1.1 	A bill for an act
1.2 	relating to education; modifying charter school provisions;amending Minnesota 
1.3 	Statutes 2008, sections 124D.10, subdivisions 1, 2a, 3, 4, 4a, 5, 6, 6a, 7, 8, 9, 11, 
1.4 	14, 15, 17, 20, 23, 23a, 25, by adding subdivisions; 124D.11, subdivisions 4, 9; 
1.5 	repealing Minnesota Statutes 2008, section 124D.10, subdivisions 18, 19, 26.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2008, section 124D.10, subdivision 1, is amended to 
1.8 	read:
1.9 		Subdivision 1.Purposes. (a) The purpose of this section is to:
1.10 	(1) improve pupil learning and student achievement;
1.11 	(2) increase learning opportunities for pupils;
1.12 	(3) encourage the use of different and innovative teaching methods;
1.13 	(4) require the measurement of measure learning outcomes and create different and 
1.14 	innovative forms of measuring outcomes;
1.15 	(5) establish new forms of accountability for schools; or and
1.16 	(6) create new professional opportunities for teachers, including the opportunity to 
1.17 	be responsible for the learning program at the school site.
1.18 	(b) This section does not provide a means to keep open or replace a school that 
1.19 	otherwise would be closed. Applicants in these circumstances bear the burden of proving 
1.20 	that conversion to a charter school fulfills a purpose the purposes specified in this 
1.21 	subdivision, independent of the school's closing.

1.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

1.23 	Sec. 2. Minnesota Statutes 2008, section 124D.10, subdivision 2a, is amended to read:
2.1 		Subd. 2a.Charter School Advisory Council. (a) A Charter School Advisory 
2.2 	Council is established under section 15.059 except thatand the term for each council 
2.3 	member shall be three years. The advisory council is composed of seven nine  members
2.4 	from throughout the state who have demonstrated experience with or interest in charter 
2.5 	schools. The members of the council shall be appointed by the commissioner. The 
2.6 	advisory council shall bring to the attention of the commissioner any matters related to 
2.7 	charter schools that the council deems necessary and shall:The members may include 
2.8 	charter school sponsors, charter school personnel, public K-12 teachers, school board 
2.9 	members, parents of currently enrolled K-12 public school students, and school district 
2.10 	representatives. The commissioner shall appoint the council members. 
2.11 	(1) encourage school boards to make full use of charter school opportunities;
2.12 	(2) encourage the creation of innovative schools;
2.13 	(3) provide leadership and support for charter school sponsors to increase the 
2.14 	innovation in and the effectiveness, accountability, and fiscal soundness of charter schools;
2.15 	(4) serve an ombudsman function in facilitating the operations of new and existing 
2.16 	charter schools;
2.17 	(5) promote timely financial management training for newly elected members of 
2.18 	a charter school board of directors and ongoing training for other members of a charter 
2.19 	school board of directors; and
2.20 	(6) facilitate compliance with auditing and other reporting requirements. The 
2.21 	advisory council shall refer all its proposals to the commissioner who shall provide time 
2.22 	for reports from the council.
2.23 	The advisory council shall advise and make recommendations to the commissioner 
2.24 	on sponsoring charter schools and other matters, including: 
2.25 	(1) approving, reviewing, and disciplining sponsors, consistent with this section; 
2.26 	(2) supporting charter school innovation, effectiveness, accountability, and fiscal 
2.27 	soundness; 
2.28 	(3) providing a management training program for charter school administrators 
2.29 	and board members; 
2.30 	(4) complying with auditing and other financial reporting requirements; 
2.31 	(5) reviewing affidavits, charter school applications, and charter school grade and 
2.32 	program expansion applications; and 
2.33 	(6) identifying models to improve communication, cooperation, and the exchange of 
2.34 	ideas between and among public charter and district schools.
2.35 	(b)  The advisory council shall recommend to the commissioner and the legislature, 
2.36 	by December 1, 2009, an organizational model to give state-level leadership to new school 
3.1 	planning, development, start-up, and successful ongoing operation in both the district and 
3.2 	chartered sectors of public education. The council, as part of its recommendation, must 
3.3 	suggest legislation necessary to implement this new state-level organization model. 
3.4 	(c) The Charter School Advisory Council under this subdivision expires June 30, 
3.5 	2007 2015.

