Kelly Bowers Superintendent | Charter School Oversight

WHEN CHARTER OVERSIGHT BECOMES CRISIS MANAGEMENT

Kelly Bowers Superintendent of Schools and Craig Bueno, Board President – Livermore Valley Joint Unified School District

John R. Yeh, Partner of Burke, Williams & Sorensen, LLP

About Livermore Valley Joint Unified School District

• City of Livermore, Alameda County: Home to Lawrence Livermore National Laboratory, thriving wine region
• LVJUSD – Livermore Valley Joint Unified School District
• Nearly 14,000 students, transitional kindergarten thru 12th grade
• 9 elementary campuses
• 2 K-8 schools
• 3 middle schools
• 2 comprehensive high schools
• 2 alternative schools, International Baccalaureate Programmes, Green Engineering Academy, Dual Immersion Program and Science, Technology, Engineering & Math (STEM) pathways

About LVJUSD

The Origin of the Charter Schools

• • LVJUSD closed 2 open-boundary magnet schools in early 2000’s

  • Livermore Valley Joint Unified School District

• LVCS (K-8) charter granted by SBE in 2005 after rejection by LVJUSD, County Board
• LVCP (9-12) granted by SBE in 2010
• District assumed authorizer status over LVCS in 2012,

LVCP in 2014

• LVCS and LVCP operated by Tri-Valley Learning Corporation (TVLC), a Charter Management Organization

The Origin of the Charter Schools

• “The closure of two District schools in 2004, and subsequent formation of LVCS as an SBE-authorized charter school, was a divisive event for the Livermore community …. While oversight of LVCS will require hard work by both parties, local authorization of the charter school would be the first step towards the long-term goal of bringing the TVLC charter schools and the District back together as a unified community. The District is committed to carrying out its charter authorizer obligations in a fair manner that protects and promotes the interests of all students.”

(The District’s Board Report, November 12, 2012)

Initial Successes

• Successful renewal of parcel tax
• Voluntary inclusion of charter schools in parcel tax

revenues

• Shared community events (e.g., Math Counts, educator awards, Ag (Agriculture) Day, athletic league competitions, STEAMFEST)

The Unraveling – the Allegations

• Operation of an unlawful foreign exchange program enrolling students from China and charging tuition
• Bullying, intimidating, and involuntarily transporting Chinese foreign exchange students to Stockton to enroll them in another school
• Principal charged with alleged failure to report child abuse when a TVLC employee used a chokehold on a foreign exchange student as a means of forcing submission, to which the employee subsequently pled no contest
• Incurring nearly $60 million in public facilities funding even though charter schools were obtaining facilities from the District at a below-market rate
• Setting up shell corporations through which to funnel public education funds for the establishment and operation of private schools.

The Unraveling – the Allegations

• Failing to make payroll, causing problems for teachers with their STRS reporting
• Failing to pay debts to vendors and employees
• Failing to submit audit report for two consecutive fiscal years
• Filing for bankruptcy
• Losing WASC accreditation for its high school, LVCP, which harmed the college admissions prospects of its students
• Allegations that Principal changed student grades without teacher consent, just to boost the charter school’s graduation rates
• LVJUSD issued 22 Notices of Concern or Notices of Violation to LVCS/LVCP over a two-year period (2015-2017)

OVERSIGHT CHALLENGES

Financial Overleveraging

• California Statewide Communities Development Authority (2015) $24,710,000: sublease of high school site to LVCP (shared with private school)
• California State Finance Authority (2012) $27,500,000: facilities for LVCS
• LVCS/LVCP peak enrollment at the time: approximately 1,600 students
• Charter schools were occupying District facilities at the time

Fiscal Crisis Management Assistance Team (FCMAT) AB 139 Extraordinary Audit

Charter Schools’ Lack of Financial Sustainability

• Charter schools’ failure to pay their financial obligations • Over 1,000 creditors in bankruptcy
• Failure to make payroll
• Delay in paying teacher and staff salaries • Delay in making STRS contributions
• Mid-Year teacher layoffs
• Disruption to student education
• Disruption to maintenance and cleanliness of school sites
• Loss of accreditation threatened college prospects
• In the meantime, opening of private school on same site as LVCP with public bond financing

OVERSIGHT ABOVE AND BEYOND

District Measures

• Absorbed approximately 500 new students at the beginning of the 2016-2017 school year
• Absorbed approximately 700 students during 2016-2017 school year
• Enrolled an additional 125+ at the start of 2017-2018

District Measures

• Rancho Las Positas School opened a satellite site mid- year on an available site
• High school and middle school students absorbed into District schools
• District Director of Student Services named Principal
• Requirements:
• Preparation of site
• Hiring of teachers
• Fielding enrollment inquiries
• All while educating nearly 14,000 LVJUSD students

District Measures

• Monday June 5, 2017: TVLC announces in Bankruptcy Court that it only has $10,000 in operating funds and must close at the end of the day
• District subsidizes final payroll period for LVCS and LVCP teachers to allow students to complete their examinations and experience their last day of school

District Measures

• LVJUSD works with neighboring districts to re- accommodate charter schools’ non-District students
• Community-based process for selecting satellite school’s new name: Parents, teachers, staff, students
• Board approved

Lawrence Elementary School on June 13, 2017

• TVLC Conversion from Chapter 11 to Chapter 7 Bankruptcy
• Former TVLC employees still trying to resolve payroll issues

LESSONS LEARNED

Assembly Education Committee

The Need for Reform

• Governance: charter school boards select their own members; they are not elected or selected by the public
• Lack of accountability to public
• Ed. Code section 47604 allows a charter school to incorporate as a nonprofit public benefit corporation
• Charter schools claim right to use more lenient corporate standards regarding conflict of interest, transparency
• Lack of legal prohibitions against transferring public education funds to corporate entities beyond the reach of public scrutiny

Barriers to Reform

When charter schools resist oversight and accountability

Barriers to Reform – The Education Code?

