Charter Schools

1. Charter Schools and small group discussion Brette Kaplan, Esq. bkaplan@bruman.com Julia Martin, Esq. jmartin@bruman.com Steven Spillan, Esq. sspillan@bruman.com Brustein & Manasevit, PLLC Fall Forum 2013

2. Brustein & Manasevit, PLLC Agenda • Introduction • Charter Schools: Background and Policy Trends • Special issues for charters • Funding allocations • CSGP Assurances • Demographics • Facilities • Operator Fraud • Group discussion

3. Brustein & Manasevit, PLLC Charter Schools Background and Policy Trends

4. Brustein & Manasevit, PLLC What is a Charter School? • Generally: • A non-sectarian, publicly funded, independent public school of choice • Operates under a contract or charter from the State’s chartering agency • Exempt from certain State and local regulations • But not civil rights, audit, health and safety, or charter requirements • Admits students based on parent choice and/or lottery • May operate as its own LEA, or as part of another LEA • Governed by ESEA Sec. 5210(1)

5. Brustein & Manasevit, PLLC Who are Key Parties for Charters? • Authorizer • Created/assigned by State charter school laws • Tasks: • Approve charter applications and renewals • Set requirements of charter • Oversee schools and monitor compliance • Close schools if needed • Types: • IHEs • Independent boards • Non-for-profit organizations • Mayors or municipalities • LEAs • SEAs

6. Brustein & Manasevit, PLLC Who are Key Parties for Charters? • Operator • May be group of parents/teachers/community members, may be a Charter Management Organization (CMO) or Educational Management Organization (EMO) • May be for-profit or non-profit • Teachers • May be unionized or non-unionized • Depending on status, charter may contract separately with teachers • Students • Enroll based on choice or lottery system • Charter may not be selective

7. Brustein & Manasevit, PLLC How are Charter Schools Autonomous? • May develop and set own policies regarding: • Length of school day, week, or year • Amount of instructional time for individual subjects • Use of specific curricula, materials, or instructional methods • Use of tutoring programs • Budget decisions • Staffing decisions and policies • May offer pay-for-performance, other incentives

8. Brustein & Manasevit, PLLC How are Charters Held Accountable? • Required to meet ALL federal and State education standards, including: • Academic achievement standards • Health and safety requirements • Civil Rights requirements (ADA, Title VI, Title IX, Section 504, IDEA, etc.) • Federal and State audit and fiscal requirements • Other requirements as outlined in chartering document

9. Brustein & Manasevit, PLLC National Trend: Growth • First charters in Minnesota in 1992 • As of 2012 elections, operate in 42 States and DC • Latest additions: Georgia and Washington • Only eight States don’t have charters (AL, KY, MT, NE, ND, SD, VT, WY) • More than 5,000 charter schools nationwide • In 2012-13 school year alone, over 500 new charter schools • 80% increase in number of students since 2007-08 • Charters serve about 2.3 million students (3% of total) • In 100 cities, charters serve 10% of students or more

10. Brustein & Manasevit, PLLC Policy Trend: Push to Remove Caps • Currently 25 States (including DC) limit number of charters • Some States considering increasing/lifting caps • Federal legislative proposals offer grant preference to States with no caps • Different types of caps: • Number of schools/charters • Number or share of students • Limit to annual growth in number of schools/students • Why remove caps? • Allows growth to meet demand • Allows competition in charter “market” • Why keep caps? • Incentivize closure of unsuccessful models/schools

11. Brustein & Manasevit, PLLC Policy Trend: Push for More Authorizers • More than 1,000 chartering authorities nationally • 850 are LEAs, authorizing 52% of charters • Why add authorizers? • Process moves more quickly, creates more charters • Removes bias (?) • Why limit authorizers? • Simplifies process • Allows for more quality control

