Members of the Oklahoma Senate voted Tuesday to bring Oklahoma’s charter school laws in line with national standards and prevent charter-school sponsors from using the schools as a de facto profit generator.

Under Oklahoma law, an entity that sponsors a public charter school—often a traditional public school district—is allowed to assess the charter school a fee of up to 5 percent of the charter’s state funding “for administrative services rendered.” While charter schools have substantial independence, they are required to have a sponsoring entity.

House Bill 3369, by Rep. Jon Echols and Sen. Kim David, would reduce the administrative fee to a maximum of 3 percent and would require the sponsoring district to provide an invoice of services rendered in exchange for the fee.

David said Oklahoma’s fee structure is out of line with national standards.

“Currently, there are only two school districts in the state that charge 5 percent,” said David, R-Porter. “All the rest of them charge 3 percent. The national average is 3 percent. So this is making all of them the same—which is the national average.”

The legislation also establishes a fund to cover the costs associated with the closure of a charter school.

The administrative fee has long been a source of contention. Charter school officials have said they receive little in return for the payments, which are substantial. When a 2-percentage-point increase in the administrative fee was announced last year in Oklahoma City, officials estimated it would shift up to $775,000 from all charter schools to the sponsoring traditional Oklahoma City district.

When the Oklahoma City school district announced it was raising its “administrative” fee from 3 percent to 5 percent, the operator of two charters schools—Families for Education—filed a lawsuit in response. That lawsuit noted Oklahoma City district officials repeatedly said the fee increase was “to make up for the loss of students it incurs due to those students leaving its school to attend the various charter schools” and not for legitimate administrative costs.

Oklahoma City Superintendent Sean McDaniel explicitly linked the fee increase to the district’s loss of students to charter schools in an April 23, 2019 letter.

The lawsuit also said charter schools have requested an itemization of services provided by the district to charters and associated district costs but were informed “that an itemization would not be provided.”

Currently, the Tulsa and Oklahoma City school districts are the only charter sponsors that impose a 5-percent administrative fee. Opponents suggested HB 3369 would harm those two districts.

“There’s going to be a 2-percent decrease,” said Sen. J.J. Dossett, D-Owasso. “What’s going to be the amount of money that Oklahoma City Public Schools, Tulsa Public Schools are going to lose over this?”

He said Tulsa Public School officials “claim that 3 percent is simply not enough to cover the costs.”

“I don’t believe that the schools will lose anything,” David said, noting sponsoring districts will still be allowed to charge for any actual expenses associated with charter-school sponsorship.

“By state law, all expenses have to be refunded,” David said.

Sen. Julia Kirt, D-Oklahoma City, said one charter school has closed in Oklahoma City every three to four years, on average.

“I’m afraid that this escrow account that we’re creating will not be enough to help the districts if they end up in a situation with charters that can’t steward those children sufficiently,” Kirt said.

David noted HB 3369 requires each charter school to pay into a new fund at a rate of $5 per charter student until the fund has $1 million in it. That money will cover the costs when a charter school ceases operation in the future, she said.

“Currently, there is no fund available for the schools to be reimbursed for the cost of closures,” David said.

David noted the 5-percent administrative fee allowed in Oklahoma is fifth highest in the nation “for what we charge our charter schools,” and it is not clear what sponsors provide in exchange for that payment.

Under HB 3369, David said sponsoring districts “don’t get to bring in any additional fees for no services rendered.”

HB 3369 passed the Oklahoma Senate on a 38-7 vote. Sen. Mary Boren, D-Norman, and Sen. Michael Brooks, D-Oklahoma City, joined Republicans in support of the bill.

HB 3369 now proceeds to the Oklahoma House of Representatives.