The 2026–27 TK–12 budget trailer bill, AB 126 (Stats. 2026, ch. 65), added Education Code section 51827. It was later amended in September. It changes how school districts, county offices of education, educational JPAs, and charter schools approve and structure certain contracts. Section 51827 is added to a chapter of the Education Code pertaining to Classes and Courses of Instruction, and is arguably limited to those subjects in its application.
Part 1: Effective Now, Contracts you sign must comply if they run past July 1, 2027
Contracts in effect on or before July 1, 2027 remain valid until they expire or are replaced by a successor agreement. However, as of July 9, 2026, an LEA may not enter into a new contract, or amend or supplement an existing one, if the agreement will be operative after July 1, 2027 and does not comply with Section 51827.
In practice, a multi-year agreement, renewal, or amendment that runs past July 1, 2027 should meet the new requirements.
Part 2: Every LEA must adopt a Related policy by July 1, 2027
By July 1, 2027, the following must each adopt a policy for evaluating and approving contractors that includes the provisions listed in Part 3:
- each school district and educational JPA governing board
- each charter school governing body
- each county superintendent of schools
Both adoption of the policy and compliance with it will be added to the K–12 audit guide, so auditors will be checking.
Part 3: The Substantive Requirements
- No public funds can be spent on a contract unless materials and activities are nonsectarian and nondiscriminatory.
- No public funds can be spent on a contract that pays for tuition or fees at a private school that filed an affidavit [private school affidavit filing], unless an IEP requires it.
(A) An LEA cannot offer payments or gifts to pupils, prospective pupils, or their families as an enrollment, referral, or retention incentive.
(B) An LEA cannot offer payments or gifts to employees to manipulate attendance records. Incentives for pupil engagement or reengagement of chronically absent pupils, including home visits, remain allowed.
- Nonclassroom-based charter school contracts must itemize credentialed staff, administrative staff, and instructional costs enough to assess funding.
- Contracts must reflect reasonable market value.
- LEAs cannot purchase or contract for annual or season passes to amusement parks, zoos, or entertainment venues. Single-use admission, meals, and transportation tied to teacher-assigned educational activities, graduation, celebrations, or co-curricular events are allowed.
(A) LEAs may contract only with entities holding a business license (where applicable) and proper insurance. Government agencies need no license.
(B) This does not apply to: (i) contracts with licensed, compliant family daycare homes [licensed family child care homes]; or (ii) contracts between an agency acting as an alternative payment program provider [subsidized childcare payment program] or a license-exempt provider.
- LEAs may not contract with a pupil or the pupil’s family for services provided only to that pupil — except for pupil transportation by: (A) a parent or guardian; (B) a relative or nonrelative extended family member; (C) a court-appointed educational rights holder; or (D) a court-appointed special advocate.
- LEAs may not reimburse parents or guardians — except for disability services under an IEP required by a legal settlement.
- Contractors working with pupils unsupervised must have reasonable safety, emergency, and accident-reporting policies, including for virtual settings.
- Contractor personnel working with pupils must have a valid criminal records summary [as required by Ed Code section 45125.1].
- “As part of a contract” with an LEA, contractors “shall provide evidence of qualification and expertise” for the provide activities “in accordance with the policies of the governing board or body” of the LEA.
- Contractors may not charge fees to pupils or their families, except as authorized for: (A) state preschool programs; (B) the High School ASSETs program; (C) the After School Education and Safety Program; (D) expanded learning opportunity programs; (E) certain schoolage childcare programs; and (F) certain childcare programs.
Key Takeaway: Districts should be aware of the restrictions applying to multi-year agreements now. Districts will need to adopt board policies and potentially updating form contracts ahead of the July 1, 2027 deadline.