12. Brustein & Manasevit, PLLC Policy Trend: Parent Trigger Laws • Generally: • Allow parents to petition to transform a failing public school • Transformation usually involves transition to charters • Rarely used • Seven States have parent trigger laws (LA, MS, CT, TX, IN, OH, CA) • Has only been successfully used in CA • LAUSD, April 2013 • Follows two blocked attempts • Why use parent triggers? • Gives parents a voice • Why restrict? • “Triggered” schools often taken over by for-profit CMOs • Have high failure rates • Can allow schools to circumvent teachers unions • Disruption for students

13. Brustein & Manasevit, PLLC Policy Trend: Unionization • Staff at most charter schools not currently unionized • About 12% of charters have union presence • In four States (AK, HI, IA, MD), 100% of charter schools are unionized • Nine States have no unionized charters: NC, NH, NV, OK, SC, TN, UT, VA • Nineteen States require some or all charter school teachers to be bound by the district collective bargaining agreements or personnel policies • BUT push from unions to get charter teachers to join • Staff at organization running 13 charters in Chicago voted earlier this year to unionize

14. Brustein & Manasevit, PLLC Federal Policy Trends • Democrats • See charters as an option in healthy school ecosystem • Generally supportive of charters • But not a solution for all students (especially rural students) • Republicans • Charters as part of “school choice” system (along with vouchers, home-schooling) • Market-based: competition from charters drives improvement in other schools • Money should “follow the child”

15. Brustein & Manasevit, PLLC Federal Policy Trends • Empowering Parents through Quality Charter Schools Act (H.R. 2218, 112th Congress) • Consolidates existing funding streams for “flexibility” • States must detail how they will ensure equity for students with disabilities • Gives priority in funding to States that: • Repeal charter caps • Increase number of authorizers • Support online and hybrid charters • Provide funding for charters comparable to other public schools • Use charter transformation as option in interventions • New money for charter school facilities • Passed House of Representatives in Sept. 2011 with bipartisan support • Likely model for future legislation

16. Brustein & Manasevit, PLLC Special Issues For Charter Schools

17. Brustein & Manasevit, PLLC Funding Allocations For Charter Schools

18. Brustein & Manasevit, PLLC ESEA Allocations • Charter as an LEA vs. Charter as part of a larger LEA • Either way, subject to Title I funding formula • Title I funding based on poverty and enrollment data from previous years • What about new or expanding charters? • NCLB included provisions (§5206), clarified in recent guidance (September 23, 2013)

19. Brustein & Manasevit, PLLC ESEA Allocations • §5206: • Charters in their first year of operation; or • Charters undergoing significant expansion • Must receive full amount to which it is entitled within 5 months of • Opening; or • When the expansions began

20. Brustein & Manasevit, PLLC ESEA Allocations • Determining “prior-year” base amount and hold harmless for newly opened charters: • Calculate initial allocation under each formula BEFORE application of hold harmless • This becomes “prior year” • Based on derived formula count compared to population data, determine hold harmless percentage • Multiply initial allocation for each formula by hold harmless percentage to determine hold harmless amount

21. Brustein & Manasevit, PLLC ESEA Allocations • Determining “prior year” and hold harmless for significantly expanding charters • Compare current year formula count with prior year formula count and calculate the percentage increase • Increase prior year allocation under each formula by that percentage to determine “prior year” base amount

22. Brustein & Manasevit, PLLC ESEA Allocations • To qualify for §5206 allocations: • 120-day notice • Establish eligibility • Provide data needed to reasonably estimate allocation amount • Provide actual enrollment data

23. Brustein & Manasevit, PLLC IDEA Allocations • Charters as LEAs vs. Charters within larger LEA • Entitled to same IDEA funds as other LEAs and public schools • LEA Charters must: • Establish eligibility • Submit local plan to SEA • Develop appropriate policies and procedures • Have sufficient capacity and resources to provide FAPE

24. Brustein & Manasevit, PLLC IDEA Allocations • Charters within an LEA must: • Fit within ESEA definition of a charter school • Be a non-profit entity • Comply with any federal enrollment data requirements • Submit to LEA: • Eligibility information • Enrollment data • Other necessary documentation

25. Brustein & Manasevit, PLLC Assurances In the Charter School Grant Program

26. Brustein & Manasevit, PLLC CSP Assurance • New assurances added to CSP application • Language in FY 2010 Consolidated Appropriations Act • Issues for FY 2010 Grant Recipients • Possible problems for future applicants

27. Brustein & Manasevit, PLLC CSP Assurance 3A • Each authorized charter school in the State operates under a legally binding charter or performance contract between itself and the school’s authorized public chartering agency which must: • Describe the obligations and responsibilities of the school and the public chartering agency; • Conduct annual, timely, and independent audits of the school’s financial statements that are filed with the school’s authorized public chartering agency; and • Demonstrate improved student academic achievement.