3.6 	EFFECTIVE DATE. This section is effective retroactively from June 30, 2007. 

3.7 	Sec. 3. Minnesota Statutes 2008, section 124D.10, subdivision 3, is amended to read:
3.8 		Subd. 3.Sponsor. (a) For the purposes of this section:
3.9 	(1) "application" means the charter school business and operational plan a school 
3.10 	developer submits to a sponsor for approval that documents the school developer's 
3.11 	mission statement, school purposes, program design, financial plan, governance and 
3.12 	management structure, and background and experience, plus any other information the 
3.13 	sponsor requests. The application also shall include a "statement of assurance" of legal 
3.14 	compliance as prescribed by the commissioner; and
3.15 	(2) "affidavit" means a written statement the sponsor submits to the commissioner 
3.16 	for approval under subdivision 4 attesting to its review and approval of a school charter. 
3.17 	(b) The following organizations may sponsor one or more charter schools: 
3.18 	(1) a school board; intermediate school district school board; education district 
3.19 	organized under sections 123A.15 to 123A.19; 
3.20 	(2) charitable organization under section 501(c)(3) of the Internal Revenue Code 
3.21 	of 1986, excluding a nonpublic sectarian or religious institution, any person other than a 
3.22 	natural person who directly or indirectly, through one or more intermediaries, controls, 
3.23 	is controlled by, or is under common control with the nonpublic sectarian or religious 
3.24 	institution, and any other charitable organization under this clause that in the federal IRS 
3.25 	Form 1023, Part IV, describes activities indicating a religious purpose,  that:
3.26 	(i) is a member of the Minnesota Council of Nonprofits or the Minnesota Council on 
3.27 	Foundations,;
3.28 	(ii) is  registered with the attorney general's office, and; 
3.29 	(iii)  reports an end-of-year ongoing fund balance of at least $2,000,000 for at least 
3.30 	four consecutive years; and 
3.31 	(iv) is incorporated in the state of Minnesota;
3.32 	(3) a Minnesota private college, notwithstanding clause (2),  that grants two- or 
3.33 	four-year degrees and is registered with the Minnesota Office of Higher Education under 
3.34 	chapter 136A; community college, state university, or technical college, governed by the 
4.1 	Board of Trustees of the Minnesota State Colleges and Universities; or the University of 
4.2 	Minnesota may sponsor one or more charter schools.;
4.3 	(b) (4) a nonprofit corporation subject to chapter 317A, described in section 
4.4 	317A.905, and exempt from federal income tax under section sections 501(c)(3) or 
4.5 	 501(c)(6) of the Internal Revenue Code of 1986, may sponsor one or more charter schools 
4.6 	if the charter school has operated for at least three years under a different sponsor or an 
4.7 	organization that has previously sponsored schools under this subdivision,  and if the 
4.8 	nonprofit corporation has existed been incorporated in the state of Minnesota  for at least 
4.9 	25 20  years; or
4.10 	(5) no more than two single-purpose sponsors that are charitable organizations 
4.11 	formed under section 501(c)(3) of the Internal Revenue Code of 1986 and incorporated 
4.12 	in the state of Minnesota whose sole purpose is to sponsor charter schools. Eligible 
4.13 	organizations interested in being approved as a sponsor under this paragraph must submit 
4.14 	a proposal to the commissioner that includes the provisions of paragraph (c) and a 
4.15 	five-year financial plan. 
4.16 	(c) An eligible sponsor under this subdivision must apply to the commissioner 
4.17 	for approval as a sponsor before submitting an affidavit to the commissioner to sponsor 
4.18 	a charter school. The application for approval as a charter school sponsor must 
4.19 	demonstrate the applicant's ability to implement the procedures and satisfy the criteria 
4.20 	for sponsoring a charter school under this section. The commissioner must approve or 
4.21 	disapprove an application within 60 business days of the application deadline. If the 
4.22 	commissioner disapproves the application, the commissioner must notify the applicant of 
4.23 	the deficiencies and the applicant then has 20 business days to address the deficiencies to 
