                                     TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                          OFFICE OF THE ATTORNEY GENERAL
                                                    State of California

                                                  DANIEL E. LUNGREN
                                                     Attorney General
                                         ______________________________________

                                        OPINION            :
                                                           :       No. 97-711
                                       of                  :
                                                           :       April 2, 1998
                             DANIEL E. LUNGREN             :
                                Attorney General           :
                                                           :
                              ANTHONY DaVIGO               :
                             Deputy Attorney General       :
                                                           :
                    ______________________________________________________________________

                         THE HONORABLE STEVE BALDWIN, MEMBER OF THE STATE ASSEMBLY, has
         requested an opinion on the following question:

                          For purposes of independent operation, may a charter school be formed as a legal entity
         separate from the school district that granted the charter?


                                                          CONCLUSION

                            While a charter school operates independently from the existing school district structure as a
         method to accomplish specified purposes, it may not be formed as a legal entity separate from the school
         district that granted the charter.


                                                           ANALYSIS

                          The purposes of the Charter Schools Act of 1992 (Ed. Code, §§ 47600-47616; "Act")
         Footnote No. 1 in authorizing the establishment of charter schools are set forth in section 47601 as follows:

                          "It is the intent of the Legislature, in enacting this part, to provide opportunities for
               teachers, parents, pupils, and community members to establish and maintain schools that operate
               independently from the existing school district structure, as a method to accomplish all of the
               following:

                           "(a) Improve pupil learning.

                         "(b) Increase learning opportunities for all pupils, with special emphasis on
               expanding learning experiences for pupils who are identified as academically low achieving.

                           "(c) Encourage the use of different and innovative teaching methods.


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                          "(d) Create new professional opportunities for teachers, including the opportunity to
               be responsible for the learning program at the school site.

                          "(e) Provide parents and pupils with expanded choices in the types of educational
               opportunities that are available within the public school system.

                          "(f) Hold the schools established under this part accountable for meeting measurable
               pupil outcomes, and provide the schools with a method to change from rule-based to
               performance-based accountability systems." (Italics added.)

                           The present inquiry is whether a charter school may be formed not only for the purposes of
         its operational independence from the existing school district structure, but as a legal entity separate and apart
         from the school district that granted its charter. In our view, there is a distinct difference between operational
         independence, which is authorized (§ 47601), and legal separation, which is not.

                             In analyzing the various provisions of the Act, we apply well established rules of statutory
         interpretation. The overriding objective of statutory construction is to ascertain and effectuate legislative
         intent. (Larson v. State Personnel Bd. (1996) 28 Cal.App.4th 265, 276.) We turn initially to the statutory
         language itself as the most reliable indicator of the Legislature's intent. (Freedom Newspapers, Inc. v. Orange
         County Employees Retirement System (1993) 6 Cal.4th 821, 826.) Every word, phrase, and sentence in a
         statute should, if possible, be accorded significance. (Penasquitos, Inc. v. Superior Court (1991) 53 Cal.3d
         1180, 1186.) Each word is to be given its usual and ordinary meaning. (Da Fonte v. UpRight, Inc. (1992) 2
         Cal.4th 593, 601.) Where the words of a statute are clear, we may not augment or modify them to accomplish
         a purpose that does not appear on the face of the statute or from its legislative history. (Burden v. Snowden
         (1992) 2 Cal.4th 556, 562.) A statute must be construed in the context of the entire statutory system of which
         it is a part, in order to achieve harmony among the parts. (People v. Hull (1991) 1 Cal.4th 266, 272.)

                           While a few of the provisions of the Act may suggest the possibility of a charter school's
         legal separation from a school district, the provisions of the Act in their entirety envision only an operational
         independence that is sufficient for the purposes sought to be accomplished. Provisions that could be
         construed as consistent with legal separation include section 47610, relating to the general operation of a
         charter school: "A charter school shall comply with all of the provisions set forth in its charter petition, but is
         otherwise exempt from the laws governing school districts except as specified in Sections 47611 and 41365."
         Footnote No. 2 Although a charter school is subject to a distinct set of provisions governing its operation, as
         compared to those governing traditional schools in the same district, nothing inherent in the distinction
         authorizes legal separation from the school district that created it.

