Public Charter School Reform Comes to South Carolina
Governor Henry McMaster recently signed S.454 into law, enacting a plethora of reforms to the public charter school sector. Originally conceived to address the (then-impending) closure of Limestone University and the affiliated Limestone Charter Association, S.454 has been hotly debated and heavily amended during its journey through the legislative process. Now that the dust has settled, we believe that its final version strikes a healthy balance between charter school and charter authorizer autonomy and legitimate state oversight needs. We’ve broken down the key components of the bill and separated it into three categories à la Sergio Leone – The Good, The Bad, and The Okay-But-Might-Need-Some-Tweaking.
The Good
The law makes a number of good changes to South Carolina’s charter laws and helps ensure that our charter application, approval, and oversight processes are transparent and accountable.
Financial Transparency and Oversight
Generally speaking, traditional public schools and charter schools are now bound by the same financial oversight law, including the requirement that their annual budgets and audits be posted publicly on their website. Charter schools, who are distinct legal entities separate from their authorizers, now need to notify their authorizer before they incur debt. A previous version of this language required permission from their authorizer, but this was rightfully watered down.
The law also puts guardrails around potential conflicts of interest between authorizers, charter schools, and management companies. For example, authorizers cannot unduly pressure their schools to purchase additional services from them and charter schools board members cannot have immediate family with a vested financial interest in a management company.
Good Governance
Charter school authorizers are now required to publicly post their annual budget as well as all of their charter school applications, contracts, and any contracts that their schools have with management organizations. Authorizers continue to be subject to audits by the Legislative Audit Council, and their Board members are considered public employees for ethics and government reporting requirements.
Charter school planning committees must now be dissolved within 6 months of the school opening, and a proper Board election has to take place by April 1st of that same year. Once elected, those Board members are required to take a charter-specific training course from their authorizer that outlines financial responsibilities, governance, and other relevant topics. As elected officials, those Board members would be precluded from holding another elected position under South Carolina’s “One Office” law. Finally, the law creates an application process for prospective new authorizers – previously, it was a registration process. The new application process will help ensure that authorizers are financially solvent and prepared for the rigors of charter school authorizing.
Strengthened Accountability
Some of the most important reforms came in these specific provisions. Now, charter schools that scored lower than “Average” at all in the last three years is ineligible for replication or expansion, helping ensure that only high-performing schools and education models are allowed to profligate. The law also prohibits low-performing schools from obtaining Alternative Education Campus (AEC) designations in an effort to avoid accountability. AECs are intended to serve high percentages of high-risk and/or special needs students, and are exempt from certain accountability provisions as a result.
Along that same vein, the law places additional guardrails around when a charter school may seek to move to a different authorizer. In the past, schools have tried to “authorizer shop” when their performance begins to drop in an effort to, again, avoid corrective or disciplinary actions from their authorizer. Now, if their current authorizer suspects that the school is trying to do this, they must deny the transfer request. However, the Department of Education is required to develop a streamlined transfer process for schools if their authorizer closes or loses their authorizing authority (e.g. Limestone University and the Limestone Charter Association).
Finally, the law strengthens authorizer responsibilities surrounding corrective action plans for low-performing charters or charter violations, and requires closure of charter schools who score “Unsatisfactory” on the state report card for three consecutive years. It also specifically requires that the school’s charter contract with the authorizer include “outcome-based expectations concerning academics, operations, governance, and finance.” The Department of Education now has explicit oversight power over authorizers and their compliance with relevant law, performance of their charter schools, their authorizing practices, etc.
The Bad
From our perspective, there is just one “pain point” that remains in the law. Now, any individuals assigned to charter schools who are employed by management organizations are considered public employees for ethics and government accountability purposes.
I think the intent here was to mirror traditional public schools in that teachers and principals are public employees, but the provision is worded very broadly. A strict reading of the law could result in the HR rep for the management organization who lives in Phoenix or the accountant from Detroit being considered public employees in South Carolina just because they are assigned to that school. Although stronger ethics reporting requirements are generally a good thing, we have to be sure that it does not create an administrative reporting environment that is so burdensome so as to discourage investment in South Carolina. If a large management organization wants to establish schools in South Carolina but they know that their administrative staff across the country will be bound by these state-specific rules, that very well could lead them to look elsewhere.
Ultimately, more guidance is needed to clear this up from the State Ethics Commission to determine what it means to be “assigned” to a school and who exactly will be subject to these ethics requirements.
The Okay-But-Might-Need-Tweaking
Finally, we have a handful of things that, as the section heading suggests, are okay for now but might need to be adjusted with another piece of legislation down the road. Time will tell.
Monthly Finance Reporting
The law requires a monthly online posting of any expenditure over $100 from any source for any purpose, as long as it does not include salary information or any other information that can be used to identify an individual employee. Similarly, monthly credit card statements must also be posted, and no personal credit cards may be used for the direct benefit of the school if the purchase exceeds $250.
Although this is generally the same standard that our traditional public schools are held to, this is just a burdensome requirement across the board. I don’t hate the intent – I think if you’re spending taxpayer money then you should need to give a detailed accounting for it, but this seems like a lot. Perhaps it is not as heavy of an administrative burden as it seems, so I’ll defer to our schools on this one.
Administrator Presence
School administrators are now required to be physically present onsite during school operating hours.
This might be difficult to implement. Who is considered a school administrator? What happens if that person (or people) are sick or have professional development offsite? Are they permitted to step away to eat lunch, or do they need to eat in the school? Is there a penalty if they fail to remain onsite? Admittedly, this is a minor concern, but something that might need to be clarified down the road.
Virtual Student Access to Teachers
Students attending virtual charter schools must now have access to live teachers during the day for teaching, tutoring, assistance, etc.
Overall, this is a good thing. Regardless of what type of school the student attends, they should have access to a teacher who can help them understand the course material – it is just unclear how this might affect the finances of virtual schools. I can’t speak to how virtual teachers’ contracts are structured. If they are paid by the instructional day (perhaps synchronous instruction three days a week), requiring them to be available each instructional day could raise costs significantly. Again, I will defer to our schools to determine how this actually works in implementation.
Gubernatorial Authority Over Boards
The Governor now has the authority to remove board members from authorizers and charter schools for a variety of reasons, including chronic absenteeism and criminal convictions, and gives him authority to appoint replacements in the event of a removal/resignation.
Managing gubernatorial appointments is already contentious in South Carolina. There are appointments that the Governor has made that the Senate is not confirming and it has resulted in some conflict between them. Although the appointments in this case are not subject to Senate approval, letting the Governor reach all the way down to the actual school board seems like overreach and adds that much additional burden to his Office. A more reasonable solution would be to allow authorizers to fill vacancies on charter school boards, but we will see how often this power needs to be invoked.
Final Takeaways
S.454 represents a significant step forward in the charter space for both schools and authorizers. Although the bill is not perfect (and, to be clear, no bill is ever perfect) South Carolina is well on its way to solidifying the foundation of our charter sector so these schools can continue to grow and expand tuition-free educational options for all of our students. I am interested to see what comes next – will the legislature opt to hold public schools to the same accountability and transparency standards? Will our charter authorizers and our schools rise to the challenge? I think yes.
