Office of the Attorney General
State of California
THE HONORABLE STACEY L. MONTGOMERY
DISTRICT ATTORNEY FOR LASSEN COUNTY
THE HONORABLE STACEY L. MONTGOMERY, DISTRICT ATTORNEY FOR LASSEN COUNTY, has requested an opinion on the following questions:
- Are a California charter school and its governing body subject to the Ralph M. Brown Act and the California Public Records Act?
- Is a California charter school’s governing body subject to Government Code section 1090?
- Is a California charter school’s governing body subject to the Political Reform Act of 1974?
- Are the books and records of California charter schools subject to review and inspection by a grand jury?
- Yes, a California charter school and its governing body are subject to the Ralph M. Brown Act and the California Public Records Act.
- Yes, a California charter school’s governing body is subject to Government Code section 1090.
- Yes, a California charter school’s governing body is subject to the Political Reform Act of 1974.
- Yes, in general, the books and records of California charter schools that are chartered by a school district or county board of education are subject to review and inspection by a grand jury. However, the books and records of California corporate charter schools that are directly chartered by the State Board of Education are not subject to review and inspection by a grand jury.
We are presented with a series of questions about whether charter schools in California are subject to the same public-integrity statutes that apply to traditional public schools. For the reasons set out below, we conclude that charter schools are subject to these salutary laws.
Charter schools are a class of public schools. The California Department of Education offers this description:
A charter school is a public school that provides instruction in any combination of grades, kindergarten through grade twelve. Parents, teachers, or community members may initiate a charter petition, which is typically presented to and approved by a local school district governing board. California?Education Code (EC) also allows, under certain circumstances, for county boards of education and the State Board of Education to be charter authorizing entities.
Specific goals and operating procedures for a charter school are detailed in the agreement between the charter authorizing entity and the charter developer. A charter school is exempted from many of the statutes and regulations that apply to school districts. Students enroll in charter schools on a voluntary basis.1
Charter schools are created pursuant to the Charter Schools Act of 1992.2?In passing the Act, the Legislature declared its purposes as follows:
It is the intent of the Legislature, in enacting this part, to provide opportunities for teachers, parents, pupils, and community members to establish and maintain schools that operate independently from the existing school district structure, as a method to accomplish all of the following:
(a) Improve pupil learning.
(b) Increase learning opportunities for all pupils, with special emphasis on expanded learning experiences for pupils who are identified as academically low achieving.
(c) Encourage the use of different and innovative teaching methods.
(d) Create new professional opportunities for teachers, including the opportunity to be responsible for the learning program at the schoolsite.
(e) Provide parents and pupils with expanded choices in the types of educational opportunities that are available within the public school system.
(f) Hold the schools established under this part accountable for meeting measurable pupil outcomes, and provide the schools with a method to change from rule-based to performance-based accountability systems.
(g) Provide vigorous competition within the public school system to stimulate continual improvements in all public schools.3
One of the signature purposes of the Act is to free charter schools from the ??educational bureaucracy?4?that pertains in traditional school districts, by way of a statutory exemption from many of the laws that govern traditional school districts.5??Charter schools are grounded in private-sector concepts such as competition-driven improvement …, employee empowerment and customer focus. But they remain very much a public-sector creature, with in-bred requirements of accountability and broad-based equity ….?6
California’s Constitution mandates a system of free public schools.7?As creatures of that system, charter schools are funded by state taxes,8?and they may not charge tuition.9?Further, unlike private schools, charter schools may not restrict admissions on the basis of personal characteristics such as gender or religion.10?They are required to meet statewide educational standards and to conduct the same pupil assessments that are required of noncharter public schools.11?Charter school teachers must hold state teaching credentials,12?and they enjoy the same collective-bargaining rights13?and retirement benefits14?that public-school teachers enjoy.
