POLICY LETTER: June 3, 2005 to Arizona Attorney Mary Ellen Simonson

June 3, 2005VIA FACSIMILE AND U.S. MAILMs. Mary Ellen SimonsonLewis and Roca, LLP40 North Central AvenuePhoenix, Arizona 95004-4429Re: U.S. Department of Education Decision Concerning Arizona Department of Education Audit ED-OIG/A05-D0008, Finding No. 1Dear Ms. Simonson:We are writing in further response to your May 10, 2005, letter on behalf of a coalition of for-profit charter schools in Arizona, in which you requested the U.S. Department of Education to reconsider and reverse the Department's program determination of March 18, 2005. The Department's determination, which was issued to the Arizona Department of Education (ADE), concluded that for-profit charter schools are not eligible to receive funds under the Individuals with Disabilities Education Act (IDEA) or Title I, Part A of the Elementary and Secondary Education Act (ESEA). Because the schools you represent are not parties to the determination, we do not consider your letter to constitute a request for reconsideration. Please know, however, that we do appreciate knowing of your concerns. We have reviewed all of your arguments and attachments and are pleased to respond. As you know, the determination in question resolved an audit by the Department's Office of Inspector General (ED-OIG/A05-D0008). The determination and audit found the ADE to have improperly allocated to for-profit charter schools, during Fiscal Year 2001, $1,129,006 in funds under Title I, Part A of ESEA and Part B of IDEA. The determination took into account the opinion of the Arizona Attorney General that for-profit charter schools are distinct legal entities, with legal responsibilities independent of their public or private operators, and that they are public schools that function as local educational agencies under Arizona law. Therefore, we determined that the schools in question are public schools, irrespective of whether they are non-profit or for-profit. However, based on the definitions of elementary school and secondary school in both the ESEA and the IDEA, we concluded further that for-profit charter schools are not eligible subrecipients as local educational agencies (LEAs) because they do not have direction or control of an elementary or secondary school that meets the federal statutory definition of elementary or secondary school.Section 9101(18) of the ESEA defines elementary school as a non-profit institutional day or residential school, including a public elementary charter school, that provides elementary education, as determined under State law. The IDEA, as amended in 2004, contains the identical definition of elementary school as in the ESEA. See section 602(6) of the IDEA. The corresponding definition of secondary school in the ESEA and IDEA is identical in pertinent respects (section 9101(38) of the ESEA and section 602(27) of the IDEA). In these four provisions, the term public charter school, as used in the phrase including a public. . . charter school, is a subset of non-profit elementary schools or non-profit secondary schools. Thus, by definition, public charter schools must be non-profit. Nothing in these definitions or the legislElementary and Secondary EducationPAGE Letter to Mary Ellen SimonsonPage NUMPAGES 2June 3, 2005VIA FACSIMILE AND U.S. MAILMs. Mary Ellen SimonsonLewis and Roca, LLP40 North Central AvenuePhoenix, Arizona 95004-4429Re: U.S. Department of Education Decision Concerning Arizona Department of Education Audit ED-OIG/A05-D0008, Finding No. 1Dear Ms. Simonson:We are writing in further response to your May 10, 2005, letter on behalf of a coalition of for-profit charter schools in Arizona, in which you requested the U.S. Department of Education to reconsider and reverse the Department's program determination of March 18, 2005. The Department's determination, which was issued to the Arizona Department of Education (ADE), concluded that for-profit charter schools are not eligible to receive funds under the Individuals with Disabilities Education Act (IDEA) or Title I, Part A of the Elementary and Secondary Education Act (ESEA). Because the schools you represent are not parties to the determination, we do not consider your letter to constitute a request for reconsideration. Please know, however, that we do appreciate knowing of your concerns. We have reviewed all of your arguments and attachments and are pleased to respond. As you know, the determination in question resolved an audit by the Department's Office of Inspector General (ED-OIG/A05-D0008). The determination and audit found the ADE to have improperly allocated to for-profit charter schools, during Fiscal Year 2001, $1,129,006 in funds under Title I, Part A of ESEA and Part B of IDEA. The determination took into account the opinion of the Arizona Attorney General that for-profit charter schools are distinct legal entities, with legal responsibilities independent of their public or private operators, and that they are public schools that function as local educational agencies under Arizona law. Therefore, we determined that the schools in question are public schools, irrespective of whether they are non-profit or for-profit. However, based on the definitions of elementary school and secondary school in both the ESEA and the IDEA, we concluded further that for-profit charter schools are not eligible subrecipients as local educational agencies (LEAs) because they do not have direction or control of an elementary or secondary school that meets the federal statutory definition of elementary or secondary school.Section 9101(18) of the ESEA defines elementary school as a non-profit institutional day or residential school, including a public elementary charter school, that provides elementary education, as determined under State law. The IDEA, as amended in 2004, contains the identical definition of elementary school as in the ESEA. See section 602(6) of the IDEA. The corresponding definition of secondary school in the ESEA and IDEA is identical in pertinent respects (section 9101(38) of the ESEA and section 602(27) of the IDEA). In these four provisions, the term public charter school, as used in the phrase including a public. . . charter school, is a subset of non-profit elementary schools or non-profit secondary schools. Thus, by definition, public charter schools must be non-profit. Nothing in these definitions or the legislElementary and Secondary EducationPAGE Letter to Mary Ellen SimonsonPage NUMPAGES 2