BILL NUMBER: S6628
SPONSOR: JACKSON
 
TITLE OF BILL:
An act to amend the education law, in relation to reimbursing charter
schools for leasing certain facilities, and prohibiting charter school
employee contracts from including a non-disclosure agreement; and to
repeal certain provisions of such law relating thereto
 
PURPOSE:
The purpose of this bill is to prohibit the New York City school
district from reimbursing charter schools for their expenses on renting
or leasing space in a private facility.
 
SUMMARY OF PROVISIONS:
Section 1 amends subparagraph 1 of paragraph (e) of subdivision 3 of
Section 2853 of the Education Law stating that a city school district of
one million or more shall not reimburse a charter school that rents or
leases space in a private facility.
Section 2 repeals subparagraphs 4 and 5 of paragraph (e) of subdivision
3 of Section 2853 of the Education Law, and renumbers subparagraph 6 as
subparagraph 4.
Section 3 amends paragraph (d) of subdivision 3 of Section 2853 of the
Education Law to require that any capital improvement required to be
made for a non-charter public school in a city school district of one
million or more shall be paid for by the State.
Section 4 amends subdivision 3 of Section 2854 of the Education Law to
prohibit charter schools from including non-disclosure agreements as
part of a contract with any employee or as a condition of employment.
Section 5 amends subdivision 4 of Section 2853 of the Education Law that
requires the New York City Comptroller to conduct annual audits that
shall include, but not be limited to, any matching funds spent on char-
ter schools.
Section 6 is the effective date.
 
JUSTIFICATION:
New York City (NYC) is the only municipality 'in the state that has a
requirement to reimburse private spaces leased by charter schools. A
Class Size Matters (CSM) report(1) analyzing charter school rental
subsidies, facility upgrades and expenditures for co-located public
schools; found that the New York City Department of Education (DOE)
appeared to overspend on lease payments to 39 charter schools in an
amount that exceeded their base rents.
CSM reported a 41% increase in rental subsidies from FY2019 to FY2020.
In FY2020, the DOE paid $11.6 million in rental subsidies for 8 charter
schools whose Charter Management Organization, affiliated organization,
LLC, or foundation owned their own spaces. In some cases, the base rents
of these charter schools also increased by as much as 400% in one year,
raising questions about whether the rents were fairly assessed, and
whether the increases reflected improper self-dealing. In one especially
egregious example, the rent for the two Success Academy charter schools
housed at Hudson Yards increased from approximately $793,000 to over
$3.4 million despite that the space is owned by the Success Academy
Charter Management Organization. This increase in rent allowed Success
to charge the DOE $3 million in rental subsidies in FY2020 for two
schools, a 38% increase from the previous year.
DOE continues to rent buildings to charter schools, rather than having
the schools rent their own spaces which would allow the city to receive
60% in state reimbursement. In FY2020, NYC was ineligible to receive an
estimated $8 million in state funds by holding leases for charter
schools. The cost to the DOE of rental payments for charter schools is
increasing fast and will likely to continue to do so, as enrollments
expand and rents increase, funds which could be used instead to upgrade
and expand the capacity of our public schools.
 
LEGISLATIVE HISTORY:
2023-2024: 5.5461 - Referred to Education/A.5763 - Referred to Education
2021-2022: S.8459 - Referred to Education
 
STATE AND LOCAL FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
(1) Class Size Matters, "DOE Overspending on Charter School Facility
Costs and Underspending on Matching Funds to Public Schools: Confirma-
tion of Class Size Matters' Original Findings," March 2021.
https://secureservercdn.net/198.71.233.96/3zn.338.myftpupload.com/wp-con
tent/uploads/2021/03/CSM_DOE-Spending_Charter-Schools-Facilities_FINAL
-3.21.pdf

Statutes affected:
S6628: 2853 education law, 2853(3) education law, 2854 education law, 2854(3) education law, 2853(4) education law