A charter school may be chartered by a school district,15?by a county board of education,16?or directly by the State Board of Education.17The Legislature intends that charter schools should ?operate independently from the existing school district structure.?18?To that end, the Legislature has authorized a charter school to ?elect to operate as, or be operated by, a nonprofit public benefit corporation.?19?We are informed that the majority of charter schools operating today have opted for a corporate charter structure, although some have declined the option in favor of operating as dependent affiliates of a chartering district.20
At the same time, regardless of governance structure, a charter school is under ?the exclusive control of the officers of the public schools?21?and is a ?school district? for purposes of the allocation of education funds.22?Governing officials of a charter school are themselves ?officers of public schools to the same extent as members of other boards of education of public school districts.?23?Indeed, the Constitution ?prohibits the transfer of authority over any part of the school system to entities outside of the public school system.?24
Ever since corporate charter schools?which bear attributes of both public and private enterprises?were authorized in California, questions have arisen as to whether they are subject to the public-integrity statutes that apply to public schools and other government entities, including laws requiring open meetings and public access to records, and laws forbidding financial and other conflicts of interest. The Legislature has entertained multiple bills (all vetoed or otherwise unsuccessful) in an effort to clarify the issue.25
For example, in 2004 the Legislature proposed forbidding approval of any charter school petition that lacked ?an assurance of compliance? with the open-meetings rules embodied in the Brown Act,26?indicating that the problem was not so much a lack of coverage under the act as a lack of compliance with the Brown Act.?That bill also declared that charter schools are subject to the Public Records Act, and further specified that this was ?declaratory of existing law.?27
For another example, the committee analysis for Assembly Bill No. 2115 in 2007 included this observation:
According to the author’s office, ?This bill requires charter school governing board members to comply with the same conflict of interest policies by which school district governing board members currently abide. Recent news reports of charter school board members engaging in inappropriate financial mismanagement have highlighted the need for charter school conflict of interest laws?to be clarified. While charter schools are given more autonomy than public schools, their governing boards have authority over public funds to be used for the educational benefit of their students. Charter school governing boards should be held to at least the same standard as school district governing boards.?28
Similarly, the Legislative Counsel has described three different bills aimed at this issue as ?expressly? stating that charter schools are subject to the Brown Act and the Public Records Act.29
This is the legal environment in which we have been asked to evaluate whether, under the existing state of the law, charter schools, including corporate charter schools, are subject to the same public-integrity statutes that govern traditional public schools. Seeing that corporate charter schools are licensed and paid to participate in the essential public function of providing a mandatory free education to California’s children, we conclude that they are bound by all of the public-integrity laws that we examine here. Below, we provide separate analyses for each body of law.
The first question here is whether charter schools and their governing bodies are subject to the so-called ?sunshine laws,? that is, the open-meeting rules of the Brown Act,30?and the information-access rules of the Public Records Act.31?We conclude that charter schools are subject to these laws.
The Brown Act was passed in 195332?with this sweeping declaration of purpose:
In enacting this chapter, the Legislature finds and declares that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people’s business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly.
The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.33
The Brown Act guarantees ?the public’s right to attend the meetings of public agencies?34?and thus curb misuse of the democratic process.35
The Public Records Act was enacted in 1968.36?Its purpose is to ?facilitate the public’s right to monitor governmental activities on the principle that ?access to information concerning the conduct of the people’s business is a fundamental and necessary right of every person in this state.??37
Both the Brown Act and the Public Records Act are applicable to a ?local agency? and to the ?legislative body? of a local agency.38?The Brown Act defines ?local agency? as ?a county, city, … city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency.?39?Similarly, the Public Records Act defines ?local agency? to include ?a county; city …; city and county; school district; municipal corporation; district; political subdivision; or any board, commission or agency thereof; other local public agency; or entities that are legislative bodies of a local agency pursuant to subdivisions (c) and (d) of Section 54952.?40
Thus, the question that needs answering is whether a charter school is a ??school district? or ?other local public agency? for purposes of the Brown Act and the Public Records Act. To answer this question, we apply familiar rules of statutory interpretation. ?We start with the statute’s words, which are the most reliable indicator of legislative intent. We interpret relevant terms in light of their ordinary meaning, while also taking account of any related provisions and the overall structure of the statutory scheme to determine what interpretation best advances the Legislature’s underlying purpose.?41
Starting with the language of the statutes in question, we observe that a ?school district? is specifically listed as a ?local agency? under both the Brown Act and the Public Records Act.42?Further, from looking at related statutes and at the statutory scheme as a whole, we know that a charter school is a ?school district? for specified purposes including being ?under the exclusive control of the officers of the public schools for purposes of?Section 8 of Article IX of the California Constitution, with regard to the appropriation of public moneys to be apportioned to any charter school ….?43
Taken together, these provisions come very close to disposing of the issue. After all, ?school districts? are subject to sunshine laws,44?and charter schools are ?school districts? for purposes of receiving state funding.45?What charter schools do with the public money that they receive is a matter of legitimate concern to the taxpaying public. While this definition technically leaves open the question whether charter schools are?not??school districts? for purposes?other?than receiving state funding, we see no need to try to ascertain here what those might be.46?Receiving funding from the state for the purpose of educating public schoolchildren is reason enough to require that corporate charter schools’ business?which is also the people’s business?be conducted in the open.