                           Section 47605, subdivision (b) provides that a charter petition must contain certain
         descriptions, among which are: "A description of the rights of any employee of the school district upon
         leaving the employment of the school district to work in a charter school, and of any rights of return to the
         school district after employment at a charter school." (§ 47605, subd. (b)(13).) It may be argued that a literal
         reading of the phrases "leaving the employment of the school district" and "return to the school district after
         employment at a charter school" indicate that a charter school is not only distinct as an employer, but is a
         distinct legal entity for all purposes. Again, section 47605, subdivision (d) provides that admission to a
         charter school shall not be determined according to the child's place of residence within the state. Since
         admission to a traditional school is geographically limited by its boundaries, while a charter school is not so
         limited for purposes of admission, it may be contended that a charter school is a separate legal entity for all
         purposes.

                          In any event, numerous other provisions of the Act are essentially inconsistent with the
         "separate legal entity" interpretation. At the outset, for example, section 47602, subdivision (b) provides:


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                           "In addition to the total number of charter schools that school districts may operate in
               this state pursuant to subdivision (a) and the 10 charter schools that a single school district may
               operate pursuant to subdivision (a), a school district that maintains an enrollment of more than
               600,000 pupils in the current school year may operate 12 charter schools for a maximum of 22
               charter schools in these types of school districts."

         The words "school districts may operate [a charter school]" must be harmonized with the independent
         operation of a charter school as a method to accomplish specified purposes. However, those words are
         absolutely inconsistent with the notion of charter schools as independent legal entities for all purposes.
         Footnote No. 3

                           Among the prescriptions that must be included in a school charter are "procedures to be
         followed by the charter school and the entity granting the charter to resolve disputes relating to the provisions
         of the charter." (§ 47605, subd. (b)(14).) The entity granting the charter is normally a school district. (§
         47605, subds. (a), (b).) As a separate legal entity, a charter school would have no occasion to resolve a
         dispute with the school district relating to the provisions of its own charter. The necessity of resolving such
         disputes suggests instead that the charter school remains a component part of the school district that created
         it.

                          Further indicating a charter school's status as a part of a school district, section 47616.5
         provides that the Legislative Analyst shall contract for an interim evaluation of the effectiveness of the state's
         charter school system, including "[t]he governance, fiscal liability and accountability practices and related
         issues between charter schools and the governing boards of the school districts approving their charters." (§
         47616.5, subd. (j).)

                           Finally, section 47607 states as follows:

                           "(a) A charter may be granted pursuant to Sections 47605 and 47606 for a period not
               to exceed five years. A charter granted by a school district governing board or county board of
               education may be granted one or more subsequent renewals by that entity. Each renewal shall be
               for a period not to exceed five years. A material revision of the provisions of a charter petition
               may be made only with the approval of the authority that granted the charter.

                           "(b) A charter may be revoked by the authority that granted the charter under this
               chapter if the authority finds that the charter school did any of the following:

                                "(1) Committed a material violation of any of the conditions, standards, or
               procedures set forth in the charter petition.

                                 "(2) Failed to meet or pursue any of the pupil outcomes identified in the charter
               petition.

                                 "(3) Failed to meet generally accepted accounting standards of fiscal
               management.

                                 "(4) Violated any provision law."

         Accordingly, a school charter may be periodically renewed, revised, or revoked only by the school district
         governing board that granted it. Such authority of a school district governing board to grant, renew, revise,
         and revoke a charter is consistent with the determination that a charter school is not an independent legal
         entity apart from the school district itself.

                           It is concluded that a charter school may not be formed as a separate legal entity from the

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         school district that granted the charter. Whether a charter school may exercise such independent legal rights
         as to sue and be sued, purchase property, employ personnel, and contract for services, including legal
         services, is governed by the provisions of the particular charter. (See § 47601; 80 Ops.Cal.Atty.Gen. 52,
         55-56 (1997).)

                                                                 *****

         Footnote No. 1
         Unidentified section references herein are to the Education Code.
         Footnote No. 2
         Section 47611 authorizes a charter school to participate in the State Teacher's Retirement System. Section 41365 allows
         charter schools that are not conversions of existing schools to obtain loans from the state upon approval of the
         Superintendent of Public Instruction.
         Footnote No. 3
         Moreover, section 47601 provides in part that charter schools are established to provide "parents and pupils with expanded
         choices in the types of educational opportunities that are available within the public school system." (Italics added.)
         Similarly, section 47605, subdivision (a) states: "A petition for the establishment of a charter school within any school
         district may be circulated . . . ." (Italics added.)




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