If a nonprofit charter school board hires a for-profit management company to run the day-to-day school, can it hand over hiring and firing of teachers to that company, or does the board itself have to keep final say?

Plain-English summary

NC's Charter School Act lets a nonprofit corporation hold the charter for a charter school. Many nonprofit boards then contract with a for-profit "educational management organization" (EMO) to run day-to-day operations. The legal question is how far that delegation can go before it crosses into the territory the statute reserves to the nonprofit board.

Chief Deputy AG Andrew A. Vanore, Jr. and Special Deputy AG Thomas J. Ziko, responding to Senator Wib Gulley, answered three sub-questions. They drew their bright line at one section of the statute: G.S. § 115C-238.29F(e), which says "[t]he charter school's board of directors shall employ and contract with necessary teachers to perform the particular service for which they are employed in the school" and "[t]he board may discharge teachers and noncertified employees." Because the statute uses mandatory language ("shall employ") for teacher hiring and explicitly assigns discharge to the board, the AG concluded the board cannot contract those decisions away.

Issue 1: Must the board retain authority to approve or disapprove teacher hires that the management company recommends?

Yes. The statute requires the board to employ and contract with teachers. The AG read that as a non-delegable function. The board can structure things so that the management company does the recruiting, screening, and initial hiring recommendation, and the board can agree (by contract with the EMO) to exercise its statutory authority "only on the recommendation of the management company." But the actual employment of a teacher requires the board's approval. No one teaches at a charter school without the board's sign-off.

Issue 2: Must the board retain authority to discharge a teacher for cause if the management company refuses to act?

Yes. The AG combined two statutory provisions to get here. G.S. § 115C-238.E(d) says the board "shall decide matters related to the operation of the school, including budgeting, curriculum, and operating procedures." G.S. § 115C-238.29F(e) says the board "may discharge teachers and noncertified employees." Read together, the legislature wanted the board to retain ultimate control over school operation, and a corporation can only act through its agents and employees; if the board cannot fire its own teachers for cause, it cannot meaningfully run the school. So while the board may set up procedures by which the management company makes initial discharge decisions, the board cannot alienate its ultimate authority to discharge for cause.

Issue 3: Do those limitations apply to principals and other non-teaching staff?

No. The statute is specific about teachers. For non-teaching positions, the statute says the board "may employ" them and "may contract for other services." That permissive language is doing real work. The board can either:

• Employ non-teaching staff directly (in which case the board's discharge authority applies); or
• Let the management company employ those people on its own payroll (in which case they are not charter school employees at all, and the board's only recourse for poor performance is contractual against the EMO).

The AG flagged the consequence: if non-teaching staff are EMO employees, the board cannot fire them. But the board remains responsible for school operation under the charter, so if EMO employees mismanage the school, the State Board of Education can revoke the charter under G.S. § 115C-238.29G. The check on the EMO is not employee discipline; it is the existential threat that the school can be shut down.

The opinion is foundational for NC charter school governance. It draws a non-delegable core (teacher hiring and discharge authority) while preserving flexibility around the periphery (administrative staffing, day-to-day operations).

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Charter School Act has been amended multiple times since 1998. The statutory citations in the opinion (G.S. § 115C-238.29F(e), G.S. § 115C-238.E(d), G.S. § 115C-238.29G) may have been renumbered or substantively changed; in particular, the State Board of Education's charter oversight authority has been reallocated more recently to the Charter Schools Review Board. Anyone evaluating a current EMO management agreement should pull the current Article 14A of Chapter 115C and check for later AG opinions, agency guidance, and case law.

Common questions

Q: Can a charter school hire a for-profit management company at all?
A: Yes. The AG previously confirmed that the nonprofit board "may contract with a for-profit corporation to oversee the day-to-day operations of the charter school, as long as the corporation is bound to abide by the board of directors' policies and procedures and the board of directors of the charter school retains the overall authority to decide 'matters related to the operation of the school' as provided by statute." (Letter to Richard Thompson, Deputy Superintendent, March 11, 1997.) This 1998 opinion is the follow-up that draws the limits on that arrangement.

Q: Can the board contract so the management company picks teachers and the board "rubber-stamps" them?
A: The board can agree to act only on the management company's recommendation. That is fine. What the board cannot do is take itself out of the loop entirely. Each teacher hire has to involve the board's actual approval. If the contract structure means "you recommend, we approve," and the board is in fact reviewing those recommendations (not just signing blindly), the AG's opinion appears to be satisfied. If the structure makes the board a literal rubber-stamp with no review, the opinion's logic puts that arrangement on shaky ground.

