California Charter Schools: Funding, Authorization, and Oversight

California charter schools are publicly funded, tuition-free schools that run independently of their local school district under a written charter agreement. They are governed by the Charter Schools Act of 1992, beginning at Education Code Section 47600.¹ They receive state money through the same funding formula that supports traditional districts, cannot charge tuition, and cannot screen students by entrance exam or academic record.² In exchange for operational freedom over curriculum, schedule, and budget, each school signs on to a set of performance, financial, and transparency obligations that its authorizer enforces through annual audits and periodic renewal.

The rest of this guide walks through how a charter school gets approved, how long it lasts, how it is funded, how it finds a building, and what federal and state rules stay in force no matter what the charter says.

How a Charter School Gets Authorized

A local school district’s governing board is the primary authorizer. The board reviews the petition, votes to approve or deny it, and then oversees the school once it opens. If the district denies the petition, the petitioner can appeal to the county board of education. If the county also denies it, a further appeal to the State Board of Education is available in most cases.³

County boards can also directly authorize countywide charter schools that cross district lines, but those petitions have no State Board appeal if denied.⁴

What the Petition Must Contain

A charter petition must include reasonably comprehensive descriptions of fifteen elements listed in Education Code Section 47605. Among them: the educational program and annual goals, how student progress will be measured, governance structure, employee qualifications, health and safety procedures, admission policies, financial audit procedures, student discipline processes, staff retirement coverage, and closure procedures.³ Petitions covering high school grades must also explain how parents will be informed about course transferability and college entrance eligibility.

The petition needs signatures to demonstrate community support. A conversion petition generally requires signatures from at least half the teachers at the school being converted, while a new start-up gathers parent or guardian signatures showing meaningful interest. A board can deny a petition on signature grounds alone, so exact numbers should be confirmed with the local district before filing.

Hearing and Decision Timelines

Once a completed petition is filed, the district board must hold a public hearing within 60 days and then approve or deny the petition within 90 days of receipt. Both sides can agree to extend that deadline by another 30 days.³

Grounds a Board Can Use to Deny

A denial cannot be a general rejection. The board must issue written factual findings tied to the specific petition, and those findings must rest on at least one of five statutory grounds:

The proposed educational program is unsound for the students the school intends to serve.
The petitioners are demonstrably unlikely to carry out the program described.
The petition lacks the required signatures.
The petition is missing required affirmations, including nondiscrimination and nonsectarian commitments.
The descriptions of the fifteen required elements are not reasonably comprehensive.

A denial that does not rest on at least one of these grounds, with specific evidence to back it up, is vulnerable on appeal.

Appealing a Denial

Petitioners have 30 days to appeal a district denial to the county board, which follows the same 60-day hearing and 90-day decision schedule. If the petition on appeal contains new or significantly different terms, the county must return it to the district for reconsideration within 30 days.³

A county denial can be appealed to the State Board of Education within 30 days, but the State Board’s review at that stage is limited to whether the district or county abused its discretion. It reviews the record rather than starting fresh, and the petitioner must argue with specific citations how the earlier decision-maker got it wrong.⁴ One exception: if a county oversees only a single district, a petitioner denied by that district can go directly to the State Board, which then conducts a full de novo review.

Charter Length, Renewal, and Revocation

A charter is granted for up to five years. Renewal uses the same petition standards but adds a performance layer, so the authorizer must evaluate results on the state’s accountability indicators before deciding.⁵

High-performing schools receive substantial protection. An authorizer cannot deny renewal to a school that, for the two consecutive years immediately before the decision, earned the two highest performance levels on all state indicators for which it received ratings. The same protection applies to schools that matched or exceeded the state average on all academic measures and outperformed the state average for a majority of historically underperforming student subgroups. Those schools can receive renewal terms of five to seven years.⁵

Even a strong performer can be denied renewal if the authorizer finds it is demonstrably unlikely to implement the renewed program due to serious fiscal or governance problems, or if it is not serving all students who want to attend.

