The Mississippi Ethics Commission says charter school board members are subject to state ethics laws, which prohibit conflicts of interest that could lead to the misspending of public dollars.

But several operators and advocates of Mississippi charter schools, which receive taxpayer funding, say they should be exempt from those laws.

The conflict was brought to light by Ethics Commission opinions filed in 2020 after two charter schools were discovered to be spending their public funding with board members’ employers.

The revelations highlight long-standing tension between charter school and traditional public school advocates, who say charter schools need to be held to the same standards as other public governing bodies.

“The state ethics laws are not overly burdensome; they simply say that members of state agency governing boards cannot profit off of state funds by directing contracts to their own businesses or employer,” said Nancy Loome, executive director of the public education advocacy group The Parents’ Campaign. “All public school board members must abide by those rules, and charter school board members should, as well.”

Charter schools are, by law, public schools funded by local and state tax dollars. They do not charge students tuition and are held to the same academic and accountability standards as traditional public schools. These schools are often the subject of scrutiny because they are allowed more flexibility than public schools in how they operate. 

Mississippi’s charter school law, adopted by lawmakers in 2013, is the only one in the nation that does not have a specific conflict of interest provision in it, according to the National Alliance for Public Charter Schools.

Charters are required by state law to operate as nonprofit organizations and must adhere to IRS regulations that require conflict of interest disclosures. However, those nonprofit regulations are much less strict than several key ethics laws that public schools are subject to, including the banning all business between the organizations and board members’ companies.

Traditional public schools, meanwhile, are subject to the more stringent state ethics laws, including that school boards cannot do business with individual board members’ companies.

“All we’re saying is members of public charter school boards have to live by the same rules as members of every other type of school board,” Tom Hood, the executive director of the Ethics Commission, told Mississippi Today. “They’re not getting treated any worse or any better.”

The ethics questions arose after Ambition Prep, a K-8 charter school in Jackson, used federal funding in 2018 to contract with an insurance company owned by one of the school’s board members. Ambition Prep officials told Mississippi Today they followed their own conflict of interest laws and were not aware they had to adhere to the state ethics laws.

“Nobody knew or stated (at that time) that charter schools had to follow the ethics laws,” said DeArchie Scott, the school’s founder and executive director.

A separate charter school also attempted to enter into a contract with a board member’s professional development company but stopped at the request of the Mississippi Charter Authorizer Board, the board that oversees charter schools in the state.

The Ethics Commission responded in a 2020 ruling that all of the state’s charter school governing board members are subject to all the restrictions of the state ethics law, just as traditional public school board members, lawmakers and other public officials are.

The commission reasoned that because charter schools receive public dollars and their boards are subject to other laws such as those that require open meetings and the Public Records Act, “members of charter school governing boards are ‘public servants’ as defined (in the law), and are subject to all the applicable provisions of the Ethics in Government Law.” 

Several charter school operators disagreed with both Ethics Commission rulings. 

On Dec. 14, 2020, a lawyer for Ambition Prep wrote a letter to the commission, asking it to reconsider whether charter school board members are subject to state ethics laws. The commission declined.

Members of the charter school community argue the Ethics Commission’s take on their role goes against the intention of the charter school law that was passed in 2013, and that the law does not explicitly state board members are subject to ethics laws. 

Some also say there may be unintended consequences as a result of the opinions. 

Rachel Canter, executive director of the nonprofit education group Mississippi First, was involved in the creation of the charter school law prior to its passage in 2013. 

“It’s a big legal shift from the understanding that everybody had about charter schools for the seven years prior to (the Ethics Commission opinions), which was that charter schools are overseen and held accountable, according to the charter school law, in their contract by the authorizer board and not by any other government agency or entity,” Canter said.

She said charter schools have already operated under nonprofit rules — the looser IRS regulations — that aim to prevent conflicts of interest.

“We in the nonprofit world have something called arm’s length negotiation, which says if you’re a board member and something comes before the board in which you have a financial interest, you have to recuse yourself and leave the room,” Canter said. “But if it’s in the best interest of the organization, the decision can still be made (to approve the arrangement).” 

Canter also noted that charter schools’ finances are audited annually by the Charter School Authorizer Board. She said the effect of the opinions is essentially stating to charter schools that they now must operate under a different set of rules. 

“Charter schools are saying you’re trying to make us governmental organizations and we are not government organizations,” she said.

Jon Rybka, the CEO of RePublic Schools, a Nashville-based charter operator with three schools in Jackson, said charter schools are unique and face different challenges than other governmental entities. Rybka pointed out that in Mississippi, charter schools are “both governmental entities and nonprofits” and believes that they should be governed by regulations that are tailored to their unique situations. 

“If I had to guess, every mission-driven school, church or nonprofit has board members that are involved because they care about the mission, so they’re probably involved in the mission in other areas as well,” Rybka said. “I just don’t want to see this ruling getting in the way of good people bringing their resources to the mission.”

Amanda Johnson, executive director of Clarksdale Collegiate Public Charter School in Clarksdale, said she is concerned about the opinions’ impact on charter schools’ flexibility and autonomy.

“When I think about why I do this work and why I believe in charters, part of it is because they are set up to be different and be provided with some additional flexibility, appropriate flexibility, that allows the schools to operate in a different way than a traditional district,” Johnson said. “It’s not that we are above ethics laws or behaving ethically, but we should not be under the same rules and regulations that a governmental agency would be under.”

Johnson, along with others, also says that restrictions like these are part of the reason charter schools have not expanded in Mississippi as they have in other areas. Since 2013, when the charter school law was passed, only eight charter schools have opened in the state, six of which are in Jackson.

“There are charter schools, CMOs (charter management organizations), that operate in other states that the Authorizer Board has tried to attract, legislators have tried to attract (to Mississippi) and haven’t been able to,” said Johnson. “Making this work more restrictive is going against what charter schools were designed to be. It makes it less attractive (to CMOs) and more difficult (for schools) to recruit board members as well.” 

But others disagree with the sentiments of the state’s charter operators and say it’s important for charter schools to be held to the same standards as traditional public schools.

“There have been many unfortunate stories from other states of charter school laws leading to scandals involving misuse of taxpayer funds,” Loome, with The Parents’ Campaign, said. “Thankfully, Mississippi law protects children and taxpayers from that sort of unscrupulous activity.”

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