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SB-806 Charter schools: operation: for-profit entities.(2017-2018)

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Date Published: 04/17/2017 02:53 PM
SB806:v97#DOCUMENT

Amended  IN  Senate  April 17, 2017
Amended  IN  Senate  March 29, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 806


Introduced by Senator Glazer

February 17, 2017


An act to amend Section 47604 of, and to add Sections 47604.1 and 47604.2 to, the Education Code, relating to charter schools.


LEGISLATIVE COUNSEL'S DIGEST


SB 806, as amended, Glazer. Charter schools: operation: for-profit entities.
(1) Existing law, the Charter Schools Act of 1992, provides for the establishment and operation of charter schools and provides that a charter school may operate as, or be operated by, a nonprofit public benefit corporation. Existing law provides that the governing board of a school district that grants a charter for the establishment of a charter school formed and organized as a nonprofit public benefit corporation is entitled to one representative on the board of directors of the nonprofit public benefit corporation.
This bill would instead require a charter school to operate as or by a nonprofit public benefit corporation or be operated by a school district or county office of education and would provide that an authority that grants a charter for the establishment of a charter school formed and organized as a nonprofit public benefit corporation is entitled to one representative on the board of directors of the nonprofit public benefit corporation. The bill would prohibit a for-profit entity from engaging in certain activities as they relate to a charter school, including prohibiting a for-profit entity from participating in the candidate review or being involved in the appointment or selection of members of the nonprofit public benefit corporation’s board of directors and prohibiting more than 50% of the full-time equivalent certificated employees serving pupils of the charter school from being employees of a for-profit entity. The bill would require a contract between a charter school and a for-profit entity to provide instructional services to be provided to any member of the public upon request and approval at a publicly noticed meeting of the governing body of the charter school. To the extent the bill would impose new duties on charter schools, the bill would impose a state-mandated local program.
(2) The Ralph M. Brown Act requires that all meetings of a legislative body, as defined, of a local agency be open and public and all persons be permitted to attend unless a closed session is authorized. The Bagley-Keene Open Meeting Act requires, with specified exceptions, that all meetings of a state body be open and public and all persons be permitted to attend.
This bill, with respect to the operation of the charter school only, would clarify that the governing body of a charter school is subject to the Ralph M. Brown Act, unless it is operated by an entity governed by the Bagley-Keene Open Meeting Act, in which case the charter school would be subject to the Bagley-Keene Open Meeting Act.
(3) The California Public Records Act requires state and local agencies to make their records available for public inspection and to make copies available upon request and payment of a fee unless the records are exempt from disclosure.
This bill, with respect to the operation of the charter school only, would clarify that the governing body of a charter school is subject to the California Public Records Act.
(4) Existing law prohibits certain public officials, including, but not limited to, members of governing boards of school districts and citizens’ oversight committees, from engaging in specified activities that are inconsistent or incompatible with, or inimical to, their duties as public officials, including, but not limited to, entering into a contract in which the official or the official’s family member has a financial interest, as specified.
This bill, with respect to the operation of the charter school only, would clarify that the governing body of a charter school is subject to these provisions unless the charter school is operated as, or operated by, a nonprofit public benefit corporation.
(5) The Nonprofit Public Benefit Corporation Law establishes the requirements for forming a nonprofit public benefit corporation.
This bill, with the respect to the operation of the charter school only, would clarify that the governing body of a charter school that is operated as a nonprofit public benefit corporation is subject to the Nonprofit Public Benefit Corporation Law.

(5)

(6) Existing law prohibits certain self-dealing transactions, as defined, in which a nonprofit public benefit corporation is a party and in which one or more of its directors has a material financial interest, as specified.
This bill, notwithstanding the self-dealing provision described above, would impose certain requirements on the governing body of a charter school and a member of the governing body of a charter school if the charter school and the member enter into a loan agreement, real property lease agreement, or a guarantor agreement for a line of credit or real property lease, as specified.

