Court Holds that Charter Renewal Petitions Denied by School Districts Must be “Supported by Evidence,” Finding also that Charter Schools Have a “Vested Right” Once Approved

07.23.2019

On July 11, 2019, the California Court of Appeal, Fourth Appellate District, held in Oxford Preparatory Academy v. Chino Valley Unified School Dist. (2019 WL 3024753) that if a school district board’s decision to deny a charter renewal petition is challenged in court, that review requires a court to consider whether that decision is “supported by evidence.”

Background

Under the Charter Schools Act of 1992 (Ed. Code § 47600 et seq. “Charter Schools Act”), a charter authorizer may only deny a charter renewal petition if it makes written factual findings specific to the charter, as set forth under Education Code sections 47605 and 47607, and is required to consider particular information as specified by state law.  If a school district denies a charter school renewal petition, the charter school may appeal that decision to a  county board of education, and, thereafter, to the California State Board of Education (“SBE”).

In 2016, the Chino Valley Unified School District (“District”) twice denied Oxford Preparatory Academy’s (“OPA”) charter renewal petition based, in part, on concerns about OPA’s governance structure and financial irregularities.  The District adopted a lengthy resolution setting forth findings in support of its second denial.  Subsequently, OPA appealed the denial to the San Bernardino County Board of Education (“County Board”) and then the SBE, but the County Board declined and the SBE failed to act on OPA’s appeal, resulting in the District’s denial being upheld.  Thereafter, OPA challenged the District’s decision by filing a writ under sections 1094.5 and 1085 of the Code of Civil Procedure, arguing that the trial court should apply its independent judgment to determine “whether the District’s decision [to deny] was supported by the weight of the evidence.”  The trial court deemed the District’s decision to be a “legislative act” and applied the corresponding standard which gives more deference to the agency acting in a legislative capacity, i.e., the trial court determined the District’s decision was not arbitrary or capricious and denied OPA’s writ petition.  OPA appealed.

Notable Findings

First, the Oxford Court drew a distinction between the process for reviewing an initial petition to establish a charter school, and the present case, which deals with a renewal petition.  Second, the Oxford court noted SBE’s denial of a statewide charter petition is handled differently than the denial of a renewal by a district, which must be granted absent specific findings.  Importantly, the Oxford Court noted that the District, in considering a charter renewal petition, is tasked with reviewing “evidence of the school’s past performance against objective standards to determine whether the school is likely to succeed in the future.”  The Court deemed this determination to be “quintessentially adjudicatory in nature.”  Accordingly, the Court concluded that a court sitting in review of such a determination is not limited just to determining whether the school district board’s action was arbitrary and capricious, but instead must confirm that the school district board’s denial of the charter renewal was actually supported by evidence.

Additionally, the Court held that a charter school obtains a “fundamental vested right” to continue operating upon approval of its initial charter petition, noting that charter schools are automatically renewed if a school district board does not take action to deny a charter renewal petition (though we note that there is no such automatic renewal based on a county board or SBE’s failure to deny a renewal request or appeal).  Accordingly, because the District’s decision to deny a charter renewal petition “substantially affects” a “fundamental vested right,” it requires independent judicial review.

The Court did not make any determination regarding whether the District’s denial of OPA’s renewal request complied with the law; that is a decision for the trial court which must now reconsider OPA’s appeal based on the correct standard of review.

Implications

Following the Oxford decision, a school district’s action to deny a charter renewal petition will be subject to greater scrutiny by the courts if challenged by the charter school.  As such, a school district seeking to deny a charter renewal petition must ensure that its findings are supported by evidence and may not rely on the lesser standard of judicial review, i.e., that the action was not arbitrary or capricious.  Moreover, the Oxford holding that charter schools have a “vested right” in operating their programs once approved, compels authorizers to do their due diligence and fully vet charter school petitions before they are approved.

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