Court rejects lawsuit over funding for nonclassroom-based programs; CDE reminds nonclassroom-based charters to obtain funding determination

On July 27, 2021, a Sacramento County Superior Court rejected claims by online and hybrid-learning charter schools that the state’s new funding formula implemented during the pandemic illegally underfunded new students enrolled in such schools. In a 16-page ruling, Judge James P. Arguelles found that the funding changes did not violate the state constitution.

The lawsuit challenged part of Senate Bill 820, which recalculated school funding during the pandemic when schools were shut and then virtual. The new formula allotted the same Average Daily Attendance (ADA) funding for schools in the 2020-21 academic year as they received the previous year but allowed district schools and classroom-based charter schools to receive additional funding for student growth if they had projected and could show increased enrollment.

Non-classroom-based charters, defined as schools where students spend less than 80% of their time in a physical classroom, were not eligible for the recalculation because their funding is based on several factors in addition to ADA.

Four nonclassroom-based charter schools and more than a dozen of their students filed a suit, which later received class action status, arguing that they would lose millions of dollars under the new formula and cause thousands of students to receive a substandard education.

In rejecting that argument, the court found that the schools did not provide evidence that, as a result of the state’s changes, the students “actually or effectively have been deprived of an education for any period during the 2020-21 fiscal year.”

In a separate development, the California Department of Education recently released a reminder to nonclassroom-based charter schools to submit a funding determination form, so they will not lose money in the event that their in-person enrollment drops below 80% due to the pandemic.