(6)

(7) The Political Reform Act of 1974 requires every state agency and local governmental agency to adopt a conflict-of-interest code, formulated at the most decentralized level possible, that requires designated employees of the agency to file statements of economic interest disclosing any investments, business positions, interests in real property, or sources of income that may foreseeably be affected materially by any governmental decision made or participated in by the designated employee by virtue of his or her position.
This bill, with respect to the operation of the charter school only, would clarify that the governing body of a charter school is subject to the Political Reform Act of 1974.

(7)

(8) This bill would state various exceptions and clarifications regarding the applicability of the acts described above in paragraphs (2) to (6) (7), inclusive.

(8)

(9) This bill would make the provisions in paragraphs (2) to (6) (7), inclusive, operative on July 1, 2018. 2018, as provided.

(9)

(10) The California Constitution requires the state to reimburse local governments for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. Existing law authorizes the governing board of a school district or a county board of education, on a districtwide or countywide basis or on behalf of one or more of its schools or programs, after a public hearing on the matter, to request the State Board of Education to waive all or part of any section of the Education Code or any regulation adopted by the state board that implements a provision of that code that may be waived, except as provided.
This bill would provide, for purposes of those provisions, that a charter school is considered a local government or school district, as applicable.

(10)

(11) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.

(11)

(12) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

It is the intent of the Legislature in enacting this act to do all of the following:

(a)Ensure that charter school governance is transparent.

(b)Ensure that monitoring and oversight of charter schools is conducted to protect the public interest.

(c)Occupy the field of open meeting, public records, and conflict-of-interest laws as they relate to the governing bodies of charter schools and preempt the application by charter school authorizers of additional policies to the governing bodies of charter schools.

SECTION 1.

 (a) This act shall be known and may be cited as the Charter Schools Transparency and Standards of Governance Act of 2017.
(b) The Legislature hereby finds and declares all of the following:
(1) Charter schools provide opportunities for teachers, parents, pupils, and community members to establish and maintain schools that operate independently from the existing school districts, and therefore should be recognized as the most local of all forms of public education.
(2) Charter schools should be governed with transparency and according to the highest ethical standards.
(3) Charter schools should operate with monitoring and oversight that is the least restrictive possible while still protecting the best interests of the students and the public.
(4) Therefore, it is the intent of the Legislature in enacting this act that all of the following occur:
(A) All charter schools shall operate under the requirements set forth in this act for open meetings, public records, and conflict of interests, and these requirements shall be the only ones applied to charter schools.
(B) No charter school authorizer, with or without the approval of an existing charter school or a charter petitioner seeking approval of a charter school, shall adopt a memorandum of understanding that includes any requirements in addition to those described in this act.
(C) It is in the best interests of charter schools, their pupils, and the public that all charter schools operate under the same clear set of transparency and governance standards and that these standards be implemented in all schools as soon as possible after January 1, 2018.

SEC. 2.

 Section 47604 of the Education Code is amended to read:

47604.
 (a) A charter school shall operate as, or be operated by, a nonprofit public benefit corporation formed and organized pursuant to the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), or shall be operated by a school district or county office of education.
(b) An authority that grants a charter for the establishment of a charter school formed and organized as a nonprofit public benefit corporation pursuant to this section shall be entitled to a single representative on the board of directors of the nonprofit public benefit corporation.
(c) An authority that grants a charter to a charter school to be operated by, or as, a nonprofit public benefit corporation is not liable for the debts or obligations of the charter school, or for claims arising from the performance of acts, errors, or omissions by the charter school, if the authority has complied with all oversight responsibilities required by law, including, but not limited to, those required by Section 47604.32 and subdivision (m) of Section 47605.
(d) A charter school shall not operate as, or be operated by, a for-profit entity.
(e) A for-profit entity shall not participate in the candidate review or be involved in any way or influence the appointment or selection of members of the board of directors of the nonprofit public benefit corporation operating a charter school.
(f) A for-profit entity providing direct instructional services to charter school pupils shall not supervise or direct any certificated employees of the charter school and no more than 50 percent of the full-time equivalent certificated employees serving pupils of the charter schools may be employees of a for-profit entity.
(g) A for-profit entity shall not approve, validate, deny, or veto the annual budget or individual expenditures of a charter school.
(h) A contract between a charter school and a for-profit entity to provide instructional services shall be provided to any member of the public upon request and approval at a publicly noticed meeting of the governing body of the charter school.

