TEA’s interpretation of charter school oversight legislation could make the bill unenforceable

Editor’s note: Texas AFT comments to TEA are below.

This past week, Texas AFT submitted comments on rules to implement a law intended to prohibit Texas charter school operators from self-dealing for profit, but a key omission by the TEA in the drafting of these rules could make the bill unenforceable. 

Charter operators have been known to profit from their schools by leasing land that is owned by the very same individuals who are in charge of the charter school operations. Charter schools will lease this land at prices above market value to funnel government funds into their own pockets.

SB 1454 allows the commissioner of education to review any real estate transactions that a charter operator makes with any party that is “related” in some way to the charter operator. If any transaction with a “related party” exceeds fair market value or doesn’t benefit the charter school, the commissioner may take action against these charter operators.

TEA’s proposed amendment to implement this bill would not provide the effective oversight that the legislation intends. The proposed amendment fails to define the important term “related party.” Without a codified definition for this term, the law is practically unenforceable. As passed, SB 1454 explicitly instructs the commissioner of education to define “related party,” so the commissioner’s failure to do so is a blatant dereliction of his statutory duties. 

Texas AFT Legislative Counsel Patty Quinzi submitted comments pointing out this crucial omission in the TEA’s proposed amendment:

Although the proposed amendments to 19 TAC Sec.100.1067 are supposed to enact requirements in SB 1454, passed in 2019, the amendments lack a critically important definition required in SB 1454–that of “related party.”

SB 1454 was intended to prohibit charter school self-dealing with Texas taxpayer money, but since its passage in 2019 no rule has defined the scope of that prohibited self-dealing. The charter school industry’s history of using related and subsidiary organizations to maximize profits was the impetus behind this bill, and the Education Code, Section 12.1166, states, “The commissioner shall adopt a rule defining ‘related party’ for purposes of this subchapter.”

Without this definition in rule, the provisions included in SB 1454 that are intended to provide taxpayer transparency are practically unenforceable. Please amend the proposed amendments to include the statutorily-required definition of “related party.”