Legislature closes loophole that allowed charter schools to award large contracts without bidding

The Minnesota Legislature approved a bill this week that will require charter schools to follow new rules when awarding outside contracts.

The bill’s passage comes on the heels of a Sahan Journal investigation that found Minnesota charter schools spend millions on large contracts each year with little oversight.

Representative Laurie Pryor, DFL-Minnetonka, the bill’s chief House author, said that the independent nature of charter schools made it important to develop checks and balances.

“They don’t have the same kind of accountability that a traditional school district does,” she said in an interview with Sahan Journal. “We know that we just need to keep making sure that we also have those high expectations and that high level of transparency and accountability for charter schools, because they are different.”

The new rules about charter schools are part of the education policy omnibus bill. The Senate passed the final bill on Monday, and the House passed it on Wednesday. It now goes to Governor Tim Walz for his signature.

Senator Steve Cwodzinski, DFL-Eden Prairie, the bill’s chief Senate author, said he was proud to have steered the bill to passage in the Senate.

“Minnesotan students, their families, and our school communities deserve to know why and how their schools use their budgets,” he said.

A Sahan Journal investigation found that Minnesota charter schools spent more than $132 million in large outside contracts in the 2021-2022 school year. Unlike cities, counties, and school districts, charter schools are not required to follow procurement laws when they allocate state funds.

Sahan Journal found that one charter school, Noble Academy in Brooklyn Park, awarded a $20,000 lawn care contract to the deputy superintendent’s daughter and a multimillion-dollar management contract to the school’s founder. The Minnesota Department of Education investigation ultimately closed the complaint after the school agreed to rebid the management contract. MDE imposed no penalties on the school, but proposed a bill to address charter school contracting practices.

MDE spokesman Kevin Burns lauded passage of the bill, and said it would “enhance accountability and transparency” in charter school spending.

The bill would require charter schools to undergo a competitive bidding process for all contracts worth more than $25,000. If the school awarded a contract outside this process, the state could reduce the school’s funding for the amount of the contract.

As part of a 120-page bill, the procurement provisions attracted little attention. Much of the floor debate prior to passage focused on the sections of the bill aimed at prohibiting book bans and addressing literacy.

On the House floor Wednesday, only one legislator mentioned the provisions: Representative Anne Neu Brindley, R-North Branch. Neu Brindley questioned why Democrats were singling out charter schools for aid reduction if they didn’t “follow all the rules exactly.”

“We should apply this to all the schools equally,” she said.

Pryor, the House sponsor, told Sahan Journal that legislative staff had looked into Neu Brindley’s concern and found that while the processes are different, comparable accountability measures exist for traditional school districts that violate procurement policies.

She credited both the Minnesota Department of Education and the Minnesota Association of Charter Schools for bringing forward accountability proposals this year. The procurement policy came from MDE, while a slew of other accountability measures, including additional training for charter school board members and restrictions on employing charter school board or staff members’ relatives, came from a proposal from the Minnesota Association of Charter Schools.

Joey Cienian, executive director of the Minnesota Association of Charter Schools, said that procurement policies could help charter schools maximize available funds and better serve students. But he stressed that good procurement policies should take into account charter schools’ limited administrative capacity, and expressed caution about the $25,000 threshold for a competitive bidding process.

“It’s important to get the minimum purchasing threshold right so that charter school leaders are not engaging in competitive bidding processes when it’s unnecessary,” he said. “This is an area where we will be watching closely and listening for concerns from our chartered public schools to find the right balance.”

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