Law & Courts

U.S. Circuit Court Bars Ariz. For-Profit Charters From Federal Payments

By Rhea R. Borja — October 03, 2006 3 min read

In what may be the end of a long legal road, the U.S. Court of Appeals for the 9th Circuit has ruled that for-profit charter schools in Arizona cannot receive federal funds.

The San Francisco-based court in the ruling filed Sept. 25 upheld a previous U.S. District Court decision that federal money may go only to nonprofit charter or regular public schools.

The ruling is a decisive blow to the Arizona State Board for Charter Schools and the for-profit charter school companies in the state, 11 of which were named as plaintiffs in the appellate court’s opinion. They include Phoenix Education Management LLC, Intelli-School Inc., and the Leona Group Arizona LLC, all based in Phoenix.

Arizona has 469 charter schools, 43 of which are for-profit.

For-profit charter schools will lose some $2 million in federal funds anticipated this school year for special-education and low-income students as a result of the ruling, said Kristen Jordison, the executive director of the state charter school board. In anticipation of the recent court decision, 13 of the state’s 56 for-profit charter schools switched to nonprofit status this fall, she said.

She added that on average statewide, about 10 percent of a charter school’s budget comes from federal aid for students who qualify for the Title I program for disadvantaged students and the Individuals with Disabilities Education Act.

“This is not $2 million going to line a for-profit business’s pockets,” she said. “These funds have a specific, designated purpose.”

Ms. Jordison added that the state charter board is scheduled to discuss Oct. 10 whether to appeal the unanimous decision by the three-judge panel to the U.S. Supreme Court.

No Alternative Definition

Arizona first faced the prospect of losing federal funds for for-profit charter schools in late 2003. That’s when an audit by the U.S. Department of Education’s inspector general’s office called on the state to repay at least $1.1 million in federal funds, maintaining that for-profit charters did not meet the federal definition of local education agencies. (“U.S. Audit Raps Arizona’s Use of Charter Aid,” Dec. 3, 2003.)

The federal Education Department later said it would not require Arizona to repay the federal money, according to a state education department spokesman.

Unlike all other states with charter schools, which are publicly financed but largely independent, Arizona gives federal money directly to charter schools instead of channeling it through local school districts or other governing agencies. According to federal law, federal aid can go to for-profit operators of charter schools if the funds first go through nonprofit organizations that oversee the schools.

Arizona state schools Superintendent Tom Horne challenged the federal Education Department’s findings. He stated that the department ignored state law, which called for equal treatment of nonprofit and for-profit charter schools. The state attorney general’s office agreed. (“Arizona Opinion: Give Federal Aid to Company-Run Charters,” Aug. 11, 2004.)

In June 2005, the charter board and the for-profit charter school companies sued the federal Education Department in the U.S. District Court in Phoenix. The court decided in favor of the Education Department, and the charter board and companies appealed the ruling.

The appellate court’s ruling in Arizona State Board v. U.S. Department of Education centered on the word “including” to define the schools eligible for federal aid. The federal IDEA and the Elementary and Secondary Education Act—last reauthorized as the No Child Left Behind Act—define such a school as “a nonprofit institutional day or residential school, including a public [elementary or secondary] charter school, that provides [elementary or secondary] education, as determined under state law.”

U.S. Circuit Judge Michael Daly Hawkins wrote in the court’s opinion that the “Arizona Charter Board seeks to introduce an alternative interpretation, arguing that the subsequent term ‘including’ expands, rather than simply illustrates, the definition of eligible schools.” But the meaning of the word, he wrote, “is both plain and unambiguous.”

A version of this article appeared in the October 04, 2006 edition of Education Week as U.S. Circuit Court Bars Ariz. For-Profit Charters From Federal Payments


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Teaching Webinar
Meeting the Moment: Accelerating Equitable Recovery and Transformative Change
Educators are deciding how best to re-establish routines such as everyday attendance, rebuild the relationships for resilient school communities, and center teaching and learning to consciously prioritize protecting the health and overall well-being of students
Content provided by Campaign for Grade-Level Reading
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Reading & Literacy Webinar
Addressing Learning Loss: What Schools Need to Accelerate Reading Instruction in K-3
When K-3 students return to classrooms this fall, there will be huge gaps in foundational reading skills. Does your school or district need a plan to address learning loss and accelerate student growth? In this
Content provided by PDX Reading
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Equity & Diversity Webinar
Culturally Relevant Pedagogy to Advance Educational Equity
Schools are welcoming students back into buildings for full-time in-person instruction in a few short weeks and now is the perfect time to take a hard look at both our practices and systems to build
Content provided by PowerMyLearning

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Law & Courts California COVID-19 Closures Infringed Private School Parents' Rights, Federal Court Rules
A federal appeals court holds that the state's closure rules for private schools were not narrowly tailored to serve compelling interests.
4 min read
Image shows a courtroom and gavel.
Law & Courts 'I Just Want to Play.' Judge Halts W. Va. Law Barring Transgender Girls From Girls' Sports
Ruling for an 11-year-old transgender girl, the judge holds that the law likely violates the equal-protection clause and Title IX.
3 min read
Image of a gavel.
Marilyn Nieves/E+
Law & Courts Praying Coach v. District That Suspended Him: What's Next in Fight Over Religious Expression
The U.S. Court of Appeals for the 9th Circuit declined to reconsider an earlier panel ruling that sided with the school district.
4 min read
Bremerton High School assistant football coach Joe Kennedy, center in blue, kneels and prays after his team lost to Centralia in Bremerton, Wash., on Oct. 16, 2015. Kennedy, who was suspended for praying at midfield after games, has filed a discrimination complaint on Tuesday, Dec. 15, 2015 with the U.S. Equal Employment Opportunity Commission according to The Liberty Institute, a Texas-based law firm representing the coach.
Joe Kennedy, center in blue, kneels and prays after a game in October 2015 when he was the assistant football coach at Bremerton High School in Bremerton, Wash. In a long-running legal fight, Kennedy contends he has First Amendment free-speech and free-exercise-of-religion rights to express his Christian faith while on the job. The case is likely headed back to the U.S. Supreme Court.
Lindsey Wasso/The Seattle Times via AP
Law & Courts Appeals Court Again Backs Transgender Student, But on Narrower Grounds Amid Signs of Rift
A federal appeals panel removed a holding for student Drew Adams based on Title IX, perhaps to ward off a rehearing by the full court.
4 min read
Image of a gavel.
Marilyn Nieves/E+