Should school districts both oversee and lease to charters?

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A disagreement between the state and some school officials about charter school leases could be resolved by a bill heard in the House Education Finance Committee on Wednesday.

HF954 would allow school districts to serve as both authorizers and landlords of charter schools – and qualify those schools for lease aid from the state.

Rep. Jim Davnie (DFL-Mpls), the bill’s sponsor, says it’s needed to correct the Education Department’s “misinterpretation” of a law intended to reduce conflicts of interest in charter school operations. The law prohibits charter schools from lease arrangements with related parties – including school districts that oversee them, the department has said.

The Minneapolis school district took the Education Department to court last fall after the state refused to pay lease aid for two charter schools overseen by the district and housed in district buildings. The Minnesota Court of Appeals ruled in the department’s favor, and the Supreme Court last month declined to review the decision.

State law is meant to encourage, not stifle, collaboration between charter schools and school districts, Davnie argued. Several Minneapolis charter school leaders and advocates also testified in support of the bill.

The department is still concerned about the potential for conflicts of interest when a district serves as both authorizer and landlord of a charter school, Assistant Commissioner Rose Hermodson said after the hearing. For example, authorizers sometimes have to decide whether to close troubled charter schools. If an authorizer is also reaping financial benefits as the school’s landlord, “Can that decision be fair and impartial?”

Hermodson supports the concept of having districts lease buildings to charter schools, but the department needs clear direction about how to handle potential conflicts, she said.

Charter schools are public but independently operated. State law requires every charter school to have an authorizer, which can be a traditional school district.

The committee laid over HF954 for possible inclusion in its omnibus education finance bill. The bill has a Senate companion sponsored by Sen. Patricia Torres Ray (DFL-Mpls). SF1130 was referred to the Senate Finance Committee last week.