April 11, 2021

Ruling in charter fraud case has major implications for small school district budgets

A little-known Education Code provision has allowed some small school districts
to collect millions of dollars in fees from online charter schools. But a new ruling
in the A3 charter school case could strictly limit how much districts can charge in fees.

A universal rule of lawmaking: What seem to be the tiniest and most overlookable parts of a law frequently end up being those that play the most outsize role.

That was the case with a provision in the state’s Education Code that allows school districts to collect fees for each charter school they authorize to operate, up to 3 percent of the charter’s revenue. The provision has allowed some small school districts – that often serve just a few hundred students – to collect millions of dollars in fees from online charter schools that enroll thousands of students. In some cases, small school districts have received more in fees than any other single source of revenue.

Until now, exactly how much fees school districts could and should collect have been murky questions. But a new ruling in the A3 charter school case – in which two ringleaders recently pleaded guilty to pocketing tens of millions of dollars in public funds – has helped to clarify that school districts should only be taking as much money as it costs for them to oversee the charter schools they authorize.

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