Q: What about firing a teacher who is not meeting the management company's standards?
A: The management company can initiate the discharge process, and the board can have policies that defer to the company's recommendations. But if the board ever needs to discharge a teacher for cause and the management company has not acted, the board has to retain the power to do it itself. That is the irreducible authority the statute keeps with the board.

Q: If the management company hires the principal on its own payroll, who fires the principal?
A: The management company. The principal in that scenario is not a charter school employee. The board cannot directly discharge that principal. If the principal is doing a bad job, the board's options are (a) work it out contractually with the EMO, (b) pursue contractual remedies, or (c) in an extreme case, allow the State Board of Education to act under G.S. § 115C-238.29G if the school is not being operated in accordance with the charter.

Q: What happens if a charter school has been delegating teacher hiring entirely to the EMO?
A: The AG opinion suggests that arrangement is contrary to the statute. The board would need to amend its EMO contract to reassert its statutory employment authority. From a litigation-risk standpoint, a hiring or termination dispute over a teacher whose hire was approved only by the EMO and not by the board could expose the board to claims that the employment relationship itself was unauthorized.

Q: Does this opinion apply to virtual charter schools and other newer charter models?
A: The 1998 opinion was written before virtual charters existed. The same statutory language about teacher hiring still applies (subject to later amendments) to whatever model of charter the General Assembly currently authorizes. Specific structural variations (virtual, conversion, drop-out recovery, etc.) may carry additional rules that aren't covered here.

Background and statutory framework

The Charter School Act was enacted in 1996 (Article 14A of Chapter 115C). It allows non-profit corporations to operate publicly-funded schools that are exempt from many of the rules that apply to traditional district public schools. The charter itself is the corporation's authorization, granted by the State Board of Education.

The model has invited heavy involvement by for-profit management companies that contract with the non-profit board to provide curriculum, operations, staffing, and management services. That arrangement raises a recurring tension: the nonprofit board is the public-facing accountable entity (and the holder of the public charter), but the EMO is often doing most of the actual work. Where does the legal line sit between healthy delegation and impermissible abdication?

The 1998 AG opinion is one of the first NC pronouncements on that line. The AG's answer focuses on teachers, because teachers are the people whose employment status is most clearly addressed in the statute. For everything else, the opinion offers more flexibility, but it ties that flexibility to clarity about who the employer is: if the management company is the employer, that comes with the board losing direct control over the employee; if the board is the employer, the board's discharge authority cannot be given away.

The opinion's logic is grounded in a basic principle of public-entity governance: a public board cannot delegate its core statutory functions to a private contractor. Courts apply that principle across many contexts (planning boards, utility commissions, school boards), and the AG applies it here to charter school boards by reading the mandatory and permissive verbs in the statute.

Citations

• N.C.G.S. § 115C-238.29F(e) (charter school board "shall employ and contract with necessary teachers"; "[t]he board may discharge teachers and noncertified employees")
• N.C.G.S. § 115C-238.29F(1) (board's retention of authority over discharge)
• N.C.G.S. § 115C-238.E(d) (board "shall decide matters related to the operation of the school, including budgeting, curriculum, and operating procedures")
• N.C.G.S. § 115C-238.29G (State Board of Education authority to revoke a charter)
• Letter to Richard Thompson, Deputy Superintendent (March 11, 1997) (prior NC AG opinion confirming board may contract with for-profit corporation for day-to-day operations)

Source

• Landing page: https://ncdoj.gov/opinions/charter-schools/

Original opinion text

• Does G.S. 115C-238.29F(e) require the board of directors of the nonprofit corporation that holds the charter to retain the authority to approve or disapprove the employment of the teachers whom the management company selects to teach at the school?
• Does G.S. 115C-238.29F(e) require the board to retain the authority to demand removal of a teacher in the case of gross nonperformance or gross misperformance if the management company fails to act upon the board's request to effect a removal in such a circumstance?
• Do any of the statutory limitations mentioned above apply to the management company's employment of principals or other, nonteaching staff at the school?