Revocation Before a Charter Expires

An authorizer can revoke a charter mid-term, but only after a formal process backed by substantial evidence on one of four grounds: a material violation of the charter’s conditions, failure to meet the student outcomes identified in the charter, fiscal mismanagement or failure to follow generally accepted accounting principles, or a violation of law.⁵ Before revoking, the authorizer must notify the school of the violation and give it a reasonable opportunity to cure, unless the problem poses a severe and imminent threat to student or staff safety.

How California Charter Schools Are Funded

Most operating revenue flows through the Local Control Funding Formula, the same system used by traditional districts. LCFF allocates money based on Average Daily Attendance, so a school’s funding rises and falls with how many students actually show up. For the 2025–26 fiscal year, base grants per ADA before adjustments range from $10,256 for grades 4–6 to $12,423 for grades 9–12. With grade-span adjustments, a TK–3 student generates $11,323 and a high school student generates $12,746.⁶

On top of the base grant, schools receive supplemental funding equal to 20 percent of the adjusted base grant multiplied by the proportion of students who are English learners, foster youth, or eligible for free or reduced-price meals. Schools with high concentrations of these students receive an additional concentration grant.²

Direct-Funded Versus Locally Funded

How the money actually reaches the school depends on its funding designation. A direct-funded charter school receives its LCFF apportionment from the county treasurer, bypassing the district. A locally funded charter school receives its allocation through its authorizing district.⁷ Direct funding gives schools more control over cash flow, which is why most operators prefer it. Both types remain eligible for categorical grants covering purposes like special education.

Tuition is not an option. State law bars charter schools from charging it, so financial stability depends almost entirely on consistent enrollment and attendance.

Getting a Building: Proposition 39

Facilities are one of the hardest practical problems for a new charter school. Charter schools cannot issue general obligation bonds. Proposition 39, codified at Education Code Section 47614, addresses the gap by requiring school districts to provide facilities to charter schools operating within their boundaries.⁸

The space must be “reasonably equivalent” to the classrooms and buildings other public school students in the district use. It must be contiguous, furnished, and equipped, and the district must make reasonable efforts to place the charter school near its preferred location. The charter school pays only a pro-rata share of facility costs the district funds from unrestricted general fund revenues, and the district cannot charge beyond that share.

To trigger this right, the charter school must project at least 80 units of Average Daily Attendance from students living within the district. The school submits enrollment projections each year, and the district allocates space based on those numbers. If actual attendance falls short of the projection, the school reimburses the district for the over-allocated space at rates set by the State Board of Education.⁸

Oversight, Audits, and Board Transparency

Authorizing costs money, and authorizers can recover some of it. The law caps the oversight fee at 1 percent of the charter school’s revenue. If the authorizer provides substantially rent-free facilities, the cap rises to 3 percent.⁹

Every charter school must submit an annual independent financial audit for the preceding fiscal year to its authorizer by December 15.¹⁰ The authorizer also conducts its own reviews, including site visits and evaluation of progress toward the school’s stated goals. Fiscal mismanagement is both a ground for revocation and a potential source of personal liability for board members.

Charter school governing boards must comply with the Ralph M. Brown Act, so meetings must be open to the public with proper advance notice and posted agendas, with narrow exceptions for closed sessions on personnel or pending litigation. The California Public Records Act also applies, giving the public the right to inspect school documents, contracts, and financial records.¹¹ Board members file statements of economic interest under the Political Reform Act and cannot have a financial interest in board decisions.¹²

Who Can Enroll and Who Can Teach

Charter schools must be nonsectarian and open to all students. They cannot discriminate based on race, gender, disability, nationality, or any other protected characteristic, and they cannot require entrance exams or use academic performance as an admission criterion.¹³ When applications exceed available seats, state law requires a public random lottery, though schools may give preference to students living within the district.

English learners must receive equal access. Under Title VI of the Civil Rights Act, public schools must take reasonable steps to ensure students with limited English proficiency can participate meaningfully in all educational programs, including advanced and extracurricular offerings. Schools must provide language support until a student is proficient enough to succeed in regular coursework and must notify parents with limited English proficiency about school activities in a language they understand.

