Brown vetoes bill requiring charters to comply with conflict of interest, open records laws

Gov. Jerry Brown vetoed a bill Friday, pushed hard by the California Teachers Association, that would have required charter schools to comply with the state’s open meetings, public records and conflict of interest laws.

Brown’s rejection of Assembly Bill 709, authored by Mike Gipson, D-Carson, was expected. Brown vetoed an almost identical bill two years ago, and, as a Senate Education Committee analysis noted, the bill “does not include any substantive changes that seek to address” the issues Brown raised then.

In his veto message on Friday, the deadline for acting on hundreds of bills, Brown quoted from his 2014 veto letter: “While I support transparency, this bill goes further than simply addressing issues of potential conflicts of interest and goes too far in prescribing how these boards must operate.”

“That’s still my view,” Brown concluded. A longtime advocate and, as governor, protector of charters, Brown started two charter schools in Oakland before his re-election as governor in 2010.

The California School Boards Association, the Association of California School Administrators  and other school management groups supported the bill, but the CTA made it a high-profile campaign as part of its escalating opposition to charter schools. On a new website, Kids Not Profits, it highlighted incidents of mismanagement and fraud by charter schools and their administrators, as well as discriminatory admission policies by some charters that violated the state charter school law. Gipson’s bill would extend vital requirements for accountability and transparency to charter schools, it argued.

CTA President Eric Heins expressed disappointment on Friday. “It is unfortunate that given all the reports showing fraud, waste, mismanagement and unequal access to students, Governor Brown would veto such important legislation that simply required the same standards of accountability and transparency that apply to all neighborhood public schools.”

All but a handful of the state’s 1,200 charter schools are run by nonprofit boards of directors. Although they are not required by statute, California Charter Schools Association President Jed Wallace said that “95 percent” of charters already comply with the state’s open meeting laws – the Brown Act and the Bagley-Keene Act – and with the requirements of the California Public Records Act to make public documents accessible. They do so voluntarily, or their authorizers – school districts and county offices of education – require them to in granting or renewing a charter.

The association did press for one change, which the CTA opposed, to permit telephonic meetings by charter organizations with schools in multiple locations, Wallace said. It would be impossible for those organizations to comply without creating separate boards of directors at each location, he said. A failure to make this accommodation, he said, could jeopardize the operation of some of the best-known, successful operators, he said. Aspire Public Schools, Alliance for College-Ready Schools and KIPP are among the state’s charter management organizations.

But Brown’s and the association’s primary objection was over what they characterized as a poor fit of superimposing Government Code 1090, the state’s primary conflict-of-interest law applying to school districts and other government bodies, onto charter schools. The law prohibits public officials from personal financial gain and an interest in contracts they approve in their official capacity. They must recuse themselves from any role in making the decisions and are potentially subject to criminal penalties if they don’t. Legal liability could also extend to other board members with no financial gain, attorneys have argued.

Wallace called Code 1090 “a very complicated and convoluted law” that was intended to prevent abuses by government officials in agencies with expansive authority to raise taxes and pursue eminent domain not applicable to charter schools. School districts that are antagonistic to charters “could use Code 1090 like a bludgeon,” he said.

Wallace said that charters already must adhere to the state’s corporation laws for nonprofits, which impose similar conflict-of-interest prohibitions – except that the penalties are civil, not criminal. Charges of fraud and self-enrichment against charter founders and administrators all reflect a failure of enforcement and oversight, not a legal loophole, he said.

Examples of high-profile financial abuse are the $3.8 million that former American Indian Model Schools in Oakland paid its leader and founder Ben Chavis for buildings he leased and the $3 million in high-interest loans and fees that the founder of the now-defunct FAME charter in Fremont approved for relatives.

In a current case of financial abuse, Los Angeles Unified has threatened to close El Camino Real Charter High School in Woodland Hills in part because of the principal’s unauthorized extensive personal spending on a school credit card. And the state Department of Education has asked the state controller to audit California Virtual Academies, a chain of nonprofit online schools, for possible conflicts of interest between the schools and the for-profit company K12, Inc., that appoints CAVA boards of trustees and contracts to run the schools.

The Legislature has failed in nearly every year since 2010 to pass a law extending the public records, open meetings and conflicts of interest laws to charters. Gov. Arnold Schwarzenegger vetoed a version in 2010, and now Brown has vetoed two bills. A version authored by Sen. Bob Huff, R-San Dimas, in 2014, backed by the charter schools association, failed to make it out of the Senate.