We have previously opined that the board of directors of the nonprofit corporation that holds the charter for a school under the Charter School Act "may contract with a for-profit corporation to over-see the day-to-day operations of the charter school, as long as the corporation is bound to abide by the board of directors' policies and procedures and the board of directors of the charter school retains the overall authority to decide 'matters related to the operation of the school' as provided by statute." Letter to Richard Thompson, Deputy Superintendent, March 11, 1997. Among other duties, the Charter School Act specifically provides that "[t]he charter school's board of directors shall employ and contract with necessary teachers to perform the particular service for which they are employed in the school. . ." G.S. 115C-238.29F(e). This mandatory language stands in contrast to later sentences in that same section which generally provide: "The board also may employ necessary employees who are not required to hold teacher certificates to perform duties other than teaching and may contract for other services. The board may discharge teachers and noncertified employees."

In light of those statutory provisions, our opinions on the three issues presented in your letter follow.

1. Does G.S. 115C-238.29F(e) require the board of directors of the nonprofit corporation that holds the charter to retain the authority to approve or disapprove the employment of the teachers whom the management company selects to teach at the school? Yes.

As noted above, G.S. 115C-238.29F(e) specifically requires that "[t]he charter school's board of directors shall employ and contract with necessary teachers to perform the particular service for which they are employed in the school." Therefore, it is our opinion that the board of directors must have the exclusive authority to employ teachers in the charter school. The board may agree through contract to exercise that authority only on the recommendation of the management company but no one may be employed to teach in a charter school without the approval of the board of directors.

2. Does G.S. 115C-238.29F(e) require the board to retain the authority to demand removal of a teacher in the case of gross nonperformance or gross misperformance if the management company fails to act upon the board's request to effect a removal in such a circumstance? Yes.

G.S. 115C-238.E(d) provides that "[t]he board of directors of the charter school shall decide matters related to the operation of the school, including budgeting, curriculum, and operating procedures." The Act also specifically provides that "[t]he board may discharge teachers and noncertified employees." G.S. 115C-238.29F(e). In our opinion, it appears that the General Assembly intended to include the discharge of employees among the specific matters related to the operation of the school that the board must decide. Consistent with G.S. 115C-238.E(d), the board may adopt operating procedures that permit a management company to make initial decisions regarding the discharge of employees. However, insofar as a corporation can only act through its agents and employees, a board of directors cannot "operate" the charter school unless it retains the ultimate authority to discharge its own employees for cause. Therefore, it is our opinion that while the board of directors of the charter school may through contract authorize a management company or other individual to discharge teachers or noncertified employees, the board of directors cannot alienate their authority to discharge employees for cause.

3. Do any of the statutory limitations mentioned above apply to the management company's employment of principals or other, nonteaching staff at the school?

While G.S. 115C-238.29F(e) requires the board of directors to employ and contract with teachers for the charter school, the statute goes on to state that: "The board also may employ necessary employees who are not required to hold teacher certificates to perform duties other than teaching and may contract for other services." Thus, the board is under no statutory obligation to hire persons other than teachers. Furthermore, the Act specifically authorizes charter school boards to contract for services other than teaching. In light of these statutory provisions, it is our opinion that the board of directors is free to contract with a for-profit company to administer the charter school on a day-to-day basis. That company may employ persons to perform any duties in the charter school other than classroom teaching.

If those persons are employed and paid by the for-profit management company, they would not be charter school employees and would not be subject to discharge by the board of directors. In the event the board of directors became dissatisfied with the company's employees, they would have to pursue some contractual remedy against the management company. Of course, the board of directors remains ultimately responsible for operating the school in accordance with the charter. If the employees of the management company do not operate the school in accordance with the terms of the charter, the State Board of Education has the authority to revoke the charter under G.S. 115C-238.29G.

On the other hand, if the board simply delegates to the management company the authority to employ persons on behalf of the board, then those persons would be employed and paid by the charter school. As noted above, under G.S. 115C-238.29F(1), the board must retain the authority to discharge any of its employees, teachers or noncertified employees, for cause. In the event the board of directors became dissatisfied with the performance of these employees, then the board would have the ultimate authority to terminate their employment.

We hope this opinion reduces any confusion that might exist regarding the statutory authority of the charter school board of directors and the extent of their authority to delegate responsibilities to administrators or educational management companies. If you have further questions on this or any other subject, please contact us.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

Thomas J. Ziko
Special Deputy Attorney General