Teacher Credentials

Charter school teachers must hold a Commission on Teacher Credentialing certificate, permit, or other document appropriate for their assignment, kept on file at the school and subject to inspection by the authorizer.¹⁴ A transition period that allowed teachers employed at charter schools during the 2019–20 school year to obtain their credentials expired on July 1, 2025.¹⁵

Retirement Coverage

For charter schools authorized on or after January 1, 2023, participation in both CalSTRS (for certificated teachers) and CalPERS (for classified staff) is mandatory. Schools authorized before that date could choose in their charter petition among CalSTRS, CalPERS, federal Social Security, or another arrangement. If a pre-2023 school opted into CalSTRS, all provisions of the Teachers’ Retirement Law apply and eligible teachers automatically become members.¹⁶

Federal Obligations That Still Apply

Charter schools are public schools, so federal law reaches them the same way it reaches any traditional school.

Special Education Under IDEA and Section 504

The Individuals with Disabilities Education Act applies in full. Students with disabilities retain every IDEA right, including a Free Appropriate Public Education delivered through an Individualized Education Program.¹⁷ Which entity delivers the services depends on how the charter school is classified under state law. If it operates as its own local educational agency, it carries the responsibility directly. If it is treated as a school within an existing district, the district does.

A charter school cannot cap the special education services it provides or refuse to serve a student whose needs exceed what it currently offers. If the school lacks capacity to deliver an IEP, the responsible entity must contract with another provider or arrange a placement elsewhere at no cost to the family. Section 504 of the Rehabilitation Act also applies, prohibiting disability discrimination in admissions, instruction, and extracurriculars. Schools generally cannot ask prospective students whether they have a disability during admissions, and they cannot “counsel out” students by discouraging attendance because of a disability.¹⁸

Title I and Federal Charter Grants

Charter schools with significant populations of students from low-income families can access Title I funds. Schools where at least 40 percent of students come from low-income households can use Title I money for schoolwide programs benefiting all students rather than targeting only specific individuals.¹⁹ The federal Charter Schools Program also awards competitive grants to state entities, which then subgrant to developers opening new schools or expanding high-quality existing ones. For fiscal year 2026, estimated total federal funding is $60 million, with an expected three to six state-level awards; states must direct at least 90 percent of the money to subgrants for eligible developers, reserve at least 7 percent for technical assistance, and spend no more than 3 percent on administration.²⁰

Tax-Exempt Status

Most California charter schools are operated by nonprofit organizations qualifying for federal tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. To keep that status, the organization must operate exclusively for educational purposes, cannot allow its earnings to benefit any private individual, and cannot engage in political campaign activities or substantial lobbying.²¹ Losing it would trigger a tax liability and disqualify the school from most grants and charitable contributions.

1
California Legislative Information. California Code Education Code 47600 – Charter Schools Act of 1992
2
California Department of Education. Local Control Funding Formula Overview
3
California Legislative Information. California Code Education Code 47605
4
California Department of Education. State Board of Education Appeals Process FAQs
5
California Legislative Information. California Education Code 47607
6
California Department of Education. Funding Rates and Information, Fiscal Year 2025-26
7
California Department of Education. Charter School Funding Types
8
California Legislative Information. California Code Education Code 47614
9
California Legislative Information. California Education Code 47613
10
Fiscal Crisis and Management Assistance Team. Charter School Fiscal Oversight – The Basics
11
California Department of Education. Charter School FAQ Section 11
12
California State Assembly. Assembly Committee on Education – AB 709 Analysis
13
California Department of Education. Nondiscrimination in Charter Schools
14
California Department of Education. Charter School FAQ Section 5
15
California Legislative Information. California Code Education Code 47605.4
16
CalSTRS. SB 1343 Charter School Retirement Requirements
17
U.S. Department of Education. Frequently Asked Questions – Rights of Students with Disabilities in Public Charter Schools under the Individuals with Disabilities Education Act
18
U.S. Department of Education. Know Your Rights – Students with Disabilities in Charter Schools
19
National Center for Education Statistics. Fast Facts – Title I
20
U.S. Department of Education. Expanding Opportunities Through Quality Charter Schools Program CSP Grants to State Entities
21
Office of the Law Revision Counsel. 26 U.S. Code 501 – Exemption From Tax on Corporations, Certain Trusts, Etc.