SEC. 3.

 Section 47604.1 is added to the Education Code, to read:

47604.1.
 (a) Subject to the limitations of this subdivision and with respect to the operation of a charter school only, the governing body of a charter school is subject to all of the following:
(1) The Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), except that a charter school operated by an entity governed by the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) is subject to the Bagley-Keene Open Meeting Act regardless of the authorizing entity.
(2) The California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(3) Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, unless the charter school is operated as, or is operated by, a nonprofit public benefit corporation pursuant to Section 47604.
(4) The Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code). For purposes of Article 3 (commencing with Section 87300) of Chapter 7 of Title 9 of the Government Code, a charter school shall be considered an agency and is the most decentralized level for purposes of adopting a conflict of interest code.
(5) The Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), if the charter school is operated by or as a nonprofit public benefit corporation.
(b) (1) Notwithstanding Section 5233 of the Corporations Code, a member of the governing body of a charter school shall not provide a loan to the charter school or sign a guarantor agreement relative to a line of credit for the charter school unless all of the following are satisfied:
(A) The governing body of the charter school adopts a resolution at a public meeting declaring and describing the need for the loan or the line of credit. In the case of a line of credit, the funds from the line of credit shall not be accessed until the governing body of the charter school compiles with this paragraph.
(B) The governing body of a charter school discloses and approves the loan agreement or line of credit, including the terms of the loan or the line of credit, during a public meeting.
(C) The member of the governing body of the charter school who offers the loan or the guarantor agreement relative to a line of credit abstains from voting on, influencing, or attempting to influence another member of the governing body of the charter school regarding all matters affecting the loan agreement or the line of credit.
(2) Notwithstanding Section 5233 of the Corporations Code, a member of the governing body of a charter school shall not lease real property or sign a guarantor agreement relative to a lease of real property to be occupied by a charter school unless both of the following are satisfied:
(A) The governing body of the charter school discloses and approves the real property lease agreement, including the terms of the lease and the guaranty, if applicable, during a public meeting.
(B) The member of the governing body of the charter school who is a lessor or guarantor of the real property to be occupied by the charter school abstains from voting on, influencing, or attempting to influence another member of the governing body of the charter school regarding all matters affecting the real property lease agreement.
(c) A member of the governing body of a charter school shall abstain from voting on, influencing, or attempting to influence another member of the governing body of the charter school regarding 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. 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 common law, or an individual in an adoptive relationship within the third degree.
(d) To the extent that the governing body of a charter school engages in activities that are not related to the operation of the charter school, this section does not make those unrelated activities subject to Section 1090 of the Government Code, the Ralph M. Brown Act, the Bagley-Keene Open Meeting Act, or the California Public Records Act. A meeting of the governing body of a charter school to discuss items related to the operation of the charter school shall not include discussion of any item regarding an activity of the governing body of the charter school that is not related to the operation of the charter school.
(e) Notwithstanding the requirements of the Ralph M. Brown Act or the Bagley-Keene Open Meeting Act, the governing body of a charter school shall hold its meetings within the physical boundaries of the state in accordance with all of the following:
(1) Proper notices pursuant to the Ralph M. Brown Act or the Bagley-Keene Open Meeting Act are posted at all charter school facilities.
(2) The meeting is held at a charter school facility, or a teleconference location is available in at least one charter school facility, within the physical boundaries of each county in which any of the charter school’s facilities are located.
(3) The meeting location complies with the open, public, and accessibility requirements of the Ralph M. Brown Act or the Bagley-Keene Open Meeting Act. A charter school may also meet in a county contiguous to the county where one or more of the charter school’s facilities are located if at least 10 percent of the pupils who are enrolled in the charter school reside in that contiguous county.
(4) A nonclassroom-based charter school that does not have a facility may meet within the boundaries of the county in which the greatest number of pupils who are enrolled in the charter school reside.
(5) This subdivision shall not limit the authority of the governing body of the charter school to meet outside these boundaries to the extent authorized by Section 54954 of the Government Code, provided that the meeting place is in compliance with Section 54961 of the Government Code.
