in California's education system.  That role  
          should be performed to at least the same high standards of  
          integrity, transparency and openness required of traditional  
          public schools."

          The California Charter Schools Association (CCSA) opposes the  
          bill and argues, "CCSA supports applying appropriate conflict of  
          interest provisions to charter schools, including transparency  
          and recusal by board members with a financial interest in a  
          board decision.  In fact, most charter schools are nonprofit  
          corporations and must abide by the Corporations Code that  
          includes conflict of interest provisions.  We believe that AB  
          572's directive that charter schools comply with Government Code  
          Section 87100 et seq applies an inappropriate conflict of  
          interest scheme to charter schools.  We are open to crafting a  
          conflict of interest law that is specific to charter schools."

           Corporations Code  .  Statute governing corporations requires not  
          more than 49% of persons serving on the board of any corporation  
          to be "interested persons."  "Interested persons" is defined as  
          either of the following:  a) any person currently compensated by  
          the corporation for services rendered to it within the previous  
          12 months (excluding any reasonable compensation paid to a  
          director); or, b) any relative, as specified, of any such  
          person.  Advocates of charter schools contend they should abide  
          by conflict of interest provisions related to corporations not  
          local education agencies due to the fact that some charter  
          schools are operated by non-profit corporations.  The committee  
          should consider whether it is appropriate to have public funded  
          charter schools abide by the corporations code rather than the  
          government code with regard to conflict of interest policies.  

           Committee Amendment  :  Staff recommends the bill be amended to  
          clarify that charter schools shall comply with the Political  
          Reform Act.

           Previous legislation  :  AB 2115 (Mullin) from 2008 required  
          charter schools to adopt and comply with a conflict of interest  
          policy that requires its governing board members to abide by the  
          same conflict of interest requirements as local education agency  
          (LEA) governing board members.  According to the Assembly  
          Appropriations Committee, AB 2115 had, unknown, minor absorbable  
          state reimbursable mandated costs, likely less than $100,000, to  
          the 585 charter schools in the state to adopt conflict of  
          interest policies and abide by the Brown Act, as specified.  The  








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          bill was vetoed by the Governor with the following message:

              "Not only would this bill create state mandated costs  
              for charter schools to comply with its provisions, the  
              measure runs counter to the intent of charter schools,  
              which were created to be free from many of the laws  
              governing schools districts."

          AB 1197 (Wiggins) of 2004, specified that individuals who govern  
          charter schools shall file statements of economic interest under  
          the Political Reform Act.  The bill failed passage on the Senate  
          Floor.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support  

          Antioch Unified School District
          Association of California School Administrators (ACSA)
          California Association of School Business Officials (CASBO)
          California Federation of Teachers (CFT)
          California School Boards Association (CSBA)
          California State PTA
          California Teachers Association (CTA)
          Orange County Department of Education
          Palos Verdes Unified School District
          Public Advocates
          Saddleback Valley Unified School District
          San Bernardino County Office of Education
          San Diego County Office of Education
          San Francisco Unified School District
          Santa Clara County Office of Education
          St. Helena Unified School District

           Opposition  

          California Charter Schools Association
          An Individual
           
          Analysis Prepared by  :    Chelsea Kelley / ED. / (916) 319-2087