28. Brustein & Manasevit, PLLC CSP Assurance 3B • Authorized public chartering agencies use increases in student academic achievement for all groups of students as the most important factor when determining to renew or revoke a school’s charter

29. Brustein & Manasevit, PLLC CSP Assurance 3B • Increased student achievement across all subgroups: • Economically disadvantaged students; • Students from major racial and ethnic groups; • Students with disabilities; and • Students with limited English proficiency

30. Brustein & Manasevit, PLLC CSP Assurances: Common Problems • State policymaking/approval procedures • Process vs. speed • Internal political obstacles • Charter school authorizers vs. CMOs

31. Brustein & Manasevit, PLLC Demographic Issues For Charter Schools

32. Brustein & Manasevit, PLLC GAO Report: Students with Disabilities • Attend charter schools at much lower rates • GAO Report: Additional Federal Attention Needed to Protect Access for Students with Disabilities (June 2012) • http://www.gao.gov/assets/600/591435.pdf • GAO Report to Congress found that in 2009-10, students with disabilities made up: • 11.1% of total school-age population • 11.2% of traditional public school population • 8.2% of charter school population • Up from 7.7% in 2008-09 • Varies by State • In NH, students with disabilities made up 6% of charter school population; 13% overall • In IA, MN, NV, NM, OH, PA, VA, WY – about the same as % of total population

33. Brustein & Manasevit, PLLC GAO Report: Students with Disabilities • Why? • GAO doesn’t know • Possible explanations: • Placement by charter/LEA • Location of schools • Parent preference/student need • School capacity/resources • Funding

34. Brustein & Manasevit, PLLC Special Education – CRPE Report • Why the Gap? Special Education and New York City Charter Schools • September 2013 CRPE Report • Examined why the disparity in special education enrollment rates in traditional public and charter schools exist • 3-4% enrollment gap

35. Brustein & Manasevit, PLLC Special Education – CRPE Report • Findings • Students with disabilities (especially those with autism and speech or language impairment) are likely to apply to charter schools in kindergarten • Gap grows considerably from K-3rd grade • Charters less likely to classify students • Students transferring between charter and district schools • Charters not refusing to admit or pushing out students with special needs • Gap occurs mostly with subjective categories of student disabilities • Emotional disability and special learning disability • Mobility among special education students regardless of attending a charter or traditional public school

36. Brustein & Manasevit, PLLC English Language Learners • GAO: Education Needs to Further Examine Data Collection on English Language Learners in Charter Schools (July 17, 2013) • http://www.gao.gov/products/GAO-13-655R • Goal: Compare ELL enrollment in charter schools and traditional public schools • Looked at ED’s data from 2010-11 school year • GAO Report to Congress addressed: • Quality of ED’s data on ELLs in charter schools; and • Efforts taken by ED to improve collection of ELL data from charter school

37. Brustein & Manasevit, PLLC English Language Learners • GAO unable to compare ELL enrollment in charter schools and traditional public schools • Unreliable & incomplete data • For over 1/3 of charter schools, field reporting ELLs enrolled in ELL programs left blank

38. Brustein & Manasevit, PLLC English Language Learners Problems: • No “data steward” • Office responsible for overseeing data quality • Definitional issue • Dataset is count of ELLs enrolled in “English language instruction educational programs” • Not a simple count of all ELLs • Charter Schools may have not submitted data to states • States have difficulty obtaining data from charter schools • Some charters missing other data suggesting boarder problem with charter school reporting

