New Charter School Regulations Targeting Self-Dealing, Lack of Transparency Set to Go Into Effect

Headline from the San Antonio Express-News that reads, "Lax Texas charter school laws allow splashy land buys, profits for leaders."

Passed during the regular legislative session and recently signed by Gov. Greg Abbott, House Bill 1707, filed by Rep. Stephanie Klick (R-North Richland Hills), was designed to increase charter school expansion and had been pushed by the charter school industry and its lobbyists over the past four legislative sessions. 

The good news: While the bill neared the finish line this year, lawmakers added a few key provisions that will increase transparency for charter schools and target self-dealing in real estate transactions conducted by charter school operators.

HB 1707 will exempt charter schools from local zoning ordinances, effectively preempting any local control and public input regarding where and when a new charter campus opens in a community. Texas AFT and the entire pro-public education community opposed the bill throughout the legislative session, as did the Texas AFL-CIO, local property owners concerned about how charters could negatively affect property values, and city officials from Denton, Dallas, and Austin.  

While the original intent of HB 1707 was to facilitate charter school proliferation, several key amendments to the bill proposed by pro-public education legislators were added to its final version that will actually increase charter school oversight and transparency.

Thanks to an amendment by Rep. Gina Hinojosa (D-Austin), a charter school must certify in writing that no one associated with the charter school “derives any personal financial benefit from a real estate transaction with the charter school” in order to be exempt from local zoning ordinances. This important step toward transparency comes after several news stories about how self-appointed charter board members were caught in self-dealing scandals.

A  San Antonio Express-News investigation uncovered numerous shocking examples of charter schools using state funds to purchase property with little educational purpose, including a Houston high-rise luxury condominium,105 acres of property that include a house with a pool, and former U.S. Secretary of State Rex Tillerson’s luxury horse ranch, just to name a few. 

Multiple charter schools, including Pioneer Technology and Arts Academy, Horizon Montessori, DRAW Academy, and Comquest Academy, have superintendents who own or control the property they lease to their charter schools, the Express-News found. Some charter school administrators privately own facilities used by the charter schools they oversee and collect millions in taxpayer funds by renting them to the same schools they run.

Rep. Terry Canales (D-Edinburg) made another important improvement to the bill by adding an amendment requiring for-profit charter management operators (CMO) to be considered a “governmental body” for the purposes of the Public Information Act. This is important for financial transparency because so-called “non-profit” charters that contract many services to CMOs are currently able to withhold information from the public using the excuse that the CMO possesses it. 

Another amendment added by Rep. Mary Gonzalez (D-El Paso) requires charter schools to notify local school districts about the location of a new charter campus within 20 business days of closing on the purchase or lease of real property for that campus. This will allow districts to plan for enrollment shifts and accompanying staff changes.

Because of what little state oversight there is over charter school financial dealings, Texas AFT will be closely monitoring whether charter schools actually comply with the new transparency requirements.