AZ lawmakers fumble chance to regulate charters

AZ lawmakers fumble chance to regulate charters

(Ariz.) Last year a charter operator who happened also to be a member of the Arizona Legislature drew public outrage when the transfer of ownership of the school triggered a payout to him of $30 million in tax money.

Earlier this year, lawmakers took up in earnest a common sense reform bill that would have imposed new fiscal oversight and accountability on charters. But the bill failed late last month, and now the author is speaking out, criticizing her colleagues for failing to compromise.

“Why did it come up short?” state Sen. Kate McGee asked rhetorically in an op-ed published in the Arizona Republic last week. “Simply put, some lawmakers believed the legislation went too far while others felt strongly it didn’t go far enough.”

Arizona was among the first states to allow charter schools into the public education system when the authorization law passed the Legislature in 1994. Today, about 16 percent of all Arizona K-12 students attend a charter school.

Unlike many states, Arizona law exempts charters from conflict-of-interest requirements and provides only minimal oversight. As a result, there are a number of charter operators that take big profits from their schools.

The American Leadership Academy, for instance, serves about 8,000 students at four campuses. The charter’s founder has gleaned about $37 million in real estate transactions associated with the schools, according to the Arizona Republic.

Primavera, an online charter, paid its CEO $8.8 million when the business was taken private in 2015, the paper reported.

Then, there is Eddie Farnsworth, a long-time member of the Arizona House of Representatives who was elected to the state Senate last November. He reportedly received a $30 million payout last year when his for-profit charter school was transferred to a non-profit entity.

McGee’s bill was intended to address some of the holes in the state’s charter school law. Among other things, her bill would have:

  • Provided new authority to the state attorney general to investigate and prosecute charter-school financial abuses, including granting the office civil subpoena authority;
  • Mandated every charter school have a governing body of at least 3 members, and prohibited family members from constituting a majority;
  • Imposed more financial disclosure reporting including annual revenues, expenditures, assets and liabilities.
  • Restricted some internal transactions without a public hearing and written justification showing how the deal is in the best interest of the school.

The bill won passage out of the state Senate on a party line vote but only after majority Republicans rejected tougher conflict of interest language and tighter transparency mandates.

But late last month in a surprise move, the House Speaker—Republican Rusty Bowers—pulled the bill from consideration.

“SB 1394 was intended to be a meaningful, bipartisan bill to increase accountability and transparency in charter schools. Unfortunately, because the bill the Senate passed failed to achieve those goals, it doesn’t have the support needed for passage in the House, and I’ve decided not to assign it to committee,” Bowers said in an email to the Arizona Republic.

McGee, in her op-ed, lamented the Speaker’s decision.

“The legislation would not have solved every concern relating to charter schools in Arizona,” she said. “But it would have been a tremendous step forward when it comes to shining a light on charter finances, ensuring charter governance is more independent and granting oversight entities new tools to get the job done.” more