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California bans for-profit charter schools after passage of AB 406
In September, Gov. Jerry Brown signed into law Assembly Bill 406, prohibiting for-profit charter schools in California.
The bill was supported by CSBA along with other organizations, including the California Charter Schools Association. Gov. Brown vetoed a similar bill in 2015, writing that he did not believe the case had been made to eliminate for-profit charter schools in the state. With the Governor’s signature secured, the new law will go into effect next year.
  • The new law prohibits a charter school from being operated as, or operated by, a for-profit corporation.
  • The bill also specifies that a charter school may not enter into a subcontract to avoid the requirements of the bill.
  • The Governor’s signature secured, the new law will go into effect next year.
Current California law authorizes charter schools to operate as nonprofit corporations but is silent on whether a charter school is permitted to operate as a for-profit. Although for-profit charter schools have not been as common in California as in some other states, for-profit charter schools still serve tens of thousands of students in California. Legislative analysis on AB 406 found there are 34 charter schools in the state run by for-profit education management organizations or for-profit charter management organizations, serving more than 25,000 students. The track record of these for-profit charter schools in the state has been inadequate on several measures, including transparency and student achievement.
Beginning July 1, 2019, the new law prohibits a charter school from being operated as, or operated by, a for-profit corporation. A petitioner that submits a charter petition, charter renewal, or material revision application cannot operate as, or be operated by, a for-profit corporation, for-profit educational management organization, or for-profit charter management organization.

The bill defines “operating” a charter school as any of the following: nominating, appointing, or removing board members or officers of the charter school; employing, supervising, or dismissing employees of the charter school; managing the charter school’s day-to-day operations; approving, denying, or managing the budget or any expenditures of the charter school that are not authorized by the governing body of the charter school; and providing services to a charter school before the governing body of the school has approved the contract for those services at a publicly noticed meeting.

School boards and county offices of education should review the organizational structure of charter schools which they have authorized.
The bill also specifies that a charter school may not enter into a subcontract to avoid the requirements of the bill.

School boards and county offices of education should review the organizational structure of charter schools which they have authorized. When reviewing charter petitions, renewals, or material revisions on or after July 1, 2019, school boards and county offices of education should ensure the charter school is not operated by a for-profit corporation, as defined under AB 406.

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