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California Gov. Brown signs bill banning for-profit charter schools. But will it really do that?

California Gov. Jerry Brown speaks during the Global Climate Action Summit in San Francisco on Sept. 14. (Bloomberg News) (David Paul Morris/Bloomberg)

California Gov. Jerry Brown has signed into law a bill that has been billed as banning for-profit charter schools. But does it really do that?

California has permitted charter schools — which are publicly funded by privately operated, sometimes by for-profit companies — since 1992. Since then, the charter sector has grown so much that the state now has the most charter schools in the country and the most charter school students. It is estimated that there are about 1,275 charter schools, with a collective student population of about 630,000 students, in California. Nearly 35 charter schools, with some 25,000 students, are run by five for-profit companies.

Though the number of charter schools has grown in California, oversight has not — and the state has been called the Wild West when it comes to charters because of repeated financial and other scandals. Charter schools are not required to follow all of the rules that traditional public schools are.

Brown had refused to sign an earlier bill banning for-profit charter schools as well as legislation seeking to make charter schools more transparent about their operations. He started two charter schools when he was mayor of Oakland and has been a staunch supporter.

Yet he signed the newest law. Why? This post looks at what the law does and doesn’t do.

It was written by Carol Burris, a former award-winning New York high school principal who is executive director of the Network for Public Education, a nonprofit advocacy group. Burris was named the 2010 educator of the year by the School Administrators Association of New York State, and in 2013, the National Association of Secondary School Principals named her the New York State High School principal of the year. Burris has been chronicling problems with modern school reform and school choice for years on this blog. She has previously written about problems with charter schools in California and a number of other states.

By Carol Burris

“The California Charter Schools Association (CCSA) today celebrated a ban on for-profit charter schools throughout California, after Governor Jerry Brown signed Assembly Bill (AB) 406.”

That was headline news on the website of the California Charter Schools Association, the wealthiest and most powerful charter lobby in the United States. Is this bill banning for-profit charters a true cause for celebration, or is it a carefully crafted bill that in the end will have little effect?

Assembly Bill 406, no matter how well intended, will not shut down California’s for-profit schools anytime soon. In some ways, it may make matters worse by obscuring the reality of what many charter schools are — schools run by private corporations that receive public funding with insufficient oversight and supervision. And whether they are for-profit or nonprofit, there will still be ample opportunity in the charter sector for profiteers to take advantage of the public treasure and trust.

Only 34 of California’s approximately 1,200 charter schools are owned or managed by for-profit companies. Connections Academy, run by the for-profit Pearson Corporation, is connected with four California charter schools. Most of the affected schools are run by the for-profit, online schools of K12 Inc. using various corporation names. Online charter schools have a terrible record with average graduation rates of about 40 percent. (These schools say they often enroll students who struggle in traditional settings and should not be compared to traditional schools.)

K12 Inc., the obvious target of the bill, was started by former Goldman Sachs banker Ron Packard and Bill Bennett, secretary of education under Ronald Reagan, in 2000. The corporation received its start-up funding, in part, from junk bond salesman Michael Milken. Education Secretary Betsy DeVos had an early stake in the company but sold her shares a decade ago.

According to its website, the Virginia-based online learning corporation operates several “online schools” in California with different instructional themes. K12 Inc.’s presence, however, goes well beyond the names it lists. In California, it is best described as a many-headed hydra. Each of the online schools that are connected to K12 Inc. under various corporation names, are in turn fronted by nonprofit charter schools. The Uplift chain, for example, manages four nonprofit charter schools, authorized by different districts, each of which gets revenue for “supervising” the school.

Tiny cash-strapped elementary districts in California are especially susceptible to K12 Inc.’s representatives or their proxies coming in and convincing them to open online charters. To understand how that works, read here and here.

The largest and most well-known K12 Inc. school is California Virtual Academies (CAVA), which operates nine online charter schools under different names. CAVA paid a settlement of over a $168 million in 2016 over alleged violations of California’s false claims, false advertising and unfair competition laws.

University Prep, another connected corporation of K12 Inc., has three online charter schools in California. One was authorized by the Raisin City Elementary School District and another by the Dehesa Elementary School District. Raisin City has one public elementary school with only 297 students, yet the district authorized four charter schools — three online, including the California Academy of Sports Science Fresno (a K12 Inc. school under its California Academy of Sports Science Corporation), and University Prep Fresno (K12 Inc.).

The Dehesa Elementary School District is cashing in even more. It has one tiny elementary school of 145 students, yet the district shows a total enrollment of 8,677 students due to its authorization of nine charter schools that can pull students from anywhere in San Diego County and adjoining counties. Of these nine charters, six are online schools.

What is most interesting to note is that three K12 Inc. University Prep online charters, including those in Dehesa and Raisin City, were granted their operational number by the California State Education Department on Sept. 9, 2018, two days after Gov. Jerry Brown signed the bill banning for-profit charter schools.

That is because the bill does not go into effect until July 1, 2019, giving K12 Inc. and other for-profit corporations nearly a full year during which they can work with authorizers to submit applications for new charter schools. The charter does not even need to be approved — just have its application in the queue.

Districts like Dehesa and Raisin City (and there are many more), who have become dependent on authorizer revenue, will scurry to open new K12 Inc. online charters until the deadline. And once they are authorized, they can’t be shut down until they are up for renewal in five years, which gives them a pass until 2024.

Even the three new online schools authorized by Dehesa can operate without any modifications until 2023. If one of the charters comes up for renewal and is denied due to for-profit management, students will be encouraged to enroll in a different online charter school with a later renewal date.

All of this gives plenty of time for K12 Inc. and other for-profit corporations to reorganize how they do business to be in compliance with the new law. The law does not ban their presence nor does it ban charter schools from buying all of their high profit online products or even their consulting services. It just says, in essence, they can’t run the schools.

Is K12 Inc. worried? Not so much.

According to EdSource:

A spokesman for K12 Inc., the largest for-profit charter school corporation, said the company believes it wouldn’t have to change its operations to comply with AB 406.

That says it all.