BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 572|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 572
Author: Brownley (D)
Amended: 9/2/09 in Senate
Vote: 21
SENATE EDUCATION COMMITTEE : 6-1, 6/17/09
AYES: Romero, Alquist, Hancock, Liu, Maldonado, Simitian
NOES: Wyland
NO VOTE RECORDED: Huff, Padilla
SENATE JUDICIARY COMMITTEE : 3-2, 7/1/09
AYES: Corbett, Florez, Leno
NOES: Harman, Walters
ASSEMBLY FLOOR : 51-29, 5/28/09 - See last page for vote
SUBJECT : Charter schools
SOURCE : California School Boards Association
DIGEST : This bill makes charter schools, like public
school districts, subject to open meeting laws, the
California Public Records Act, Government Code conflict of
interest laws, and the Political Reform Act. Thus, charter
school board meetings would be made open to the public,
charter school records would be available for public
inspection, and charter schools would be required to adopt
more stringent conflict of interest policies. Becomes
operative on July 1, 2011.
CONTINUED
AB 572
Page
2
Senate Floor Amendments of 9/2/09 further clarify how a
charter school board is to operate, so that it may meet
these open meeting and open records laws, while conducting
the business of charter schools. Specifically, the
amendments (1) clarify that a meeting of the charter
school's governing body to discuss charter school business
shall not include discussion of any item not related to the
operation of the charter school (in other words, the
charter school board must have separate meetings for school
operations, for example, and for discussion of their
nonprofit corporation business activities, (2) define where
meetings of the charter school may be held (within the
boundaries of the school facilities or where 10 percent or
more of the enrolled students reside or where the greatest
number of pupils in the school reside), (3) permit the
governing body of a charter school to hold closed sessions
to consider a matter regarding pupil discipline (which is
actually existing law), (4) define the jurisdiction of a
charter school for purposes of the Political Reform Act of
1974, and (5) clarify that the failure of a designated
person to file a required Statement of Economic Interest on
time shall not be the sole basis for revocation of a
charter.
ANALYSIS :
Background
Charter schools were authorized in 1992 to give communities
the opportunity to establish schools that could operate
freely from the structural programs of public school
districts. Charter schools are intended to provide a
unique learning environment, giving students who do not
respond well to standard education programs a different
approach to scholastic achievement. In the 2007-2008 State
of California Education report, 675 charter schools were in
operation, serving almost 250,000 students. (Education
Data Partnership, May 22, 2009.) Charter schools are
funded in the same way that public schools are funded. In
the 17 years of charter school existence in California,
however, many reports of widespread financial mismanagement
of charter schools' public funds have led to the belief
that charter schools' conflict of interest rules need to be
tightened. The following are examples of those reports of
AB 572
Page
3
abuse and mismanagement.
In 2007, the Los Angeles County Office of Education,
through an outside auditor, found that for the three years
audited, the Gorman Learning Center Charter School provided
false information on State Schools Funds applications and
received $7.7 million more than the school should have
received. The audit further revealed that the school spent
thousands of dollars on questionable items, such as a
$14,000 board retreat that included helicopter and yacht
rentals, and horseback riding and diving lessons for board
members and their families. According to the March 24,
2007 Los Angeles Times article that reported on this
school, the school's chief executive officer
inappropriately hired family members and the director of
human resources received $18,000 in school funds to pay for
her rent.
A September 5, 2007 Los Angeles Times article reported that
Charles Cox, head and founder of California Charter
Academy, was indicted and charged with the misuse of over
$5 million in school funds, using the money as compensation
in the form of wages to himself, friends, and family
members, and to make extravagant purchases unrelated to the
chartered school. Cox was also charged with
inappropriately entering into school service contracts with
a company he owned.
In August 2006, the Superintendent of Public Instruction
and various California County Offices of Education
commissioned an outside audit of Options for Youth, Inc,
(OFY) and Opportunities for Learning, Inc. (OFL) Charter
Schools. The audit revealed OFL and OFY had contracts with
many companies which were owned by overlapping family
members; had several of the same corporate officers,
directors and staff of OFL and OFY; and all sold and
purchased goods and services from each other. Although
financial interests in transactions between the companies
were disclosed, some of the related party arrangements were
questionable. The audit concluded that both OFY and OFL
schools had inadequate conflict of interest policies and
therefore could not be protected against improper
transactions.
AB 572
Page
4
The bill intends to tighten the rules relating to public
accountability, and regulate the management and operations
of charter schools by making them subject to the same open
meetings, public records access, conflict of interest, and
Political Reform Act laws that govern other public schools
and school districts. This bill was passed by the Senate
Education Committee with a
6-1 vote on June 17, 2009.
Changes to Existing Law
Existing law, the Ralph M. Brown Act, requires that a local
agency's board of directors meeting be open to the public.
(Section 54950 et seq. of the Government Code)
This bill subjects a charter school's board meetings to the
Ralph M. Brown Act.
Existing law, the Bagley-Keene Open Meeting Act, requires
that state body meetings be open to the public. (Section
11120 of the Government Code)
This bill requires charter school board meetings to comply
with standards of the Bagley-Keene Open Meeting Act, if the
charter school is a state body.