4.24 	the commissioner's satisfaction. Failing to address the deficiencies to the commissioner's 
4.25 	satisfaction makes an applicant ineligible to be a sponsor. The affidavit to be submitted to 
4.26 	and evaluated by the commissioner must include at least the following:
4.27 	(1) how sponsoring schools is a way for the organization to carry out its mission; 
4.28 	(2) a description of the capacity of the organization to serve as a sponsor, including 
4.29 	the personnel who will perform the sponsoring duties, their qualifications, the amount of 
4.30 	time they will be assigned to this responsibility, and the financial resources allocated 
4.31 	by the organization to this responsibility; 
4.32 	(3) a description of the application and review process the sponsor will use to make 
4.33 	decisions regarding the granting of charters, which will include at least the following: 
4.34 	(i) how the statutory purposes defined in subdivision 1 are addressed;
4.35 	(ii) the mission, goals, program model, and student performance expectations;
5.1 	(iii) an evaluation plan for the school that includes criteria for evaluating educational, 
5.2 	organizational, and fiscal plans;
5.3 	(iv) the school's governance plan;
5.4 	(v) the financial management plan; and
5.5 	(vi) the administration and operations plan;
5.6 	(4) a description of the type of contract it will arrange with the schools it sponsors 
5.7 	that meets the provisions of subdivision 6 and defines the rights and responsibilities of the 
5.8 	charter school for governing its educational program, controlling its funds, and making 
5.9 	school management decisions; 
5.10 	(5) the process to be used for providing ongoing oversight of the school consistent 
5.11 	with the contract expectations specified in clause (4) that assures that the schools sponsored 
5.12 	are complying with both the provisions of applicable law and rules, and with the contract;
5.13 	(6) the process for making decisions regarding the renewal or termination of 
5.14 	the school's charter based on evidence that demonstrates the academic, organizational, 
5.15 	and financial competency of the school, including its success in increasing student 
5.16 	achievement and meeting the goals of the charter school agreement; and 
5.17 	(7) an assurance specifying that the organization is committed to serving as a 
5.18 	sponsor for the full five-year term.
5.19 	(d) The sponsor must participate in department-approved training.
5.20 	(e) A sponsor that chartered a school before August 1, 2009, must apply by June 
5.21 	30, 2011, to the commissioner for approval, under paragraph (c), to continue as a sponsor 
5.22 	under this section. For purposes of this paragraph, a sponsor that fails to submit a timely 
5.23 	application is ineligible to charter a school. 
5.24 	(f) The commissioner shall review a sponsor's performance every five years 
5.25 	in a manner and form determined by the commissioner and may review a sponsor's 
5.26 	performance more frequently at the commissioner's own initiative or at the request of a 
5.27 	charter school operator, charter school board member, or other interested party. The 
5.28 	commissioner, after completing the review, shall transmit a report with findings to the 
5.29 	sponsor. If, consistent with this section, the commissioner finds that a sponsor has not 
5.30 	fulfilled the requirements of this section, the commissioner may subject the sponsor to 
5.31 	corrective action, which may include terminating the contract with the charter school 
5.32 	board of directors of a school it sponsored. The commissioner must notify the sponsor in 
5.33 	writing of any findings that may subject the sponsor to corrective action and the sponsor 
5.34 	then has 15 business days to request an informal hearing before the commissioner takes 
5.35 	corrective action. 
6.1 	(g) The commissioner may at any time take corrective action against a sponsor, 
6.2 	including terminating a sponsor's ability to charter a school for:
6.3 	(1) failing to demonstrate the criteria under paragraph (c) under which the 
6.4 	commissioner approved the sponsor; 
6.5 	(2) violating a term of the chartering contract between the sponsor and the charter 
6.6 	school board of directors; or 
6.7 	(3) violations by the charter school that the sponsor authorizes and that the board of 
6.8 	directors fails to correct. 

