A new provision in the charter school reform bill would exempt the public charter school system from the state Ethics Code, despite a recent auditor’s report that lambasted a few charters for unethical and improper spending and employment practices.

The exemption was added to Senate Bill 2115, HD 1, as it emerged from the House Education and Labor committees. Last week the Finance Committee deferred decision-making on the bill until this afternoon, after a deputy attorney general questioned the constitutionality of that provision.

The language would exempt charter schools, their employees, their governing boards and the proposed Charter School Commission from state ethics laws. Instead, the Charter Commission would develop and enforce its own ethics policies and procedures covering gifts, confidential information, fair treatment and contracts.

Rep. Della Au Belatti, Education Committee vice chairwoman, who has been shepherding the bill through the House, said the provision was inserted in an effort to clarify the law and "in some ways strengthen it."

"Right now it’s in there as a point of discussion," Belatti said Friday. "I’m very concerned, of course, that the schools and their employees be complying with ethical standards. The question is whether they are under the enforcement of the Ethics Commission, especially in light of some of the litigation and confusion that has been surrounding the charter schools."

She said legislators would take into account "comments of concern" received about the revision.

"This is a work in prog­ress," she added.

The amendment came as a surprise to some observers because the omnibus bill is designed to revamp the state’s public charter school system by improving monitoring of their academic and financial performance and putting schools on performance contracts.

The provision appears to conflict with a state constitutional mandate that "requires the Legislature to adopt a code of ethics that applies to employees of the state and members of state boards," according to testimony Thursday by Deputy Attorney General Monica Morris. It advised the Finance Committee to remove the proposed exemption.

John Colson, a former charter school principal and chairman of the Charter School Review Panel, also questioned the wisdom of the exemption.

"Part of what the Legislature has been asking for was accountability," he said during a phone interview. "In my mind accountability involves audits, accreditation, performance contracts and ethics — how we behave as schools, how financially prudent we are and whether we are doing the correct things academically to support our kids."

"I don’t see the point of creating another agency that would deal with charter school ethics," Colson told the Star-Advertiser, saying he was speaking only for himself. "Why would we want to create a redundancy? It (the Ethics Commission) is already there. God knows we struggle for funding as it is. I don’t know that we can put that responsibility on a volunteer Charter Commission."

The Ethics Code requires state employees to avoid conflicts of interest and treat everyone fairly as they carry out their official duties. Although charter schools are autonomous from the Department of Education and report to their own governing boards, they are public schools, and their staff members are state employees who are paid with public funds, belong to public-sector unions, participate in state retirement plans and receive state benefits such as sick leave and vacation.

Les Kondo, executive director of the state Ethics Commission, said the exemption would give charter school employees the advantages of working for the government without the drawbacks.

"They will enjoy all the benefits of being a state employee, including membership in government unions and health benefits, but will not be required to comply with the state Ethics Code like all other state employees," he said. "You get the privileges, you get the benefits but you don’t have the obligations."

Lynn Finnegan, executive director of the Hawaii Public Charter Schools Network, said her nonprofit group had not pushed for the change.

"We didn’t ask for it, but I see what they’re trying to accomplish," said Finnegan, a former legislator. "When you blanket say that you’re going to be exempt, people come away with the thought that they’re not going to have any ethics policies. I don’t believe anyone is advocating for no ethics policies."

She added: "The bill calls for the monitoring and oversight to really tighten up. I think it would be a good idea for a Charter Commission to allow for ways to continue to meet high ethical standards but maybe give some flexibility to meet those standards, not necessarily as defined by state law, but defined by a negotiation between the commission and the school.

"We want to be held accountable as charter schools, but oftentimes what that means is you’re handcuffed, as in DOE and BOE, from doing efficient and effective work," she said.