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Brown Signs Bills Impacting Medi-Cal Billing, Migrant Students, and Banning For-Profit Charter Schools

October 3, 2018

During late September, Gov. Jerry Brown signed several bills backed by the California School Boards Association (CSBA):

Brown signed Assembly Bill 3192 (O’Donnell, D-Long Beach), a CSBA co-sponsored bill that will streamline the process for receiving Medi-Cal funding. The bill requires that, by Jan. 1, 2020, the California Department of Health Care Services prepares and distributes a fiscal and compliance guide for the LEA Medi-Cal Billing Option. This guide will provide greater clarity and consistency for schools receiving funding from this program.

Other CSBA-supported bills signed by the Governor include AB 2121 (Caballero, D-Salinas), which adds migrant students and those enrolled in newcomer programs to the existing group of students who can receive full or partial credit for work satisfactorily completed in another school, and exempts them from local coursework requirements that are additional to state coursework requirements; and AB 2015 (Reyes, D-Grand Terrace), requiring the governing board of a school district or the governing body of a charter school to ensure that students receive information on how to properly complete and submit the Free Application for Federal Student Aid or the California Dream Act Application at least once before pupils enter grade 12.


In other September action, Gov. Brown signed new legislation banning for-profit corporations, for-profit educational management organizations, and for-profit charter management organizations from operating charter schools in California. Assembly Bill (AB) 406 takes effect July 1, 2019. The law firm Lozano Smith offered the following analysis:

Amidst a growing nationwide movement to privatize public schools, for-profit corporations known as educational management organizations (EMOs) and charter management organizations (CMOs) are on the rise. These organizations make public education their business, establishing charter schools that are required to contract with the for-profit corporations for all or a majority of services, and taking a percentage of the taxpayer dollars that fund these schools as profit.

Until now, California law has expressly allowed public charter schools to be operated by non-profit corporations, but has stood silent on whether a charter school may be operated by a for-profit corporation. Absent any clear prohibition, according to the California Senate Education Committee, for-profit corporations now operate as many as 34 charter schools statewide, delivering public education to over 25,000 students.

AB 406, signed into law on September 7, amends the Education Code to provide a definitive prohibition where current law is silent. Under AB 406, a public charter school may not be operated as, or by, a for-profit corporation, including an EMO or CMO. For the purposes of AB 406, the Legislature assigned a broad definition to the term "operate," and a for-profit corporation may not do any of the following in relation to a charter school:

  1. Nominate, appoint, or remove charter school board members or officers;
  2. Employ, supervise, or dismiss charter school employees;
  3. Manage a charter school's day-to-day operations as its administrative manager;
  4. Independently approve, deny, or manage the budget or expenditures of a charter school; or
  5. Provide services to a charter school before the school's governing body has properly approved a contract for such services.

After the law goes into effect, petitioners submitting new or renewal charter petitions may not propose to be operated by a for-profit corporation. A charter school also may not enter into a subcontract to avoid the requirements of AB 406. In enacting this law, the Legislature is attempting to ensure public schools do not use taxpayer dollars to generate profits for corporations. It is not yet clear whether AB 406 will effectively encompass all possible organizational structures a for-profit corporation could adopt, and whether this bill will have its intended effect of eliminating for-profit corporate management of the day-to-day operations of California charter schools.

Charter school operators and authorizers should examine the organizational structure of charter schools within their purview to determine if current operations might be impacted upon renewal by AB 406. Although AB 406 is not immediately effective, local educational agencies reviewing either new or renewal charter petitions on or after July 1, 2019 should carefully review all elements of a petition, including those related to governance structure, operations, and board bylaws, to ensure the proposed new or renewal charter school meets all requirements under the law, and does not impermissibly assign operational oversight to a for-profit corporation. Charter authorizers may also need to consider the impacts of significant changes to the governance structure of a charter school's operation, and may wish to consult with their legal counsel.

Source: California School Boards Association, Lozano Smith

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