6.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

6.10 	Sec. 4. Minnesota Statutes 2008, section 124D.10, subdivision 4, is amended to read:
6.11 		Subd. 4.Formation of school. (a) A sponsor may authorize one or more licensed 
6.12 	teachers under section 122A.18, subdivision 1, to operate a charter school subject to 
6.13 	approval by the commissioner. A board must vote on charter school application for 
6.14 	sponsorship no later than 90 days after receiving the application. The school must be 
6.15 	organized and operated as a cooperative under chapter 308A or nonprofit corporation 
6.16 	under chapter 317A and the provisions under the applicable chapter shall apply to the 
6.17 	school except as provided in this section. Notwithstanding sections 465.717 and 465.719, 
6.18 	a school district may create a corporation for the purpose of creating a charter school.
6.19 	(b) Before the operators may form establish and operate a school, the sponsor must 
6.20 	file an affidavit with the commissioner stating its intent to authorize a charter school. A 
6.21 	sponsor must file a separate affidavit for each school it intends to charter. The affidavit 
6.22 	must state the terms and conditions under which the sponsor would authorize a charter 
6.23 	school and how the sponsor intends to oversee the fiscal and student performance of 
6.24 	the charter school and to comply with the terms of the written contract between the 
6.25 	sponsor and the charter school board of directors under subdivision 6. The commissioner 
6.26 	must approve or disapprove the sponsor's proposed authorization affidavit within 90 60 
6.27 	business days of receipt of the affidavit.  If the commissioner disapproves the affidavit, the 
6.28 	commissioner shall notify the sponsor of the deficiencies in the affidavit and the sponsor 
6.29 	then has 20 business days to address the deficiencies. If the sponsor does not address the 
6.30 	deficiencies to the commissioner's satisfaction, the commissioner's disapproval is final. 
6.31 	 Failure to obtain commissioner approval precludes a sponsor from authorizing the charter
6.32 	chartering the  school that was is the subject of the this affidavit.
6.33 	(c) The sponsor may prevent an approved charter school from opening for operation 
6.34 	if, among other grounds, the charter school violates this section or does not meet the 
7.1 	ready-to-open standards that are part of the sponsor's oversight and evaluation process or 
7.2 	are stipulated in the charter school contract.
7.3 	(d) The operators authorized to organize and operate a school, before entering into 
7.4 	a contract or other agreement for professional or other services, goods, or facilities, 
7.5 	must incorporate as a cooperative under chapter 308A or as a nonprofit corporation 
7.6 	under chapter 317A and must establish a board of directors composed of at least five 
7.7 	members who are not related parties until a timely election for members of the ongoing
7.8 	charter school board of directors is held according to the school's articles and bylaws
7.9 	under paragraph (f). A charter school board of directors must be composed of at least 
7.10 	five members. Any Staff members who are employed at the school, including teachers 
7.11 	providing instruction under a contract with a cooperative, and all parents or legal guardians
7.12 	of children enrolled in the school may participate in the election for are the voters eligible 
7.13 	to elect the members of the school's board of directors. Licensed teachers employed at the 
7.14 	school, including teachers providing instruction under a contract with a cooperative, must 
7.15 	be a majority of the members of the board of directors before the school completes its 
7.16 	third year of operation, unless the commissioner waives the requirement for a majority 
7.17 	of licensed teachers on the board. A charter school must notify eligible voters of the 
7.18 	school board election dates at least 30 days before the election.  Board of director meetings 
7.19 	must comply with chapter 13D.
7.20 	(e) Every charter school board member shall attend department-approved training 
7.21 	on board governance, the board's role and responsibilities, employment policies and 
7.22 	practices, and financial management standards and practices. A board member who does 
7.23 	not begin the required training within three months of being seated and complete the 
7.24 	required training within 12 months of being seated on the board is ineligible to continue to 
7.25 	serve as a board member. 
7.26 	(f) The ongoing board must be elected before the school completes its third year 
7.27 	of operation. The charter school board of directors shall be composed of at least five 
7.28 	members who are not related parties and shall include at least a licensed teacher employed 
7.29 	at the school, a charter school parent or legal guardian, and an interested community 
7.30 	member. The chief financial officer and the chief administrator are nonvoting board 
