SB 1477: School accountability: independent study, educational enrichment activities, oversight, and audit requirements.

(1)Under existing law, once the Controller or county superintendent of schools makes a final determination that specified audits performed by a certified public accountant or public accountant were not performed in substantial conformity with provisions of an audit guide, or that the audit reports do not conform to the provisions of an audit guide, the certified public accountant or public accountant is ineligible to conduct specified audits for 3 years. Existing law requires the Controller to notify each school district and county office of education of those certified public accountants or public accountants determined to be ineligible pursuant to these provisions.

This bill would extend the above-described rules related to the ineligibility of the certified public accountant or public accountant to audits of a nonclassroom-based charter school, as provided, and would additionally require the Controller to notify charter schools of those certified public accountants or public accountants determined to be ineligible to conduct these audits, as provided.

(2)The Charter Schools Act of 1992 specifies the procedures for the submission, review, and approval or denial of a petition to establish a charter school. The act requires a petition for the establishment of a charter school to contain specified information, including a reasonably comprehensive description of the manner in which annual, independent financial audits will be conducted. Existing law, by not later than May 1 of each fiscal year, requires the governing board of each local educational agency to provide for an audit of the books and accounts of the local educational agency, as specified, or make arrangements with the county superintendent of schools to provide for that auditing.

By January 31, 2025, and by January 31 of each year thereafter, this bill would require the governing body of a charter school to review, at a public meeting as an item on the agenda, the annual audit of the charter school for the prior fiscal year, any audit exceptions identified in that audit, the recommendations or findings of any management letter issued by the auditor, and any description of correction or plans to correct any exceptions or management letter issue. By imposing additional requirements on charter schools, the bill would impose a state-mandated local program.

The bill would require an auditor of a nonclassroom-based charter school, when performing certain audits, to take certain actions, including the sampling of certain financial documents, the identification of transfers of funds or assets exceeding prescribed amounts, the identification of transactions that do not meet certain standards, and the preparation of a letter to be included with the audit report, as specified.

(3)Commencing July 1, 2025, this bill would require a school district, county office of education, or charter school to only enter into an agreement for the provision or arrangement of educational enrichment activities with a vendor that is vetted and approved pursuant to the bill. The bill would authorize a local educational agency to expend public funds for the provision or arrangement of educational enrichment activities, provided that all educational enrichment activities, materials, and programs are nonsectarian.

The bill would require the governing board or body of a local educational agency, in approving any contract for vendor services for educational enrichment activities, to establish specified policies and procedures to ensure educational value, pupil safety, and fiscal reasonableness, and would further require that these policies ensure that vendor services for educational enrichment activities meet designated criteria. The bill would require auditing of approval of, and compliance with, policies and procedures established under the bill to be included in designated annual audit reports. The bill would require a vendor contract that will exceed $100,000 in a fiscal year to be approved by the governing board or body of the local educational agency in an open public meeting. The bill would also require any educational enrichment activity provided by a school to be approved and verified by the pupils assigned teacher as relevant to specific educational assignments and educationally appropriate for that pupil.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.