SBE delays action on charter school conflicts of interest

Recognizing that there are still significant questions about proposed conflict-of-interest rules for charter school boards, the state Board of Education last month delayed a scheduled vote on the issue to allow more time to study the idea.

The postponement came over the objections of CSBA’s Education Legal Alliance, the California Association of School Business Officials, the California Teachers Association and a host of individual districts and county offices of education—both large and small—who urged the board to scrap the proposed rules altogether.

The new regulations would permit individuals who sit on charter governing boards or councils to have a financial interest in the educational operation they oversee so long as these individuals do not exceed 49 percent of the board or council. Board members with such financial interests would be required to publicly report those interests and to refrain from voting on any issue related to their financial stake in the charter operation.

State Department of Education officials had recommended that the board adopt conflict-of-interest rules for charter schools that would be similar to those for nonprofit boards and charities, concluding that they would prevent charter school operators who sit on charter school governing boards from making policy decisions that benefit them financially.

State board members who support the new charter rules say that most charter boards are currently not covered by any conflict code at all, so some regulation is needed.

Critics of the proposed regulations, including CSBA and its Education Legal Alliance, contend that charter schools are public schools that are supported by public money, and so they should comply with the same accountability rules that traditional school district and county office of education boards do.

Government Code sections 1090 and 87100 prohibit local agencies, including school districts, from entering into contracts when an individual governing board member has a disallowed financial interest in the contract. There is no definitive court ruling that those rules apply to charter school boards, but critics of the proposed regulations contend that they do—and, in any event, that only the state Legislature, not the state Board of Education, has the authority to enact a conflict-of-interest statute if needed.

“Our position is they have no authority to adopt regulations on this topic. This is an area of law that has not been examined by the courts. But it’s clear to most that Government Code sections 1090 and 87100, the laws that prohibit traditional board members from having conflicts of interest, also apply to charter boards,” said Richard Hamilton, director of CSBA’s Education Legal Alliance. “In fact, the Fair Political Practices Commission has so concluded in the past.”

Ultimately, state board member Alan Bersin urged his colleagues to postpone a decision. The former state education secretary said the board and staff members at both the state board and CDE “have to do our homework” on the existing conflict-of-interest statutes and the proposed rules, and on whether the proposed charter regulations are credible.