Adelita Grijalva Introduces Bill Closing For-Profit Charter School Loophole

Representative Adelita Grijalva (D-AZ) has introduced a bill to close a loophole that for-profit charter schools use to receive federal funding.

The U.S. Court of Appeals Ninth Circuit Court ruled in 2006 under the Arizona State Board v. United States Department of Education decision that "elementary schools" and "secondary schools" were defined by the Elementary and Secondary Education Act (ESEA) of 1965 and the Individuals with Disabilities Education Act (IDEA) solely as non-profit entities.

For-profit charter schools were thus ruled ineligible for federal funding, but they found a loophole: by reorganizing as for-profit operators of nonprofit organizations, they could receive federal funds.

As a result, Rep. Grijalva's Championing Honest and Responsible Transparency in Education Reform (CHARTER) Act tightens the rules to ensure that charter schools that enter into contracts with a for-profit entity to operate, oversee, or manage the charter school do not receive federal funding.

"For too long, for-profit companies in Arizona and across the country have exploited loopholes to cash in on our public education system — putting profits ahead of students and operating with little accountability," Rep. Grijalva said in a press release. "That's unacceptable. Every dollar meant for our kids should be going into classrooms, teachers, and resources — not into corporate pockets."

Representative Rosa DeLauro (D-CT), the bill's cosponsor, added, "For-profit companies are disguising themselves as schools, trading in taxpayer funds for boosted profits at the expense of our children's learning."

"For-profits, unlike non-profit organizations, are responsible for maximizing profit for their owners and investors, and that creates tension between what is best for students and what is best for profiteers," Rep. DeLauro continued. "The CHARTER Act would reaffirm federal law and ensure that for-profit education management organizations can no longer exploit loopholes that have given them access to funding intended for non-profit entities. Education empowers the American Dream, and every child deserves access to a quality education that puts them first— not profits for owners and investors."