Charter School Chain Sues to Prevent State Cuts

Hoping to stave off potentially crippling funding cuts, a chain of charter schools for high school dropouts has asked a state judge to take its side against the California Department of Education.

The lawsuit filed by Options for Youth and Opportunities for Learning comes a month after the state expanded a yearlong audit of the schools’ finances, and follows a long-standing dispute between education officials and founders John and Joan Hall.

Their publicly funded independent-study schools, which operate through charters with eight school districts, enrolled about 20,000 teenagers last year and collected $39 million from the state.

The complaint, filed Tuesday in Los Angeles County Superior Court, said state education officials have indicated they will challenge the way the schools calculate student-teacher ratios. The Halls count each teacher as nearly two, saying their employees work longer hours and more days per year than instructors at typical public schools. That allows Options and Opportunities schools to substantially boost enrollment and state funding.

The Halls say the practice is not uncommon and was used by more than 1,000 schools in the state last year. Nevertheless, their complaint said, the state might claim that it overpaid the schools $40 million to $60 million during the three years covered by the audit. If so, the effect would be “dire ... threatening the schools’ survival.”

Hilary McLean, spokeswoman for state schools Supt. Jack O’Connell, said she wasn’t aware of any communication between the superintendent’s office and the Halls. The issues probably won’t be resolved until the audit wraps up, probably this spring, she said.

“We really look forward to the conclusion of the audit, and hope that all of these questions will be cleared up when the results of the audit are released,” said McLean, adding that she had not read the lawsuit.

A spokesman for the Options and Opportunities schools said he would have no comment beyond what was in the lawsuit.

The schools are asking the court to declare that their calculations on teacher-student ratios were within the law, and to issue an injunction to keep state education officials from making any cuts.

They also want the court to declare that Options and Opportunities schools followed the law when they counted administrators as teachers, or certificated employees, to satisfy another state funding requirement. The law has since been changed to allow only people who actually teach to be counted.

Under the Halls’ independent study model, students meet with teachers for two hours a week and do most of their work at home. Less than 15% of students who leave Options or Opportunities do so with a diploma, but many more transfer to other high school programs after catching up on credits, which the schools also consider a measure of success.

The Halls and their backers say the schools are needed because dropouts have few academic alternatives. But state education officials have long expressed concerns that the Halls are moving too much of their money into profits.

The three Opportunities charter campuses are operated for profit; the five Options schools are nonprofits. In addition, all the schools contract for management and software services with other private businesses owned by the Halls. The former teachers have refused to disclose profits or other financial details from those companies, and they say they are entitled under the charter law to earn profits.

Charters are independently run but publicly funded schools that operate under contracts. They are aimed at providing innovative programs to boost student achievement. The Halls run the largest independent-study school chain in the state.