The Blurry Line in Charter Schools: Are They Public or Private?

For years the legal community has debated the legal status of charter schools and its employees. Charter schools have both public and private aspects, especially when a management company is involved. Here are some of the issues:

1. If the administrator is an employee of the management company and a portion of that position's salary is invested in a private retirement account, is that person still a public school employee and therefore eligible for governmental immunity?

2. Regardless of an employees funding source, is he/she a "public employee" if 100% of the time works in a public charter school?

3. Are charter schools that do not apply for and receive nonprofit status with the state or federal government a charter school? Is it necessary for charter schools to seek nonprofit status since they're already a governmental entity under the authorizing school district?

Now the Ninth Circuit of Appeals has issued a ruling based on a case out of Arizona that further blurs the lines for charter schools and their employees. The ruling states that while charter schools are public schools, they are not bound by all public school laws the same as noncharter schools. In the ruling, the court said charter school employees are not "state actors," a legal term associated with federal civil rights law.

In Colorado, charter schools authorized by the state Charter School Institute must also file for nonprofit status. It's a condition of the charter contract because the CSI is a "state agency" in statute and not a school district the same as the 178 school districts in Colorado. CSI functions as a school district in regard to Special Education law, but doesn't have the same governmental entity status as school districts. This makes it necessary for CSI-authorized charter schools to have their own nonprofit status.

Some charter schools don't file for nonprofit status. Especially charter schools closely associated with their school district, don't apply for separate nonprofit status.

The Ninth Circuit ruling appears to apply to a school that is a separate nonprofit and/or operated by a management company. Since every state's charter schools law is a little bit different, it's hard to say how Colorado's charter schools would fare.

It's important for charter school board members to know and understand the school's legal status and make sure it's in policy and other primary documents. If the school is associated with a management company, employee contracts and service provider contracts should explicitly designate employee positions of the management company and their legal status. Board members new to a charter school that's already in a management company (service provider) contract should understand these peculiarities of administrative positions and ramifications of that designation.

Because there are varied legal opinions on this issue, each charter school governing board should consult their school's legal counsel for direction and to ensure adequate documentation.