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Law & Courts

Legislation Tightens Fiscal Oversight of California Charters

By Caroline Hendrie — October 11, 2005 3 min read
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A bill giving county-level education officials the power to investigate suspected fiscal malfeasance by charter school operators is among several charter-related measures that Gov. Arnold Schwarzenegger of California has signed into law.

The measure grew out of the collapse of the network of schools run by the California Charter Academy, which enrolled some 4,500 K-12 students and 7,000 adult students at more than 50 campuses and online before abruptly closing in August 2004. A state audit released last spring concluded that the Victorville, Calif.-based chain had misused state and federal funds. The audit prompted the state to file a $23 million claim in bankruptcy court against its for-profit management company. (“Calif. Charter Network Misused Millions in Aid, Audit Finds,” April 20, 2005)

The new law gives county superintendents of schools the authority to review the fiscal records of any charter schools in their counties that they suspect of illegal practices. It also authorizes county superintendents to call in the state’s Fiscal Crisis and Management Assistance Team to scrutinize charter schools and school districts within their jurisdictions.

County superintendents and the fiscal-crisis team played major roles in the state’s audit of the California Charter Academy. But their authority to act came from the California Department of Education.

Supporters say the law will improve oversight of wayward California charter schools when their authorizers—usually school districts—aren’t keeping a close eye on the schools they charter.

“It’s an extra layer of accountability,” said Adonai Mack, a lobbyist in the state education department.

Finance Bills Signed

Another new measure, also signed by the Republican governor late last month, will phase in an increase in the state money that charter schools receive in lieu of applying directly for 28 sources of categorical funding, which is aid for specific purposes such as transportation, gifted education, or school safety.

Under the change, the state’s charter school block grant will climb from less than $300 per pupil this school year to $500 per pupil in the 2007-08 school year. The California Charter Schools Association hailed the measure as a big win for the state’s roughly 570 charter schools, public but largely independent schools that together enroll more than 200,000 students.

“It gets phased in over three years, which is somewhat disappointing,” Caprice Young, the association’s chief executive officer, said last week. “But we’re just pleased that the governor and the legislature supported this huge step toward equalizing funding for charter schools.”

A second new funding-related law was designed to address complaints from California’s unified school districts—systems that serve students at the elementary, middle, and high school levels—that they were taking a financial hit because charter high schools got more money per pupil than the districts received for them.

Under the new law, existing charter schools and any new start-ups in unified districts will receive their funding independently from their districts at state-determined rates that vary with the grades the schools serve. Schools converting to charter status after July 1 of this year will receive funding based on the amount that the district spent on them in the year before they made the change.

The bill was primarily conceived to address concerns about start-up charters raised by the 55,000-student San Francisco public school system and the 7,700-student Novato school district in nearby Marin County. Along the way, the bill’s focus was expanded to tackle concerns that some high schools might have a financial incentive to convert to charters. Those issues came to the fore after Granada Hills High School in Los Angeles converted to charter status in 2003 amid intense political controversy. (“With Little Debate, L.A. High School Gets New Charter,” May 19, 2004, “Romer Raises Stakes In L.A. Charter Fight,” May 21, 2003)

“This legislation will go a long way in maintaining funding equity between charter schools and existing schools within unified school districts,” Arlene Ackerman, the superintendent of schools in San Francisco, said in an e-mail last week.

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A version of this article appeared in the October 12, 2005 edition of Education Week as Legislation Tightens Fiscal Oversight of California Charters

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