7.31 	members. Board bylaws shall outline the process and procedures for changing the board's 
7.32 	governance model. A board may change its governance model within the requirements of 
7.33 	board membership in this section and only with approval from the sponsor and a voting 
7.34 	majority of the board of directors and the licensed teachers employed at the school. 
7.35 	(d) (g) The granting or renewal of a charter school by a sponsoring entitysponsor 
7.36 	must not be conditioned upon the bargaining unit status of the employees of the school.
8.1 	(h) The granting or renewal of a charter school by a sponsor must not be contingent 
8.2 	on a requirement to contract, lease, or purchase services from the sponsor. A party to 
8.3 	such an arrangement between a sponsor and a school must disclose the arrangement to 
8.4 	the commissioner. The commissioner may terminate a charter school contract under this 
8.5 	section if the commissioner determines that the arrangement is illegal.
8.6 	(e) (i) A sponsor may authorize the operators board of directors of a charter school 
8.7 	to expand the operation of the charter school to additional sites or to add additional grades 
8.8 	at the school beyond those described in the sponsor's application original affidavit as 
8.9 	approved by the commissioner only after submitting a supplemental application affidavit 
8.10 	for approval to the commissioner in a form and manner prescribed by the commissioner. 
8.11 	The supplemental application affidavit must provide evidence that:
8.12 	(1) the expansion of proposed by the charter school is supported by need and 
8.13 	projected enrollment;
8.14 	(2) the charter school expansion is warranted, at a minimum, by longitudinal data 
8.15 	demonstrating sustained academic performance and growth on statewide assessments 
8.16 	under chapter 120B; 
8.17 	(2) (3) the charter school is fiscally sound and has the financial capacity to implement 
8.18 	the proposed expansion;
8.19 	(3) (4) the sponsor supports the charter school has the potential physical capacity to 
8.20 	implement the proposed expansion; and
8.21 	(4) the building of the additional site meets all health and safety requirements to 
8.22 	be eligible for lease aid (5) the sponsor finds that the charter school has the management 
8.23 	capacity to implement the proposed expansion.
8.24 	(f) The commissioner annually must provide timely financial management training 
8.25 	to newly elected members of a charter school board of directors and ongoing training to 
8.26 	other members of a charter school board of directors. Training must address ways to:
8.27 	(1) proactively assess opportunities for a charter school to maximize all available 
8.28 	revenue sources;
8.29 	(2) establish and maintain complete, auditable records for the charter school;
8.30 	(3) establish proper filing techniques;
8.31 	(4) document formal actions of the charter school, including meetings of the charter 
8.32 	school board of directors;
8.33 	(5) properly manage and retain charter school and student records;
8.34 	(6) comply with state and federal payroll record-keeping requirements; and
8.35 	(7) address other similar factors that facilitate establishing and maintaining complete 
8.36 	records on the charter school's operations.
9.1 	(j) The commissioner shall have 30 business days to review and comment on the 
9.2 	supplemental affidavit. The commissioner shall notify the sponsor of any deficiencies in 
9.3 	the supplemental affidavit and the sponsor then has 30 business days to address, to the 
9.4 	commissioner's satisfaction, any deficiencies in the supplemental affidavit. The school 
9.5 	shall not expand grades or add sites until the commissioner has approved the supplemental 
9.6 	affidavit. The commissioner's approval or disapproval of a supplemental affidavit is final. 
9.7 	(k) A new charter school must not open in a newly consolidated district under 
9.8 	section 123A.48 or in a district dissolved under section 123A.46 for at least 36 months 
9.9 	after the date of consolidation or dissolution, except under subdivision 5 in this section or 
9.10 	unless the school board of the school district in which the charter school would be located 
9.11 	gives the sponsor written approval to do so.
9.12 	(l) A new charter school must not open within a one-mile radius of a public school 
9.13 	that has closed under section 123B.51 for at least 36 months after the date the school 
9.14 	closed unless the commissioner determines that the new charter school applicant does not 
9.15 	intend to reestablish the closed public school as a charter school, except under subdivision 
9.16 	5 in this section or unless the school board of the school district in which the charter 
9.17 	school would be located gives the sponsor written approval to do so. 
9.18 	(m) A sponsor may apply to the commissioner for a waiver from paragraph (k) or 
9.19 	paragraph (l). The commissioner must use the criteria in this section to approve or deny 
9.20 	the waiver within 45 business days. The commissioner's decision is final.

