This article is the second of three written by Los Angeles Times education reporter Anna Phillips. The first told the story of charter operators who were making millions of dollars opening subpar charters.

This story is about California’s broken system for authorizing charter schools. Small rural districts with small budgets can collect millions by authorizing charters that open outside their district. Charters that have been rejected elsewhere can go shopping for a friendly authorizer who gladly takes a commission of millions and conducts no oversight.

Its a win-win-lose-lose. The rural district gets money, the charter gets authorized. And no one checks on its quality. The only losers are the public schools in districts where the new charters drain away students and resources, and students who sign up for charters of unknown quality and unpredictable sustainability. Here today, gone tomorrow.

“State law allows school districts to charge charters fees that are meant to cover the cost of monitoring the schools, but it does not restrict how districts use the money. As a result, districts have spent charter oversight fees on sports coaches, textbooks and computers for their own schools.”

”When the California Legislature passed the Charter Schools Act in 1992, it was intended to introduce competition into public education as well as an incentive for districts to experiment. There was supposed to be a marketplace of ideas about new ways of teaching and learning. But what has evolved in some parts of the state resembles an actual marketplace in which charter schools can shop for lenient authorizers and school districts can rake in much-needed cash.

”Before he was elected to the school board for Acton-Agua Dulce, Pfalzgraf recalls attending meetings and watching with growing concern as a line of charter operators sought approval to open new schools. He remembers those meetings as breezy, friendly affairs in which the answer was nearly always yes and district officials asked few questions, even of schools known to have been rejected previously by other districts.

“You’re telling people they’re supposed to vet charters. But they also know that if there’s no charter revenue, they don’t have a job,” Pfalzgraf said. “I think staff was looking at this and going, ‘If I recommend no, what’s going to happen to me?’

The district’s income from charter fees has more than doubled in the past five years, surpassing $3 million last school year. Roughly 25% of its operating budget now comes from those fees, according to its current superintendent.

”Students attending the out-of-town charter schools have not always benefited. Last school year, most of the charters Acton-Agua Dulce oversaw posted lower passing rates on state exams than its own district schools. In four of the charters, more than 95% of students failed the math test…”

“Many of the charters approved by small districts are classified as non-classroom-based, meaning their students receive much of their instruction off campus. Schools in that category typically aren’t a threat to district enrollment numbers because they draw from different markets — home-schooled children, students who work full time and others who have dropped out.

”In Shasta County, for example, a one-school district with 35 students and one part-time administrator has approved three non-classroom-based charters.

”In Kern County, a district with about 300 students has authorized five charters — all but one conducts most of its classes online.

”In one small San Diego County district, charter oversight fees made up nearly a third of its operating budget last school year.”

The districts collect about 3% of the charter’s revenue, a hefty sum. It can add on thousands more for fees of various kinds.

This loophole in the law encourages corruption. It is corrupt for a small district to balance its budget by opening a charter in another district, poaching its students without oversight or acccountability.

This is an invitation to small districts to make money by harming other districts.

The law incentivized greed and malfeasance, not educational improvement.

The law must change!