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California’s attempt to crack down on charter school fraud has hit a wall, at least for now.

Gov. Gavin Newsom’s veto Monday of Senate Bill 414 leaves major oversight gaps in place for at least another year, despite bipartisan support and mounting concerns over charter school financial misconduct.

Six years after the operators of A3 charter schools were indicted for stealing more than $400 million in public funds, lawmakers had hoped to pass sweeping reforms aimed at preventing similar schemes. 

In his veto message, Newsom said the bill is too costly and overlooks some of the recommendations by a task force convened to investigate systemic weaknesses exploited by A3 and operators of other nonclassroom-based [partially or entirely online, independent study or homeschool] charters.  

“I deeply appreciate the efforts of the author and the negotiating parties to develop legislation that builds on these recommendations,” Newsom wrote. “However, this bill falls short.”

The governor did not specify what was missing from the more than 100-page bill, which passed with two-thirds of Assembly members and 60% of senators. 

“The ‘falling short’ language mystifies me,” said Eric Premack, executive director of the Charter Schools Development Center, a nonprofit support and advocacy organization. “If anything, it goes overboard.”  

Newsom’s office declined to elaborate, responding only that “the Governor’s veto message speaks for itself,” in an email to EdSource.

Premack was involved in the lengthy negotiations to combine SB 414, which was backed by charter advocates, and Assembly Bill 84, which had the support of teachers unions and other labor organizations. 

Negotiators kept the governor’s office abreast of the talks, said Premack, but reported back that the staff were in “listening mode” and did not provide substantial feedback or indicate the governor’s position. 

As the 2025 legislative deadline closed in for amending bills, negotiators said they had resolved about 90% of their differences, but the remaining issues proved intractable. When talks broke down, Assemblymember Al Muratsuchi, D-Torrance, withdrew AB 84 with plans to reintroduce it in the next legislative session.  

Sen. Angelique Ashby, D-Sacramento, SB 414’s author, was expected to do the same, but instead sent her bill to the Assembly, where it was amended to include the items agreed to during negotiations. As one of its final votes of the 2025 session, the state Senate approved it the following day and sent it to the governor.  

“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, president and CEO of the California Charter Schools Association, in a statement.

Newsom also cited cost concerns for his veto, pointing to federal cuts to education, health care and social programs.  

“While the oversight and auditing provisions are meaningful, other sections are unworkable, would face legal challenges, and require hundreds of millions to implement,” he wrote.

Although not mentioned in the governor’s veto message, one major cost driver was the creation of an Office of the Education Inspector General, envisioned as an independent agency to investigate allegations of financial misconduct. Legislative analysts estimated the office would cost about $13.5 million annually out of the state’s $325 billion budget.

Leon Schorr, who led the A3 charter school investigation as assistant chief of the San Diego District Attorney’s Special Operations Division, said California needs a dedicated education finance watchdog, either as an independent agency or housed within the state Attorney General’s Office.  

“No (district attorney’s) offices, San Diego included, have the bandwidth to keep up with all the complaints we get,” Schorr said. “There’s still misuse of school money that could be uncovered and save substantial taxpayer dollars if there were more transparency and better statewide enforcement.”

The California Teachers Association, which argued that even the amended version of SB 414 did not do enough to crack down on fraud in nonclassroom-based schools, urged the governor to veto it. “We are firmly committed to the critical work of addressing the need for oversight and transparency in California’s nonclassroom-based charters,” CTA President David Goldberg said in an email to EdSource.

Those efforts will now have to wait until lawmakers return in January 2026.

This story was originally published by EdSource and is republished here with permission.