State Board of Education’s power to withhold charter school funding restricted under state budget proposal

A provision in a state budget draft released Tuesday would limit the reasons on which the State Board of Education can rely to withhold funding from charter schools.

Under the provision, the state board can withhold or reduce a charter school’s funding to make enrollment-based adjustments, if a school has violated the term of its charter, or has had its charter terminated or not renewed. The board could also withhold funding if the state superintendent notifies the state board that a charter school has failed to meet fiscal management standards or has violated state or federal requirements for receipt of funds.

The legislative budget maneuver is designed to counter a new state board policy that requires the state’s Charter School Review Board to submit approved charter applications to the state board for funding consideration.

The state board adopted the new policy in the wake of the Republican-led General Assembly’s veto override of House Bill 618, which created the Review Board, stripped the state board of most charter school oversight responsibilities and handed them to the new panel.

Gov. Roy Cooper vetoed HB 618 in July, arguing that the state constitution gives the state board the oversight authority for public schools, including charter schools.

“This bill is legislative power grab that turns that responsibility over to a commission of political friends and extremists appointed by Republican legislators, making it more likely that faulty or failing charter schools will be allowed to operate and shortchange their students,” Cooper said in a statement accompanying the veto. “Oversight of charter schools should be conducted by education experts not partisan politicians.”

Under the new law, the power to grant, renew, amend and terminate charters now belongs to the Review Board. The state board has rulemaking, accountability, appellate and funding responsibilities under the new law.

State board chairman Eric Davis told colleagues during a policy discussion this month that the state board must retain funding authority over charter schools to ensure fiscal accountability.

“The reason why I firmly believe that the board should continue to focus on our financial accountability stems from the truth that over the last few years seven charter schools have closed, five of them with questionable financial situations, which are currently being reviewed by federal officials,” Davis said.

State Superintendent Catherine Truitt and other state board opponents of the new policy complained that they had had less than a week to review the policy before voting on it. They also questioned whether the state board has the authority to withhold funding from schools approved by the Review Board.

The new policy comes as the Review Board prepares to consider two charter applications that previously received unfavorable state board rulings. Under HB 618, charter applicants can request that the Review Board reconsider state board decisions made after July 1, 2022, in cases where they contradicted the former Charter School Advisory Board’s recommendations. The Review Board replaced the advisory board, which only made recommendations to the state board.

The Review Board is scheduled to hear reconsideration requests next month from Heritage Collegiate Leadership Academy — Wake County (HCLA-Wake) and American Leadership Academy in Monroe (ALA Monroe).

The state board denied approval of HCLA Wake’s application in March, citing concerns about school leader Kashi Bazemore’s past management of a charter school in Bertie County. The school was low-performing and was assumed by another charter operator in 2018. It permanently closed in 2022.

Meanwhile, the state board denied ALA Monroe’s charter approval after raising questions about its fiscal relationship with Charter One, an influential, Arizona-based educational management organization selected by charter applicants to run the school.