California Bans For-Profit Charter Schools

Governor Brown signed legislation banning for-profit charters. A few states, e.g. New York, banned for-profits long ago. The impetus for the legislation was the manipulation of student enrollment by K12 online management company. The suit was settled for a $168.5 million claim.

California has relatively few for-profit charters compared to Florida. Over forty percent of Florida charters are run by for-profit management companies like Academica and CSUSA and Newpoint. Florida law requires charters to be non-profit, but the law is circumvented. The management companies create a separate limited liability company (llc) with its own governing board which they appoint. This llc contracts with local school boards to open a charter. Then, the llc company subcontracts almost 100% of its public funding from the state to the for-profit management firm. These management companies are protected from public scrutiny.

Banning for-profit charter management does not stop all financial abuse at the expense of the public. It does, however, help to limit the excessive corruption and exploitation that plagues the charter industry.

Posted in California, Charter School Management, Charter Schools, Public Education.


  1. The information stated about the llcs and governing boards is not accurate.
    It is correct that only non-profit governing boards may apply for a charter school in Florida. Once the charter is granted and a contract executed with the local school district, that non-profit charter school board may contract with a for-profit or non-profit management company. A management agreement between the two parties is required and reviewed by the local school district to ensure support is provided and terms are fair to the non-profit charter school board. A llc management company may be possible and the non-profit board could contract with them but most of Flordia’s for-profit organizations are not llcs, nor do they have any role in governance over the school.
    Are there instances where this feels like a make-believe non-profit governing board, as alluded to in this article? Sure. That’s often under speculation. Florida banning for-profits management companies would be a miracle and near demise to charters in Florida. In the least I’d love to see legislation that moves to require for-profit companies who receive X% of profits from tax-payer funds be required to follow the same financial/public transparency laws as non-profits. I think something like that is more likely to be accepted here.

    • Hmm, not sure what you are referring to. See for example, the website for the Bay Area Charter Foundation, llc. It is the Board of Directors for a number of CSUSA charter schools.

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