9.21 	EFFECTIVE DATE. This section is effective August 1, 2009. 

9.22 	Sec. 5. Minnesota Statutes 2008, section 124D.10, subdivision 4a, is amended to read:
9.23 		Subd. 4a.Conflict of interest. (a) A member of a charter school board of directors
9.24 	An individual is prohibited from serving as a member of the charter school board of 
9.25 	directors or as if the individual, an immediate family member, or the individual's partner is
9.26 	an owner, employee or agent of or a contractor with a for-profit or nonprofit entity with 
9.27 	whom the charter school contracts, directly or indirectly, for professional services, goods, 
9.28 	or facilities. A violation of this prohibition renders a contract voidable at the option of 
9.29 	the commissioner or the charter school board of directors. A member of a charter school 
9.30 	board of directors who violates this prohibition shall be is individually liable to the charter 
9.31 	school for any damage caused by the violation.
9.32 	(b) No member of the board of directors, employee, officer, or agent of a charter 
9.33 	school shall participate in selecting, awarding, or administering a contract if a conflict 
9.34 	of interest exists. A conflict exists when:
9.35 	(1) the board member, employee, officer, or agent;
10.1 	(2) the immediate family of the board member, employee, officer, or agent;
10.2 	(3) the partner of the board member, employee, officer, or agent; or
10.3 	(4) an organization that employs, or is about to employ any individual in clauses 
10.4 	(1) to (3), has a financial or other interest in the entity with which the charter school is 
10.5 	contracting. A violation of this prohibition renders the contract void.
10.6 	(c) Any employee, agent, or board member of the sponsor who participates in 
10.7 	the initial review, approval, ongoing oversight, evaluation, or the charter renewal or 
10.8 	nonrenewal process or decision is ineligible to serve on the board of directors of a school 
10.9 	chartered by that sponsor.
10.10 	 (d) An individual may serve as a member of the board of directors if no conflict of 
10.11 	interest under paragraph (a) exists.
10.12 	(c) A member of a charter school board of directors that serves as a member of the 
10.13 	board of directors or as an employee or agent of or a contractor with a nonprofit entity 
10.14 	with whom the charter school contracts, directly or indirectly, for professional services, 
10.15 	goods, or facilities, must disclose all potential conflicts to the commissioner.
10.16 	(d) (e) The conflict of interest provisions under this subdivision do not apply to 
10.17 	compensation paid to a teacher employed by the charter school who also serves as a 
10.18 	member of the board of directors.
10.19 	(e) (f) The conflict of interest provisions under this subdivision do not apply to a 
10.20 	teacher who provides services to a charter school through a cooperative formed under 
10.21 	chapter 308A when the teacher also serves on the charter school board of directors.

10.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

10.23 	Sec. 6. Minnesota Statutes 2008, section 124D.10, subdivision 5, is amended to read:
10.24 		Subd. 5.Conversion of existing schools. A board of an independent or special 
10.25 	school district  may convert one or more of its existing schools to charter schools under 
10.26 	this section if 60 percent of the full-time teachers at the school sign a petition seeking 
10.27 	conversion. The conversion must occur at the beginning of an academic year.