What is more, we are constrained by the Constitution of California to construe both the Brown Act and the Public Records Act broadly to further the people’s right of access to the meetings and documents of bodies conducting the public’s business.47?The promise of public access to public information is fixed in Article I of our Constitution,48?just as Article IX establishes a system of free public schools under the exclusive control of the public school system.49?Reading the statutes liberally, we are convinced that the public has a right to expect transparency from charter schools because they are licensed and paid by the state to participate in the core function of educating California’s children.50
Accordingly, we conclude that a charter school is a ?school district … or other local public agency? within the meaning of the Brown Act and the Public Records Act and therefore subject to those laws. A charter school’s governing body is, therefore, a ?legislative body? within the meaning of Government Code section 54952, subdivision (a).51
Before leaving the subject, however, we address two possible objections to our conclusion: (1) that the doctrine of ?mega-waiver? under Education Code section 47610 precludes applying these public access laws to charter schools, and (2) that charter schools’ corporate governance structure exempts them from the laws’ coverage.?We address, and reject, each contention in turn.
We have considered the argument that, even if a charter school is a local agency within the meaning of the public access statutes, it is nevertheless?exempted?from compliance with the Brown Act and the Public Records Act by virtue of the so-called ?mega-waiver? provision of Education Code section 47610.
Section 47610 provides that, ?A charter school shall comply with [the Charter Schools Act] and all of the provisions set forth in its charter, but?is otherwise exempt from the laws governing school districts, except all of the following: ….?52?Exceptions are made for teacher retirement plans, state loans, building standards, and the minimum age for public school attendance. Based on this provision, some argue that the Brown Act and the Public Records Act do not apply to charter schools because those are among the ?laws governing school districts? from which charter schools are exempt. We disagree.
The Brown Act and the Public Records Act are not just ?laws governing school districts.? They are laws of general application governing?alllocal agencies and therefore to charter schools.53?No court has ever construed section 47610’s ?mega-waiver? to apply to a law of general application.54?Certainly nothing in the legislative history of section 47610 supports a reading that would immunize charter schools from affording public access to its meetings and documents.55??It is a well-established rule of statutory construction that the Legislature does not intend to legislate in contravention of existing public policy. Without the most cogent and convincing evidence, a court will never attribute to the Legislature the intent to disregard or overturn a sound rule of policy.?56
To shield charter schools from the reach of public access statutes would set those schools apart from all other public schools. All of the other components of the public school system?the State Board of Education, state universities, community colleges, county boards of education, and local school boards?are subject to open-meeting laws (the Brown Act for local agencies and the Bagley-Keene Open Meeting Act for state agencies).57?Every one of them is subject to the Public Records Act. We are aware of no cogent or convincing evidence that would justify sheltering charter schools from sunshine laws.
The Charter Schools Act was intended to give charter schools ?substantial freedom to achieve academic results free of interference by the public?educational bureaucracy.?58?In our view, that goal is entirely consistent with allowing structured public access to the meetings and documents of these public educational institutions. Indeed, the Charter Schools Act itself identifies as its constituency community members as well as parents, teachers, and pupils associated with a specific charter school.59
We conclude that Education Code section 47610’s ?mega-waiver? provision does not exempt charter schools from open-meetings laws and public-records laws.
