Chartering Authority Must Make Findings Supported by Substantial Evidence Showing it Considered Increases in Academic Achievement for All Groups of Pupils Served by the Charter School as the Most Important Factor in Deciding Whether to Revoke a Charter

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In American Indian Model Schools v. Oakland Unified School District (June 23, 2014, 139652) --- Cal.App.4th ---, the California Court of Appeal recently clarified a charter school may not be revoked unless there is substantial evidence in the record showing the chartering authority considered increases in academic achievement over time for all numerically significant student subgroups served by the charter school as the most important factor in deciding whether to revoke the charter.

Facts

American Indian Model Schools ("AIMS") is a nonprofit corporation that operates three independent charter schools in Oakland, California, all authorized by Oakland Unified School District.  Students attending AIMS' charter schools have consistently earned high Academic Performance Index ("API") scores at the mid to high 900 level signifying outstanding academic achievement. 

Education Code section 47607(c)(1) provides that a charter may be revoked if its chartering authority finds, through a showing of substantial evidence, that the charter school did any of the following: (1) committed a material violation of any of the conditions, standards, or procedures set forth in the charter; (2) failed to meet or pursue any of the pupil outcomes identified in the charter; (3) failed to meet generally accepted accounting principles, or engaged in fiscal mismanagement; (4) violated any provision of law.  Following an extraordinary audit conducted by the Fiscal Crisis and Management Assistance Team ("FCMAT") which uncovered evidence of conflict of interest violations, fiscal mismanagement, and improper use of public funds at AIMS' operated charter schools, the Oakland Unified School District took steps to revoke all three AIMS' charters. 

As part of the revocation process, the District issued a resolution revoking the charter of all three AIMS' schools on grounds including fiscal mismanagement.  The District in its resolution indicated that it has considered increases in AIMS' pupil academic achievement and recognized that academic performance was an important factor, but found that the other factors, including fiscal mismanagement and AIMS' failure to acknowledge or address many of the violations, weighed in favor of revocation.  Following the District's decision to revoke, AIMS appealed the revocation to the Alameda County Board of Education and the County Board upheld the revocation decision.  Since the revocation was for reasons including fiscal mismanagement, State funding was cut off for all three charter schools per Section 47607.

AIMS sued Oakland Unified in superior court challenging the revocation and requested a preliminary injunction to stop implementation of the revocation and reinstate State funding pending resolution of the appeal process.  The superior court granted AIMS' requested preliminary injunction concluding that AIMS demonstrated a likelihood of prevailing at trial since the record did not contain substantial evidence that the District complied with the requirements of Education Code section 47607(c)(2), and considered increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to revoke the charter.  The District appealed asserting the superior court incorrectly interpreted what Section 47607(c) requires and abused its discretion by finding AIMS was likely to succeed at trial.

Decision

Since the School District appealed the superior court's order issuing a preliminary injunction, the focus of the decision was whether the superior court abused its discretion when it granted the preliminary injunction.  However, to determine whether the superior court abused its discretion, the Court of Appeal had to determine whether AIMS was likely to prevail on the merits, and to get there, the Court had to determine what Education Code section 47607(c) requires.

To meet the requirement of Education Code section 47607(c), the Court determined there must be findings supported by substantial evidence that the chartering authority considered increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to revoke a charter.  Since the Court found there was no evidence in the record that the District considered increases in academic achievement of all numerically significant subgroups served by AIMS as the most important factor when deciding whether to revoke, it determined that AIMS was likely to prevail on the merits and affirmed the order of the superior court granting the preliminary injunction.

The first half of the Court's analysis weighed the harm to the AIMS schools and its students if the preliminary injunction was not granted.  Without the injunction, the charter schools would be shut down forcing their students and staff to search for new schools.  According to the Court this would result in irreparable harm to the AIMS schools and its students.  Oakland Unified asserted that continuing to fund a school accused of mismanaging public funds would cause irreparable harm.  Ultimately, the Court found the potential harm to AIMS and its students substantially outweighed the potential harm to Oakland Unified.

The second half of the Court's analysis looked at the likelihood AIMS would ultimately prevail in its challenge to the revocation.  The Court highlighted that the District's resolution revoking the charters of the AIMS schools only noted AIMS' high API scores from the prior school year and made "conclusory statements" that the District considered AIMS high academic achievement as part of the decision to revoke. The Court of Appeal found that the content and quality of the record did not reflect that the District considered academic achievement as the most important factor.  Furthermore, the Court found that Oakland Unified provided no evidence that it took into account increases in academic achievement over time for all numerically significant subgroups as defined by Education Code section 52052.  Ultimately, the Court concluded there is a reasonable probability that AIMS will prevail in its challenge of the revocation, and therefore, the issuance of the preliminary injunction was appropriate.

What This Means To You

The Court recognized that a charter school may be revoked based on any one of the four criteria in Section 47607(c)(1) even if its students have high academic achievement.  High academic achievement does not insulate a charter school from having its charter revoked.  However, the Court clarified that when making the decision to revoke, a chartering authority must consider increases in pupil academic achievement as the most important factor and there must be substantial evidence in the record demonstrating that the authorizer gave extra weight to the academic performance of all numerically significant subgroups of students served by the charter school when considering whether to revoke the charter. 

To satisfy the requirement of Section 47607(c)(2), future revocation decisions should include findings supported by substantial evidence that the chartering authority considered increases in academic achievement over time for all pupil subgroups served by the charter school as the most important factor in deciding whether to revoke.

 

Topics:  Charter Schools, Injunctions, School Districts

Published In: Civil Procedure Updates, Civil Remedies Updates, Education Updates, Nonprofits Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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