Several small, cash-strapped California school districts are using a loophole in state law to boost their revenue by overseeing a raft of far-flung charter schools, according to a recent report published by the state auditor.
The result, the report says: dismal academic results for thousands of students and a lot of extra money for the districts, one of which increased its revenue more than 10-fold.
Charter schools usually can’t open in California until they find districts willing to track their performance. The agreements are supposed to be limited by geography, but a handful of districts have authorized charters located many miles outside their geographic boundaries—some as far as 50 miles away.
Those school districts say these arrangements are legal and necessary. The applying charter operators need buildings, and they have none to offer, so the charter schools must open elsewhere.
The report, however, portrays the districts as absentee landlords. They have a financial incentive to endorse far-away charters because of the fees they charge to oversee them, yet the audit found little evidence that districts are providing the oversight services the schools are paying for.
“None of the districts we visited could demonstrate that they consistently monitored the academic performance of their respective charter schools,” even though “state law identifies academic performance as the most important factor to consider,” Auditor Elaine Howle wrote in a letter to the governor and legislative leaders.
Gov. Jerry Brown, Senate President Pro Tem Kevin de León and Assembly Speaker Anthony Rendon all declined to comment on her findings.
The report comes one year after the Legislature asked Howle to probe three districts known to oversee charter schools located outside their geographic boundaries: Los Angeles County’s Acton-Agua Dulce Unified and Antelope Valley Union, and San Joaquin County’s New Jerusalem Elementary.
It faults “vague and ineffective” state law on charter schools for allowing the three districts to expand their reach into neighboring towns, and significantly increase their revenue, without closely monitoring the schools’ operations or being accountable to the communities where the charters are located.
The results have been disastrous for students enrolled in several of the schools the districts oversee, the audit found.
Three charter schools featured in the report performed far worse on state standardized tests than comparable schools, and two of them closed earlier this year after crippling financial problems led to bankruptcy, forcing roughly 500 students to change schools.
And the full scope of the problems the audit describes isn’t even known. Although the Legislature only asked Howle to examine a few schools and districts, she learned that the state doesn’t keep a list of charter locations, meaning there’s no way to count the number that exist outside their authorizing district’s boundaries.
Letters published with the audit show superintendents for both Los Angeles area districts generally agree with the report’s findings and plan to implement reforms it recommends.
Acton-Agua Dulce Superintendent Lawrence King wrote that his district will “take appropriate actions to address issues presented in this audit.”
Antelope Valley Union Superintendent David Vierra said he hopes the report will spark “improved policies, practices and procedures.”
Asked about the audit, New Jerusalem, however, disputed many of the report’s findings and conclusions. In an email, Superintendent David Thoming called the idea that the tiny district located outside Tracy had agreed to oversee far-away charter schools to boost its revenue “100 percent baseless.”
“Our district has been involved in charter schools for 20 years!” Thoming wrote. “We have seen the value in providing school choice for families as well as providing different types of programs for the students in our area.”
But even if the district’s intentions were altruistic, there’s no denying that its work as a charter authorizer has been lucrative. During the 2015-16 academic year alone, the audit found, its authorization of outside-its-boundaries charter schools pumped an extra $6 million into a district whose regular revenues totaled just under $400,000.
New Jerusalem collected some of that money by charging oversight fees that state law allows all district authorizers to levy. The fees typically equal 1 or 2 percent of a charter school’s state funding, which is determined by the number of students enrolled. The district also controlled several charter schools’ revenue directly, the audit found.
If lawmakers take up the report’s recommendations when they return to work in January, districts such as New Jerusalem may not be allowed to authorize out-of-district charters much longer.
The audit calls on the Legislature to consider whether the practice should continue at all. It also asks legislators to amend state law to prohibit authorizers from charging excessive fees, require them to assess schools’ academic goals annually, and develop criteria that would help districts track charters’ financial health.
Most of those reforms sound reasonable, said Colin Miller, a senior adviser to the California Charter Schools Association, but his organization is also pushing for “badly needed” legislation that he said would make it easier for strong charter applicants to win approval to open.
Gail Greely wants lawmakers to act swiftly to address the auditor’s recommendations. She’s vice president of California Charter Authorizing Professionals, a two-year-old organization that promotes the field’s best practices.
“Out-of-district authorizing is a known problem. State law technically allows it, but it shouldn’t be happening,” Greely said. “It’s time for the State Board of Education or the Legislature to step in and finally do something about it.”