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Governor Newsom’s recently released education budget trailer bill language (TBL) includes details of his charter school accountability proposal. If you remember, nonclassroom-based charter school accountability was a big discussion last year with two charter bills, AB 84 (Muratsuchi) and SB 414 (Ashby). Both bills failed, with SB 414 being vetoed by the Governor. In response to the governor’s veto, a coalition of charter authorizers sent a letter to the governor asking him to take the lead this year as last year’s negotiations didn’t yield a compromise.
The Governor assumes control of the debate with the release of his education trailer bill, which contains over 50 pages of language that establishes a new program to review and report on financial and compliance audits of all LEAs and specifically new requirements for charter schools. It also expands oversight requirements for charter authorizers. Most of the language included in the trailer bill comes from the agreed upon language from last year’s negotiations between representatives from labor, charter schools, and authorizers. Here are some of the highlights of the Governor’s proposal:
Auditing
- State Controller (SCO) would have more access and discretion over LEA audits i.e., contracts for audits shall include ability for SCO to access work papers
- Contains quality control requirements for auditors
- Requires continuing education for CPAs and auditors, with specific training on charter schools and nonclassroom-based charters
- Requires “dependent” charters to present financial data separately in a school district's or county office of education’s audit
- Prevents authorizers from using a late audit or failure to file an audit as a justification for nonrenewal or revocation of a charter school
- Requires all LEAs to review audit reports with an agendized item at a public meeting within 45 days of issuance of report
- Commencing with 2027-28 fiscal year, supplemental information for all LEAs would be extensive and include pupil enrollment and attendance, large payments/asset transfers, loans, funding determination components, etc.
- Audits of charter authorizers would include ensuring the chartering authority has documented the completion of the required oversight tasks in 47604.32 (charter oversight requirements) and 44258.9 (teacher misassignments)
- Requires all LEAs, including charter schools, that offers grades 10 and 12 shall also offer and enroll pupils in grade 11
- Teacher misassignment penalties would be assessed to charter schools
- Auditor must consult with authorizer during planning stages of audit to assist in identifying potential audit risks
- Determination of materiality of related entities for charter schools
Charter Oversight
Strengthening charter oversight is a focus, which was strongly advocated for by many organizations representing charter authorizers. The proposed language expands the required duties for charter oversight. Some of the highlights are:
- Requires monitoring enrollment and attendance data and teacher misassignment audit exceptions
- Provides the charter governing body with feedback of the authorizer’s issues and concerns -if fraud, embezzlement or misuse of public funds is suspected, authorizer shall notify the SPI and county superintendent
- Authorizers must provide notification within 60 days of any material concern arising out of ongoing oversight activities
- Authorizers must visit each charter school, now including all resource centers and meeting spaces
- Authorizers must annually attend, in person, at least one governing board meeting of the charter school
- Charter authorizers shall certify that they have completed a review of its charter’s audits and certify all exceptions have been addressed and corrected and specifically identify any attendance-related audit exception or exceptions involving state funds
Specifically for oversight of nonclassroom-based charters:
- Authorizers shall review ADA
- If ADA has increased by 10% or more, review sample independent study written agreements to gauge if they align with reported attendance
Contracting
- A charter school must get approval from its governing body to compensate any individual contractor of more than $100,000 in a fiscal year
Renewals
- The use of Verified Data for charter school renewals is extended until June 30, 2028
Independent Study
- Streamlines and clarifies student-teacher ratio requirements for all LEAs, including charter schools, regardless of student age
- Requires maintenance of completed pupil work for various times of the year
You will find a link to the TBL here.
What’s Next?
There will now be hearings in the Legislature to discuss this new language. This proposal is detailed and we encourage all LEAs to review it carefully and provide us with feedback.
Please let us know if we can provide any additional information.
Thanks,
-Stephanie
Stephanie Medrano Farland
Director of Education Policy | Capitol Advisors Group
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