10.28 	EFFECTIVE DATE. This section is effective the day following final enactment. 

10.29 	Sec. 7. Minnesota Statutes 2008, section 124D.10, subdivision 6, is amended to read:
10.30 		Subd. 6. Charter  contract. The sponsor's authorization for a charter school must 
10.31 	be in the form of a written contract signed by the sponsor and the board of directors of 
10.32 	the charter school. The contract must be completed within 90 45 business days of the 
10.33 	commissioner's approval of the sponsor's proposed authorization affidavit. The sponsor 
11.1 	shall submit a copy of the signed contract to the commissioner within ten days of its 
11.2 	execution. The contract for a charter school must be in writing and contain at least the 
11.3 	following:
11.4 	(1) a description of a how the program that carries out one or more of the purposes 
11.5 	in subdivision 1;
11.6 	(2) a description of the specific academic and nonacademic outcomes that pupils 
11.7 	are to must achieve under subdivision 10;
11.8 	(3) a statement of admission policies and procedures;
11.9 	(4) a governance, management and administration of plan for the school;
11.10 	(5) signed agreements from charter school board members to comply with all federal 
11.11 	and state laws governing all organizational, programmatic, and financial requirements and 
11.12 	procedures for program and financial audits applicable to charter schools;
11.13 	(6) how the school will comply with subdivisions 8, 13, 16, and 23 the criteria, 
11.14 	processes, and procedures that the sponsor will use for ongoing oversight of operational, 
11.15 	financial, and academic performance;
11.16 	(7) assumption of liability by the charter school the performance evaluation that is a 
11.17 	prerequisite for reviewing a charter school contract under subdivision 15;
11.18 	(8) types and amounts of insurance liability coverage to be obtained by the charter 
11.19 	school;
11.20 	(9) the term of the contract, which may be up to three years for an initial contract, 
11.21 	plus a preoperational planning year and up to five years for a renewed contract if warranted 
11.22 	by the school's academic, financial, and operational performance;
11.23 	(10) if how the board of directors or the operators of the charter school will provide 
11.24 	special instruction and services for children with a disability under sections 125A.03
11.25 	to 125A.24, and 125A.65, a description of the financial parameters within which the 
11.26 	charter school will operate to provide the special instruction and services to children 
11.27 	with a disability; and
11.28 	(11) the process and criteria the sponsor intends to use to monitor and evaluate the 
11.29 	fiscal and student performance of the charter school, consistent with subdivision 15; and 
11.30 	(12) the plan for an orderly closing of the school under chapter 308A or chapter 
11.31 	317A, if the closure is a termination for cause, voluntary termination, or nonrenewal of 
11.32 	the contract that includes establishing the responsibilities of the charter school board of 
11.33 	directors and the sponsor, and notifying the commissioner, sponsor, the school district in 
11.34 	which the charter school is located, and parents of enrolled students about the closure, the 
11.35 	transfer of student records to the students' resident districts, and procedures for closing 
11.36 	financial operations.

12.1 	EFFECTIVE DATE. The section is effective the day following final enactment.

12.2 	Sec. 8. Minnesota Statutes 2008, section 124D.10, subdivision 6a, is amended to read:
12.3 		Subd. 6a.Audit report. (a) The charter school must submit an audit report to the 
12.4 	commissioner and its sponsor by December 31 each year. 
12.5 	(b) The charter school, with the assistance of the auditor conducting the audit, must 
12.6 	include with the report a copy of all charter school agreements for corporate management 
12.7 	services. If the entity that provides the professional services to the charter school is 
12.8 	exempt from taxation under section 501 of the Internal Revenue Code of 1986, that entity 
12.9 	must file with the commissioner by February 15 a copy of the annual return required under 
12.10 	section 6033 of the Internal Revenue Code of 1986. 
12.11 	(c) If the commissioner receives as part of the an audit report a management letter
12.12 	indicating that a material weakness exists in the financial reporting systems of a charter 
12.13 	school, the charter school must submit a written report to the commissioner explaining 
12.14 	how the material weakness will be resolved. 
12.15 	(d) Upon the request of an individual, the charter school must make available in a 
12.16 	timely fashion the minutes of meetings of members, the board of directors, and committees 
12.17 	having any of the authority of the board of directors, and statements showing the financial 
12.18 	result of all operations and transactions affecting income and surplus during the school's 
12.19 	last annual accounting period and a balance sheet containing a summary of its assets and 
12.20 	liabilities as of the closing date of the accounting period.

12.21 	EFFECTIVE DATE. The section is effective the day following final enactment.

12.22 	Sec. 9. Minnesota Statutes 2008, section 124D.10, subdivision 7, is amended to read:
12.23 		Subd. 7.Public status; exemption from statutes and rules. A charter school is a 
12.24 	public school and is part of the state's system of public education. Except as provided in 
12.25 	this section, a charter school is exempt from all statutes and rules applicable to a school, a 
12.26 	board, or a district, although it may elect to comply with one or more provisions of statutes 
12.27 	or rules A charter school is exempt from all statutes and rules applicable to a school, 
12.28 	school board, or school district unless a statute or rule is made specifically applicable to a 
12.29 	charter school or is included in this section.

