South Carolina Governor Henry McMaster signed Act 123 of 2026 on May 15, rewriting the state’s 1996 Charter Schools Act for the first time in three decades. The law, passed with near-unanimous support—43-0 in the Senate and 102-1 in the House—replaces the term “sponsor” with “authorizer,” creates a formal approval process for new authorizers, mandates annual reviews of all authorizers by the state Department of Education, and gives the state the power to terminate an authorizer’s registration after repeated failures.
The legislation responds to findings from the Legislative Audit Council. A November 2025 audit reported inadequate control over state funds at some Erskine-authorized charters that worked with management companies. Auditors found seven schools where management companies or their employees held signatory authority over bank accounts containing state money. In one case, a Lowcountry charter school alleged in court documents it was locked into a long-term lease with an affiliate of its management company for a building worth a fraction of total lease payments, as reported by the Post and Courier.
New financial transparency requirements
Act 123 imposes a set of financial disclosure rules that did not exist under the 1996 law. Charter schools must now post on their websites a transaction register, or check register, that records every expenditure over 100 dollars. The register must include the transaction amount, payee name, and a detailed description, and must be updated at least monthly. Individual employee salary entries are exempt from disclosure. Schools are also required to post their annual budget, audit, and any executed or amended management organization contracts. Authorizers must post charter school applications, renewal applications, and management contracts on their own websites within 30 days.
The law also targets conflicts of interest by authorizers. A new section prohibits authorizers, and entities they own or control, from contracting with or selling services to the schools they oversee. Authorizers cannot use their position to influence schools to buy additional services, use state funds to market those services, or unfairly compete with private entities. Statewide authorizers may retain only 2 percent of the total state allocation per charter school for oversight and administrative purposes.
Authorizer accountability and transfers
The South Carolina Department of Education must develop an application and evaluation process for institutions of higher learning that want to become authorizers, with a deadline of February 1, 2027. Existing authorizers are exempt from the application but must sign a statement of assurances. The State Board of Education makes the final approval decision.
Annual reviews of all authorizers are required, aligned with the state school district accreditation timeline. The reviews must examine how authorizers meet standards, evaluate the performance of their charter schools, and review renewal, revocation, and authorization decisions. The department must issue written notices of concern with timelines for correction. For authorizers that repeatedly fail over three years, the department may terminate their registration, with appeals going to the Administrative Law Court.
The law amends rules for charter school transfers among authorizers, a practice known as “authorizer shopping.” If an authorizer’s registration is terminated, the department must develop a streamlined transfer application; operating charters are not required to resubmit a full application unless the new authorizer identifies a specific area of concern. If no authorizer accepts the transfer, the school must close.
Implementation costs and early compliance
A review of 105 charter school websites conducted by the Post and Courier on August 24-25, 2026 found that 66 schools had no check register posted, and two others had registers more than three months out of date. Of 23 schools working with management companies, six did not have management contracts posted. The law does not specify deadlines or penalties for schools that fail to post required records; enforcement largely falls to authorizers, whose own oversight is now subject to annual state review. The SCDE Charter School Division’s summer 2026 newsletter described the changes as a comprehensive update to strengthen transparency, governance, and oversight.