Charter School Transparency and Efficiency

Educators Call for More Oversight of Charter School Expansion

Representatives of education stakeholders, along with school district leaders and parents, joined January 13, 2020 at a Texas Education Agency (TEA) hearing to raise concern on proposed rules that could allow the significant expansion of charter schools with little state oversight or consideration of the fiscal impact to the state or local public schools.
 
In the past decade, TEA has authorized more than 700 new campuses through charter amendments with little public input or transparency in TEA’s two-month approval process. The public is unable to obtain even basic information about where a new charter campus will locate or whom it seeks to serve. Public school districts, in contrast, provide numerous public meetings, opportunities for local input, and other transparency measures when opening a new campus.
 
The proposed rules could allow TEA to designate some charter schools as “high quality” even if some campuses are D-rated, even if they do not serve similar numbers of special needs children as neighboring schools, and even if they violate legal requirements such as hiring teachers who have college degrees or providing state-required test security measures for STAAR exams.
 
The proposed rules also could allow such “high quality” charter schools to expand with almost no state oversight. “The state would never allow a transportation contractor, for example, to abide by the rules of its choosing, locate roads where it pleases, and serve only the most profitable communities. We urge TEA to do no less for all children,” stated 17 education organizations in a joint public comment submitted to TEA.
 
The comments addressed how unfettered charter expansions can harm public education:
  • TEA should not call a charter school “high quality” if it is high-performing based on its exclusion of students with disabilities. Under federal law, TEA must ensure all public schools are identifying, enrolling, and serving special education students. One San Antonio charter school, for example, serves only 1.6 percent special education students – well below the state average of 9.6 percent.
  • Students who are harder to serve are underrepresented in Texas charter schools by a very large margin, because charter schools filter these students out, according to a new study by Dr. Michael Villarreal of the Urban Education Institute at UT-San Antonio.
  • The fiscal and educational impact to local schools is significant. When TEA lets a new charter campus open across from and draw from an existing public school district campus, fixed costs – with less funding – remain for the district, resulting in loss of services to children. TEA does not consider proximity to existing campuses when approving new charter school campuses, which leads to duplication, waste, and inefficiency.
  • The fiscal impact to the state is significant. TEA already has approved more than 557,000 seats at charter schools. This maximum approved enrollment capacity is far greater than levels estimated in the General Appropriations Act, would total more than $11 billion in state funds per biennium, and would consume more than 25 percent of state funds from the Foundation School Program.
The following education organizations endorsed the comments submitted to the Texas Education Agency and/or testified at the TEA hearing:

Texas Association of School Boards
Texas Association of School Administrators
Raise Your Hand Texas
Texas AFT
Texas State Teachers Association
Association of Texas Professional Educators
Texas Classroom Teachers Association
Texas School Alliance
Fast Growth Coalition
Texas Urban Council
IDRA
Center for Public Policy Priorities
Pastors for Texas Children
Texas Elementary Principals and Supervisors Association
Texas Association of Rural Schools
Texas Association of Community Schools
Texas Association of Midsize Schools
Coalition for Education Funding
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The Coalition for Education Funding was part of a larger working group that addressed charter school transparency and efficiency in the 86th Legislative Session in Texas. Here are our initial slate of proposals.
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Charter Legislation that Passed and Failed

Beginning in June of 2017 we started working on our legislative approach to address charter school transparency and efficiency. We began working with other groups in a working group to provide the above initial slate of proposals to legislators at the beginning of the 86th Texas legislative session.  Over 20 of these proposals were drafted and filed as bills during the legislative session. In the end, three of our proposals passed as bills:
 
  • TEA will create and manage a standard application for charter schools and maintain the charter school wait list of students.  While this was initially contained in HB 2621 (Bailes) that bill failed in the General Calendar due to a deadline expiration. The bill was revived as an amendment to SB 2293 (Fallon/Dutton) and passed the legislature. It was signed into law by the Governor on June 10, 2019. Effective September 1, 2019.
 
  • Include charter schools in the state whistleblower statute. While this was addressed by HB 3263 (Allen) the bill stalled in the House Calendars Committee. This bill language was later added to HB 3 and passed the legislature.  Makes charter schools subject to the provisions in Chapter 554, Government Code (Whistleblower Act), effective immediately. (Section 12.104(b), Education Code). Also makes charter schools subject to the same early childhood literacy and mathematics plans and college, career, and military readiness plans as required for school districts. (Section 12.104(b), Education Code). Signed by the Governor on June 12, 2019.
 
  • Require charter schools to pay the same amount to the Teacher Retirement System (TRS) as school districts pay for teacher salaries over the statutory minimum, which would free up $25 million in state funds and help to shore up TRS; or create parity that allows school districts to make the same payments to TRS that charter schools make.  HB 953 (King, K.) required charter schools to pay the state’s TRS contributions for the portion of a member’s salary that exceeds the minimum salary schedule, in the same manner required for school districts. The bill passed the House and was referred to the State Affairs Committee in the Senate where it died. The bill language was re-inserted into HB 3 and passed the legislature (Section 825.405, Government Code).  Signed by the Governor on June 12, 2019.
 
In addition to these bills on the working group’s legislative agenda the following legislation related to charters passed or failed to pass with coordinated efforts being made by members of the working group.

S.B. 1454 (Sen. Taylor/Rep. Huberty) – PASSED:
Relating to the ownership, sale, lease, and disposition of property and management of assets of an open-enrollment charter school. This bill:
  • Disallows charter holders from using state funds for supporting operations or activities not related to the educational activities of the charter holder and from being pledged or used for loans or bonds for any other organization, including a charter holder’s or related party’s out-of-state operation.
  • Allows Commissioner audit review of related party real estate transactions, and if a transaction using state funds exceeds fair market value or doesn’t benefit the charter school, the Commissioner may order action. Allows Commissioner by rule to require charter schools to provide the Commissioner a notice of intent to enter a related party transaction along with an appraisal.
  • For reports under Section 44.008, Education Code:
    • Requires charter schools’ annual audits to include a list of all related-party transactions and requires the Commissioner by rule to define “related party.”
    • Requires the charter schools’ annual financial report to separately disclose all financial transactions between a charter school and a related party, separately stating principal, interest, and lease payments and total compensation and benefits provided by the school and any related party for each member of the governing body and each officer and administrator of the school and the related party. Commissioner may adopt rules.
    • Requires a charter school to provide an accounting of each parcel of the school’s real property, including identifying the amount of local, state, and federal funds used to purchase or improve each parcel. Commissioner may adopt rules, including defining “local” funds.
    • Provides for disposition, sale, and transfer of property of a charter school that ceases to operate, with reimbursement to the state for charter holders retaining property.
 
SB 968 (Hughes/Deshotel) – FAILED TO PASS: 
  • Exempts charter schools from all city zoning ordinances so that charters could locate in any zoning district.
  • Requires cities to negotiate separate land development agreements with each charter operator. 

​SJR 74 (Creighton/Murphy) -- FAILED TO PASS: 
  • Provides a property tax exemption to for-profit companies that lease facilities to charter schools.