(f) Neither the Ralph M. Brown Act nor the Bagley-Keene Open Meeting Act shall apply to committees of the charter school, unless the committee is comprised of a majority of the members of the governing body of the charter school.
(g) The governing body of a charter school may hold closed sessions to consider a matter regarding pupil discipline as described in Section 48912.
(h) A statement of economic interest that is filed by a designated person at a charter school after the required deadline pursuant to the Political Reform Act of 1974 shall not be the sole basis for revocation of a charter pursuant to Section 47607.
(i) Notwithstanding Section 6253 of the Government Code, a charter school, upon a request for a copy of records, shall, within 20 days from receipt of the request, determine whether the request, in whole or in part, seeks copies of disclosable public records in possession of the charter school and shall promptly notify the person making the request of the determination and the reasons for the determination.
(j) Notwithstanding Sections 6253 and 6253.9 of the Government Code, a charter school may require payment of actual costs from the person making the request before producing the records.
(k) A school district, county board of education, or the state board shall not impose on a charter school any open meeting, public records, or public official conflict of interest requirements other than those specified in this section.
(l) (1) If a charter school authorizer identifies, or suspects, based on an internal or independent review, that a violation of Section 5233 of the Corporations Code, relating to self-dealing, may have occurred, the charter school authorizer may initiate action in accordance with subdivision (c) of Section 5233 of the Corporations Code. For purposes of initiating this action, a charter school authorizer shall be deemed to have relator status as described in paragraph (4) of subdivision (c) of Section 5233 of the Corporations Code, without having been granted that status by the Attorney General. The charter school authorizer shall not initiate other or different corrective actions against the charter school, unless the charter school and the charter school authorizer mutually agree to an alternative course to correct the alleged violation. If the charter school does not agree to an alternative course to correct the alleged violation, the following shall occur:
(2) If, after the proceedings pursuant to Section 5233 of the Corporations Code, the court finds no violation has occurred, the charter school authorizer shall take no further action nor impose any corrective action on the charter school.
(3) If, after proceedings pursuant to Section 5233 of the Corporations Code , the court finds a violation has occurred, the charter school shall implement the court’s final ruling in the matter. In addition, the charter school shall remove any board member, or terminate any employee, who was the subject of the complaint and found in violation of the law.
(4) Except as allowed in paragraph (5), compliance with paragraphs (1) to (3), inclusive, shall be sufficient corrective action, and the charter school authorizer shall take no further action against the charter school to correct the violation.
(5) Notwithstanding paragraph (3), if the charter school authorizer finds the violation was so pervasive to constitute a systemic problem that suggests a high risk to the continued successful and transparent operation and governance of the charter school such that additional controls are necessary, the charter school authorizer may, for a period not to exceed five years, prohibit the charter school from having any board members or officers that have a material financial interest in the operations or contracts of the school.

(l)

(m) Notwithstanding any other law, this section shall not apply to actions taken before the operative date of this section.

(m)

(n) This section shall become operative on July 1, 2018. Any policies adopted by a charter school or its authorizer in accordance with this section shall not constitute a material revision to the charter in operation on January 1, 2018. Any requirements not described in this section or in conflict with this section imposed by any memorandum of understanding between a charter school and its authorizer shall be null and void on July 1, 2018.

SEC. 4.

 Section 47604.2 is added to the Education Code, to read:

47604.2.
 (a) For purposes of Section 6 of Article XIII   B of the California Constitution, a charter school shall be considered a local government.
(b) For purposes of Article 1 (commencing with Section 17550) of Chapter 4 of Part 7 of Division 4 of Title 2 of the Government Code, a charter school shall be considered a school district.
(c) For purposes of Section 33050, a charter school shall be considered a school district.

SEC. 5.

 The Legislature finds and declares that Section 3 of this act, which adds Section 47604.1 to the Education Code, imposes limitations on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by these limitations and the need for protecting that interest:
In order to facilitate full and timely compliance with public records requests by nonprofit public benefit corporations operating schools as part of the public school system, it is necessary to reduce the costs and staff burdens associated with public records requests.

SEC. 6.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.