We have also considered the argument that charter schools should be exempt from the Brown Act and the Public Records Act because they are legally structured as corporations, not public agencies. But we see no sound basis for conditioning the public’s right to transparency on a charter school organizer’s chosen mode of governance.
The argument that corporate charter schools are merely private corporations confuses the corporate operator of the charter school with the charter school itself.?Under the express terms of the statute, the decision to operate as a corporation is that of the charter school, not the corporation.60?A corporation is unable to operate as a charter school, or to operate a charter school, unless and until it receives a charter from the appropriate chartering authority. ?The chartering authority controls the application approval process, with sole power to issue charters.?61??Approval is not automatic, but can be denied on several grounds, including presentation of an unsound educational program.?62?It is the?charter school?that is a part of the public school system, regardless of its governance structure.63?If a corporate charter school loses its charter, the corporation may continue in existence,64?but it ceases to be a charter school.65
Here, our concern is with the governing body of the local agency itself, i.e., the charter school, not with the charter school’s corporate parent. The members of a corporate charter school’s governing body ?are officers of public schools to the same extent as members of other boards of education of public school districts.?66
For all the reasons discussed above, we conclude in response to Question 1 that a California charter school and its governing body are subject to the Ralph M. Brown Act and to the California Public Records Act.
The second question is whether a California charter school’s governing body is subject to Government Code section 1090, which broadly prohibits conflicts of interest in public contracts. We conclude that it is.
Government Code section 1090 states:
(a) Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity.
(c) As used in [article 4, commencing with section 1090] ?district? means any agency of the state formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.67
The prohibition against self-dealing has a long history in California law.68?Government Code section 109069?can be traced back to an 1851 enactment,70?which itself has been deemed to express the ancient common-law doctrine against conflicts of interest. Section 1090 generally forbids public officials from participating in making government contracts in which they have prohibited interests. The purpose of the rule is to ensure that ?every public officer be guided solely by the public interest, rather than by personal interest, when dealing with contracts in an official capacity.?71?Violation of section 1090 is a felony,72?and contracts entered into in violation of section 1090 are generally considered void.73
Over time, the scope of the rule has expanded to include the officers of any ??district,? defined broadly as ?any?agency of the state formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.?74
?Any? means any.75?We harbor no doubt that a charter school is an ?agency of the state, formed pursuant to general law … for the local performance of governmental … functions within limited boundaries.?76?Because members of a charter school board of directors are deemed to be??officers of public schools to the same extent as members of other boards of education of public school districts,?77?they are subject to the prohibitions of section 1090.78
The third question asks whether a charter school’s governing body is subject to the Political Reform Act of 1974.79?In accord with decisions of the Fair Political Practices Commission, we conclude that charter school boards are subject to that law.
The Political Reform Act80?was enacted by initiative measure to give effect to the principle that, ?Public officials, whether elected or appointed, should perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them.?81
Public officials governed by the Act include ?every member, officer, employee or consultant of a state or local government agency.?82??Local government agency? means a ?county, city or?district of any kind including school district, or any other local or regional political subdivision, or any department, division, bureau, office, board, commission or other agency of the foregoing.?83
In 1998, the same year in which the Legislature amended the Charter Schools Act to permit a charter school to be operated by or as a nonprofit corporation,84?the general counsel of the Fair Political Practices Commission issued an Advice Letter concluding that board members of a charter school’s nonprofit corporation were subject to the Political Reform Act’s conflict-of-interest provisions.85
Key to its conclusion was the Commission’s determination that the charter school was a ?local government agency? within the meaning of Government Code section 82048.86?Using a four-part test to determine whether a nonprofit corporation meets the definition of a local government agency, the Commission concluded that the school (1) was formed at the impetus of a government agency; (2) was substantially supported by public funds; (3) performed a public function as its principal purpose; and (4) was treated as a public agency, (i.e., a school district) by other statutory provisions, namely the Charter Schools Act.87
The Fair Political Practices Commission is the agency responsible for enforcing the conflict-of-interest provisions of the Political Reform Act,88?and its interpretations of the Act are entitled to deference.89
We conclude, in accord with the Commission’s views, that a corporate charter school’s governing body is subject to the Political Reform Act’s conflict-of-interest provisions.
