The California State Assembly has passed AB 84, and it's in the hands of the Senate now. The bill aims to prevent fraud at non-classroom-based (i.e. flex-based) charter schools, claiming to close loopholes in funding determination and increasing oversight requirements and costs. The bill comes in response to a scandal in which the A3 charter school network illegally obtained $400M in funding between 2016 and 2019.
By treating every flex-based charter school as guilty until proven innocent, AB 84 will have devastating second-order effects. For many of these schools, the bill is a death sentence, and the communities who rely on them for alternative and inclusive forms of education will be forced to return to the traditional school settings that their children previously struggled in.
Collective punishment
As children, we form an innate understanding of fairness pretty early in our lives. When our teachers punish us for the actions of our peers, we feel wronged. Fairness forms the basis of a lot of American beliefs: you are free to act how you want, but your actions have consequences, and those consequences should be proportional, just, and targeted.
By implicating every charter as complicit in the A3 scandal, AB 84 is such a condemnation of charter schools that it feels like an opportunist attempt to damage the charter school movement entirely.
Policy should be targeted and efficient. If necessary, policymakers should aim to create effective deterrents for undesirable behaviors like fraud. But policies, whether school policies targeting classrooms, or statewide policies affecting thousands of families, are at their best when they surface undesirable behavior when it begins and create mechanisms for swift corrective action.
AB 84 is neither targeted nor efficient. It's a brute-force approach to fraud. Increasing compliance requirements for charter schools and oversight requirements for their authorizers is an expensive long-term solution: its cost scales linearly with new schools, and there's no room for it to become more efficient over time. The California State Legislature itself estimates that taxpayers will cover tens of millions of dollars per year to help schools comply with the requirements in the bill, and that cost will increase as flex-based charter schools become more popular among Californian families.
What if we took a different, more scalable approach?
Fraud happens because those who are supposed to prevent it don't have enough data to see that it's happening. AB 84 tries to increase visibility by spending more money on staff who will manually review documents.
Instead of requiring individual schools and small districts to create their own expensive, unscalable compliance teams, California should use taxpayer dollars more wisely by investing in scalable digital infrastructure that surfaces fraud in real-time, with surgical precision—and without collectively punishing the charter school community for the actions of one organization.
Detection vs. deterrence
The provisions in AB 84 can be broken down into two groups: detective measures and deterrent measures.
Detective measures ensure that schools that are committing fraud will be caught quickly, well before they receive any meaningful amount of funding. These measures only materially impact schools that are committing fraud.
Deterrent measures require all schools to adhere to a higher standard of compliance, regardless of their propensity to commit fraud. These measures impact all schools: they are expensive, they create organizational overhead, and, in some cases, they result in the closure of schools that have consistently followed every law faithfully.
Detective measures are great. They punish bad actors without punishing everyone. They place the burden of compliance on a centralized authority, like the California Department of Education, rather than individual schools that don't have enough resources. They tend to result in more scalable solutions because it's not practical for these centralized authorities to implement local solutions at each individual school.
Deterrent measures—like requiring every school to pay 3 times as much to their authorizers, or requiring authorizers to employ staff to fill certain extensive positions—should only be a last resort, after detective measures have been implemented and are still ineffective. Deterrent measures are a lazy way to punish bad actors, by punishing everyone at the same time.
If California only implemented the detective measures in AB 84, it would find that detective measures are, in and of themselves, deterrents. When the cost of fraud is high and the reward is low—because the fraud will be discovered instantly—fraud is unattractive, and fraudulent organizations are inherently deterred.
More eyes, less red tape
Detection is cheaper than deterrence, and with the right implementation, it can be a one-time cost that scales exponentially.
Consider how the best flex-based charter schools comply with regulations. They tend to be large networks that have more resources. They build or invest in scalable systems, sometimes even building their own internal software platforms, that allow them to maintain compliance.
Smaller charter schools just can't keep up without the same resources. Instead of automated systems that keep data flowing freely, these schools have to contend with manual processes that are slower. The more compliance rules they have to endure, the more they spread that compliance burden throughout the organization.
In our company's internal research, we've found that independent study teachers spend around 20 hours on compliance tasks per month. That's as much as 25% of their working hours. Often, this involves logging into a myriad of online learning platforms that students are working in and copying data into a spreadsheet or taking a screenshot of student work and uploading it to a cloud storage system like Google Drive.
If we continue down this path, this manual task—moving data from point A to point B—will be done by thousands of students, parents, teachers, and administrators every month for years to come. Oversight is essential, but oversight shouldn't have to mean teachers spending a quarter of their time doing data entry. That's time that teachers could spend on improving the exceptional personalized learning experience that flex-based charter schools are known for.
Building scalable systems at the top
Flex-based charter schools rely heavily on certified third-party vendors for online curriculum platforms and other data systems.
The California State Legislature and the California Department of Education (CDE) should take advantage of this by requiring these vendors to invest in data interoperability standards that allow the seamless flow of data between systems without requiring schools to build their own systems, and requiring their student information systems to pass more data to the state to allow the CDE to quickly identify any fraudulent activity.
Data is the bottleneck to detecting fraud, and placing the burden of compliance on vendors as a prerequisite for procurement would ensure that every charter school gets access to systems that make it easier for them to comply, not harder.
With a more scalable solution, everyone's happy: small charter schools can continue to serve their communities without being placed under even more stress with limited resources, and we can still prevent cases of fraud.
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AB 84 suffocates the very educational innovations that charter schools were created to foster. Instead of a one-size-fits-all compliance approach that burdens all schools with unnecessary compliance costs, California should prioritize scalable detection measures that allow for efficient oversight without punishing those who are doing the right thing. A smart investment in technology and data management will lead to a more effective recognition of fraud while enabling charter schools to thrive.
Sometimes, policymakers see policy as their only tool for progress. And when you only have a hammer, everything looks like a nail. But not every situation calls for a hammer, and this is one that might not.
Our goal should be to cultivate an educational ecosystem that ensures accountability while preserving the crucial alternative forms of education that charter schools provide as a supplement to traditional public schools. That balance needs to be thoughtful, precise, and fair. As it stands, AB 84 fails to strike that balance.
