Judge rules against California charter schools in class-action funding lawsuit

A California Superior Court judge ruled against hundreds of online and other non-classroom-based charter schools in a class-action lawsuit last week, declaring that the state did not wrongfully deprive the schools of education funding during the pandemic.

The ruling, handed down July 27, was a blow to the schools, which are called non-classroom-based charter schools because at least 20% of the learning occurs off campus, often online or at home.

Three San Diego-based charter school networks — the Classical Academies, the Learning Choice Academy and Springs Charter Schools — and the parents of several enrolled and waitlisted students sued the state of California last fall, saying the state did not equitably fund their charter schools by accounting for the new students they enrolled during the last school year.

The lawsuit was deemed a class-action petition representing about 300 non-classroom-based charter schools across California that enrolled about 200,000 students, said Lee Rosenberg, attorney for the plaintiffs.

Those schools took on about 25,000 new students last school year that weren’t paid for by the state, he said.

The state typically funds all public schools, including charter schools, on a per-student basis, which means the more students a school enrolls, the higher its state funding.

Last year, because of the pandemic and related school closures, the state initially froze public school funding levels to stabilize schools’ and districts’ finances.

Then state officials unfroze the funding and gave K-12 public schools funding for their existing and newly enrolled new students last year — except for non-classroom based charter schools, which provided mostly online, home school and non-traditional education services. Their funding remained frozen for existing students.

State leaders chose not to fund new students at those non-classroom-based charter schools because there is a history of fraud and abuse by some of those kinds of schools, the state attorney general wrote in a recent court filing.

“The state determined that (non-classroom based charter schools) raised major concerns for fraud and abuse and inferior education and decided to limit the incentive for expanding that model of education during the pandemic while the state considered the underlying policy around (non-classroom based charter schools),” Atty. Gen. Rob Bonta wrote in a June court filing signed by him and others in his office.

During the pandemic last year, thousands of California students left their original school districts or charter schools and enrolled in non-classroom based charter schools, so much so that some charter schools reported waiting lists of thousands of students. Charter school leaders said many families knew these schools had years of experience and expertise serving students remotely, which school districts were being forced to learn to do quickly because of the pandemic.

The lawsuit plaintiffs argued that was a key reason they deserved to be funded like the other districts for each new student.

“Under the student defunding law, students’ education funding remains at the public school that they depart — thus rewarding public school districts for not serving students they have failed to adequately serve,” the complaint said.

The funding freeze lasted for last school year.

Plaintiffs argued that this harmed the education of students at non-classroom-based charters because their schools were forced to spread the same amount of state money across more students. They said state school funding is supposed to follow the student, no matter which public school they choose.

“We’re obviously really disappointed. We’ve been fighting for almost a year now,” Rosenberg said. “The state for the first time in its history, that we’re aware of, decided not to fund the education of every single student in the state of California, and we just thought that was immoral and unacceptable.”

Sacramento Superior Court Judge James Arguelles ruled against the charter school plaintiffs because, he said, they failed to show that their students were deprived of an education last school year as a result of the lack of a funding increase.

“Petitioners have not established that their (non-classroom based) students actually or effectively have been deprived of an education for any period during the 2020-21 fiscal year,” Arguelles wrote.

He also ruled against them because he didn’t agree with their arguments that the state was bound by a contract to fund each of their students at a certain level.

State attorneys had previously argued that there is no contract between the state and charter schools that prevents the state from changing how much it funds or does not fund charter schools. It’s the state Legislature’s authority to decide how much public schools receive.

Charter school advocates for months have fought the perception that non-classroom-based charter schools are fraudulent. The California Charter Schools Assn. has argued that a few bad actors should not taint all non-classroom-based charter schools, which provide an alternative model of education that many students can’t get from their school districts.

Rosenberg said his clients are contemplating next steps and whether to appeal Arguelles’ decision.