Lawmakers’ attempts at enacting charter school and school accountability reforms in the wake of high-profile charter fraud cases have once again failed, after Gov. Gavin Newsom vetoed a bill that would have added a raft of oversight requirements.
Senate Bill 414, authored by Sen. Angelique Ashby, D-Sacramento, and backed by charter school advocates, would have implemented dozens of changes to state law, including creating an education inspector general, adding new requirements for school audits and more strictly regulating school vendors.
Earlier this year, charter school advocates had fought vigorously against Assembly Bill 84, another charter school accountability bill that was more extensive in scope and would have automatically reduced some charter schools’ per-pupil funding based on how much in-person instruction they offer.
But the backers of both bills later came together to make SB 414 a compromise bill. Most of AB 84’s components were absorbed into SB 414, though not the provision that would have automatically reduced per-pupil funding.
AB 84 still exists as a two-year bill and has been moved to the inactive file.
Its author, Al Muratsuchi, D-Torrance, who chairs the Assembly’s education committee, said negotiations on SB 414 were almost complete but had reached an impasse shortly before the legislative deadline.
He said that to his surprise, changes were made to the bill without his involvement, and Ashby advanced it despite a lack of consensus.
Newsom vetoed the bill because of sections he said were “unworkable, would face legal challenges, and require hundreds of millions of dollars to implement,” according to his veto message.
He also said some provisions added at the last minute would violate agreements he made during his first term. He did not specify which provisions, and a spokesperson declined to elaborate, saying the veto message “speaks for itself.”
In an emailed statement, Ashby said her ultimate bill was the result of 80 hours of negotiations and incorporated recommendations from state-level reports and audits.
“I fought to advance SB 414 because it is a massive overhaul to charter school accountability that seeks to achieve sweeping reform to prevent fraud and mismanagement in California, while protecting precious taxpayer resources intended to improve academic outcomes for all our students in all our schools,” Ashby said.
Newsom said he wants involved parties to work out an agreement for the next legislative session. “This legislation must ensure that public funds are properly utilized, address fraud and malfeasance, improve accountability and oversight, and acknowledge our fiscal reality to allow for successful implementation,” he wrote.
“I thank Gov. Newsom for his veto of SB 414 so we can get back to the original plan of negotiating a compromise bill,” Muratsuchi said in an interview.
The California Charter Schools Association also said it looks forward to continuing talks.
“Although we are disappointed in the governor’s veto, we are proud of the broad coalition that helped advance this bill and the significant progress we made together,” said Myrna Castrejón, the group’s president and CEO, in a statement. “We look forward to working with the administration and legislature to find a viable path that continues this progress in 2026.”
State leaders have struggled for years to address weaknesses in education laws and policies that have been highlighted by high-profile charter school cases, most notably that of the A3 charter school network, whose founders manipulated school funding, enrollment and attendance to bilk the state of $400 million.
Many of these cases have involved networks of so-called non-classroom-based charter schools, such as home-schooling, online and independent-study charters, that are under common management by an outside corporation created by the same people who created the schools. Such corporations take significant chunks of the schools’ revenue in exchange for providing much of the schools’ services, and they often hide details of how they spend the schools’ money.
Meanwhile, a statewide moratorium on new non-classroom-based charters will expire Jan. 1.
State leaders established it six years ago in order to buy time to implement reforms before allowing such charters to proliferate. But no significant updates have become law since then, and lawmakers have not approved an extension of the moratorium.
Here are some of the changes SB 414 would have enacted:
- Require schools to disclose in their audits their enrollment and attendance, their top 25 payments or transfers, their five highest-paid employees, a sampling of credit card transactions, a procedure to detect unusual high school enrollment patterns and more
- Require that auditors, not schools, select audit samples
- Establish an education inspector general to investigate fraud and misappropriation of funds at districts, charters and charter management organizations
- Require the state to identify and publish a list of charter school networks each year, and require auditors to identify networks and their member schools
- Add regulations for school vendors — including prohibitions on paying for sectarian programs, amusement park or zoo annual passes, private school tuition and reimbursing parents for vendor services
- Make changes to the funding determination process for non-classroom-based charters, including requiring all schools in a charter network to apply for funding at the same time
- Establish an accountability process for charter authorizers whereby authorizers who fall short in overseeing their charters must receive “technical assistance”
- Rename non-classroom-based charter schools “flex-based”
- Extend the non-classroom-based charter moratorium to June 30