Existing law, the California Public Records Act, declares
everyone in California has a right to access information
that concerns the people's business and provides that
public records shall be available for inspection, except as
provided by an express provision of law. (Section 6250 and
6253 of the Government Code)
This bill subjects charter schools to the California Public
Records Act and makes their public records available for
public inspection, unless exempted by law.
Existing law prohibits school district officials, and its
employees, while acting within the scope of their duties,
from entering into any contract in which they have a
financial interest. (Section 1090 et seq. of Government
Code)
This bill prohibits a charter school board from entering
AB 572
Page
5
into any contracts in which a board member has a financial
interest.
Existing law, as provided by the Political Reform Act,
requires public officials to carry out their duties in an
unbiased manner, free from influence by outside interests,
and follow regulations during elections, as defined.
(Section 81000 of the Government Code)
This bill:
1. Subjects charter school board members to the Political
Reform Act.
2. Requires a charter school board member to refrain from
voting on matters that affect his/her own employment.
3. Requires a charter school board member to refrain from
voting on an issue that would uniquely affect a relative
of that board member.
4. Does not allow a person to serve on the charter school
board if that person is prohibited from holding a civil
office by either the California Constitution or state
law.
This bill allows an individual to serve as a member of the
school's governing body of a charter school and be employed
in a separate position at that charter school.
This bill further clarifies how a charter school board is
to operate, so that it may meet these open meeting and open
records laws, while conducting the business of charter
schools. Specifically, this bill (1) clarifies that a
meeting of the charter school's governing body to discuss
charter school business shall not include discussion of any
item not related to the operation of the charter school (in
other words, the charter school board must have separate
meetings for school operations, for example, and for
discussion of their nonprofit corporation business
activities, (2) defines where meetings of the charter
school may be held (within the boundaries of the school
facilities or where 10 percent or more of the enrolled
students reside or where the greatest number of pupils in
AB 572
Page
6
the school reside), (3) permits the governing body of a
charter school to hold closed sessions to consider a matter
regarding pupil discipline (which is actually existing
law), (4) defines the jurisdiction of a charter school for
purposes of the Political Reform Act of 1974, and (5)
clarifies that the failure of a designated person to file a
required Statement of Economic Interest on time shall not
be the sole basis for revocation of a charter.
This bill becomes operative on July 1, 2011.
Prior Legislation
AB 1197 (Wiggins), 2003-04 Session, would have required
individuals who govern charter schools to file statements
of economic interest in compliance with the Political
Reform Act. The bill died on the Senate Floor.
AB 2115 (Mullin), 2007-08 Session, proposed to require
charter schools to adopt a conflict of interest policy that
would require charter school board members to follow the
same standards as local education agency board members.
The bill was vetoed by the Governor, stating that "the
measure runs counter to the intent of charter schools to be
free from many laws governing school districts."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 9/2/09)
California School Boards Association (source)
Antioch Unified School District
Association of California School Administrators
California Association of School Business Officials
California Federation of Teachers
California School Employees Association
California State PTA
California Teachers Association
Fresno Unified School District
Grizzly Challenge Charter School
Kern County Superintendent of Schools
Los Angeles Unified School District
Orange County Department of Education
AB 572
Page
7
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 : (Verified 9/2/09)
California Charter Schools Association
ARGUMENTS IN SUPPORT : According to the author, "Recent
news reports of charter school members engaging in
inappropriate financial mismanagement have highlighted the
need for charter school conflict of interest laws to be
clarified. This bill will continue the long standing
tradition that charter schools have greater autonomy than
traditional public schools, but at the same time provide
greater transparency to parents and the public regarding
the use of public funds by the charter schools for the
educational benefit of their students. Charter school
governing boards should be held to the same standard as
school district boards. AB 572 will align conflict of
interest standards for charter school boards with that of
school district boards."
The California School Boards Association (CSBA), the bill's
sponsor, argues that charter schools' abuse of already
lenient accommodations has led to the financial
mismanagement of funds and the closing of many charter
schools. They argue that to protect the state's public
education funds from future fraudulent use, charter schools
should be held to the same conflict of interest standards
applied to traditional public schools and districts.
Requiring charter schools to comply with the same conflict
of interest restrictions as traditional public schools
would help to prevent charter school board members from
personally gaining from their position and ensure board
members are acting in the best interest of the school and
its students, supporters state.
ARGUMENTS IN OPPOSITION : The California Charter Schools
AB 572
Page
8
Association (CCSA) argues that subjecting charter schools
to the same set of laws as regular school districts would
go against the purpose of charter schools. Charter
schools, it argues, are not meant to mirror traditional
public schools, but instead provide options to public
school students and be able to operate freely and
independently from school district mandated programs.
While CCSA agrees that it is necessary to provide
transparency into interested board members' conduct, CCSA
does not believe it would be appropriate to subject charter
schools to the Government Code conflict of interest laws.
For example, CCSA argues that most charter schools are
nonprofit organizations, and already required to abide by
the Corporations Code conflict of interest laws. CCSA
would argue that it would be unfair to subject the
nonprofit charter school to conflict of interest laws which
differ, and are not as stringent, than what is normally
required for nonprofit organizations.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Krekorian, Lieu,
Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,
Harkey, Jeffries, Knight, Logue, Miller, Nestande,
Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran,
Villines
DLW:mw 9/2/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****