• The Charter Schools Act – Education Code section 47601
• “[S]chools that operate independently from the existing school district structure”
• “Encourage the use of different and innovative teaching methods.”
• The Charter Schools Act – Education Code section 47601
• “A charter school shall comply with this part and all of the provisions set forth in

its charter, but is otherwise exempt from the laws governing school districts …”

• Under “animating principles” of the CSA, application of criminal statutes regarding embezzlement of public funds to charter school operators sends “the unmistakable accompanying message that education should purely be left to the district bureaucrats, [running] directly counter to the express goals of the Charter Schools Act …” (People v. Selivanov et al. (2016) 5 Cal.App.5th) (CCSA amicus brief))
• “Subjecting innovative, creative charter school leaders … to criminal prosecution for their risk-taking and operational experimentation is completely inimical to the stated purposes of the Charter Schools Act …” (People v. Selivanov et al. (2016) 5 Cal.App.5th) (CCSA amicus brief))

The Need for Reform

• Authorizer authority and remedies
• Authorizers don’t have the legal ability directly to prohibit fiscal

mismanagement or compel sound fiscal practices

• The only enforcement mechanism provided in the Education Code is revocation
• Charter school is provided due process and an opportunity to remedy the violation
• Revocation of the charter results in closure of the school
• Impact on students, parents, teachers, staff
• Impact of Ed. Code section 47607©(2) – academic performance
• Many revocation proceedings result in legal challenges
• Charter schools cite flexibility, independence, to oppose revocation

The Need for Reform

• Same rules for public funding and transparency
• Brown Act, Conflict of Interest Rules, California Public Records Act
• All public education funding must be subject to public budgeting process
• No transfers to “off the book” private entities
• Mechanism for Fiscal Mismanagement
• AB 1200 State

Trustee/Receivership

• Parallel version of State

Administrator for charter schools committing financial misconduct

It Takes a Village – Interested Agencies

• Livermore Valley Joint Unified School District
• Alameda County Office of Education
• California Department of Education
• State Superintendent of Public Instruction
• California Commission on Teacher Credentialing
• City of Livermore
• Livermore Police Department
• Child Protective Services
• Alameda County District Attorney’s Office
• Western Association of Schools and Colleges (WASC)
• Fiscal Crisis Management Assistance Team (FCMAT)
• Office of Congressman Eric Swalwell
• Office of Assemblymember Catherine Baker
• Office of Senator Steve Glazer
• Consulate General of the People’s Republic of China in San Francisco
• United States Immigration and Customs Enforcement (TVLC Foreign Exchange Program)
• Asian Americans Advancing Justice
• Securities and Exchange Commission
• United States Bankruptcy Trustee
• Federal Bureau of Investigation

Best Oversight Practices

• Review carefully all charter school budgets and interim reports
• Scrutinize all transfers of public education funding for non- educational purposes or to outside entities – what is charter school getting in return?
• Ask for budget(s) of Charter Management Organization
• Scrutinize all real estate transactions and contracts
• Determine whether they seem extraneous to the charter school’s educational mission
• Look for interested party transactions
• Monitor all governing board actions
• Review of agendas and minutes, as needed
• Attend charter school board meetings, if needed

Best Oversight Practices

• Prepare for the unanticipated
• Are the authorizer and charter school prepared for interruption in or cessation of operations?
• Monitor capacity at all District school sites
• Monitor classroom staffing ratios
• Assess local labor market and ability to adjust staffing mid-year
• Evaluate timing of ADA reporting periods and apportionment schedule
• P-1 and P-2 reporting cycles mean that ADA will not be immediately generated for new students; District costs are fixed
• Ensure that the District’s enrollment system is prepared for mid-year assignment activity

Pain, and Recovery

Best Oversight Practices – Superintendent

• Document all concerns, communications and findings
• Be transparent to the public as to the District’s actions and the

rationale for them

• Avoid divisive language, terminology or actions
• “Charter Families” v. “District Families”
• Strive for unified community – build trust and relationships
• Keep your board updated and advised of all possible options

and outcomes

• Keep open line of communication with charter school’s leaders
• Seek assistance of outside agencies
• All decisions should be made in the best interests of children

BestOversightPractices- Board Members

• Anticipate external pressure
• Community members, parents, teachers, fellow elected officials,

lobbyists, advocates

• Keep focused on the right path, and the right destination
• Follow proper legal procedures and criteria to ensure due process • Keep methods and objectives well-defined
• Support your staff as they conduct their front-line oversight duties
• Maintain relationships with the charter school’s board members
• Be transparent to the public as to the District’s actions and the

rationale for them

• All decisions should be made in the best interests of children

Fight the Good Fight

Thank you for attending!

Kelly Bowers, Ed.D., Superintendent of Schools Craig Bueno, Board President Livermore Valley Joint Unified School District

John R. Yeh, Partner Burke, Williams & Sorensen, LLP

Source: https://kellybowerssuperintendent.com/
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