For-profit charter schools would be banned under California bill heading to the governor

SACRAMENTO — For-profit companies will be banned from running charter schools in California if Gov. Jerry Brown signs a hard-fought bill that won final approval from the state Legislature on Thursday.

The proposal is the latest of several attempts to crack down on what critics say amounts to profiteering at the expense of children and taxpayers, the subject of a 2016 investigation by this news organization. Its passage came only after proponents were able to forge agreement between two groups that are almost always at odds: teachers unions and the trade association representing charter schools.

“The exposé in the Mercury News highlighted the need for reform,” said the bill’s author, Assemblyman Kevin McCarty, a Sacramento Democrat who serves on the education committee.

That investigation zeroed in on K12 Inc., a for-profit operation based in Virginia and traded on Wall Street that manages publicly funded charter schools in California and other states. The K12-run network California Virtual Academies, the largest of its kind in the state with an enrollment of roughly 15,000, graduated fewer than half of its high school students, the news organization reported, and some teachers said they were pressured to inflate grades and enrollment records.

This news organization’s probe also found that children who logged onto the company’s software for as little as one minute per day were counted as “present” for the purposes of calculating the amount of taxpayer funding the company would receive from California.

As with policies from immigration enforcement to fuel standards, the Legislature’s approval of a for-profit charter school ban is at odds with the policies of the Trump administration. U.S. Education Secretary Betsy DeVos is not only a vocal supporter of for-profit education, but her husband disclosed they were early investors in K12 Inc.

Assembly Bill 406 would change California’s charter school law to prohibit for-profit corporations and for-profit educational management organizations from running the state’s taxpayer-funded and independently run schools — even if the schools themselves are technically nonprofits.

California currently has about 35 such charter schools, according to McCarty’s office. In 2016 K12 settled a lawsuit with the state for $168.5 million over claims that it manipulated attendance records and other measures of student success.

The political challenge AB 406 ultimately overcame, McCarty said, was how to define the meaning of “for-profit management.” Charter school supporters worried the definition would be overly broad, including any company with which a school has a contract.

But the California Charter Schools Association, which originally opposed the bill, supported it in its final days.

“AB 406 is in keeping with the overwhelming public sentiment in California that public dollars should not be used to advance a profit motive when it comes to the education of our children,” Carlos Marquez, a lobbyist for the association, said in a prepared statement. “California has long embraced a vibrant and thriving charter school sector that’s public, free, and open to all. If there was any doubt that the overwhelming majority of charter schools in California are run by nonprofits and play by the rules, let AB 406 settle that question once and for all.”

A spokesman for K12 could not immediately be reached for comment. If the governor signs the bill, K12’s schools could stay open if they show they have switched to nonprofit management before their contracts expire, according to a spokeswoman for the California Charter Schools Association.

Brown has until Sept. 30 to sign or veto bills, decisions he rarely telegraphs in advance. In 2015, however, the governor vetoed a similar bill, arguing that the bill’s language was ambiguous enough that it could prevent nonprofit charters from hiring companies for various services.

Back then, the governor wasn’t convinced of the broader argument. “I don’t believe the case has been made to eliminate for-profit charter schools in California,” he wrote in the veto message.

That may have changed in the years since, after state-led investigations and audits, said Ron Rapp, a lobbyist for the California Federation of Teachers.

“The state,” he said, “is taking care of making the case.”

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