39. Brustein & Manasevit, PLLC Source: Education Needs to Further Examine Data Collection on English Language Learners in Charter Schools, GAO (July 2013)

40. Brustein & Manasevit, PLLC English Language Learners Planned Fixes • Beginning in school year 2013-14, ED plans to collect new school-level data on all ELLs regardless of enrollment in a “program” • New school-level data will have a “data steward” and will receive regular data quality reviews • Guidance for Reporting Charter School Entities (July 2013) • http://www2.ed.gov/about/inits/ed/edfacts/eden/ess/13-14-charter-workbook.doc

41. Brustein & Manasevit, PLLC English Language Learners GAO’s Recommendations • ED conduct a systematic evaluation of other important datasets to determine the extent of charter school non-reporting • ED explore whether collecting LEA-level and SEA-level counts for ELLs enrolled in “English language instruction educational programs” can be phased out if the data quality problems are not addressed.

42. Brustein & Manasevit, PLLC Facilities And Issues for Charter Schools

43. Brustein & Manasevit, PLLC Facilities Generally • Charters sometimes struggle to find appropriate facilities • Traditional public schools built with local tax and bond revenues • Charters often lack access to some or all of those sources of funds or significant “start-up” money • Varies by State – some have dedicated grant or bond programs for charter school facilities • Increased facilities costs • Have to retrofit existing buildings • Money on rent/renovations takes funds away from instruction • On average, charters spend 10% of operating budget on facilities • Banks reluctant to lend money to schools with 3- or 5-year charters • If they can get loans, interest rates are high

44. Brustein & Manasevit, PLLC Facilities Generally • Charters face several practical and compliance problems with their facilities: • No gym or library • Lack of properly outfitted computer/science labs • No kitchens to serve free or reduced-price school lunch program meals • Not accessible for students with disabilities • Money for rent/renovations takes away funds intended for instruction • Charters often occupy less desirable/purpose-built facilities  equity issues

45. Brustein & Manasevit, PLLC Sharing District Facilities • Some States have “right of first refusal” policy (like DC) • Charters can request any vacant or underused public buildings, allowed to occupy unless district has a valid reason to say no • Small charters sometimes share space with traditional public schools (“co-location”) • E.g. one floor or a set of classrooms • Allows use of otherwise empty space • BUT creates conflict/confusion between schools’ staff over: • Use of common areas • Shared utility/maintenance costs • Responsibilities for supervising students in common areas • Other areas where schools’ policies/practices differ

46. Brustein & Manasevit, PLLC Charters and Church Space • More common in some States than others • TX: 23 new charters in past 3 years, 16 to charters with religious ties • Compliance issues: • Is church directly benefiting from taxpayer dollars? • Outside of rent agreements • Through in-kind benefits or use of charter facilities/equipment • Is the charter engaging in faith-based instruction? • Are faculty/staff shared with church? • Is the school part of the church? • May need a separate, non-profit entity to operate school • Requires explicit guidelines for use of funds, frequent monitoring

47. Brustein & Manasevit, PLLC Facilities Fraud • Usually involve “circular lease agreements” • San Antonio, TX • Charter superintendent used school facilities grant to buy a building (former church) • Then leased building back to school • Chester, PA • Charter school founder bought school buildings • Sold them to non-profit charter “support” organization for $50.7 million • Leased from organization to school, school received rent reimbursement from State

48. Brustein & Manasevit, PLLC Facilities Fraud • Oakland, CA • Charter director owned building, charged rent to charter school • Director was both “lessor” and “lessee” on lease • Earned $280,000 annually in State-reimbursable rent for facility • Moral of the story: include facility/rent arrangement in monitoring protocols!

49. Brustein & Manasevit, PLLC Operator Fraud In Charter Schools

50. Brustein & Manasevit, PLLC Recent Charter “Bad Actors” • Pennsylvania Auditor General: • August 2013: State’s largest charter school pocketed $1.2 million “in improper lease-reimbursement payments.” • Found similar problems at six other charter schools in March 2013 • 11 area schools were not complying with state laws and regulations