The last question is whether the books and records of a California charter school are subject to review and inspection by a grand jury pursuant to Penal Code section 933.6. With respect to schools that are chartered by either a local school district or a county board of education, we conclude that such materials are subject to grand jury review.90
?The California grand jury has three basic functions: to weigh criminal charges and determine whether indictments should be returned [citation]; to weigh allegations of misconduct against public officials and determine whether to present formal accusations requesting their removal from office [citation]; and to act as the public’s ?watchdog? by investigating and reporting upon the affairs of local government [citation]. Of these functions, the watchdog role is by far the one most often played by the modern grand jury in California.?91?Under the supervision of the superior courts,92?the general powers and duties of county grand juries93?include the investigation of county, city, and district affairs.94?A ?grand jury has no inherent investigatory powers beyond those granted by the Legislature.?95
It has been suggested that Penal Code section 933.696?provides a basis for grand jury scrutiny of a corporate charter school. We agree that it does, with respect to schools chartered by local school districts or county boards of education.97?Section 933.6 provides:
?A grand jury may at any time examine the books and records of any nonprofit corporation established by or operated on behalf of a public entity the books and records of which it is authorized by law to examine, and, in addition to any other investigatory powers granted by this chapter, may investigate and report upon the method or system of performing the duties of such nonprofit corporation.?98
The books and records of local school districts and county boards of education are subject to grand jury review.99?Therefore if a school chartered by a local school district or county board of education is operated ??on behalf of? its local chartering authority, then the books and records of these charter schools are, in turn, subject to grand jury scrutiny.100?Thus, the issue boils down to the question whether a charter school operates ??on behalf of? the local or county school board. We conclude that it does.
To reach this conclusion, we examine the language of section 933.6 to ascertain the intent of the Legislature.101?To act ?on behalf of? another is to act ?in the interest of,? ?as a representative of,? or ?for the benefit of? another.102?Although a charter school, particularly one with a corporate governance structure, is generally conceived and organized by private individuals, it can have no operational or political existence as part of the public school system unless it first has a charter from a public school authority.103
Moreover, the language of the Charter Schools Act reflects the subordination of the charter school to the ?supervisorial oversight? of its chartering authority.104?A chartering authority may decline to grant a charter petition if the ?school presents an unsound educational program? or if the ?petitioners are demonstrably unlikely to successfully implement the program set forth in the petition.?105?A chartering authority is required to monitor the fiscal condition of each charter school under its authority, and to ensure that each charter school under its authority completes all proper reports.106?A chartering authority may revoke a charter if the school violates its charter; fails to achieve student outcomes; fails to follow generally accepted accounting principles or engages in fiscal mismanagement; or violates any provision of law.107
These conditions of empowerment, oversight, and control establish that a charter school acts ?on behalf of? its chartering authority. Furthermore, the history of Penal Code section 933.6 demonstrates that the Legislature intended to ?ensure that grand juries, in their ?watchdog? capacity, enjoy the statutory authorization to investigate the full range of local government agencies.?108?Indeed, the legislation was introduced to ?expand the authority of grand jury investigatory powers to include housing authorities and nonprofit corporations which are established by or operated for the benefit of the public.?109?Receiving substantial public funding for the provision of public education, charter schools certainly act ?for the benefit of the public.?
Accordingly, we conclude that the books and records of a California charter school that is chartered by a school district or county board of education are subject to review and inspection by a grand jury pursuant to Penal Code section 933.6.
On the other hand, section 933.6 does not apply to schools that are chartered directly by the State Board of Education. Section 933.6 applies only when the grand jury has authority to investigate the entity on whose behalf a nonprofit corporation is being operated. Since there is no authority for a grand jury to examine the books and records of a state agency, section 933.6 cannot be a source of authority for grand jury examination of the books and records of charter schools that are chartered directly by the State Board of Education.110?Thus, we conclude that the books and records of a California charter school that is chartered by the State Board of Education are not subject to review and inspection by a grand jury pursuant to Penal Code section 933.6.
Manuel M. Medeiros
Deputy Attorney General