Charter Schools Must Comply with the Brown Act, Public Records Act, Government Code Section 1090, and the Political Reform Act, and are Subject to Grand Jury Review

01.08.2019

On December 26, 2018, the Office of the Attorney General (“AG”) issued an opinion unequivocally finding that California charter schools and their governing bodies are subject to the Ralph M. Brown Act, California Public Records Act, Government Code Section 1090, and the Political Reform Act of 1974. The AG also found that the books and records of California charter schools are subject to review and inspection by a grand jury. While AG’s opinions are not binding, they are given great deference by the courts.

Background

There has long been disagreement over whether charter schools and their governing bodies, including corporations, are subject to the same transparency laws and prohibitions against conflicts of interest as apply to school districts and county offices of education. This long-awaited AG’s opinion, which has been pending since 2011, settles those debates with its unambiguous finding that these laws apply to charter schools, regardless of whether a charter school chooses to be operated by or as a nonprofit corporation.

AG’s Opinion

In concluding that charter schools are subject to the Brown Act and the Public Records Act, the AG relied on the fact that a charter school is a “school district” for purposes of receiving state funding, and found that a charter school is a “school district . . . or other local public agency” for the purposes of both of those laws. Moreover, a charter school’s governing body is a “legislative body” within the meaning of the Brown Act. Consistent with the requirements of the California Constitution, the Brown Act and Public Records Act are construed and applied broadly, and the AG found that the public has the right to transparency from charter schools which are empowered by the state to participate in the central government function of educating children.

The opinion also addressed two common objections to the conclusion that charter schools are subject to the Brown Act and Public Records Act. First, the AG rejected the contention that the “mega-waiver” provision of the Charter Schools Act precludes applying these laws to charter schools. Education Code Section 47610 provides that a charter school must comply with the Charter Schools Act and its charter, “but is otherwise exempt from the laws governing school districts.” The AG reasoned that the “mega-waiver” would contravene public policy if it exempted charter schools from the Brown Act and Public Records Act, the so-called “sunshine laws.” Additionally, the Charter Schools Act, which contains the “mega-waiver,” was intended to give charter schools freedom from educational bureaucracy, not laws of general application. Second, the AG rejected the argument that charter schools should be exempt from “sunshine laws” because charters are legally structured as corporations, not public agencies. The AG reasoned that the charter school itself is part of the public school system, without regard to its governance structure. The fact that a charter school chooses to be operated by or as a corporation does not change that, and the members of a corporate charter school’s governing body continue to be officers of the public schools.

Next, the AG concluded that charter schools are subject to Government Code Section 1090, which prohibits conflicts of interest in public contracts, protecting the public from potential self-dealing by public officials. Section 1090 has long been the law in California, and has both broad application against even the possibility that a public official will be tempted by his or her personal interest, and strict penalties for violations, including voiding of the contract, and violation is a felony. Section 1090 explicitly applies to “any agency of the state formed pursuant to general law . . . for the local performance of governmental or proprietary functions within limited boundaries,” which the AG determined includes a charter school’s governing body.

In concluding that charter schools are subject to the Political Reform Act of 1974 – California’s other main prohibition against conflicts of interests – the AG gave deference to an advice letter issued in 1998 by the Fair Political Practices Commission (“FPPC”), the agency responsible for enforcing the conflict of interest provisions of the Political Reform Act. The FPPC found, and the AG’s opinion agreed, that a charter school is a “local government agency” within the meaning of the Political Reform Act, thus a charter school’s governing body is subject to the Political Reform Act. In addition to prohibiting public officials from participating in public decisions in which the official is financially interested, the Political Reform Act requires the adoption of a conflict of interest code and the filing of a Form 700 Statement of Economic Interests.

The last question the AG’s opinion addressed was whether charter schools’ books and records are subject to review and inspection by a grand jury pursuant to Penal Code Section 933.6, which authorizes a grand jury to “examine the books and records of any nonprofit corporation established by or operated on behalf of a public entity” which it is authorized by law to examine. The AG found that a charter school operates on behalf of the local or county school board that has the power to approve, oversee, and control the charter school, making charter schools’ books and records subject to review and inspection by a grand jury. However, the AG clarified that charter schools chartered directly by the State Board of Education are not subject to grand jury review and inspection under Penal Code Section 933.6 because grand juries do not have authority to examine the books and records of state agencies. Although charter schools authorized by the State Board of Education are not subject to grand jury scrutiny, a footnote in the opinion indicated that these schools may still be subject to audit by the California State Auditor, whose function was described as “‘a grand jury with jurisdiction over state agencies.’”

Impact on Charter Schools and Authorizing Agencies

Consistent with our office’s longstanding opinion and advice that these laws requiring transparency and accountability apply to charter schools, the AG has made clear that California charter schools must comply with the Brown Act, the Public Records Act, and the conflict of interest prohibitions in both the Political Reform Act and Government Code Section 1090. While many authorizing agencies have frequently required compliance by charter schools as a condition of approval or ongoing operation, charter schools and their advocates have consistently argued that some or all of these laws do not apply to charter schools, based on the megawaiver or other rationales. The AG has determined that, like school districts and county offices of education, charter schools are required to conduct their business in public and for the benefit of the public, and may not allow personal financial interests of charter school officials to influence operational decisions.

This clarification of the law will have a significant impact on the operations of many current and proposed charter schools. As potential and current authorizing agencies, school district and county boards of education will need to hold charter schools seeking approval or operating under their oversight accountable for compliance with these laws, and will need to pay particular attention to charters’ governance provisions.

Compliance with these laws can be technical and complex and may require a significant learning curve and changes of practice for currently operating charter schools. If you have any questions regarding these matters, or if we can be of assistance in your review and consideration of a charter’s proposal, renewal, or operations, please do not hesitate to contact us.

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