California Charter School Reform Bill Vetoed by Governor Newsom

California Governor Gavin Newsom has vetoed Senate Bill 414, a legislative attempt to reform charter school oversight and accountability, following significant concerns regarding its feasibility and financial implications. The bill, authored by Senator Angelique Ashby, sought to introduce a series of regulatory measures in response to a series of high-profile fraud cases involving charter schools.

Senate Bill 414 aimed to create an education inspector general, enforce stricter audit requirements, and impose new regulations on school vendors. These changes were designed to strengthen accountability and prevent mismanagement of public funds in California’s charter school system. The initiative gained traction after the state faced mounting criticism over fraudulent activities, notably the A3 charter school network, which manipulated records to defraud the state of approximately $400 million.

Earlier in the legislative session, charter school advocates had also pushed for Assembly Bill 84, which proposed automatic funding reductions for charter schools based on the amount of in-person instruction provided. However, discussions led to a compromise, and many of AB 84’s key components were incorporated into SB 414, although the controversial funding reduction clause was ultimately excluded.

Despite extensive negotiations—totaling over 80 hours—concerning SB 414, the bill faced an unexpected impasse just before the legislative deadline. Al Muratsuchi, chair of the Assembly’s education committee and the author of AB 84, expressed surprise at the changes made without his input.

In his veto message, Newsom outlined that certain sections of the bill were “unworkable” and would likely face legal challenges, alongside potentially requiring hundreds of millions of dollars to implement. He did not identify the specific provisions that led to his decision, and a spokesperson for the governor stated that the veto message should be interpreted as final.

In response to the veto, Ashby emphasized the collaborative nature of her bill, highlighting that it was crafted to address critical gaps in charter school management and accountability. “I fought to advance SB 414 because it is a massive overhaul to charter school accountability that seeks to achieve sweeping reform to prevent fraud and mismanagement in California,” she stated in an email.

Newsom has encouraged stakeholders to reach a consensus for future legislative sessions, insisting that any forthcoming proposals must ensure responsible use of public funds, enhance accountability, and take into account the state’s fiscal realities.

Muratsuchi, reflecting on the governor’s decision, expressed gratitude for the veto as a chance to revisit negotiations for a compromise that could address the pressing need for reform.

The California Charter Schools Association also acknowledged the disappointment from the veto but expressed optimism about continuing discussions with the state’s administration and legislature to advance the reform agenda. President and CEO Myrna Castrejón stated, “We look forward to working with the administration and legislature to find a viable path that continues this progress in 2026.”

The struggle for reform comes against the backdrop of a moratorium on new non-classroom-based charter schools, which will expire on January 1, 2024. This moratorium was implemented six years ago to allow time for legislative updates to be enacted in response to growing concerns about charter school governance.

SB 414 proposed several significant changes, including:

– Mandating schools to disclose detailed information in their audits regarding enrollment, attendance, and financial transactions.
– Requiring that auditors, rather than schools, select audit samples to ensure impartiality.
– Establishing an education inspector general to investigate fraud and misappropriation of funds.
– Compiling and publishing an annual list of charter school networks and their affiliated schools.
– Implementing regulations on school vendors to prohibit certain expenditures, including sectarian programs and amusement park passes.
– Modifying the funding process for non-classroom-based charters and extending the moratorium on new charters.

The future of charter school reform in California remains uncertain, with stakeholders now looking ahead to the next legislative session for potential solutions to ongoing accountability issues.