12.30 	EFFECTIVE DATE. The section is effective the day following final enactment.

12.31 	Sec. 10. Minnesota Statutes 2008, section 124D.10, subdivision 8, is amended to read:
13.1 		Subd. 8.Federal, state, and local requirements. (a) A charter school shall meet all 
13.2 	applicable federal, state, and local health and safety requirements applicable to school 
13.3 	districts.
13.4 	(b) A school must comply with statewide accountability requirements governing 
13.5 	standards and assessments in chapter 120B.
13.6 	(c) A school sponsored by a school board may be located in any district, unless the 
13.7 	school board of the district of the proposed location disapproves by written resolution.
13.8 	(c) (d) A charter school must be nonsectarian in its programs, admission policies, 
13.9 	employment practices, and all other operations. A sponsor may not authorize a charter 
13.10 	school or program that is affiliated with a nonpublic sectarian school or a religious 
13.11 	institution. A charter school student must be released for religious instruction, consistent 
13.12 	with section 120A.22, subdivision 12, clause (3).
13.13 	(d) (e) Charter schools must not be used as a method of providing education or 
13.14 	generating revenue for students who are being home-schooled.
13.15 	(e) (f) The primary focus of a charter school must be to provide a comprehensive 
13.16 	program of instruction for at least one grade or age group from five through 18 years 
13.17 	of age. Instruction may be provided to people younger than five years and older than 
13.18 	18 years of age.
13.19 	(f) (g) A charter school may not charge tuition.
13.20 	(g) (h) A charter school is subject to and must comply with chapter 363A and 
13.21 	section 121A.04. 
13.22 	(h) (i) A charter school is subject to and must comply with the Pupil Fair Dismissal 
13.23 	Act, sections 121A.40 to 121A.56, and the Minnesota Public School Fee Law, sections 
13.24 	123B.34 to 123B.39. 
13.25 	(i) (j) A charter school is subject to the same financial audits, audit procedures, and 
13.26 	audit requirements as a district. Audits must be conducted in compliance with generally 
13.27 	accepted governmental auditing standards, the Federal Single Audit Act, if applicable, 
13.28 	and section 6.65. A charter school is subject to and must comply with sections 15.054; 
13.29 	118A.01; 118A.02; 118A.03; 118A.04; 118A.05; 118A.06; 123B.52, subdivision 5;
13.30 	471.38; 471.391; 471.392; and 471.425; 471.87; 471.88, subdivisions 1, 2, 3, 4, 5, 6, 
13.31 	12, 13, and 15; 471.881; and 471.89. The audit must comply with the requirements of 
13.32 	sections 123B.75 to 123B.83, except to the extent deviations are necessary because of the 
13.33 	program at the school. Deviations must be approved by the commissioner and sponsor. 
13.34 	The Department of Education, state auditor, or legislative auditor or sponsor may conduct 
13.35 	financial, program, or compliance audits. A charter school determined to be in statutory 
14.1 	operating debt under sections 123B.81 to 123B.83 must submit a plan under section 
14.2 	123B.81, subdivision 4. 
14.3 	(j) (k) A charter school is a district for the purposes of tort liability under chapter 466.
14.4 	(k) (l) A charter school must comply with sections 13.32 chapters 13 and 13D; and 
14.5 	sections 120A.22, subdivision 7; 121A.75; and 260B.171, subdivisions 3 and 5. 
14.6 	(l) (m) A charter school is subject to the Pledge of Allegiance requirement under 
14.7 	section 121A.11, subdivision 3. 
14.8 	(n) A charter school offering online courses or programs must comply with section 
14.9 	124D.095.
14.10 	(o) A charter school and charter school board of directors are subject to chapter 181.

14.11 	EFFECTIVE DATE. This section is effective the day following final enactment. 

14.12 	Sec. 11. Minnesota Statutes 2008, section 124D.10, is amended by adding a 
14.13 	subdivision to read:
14.14 		Subd. 8a.Aid reduction. The commissioner must reduce a charter school's state 
14.15 	aid according to section 127A.42, if the charter school board fails to correct a violation 
14.16 	under this section.

14.17 	EFFECTIVE DATE. This section is effective the day following final enactment. 

14.18 	Sec. 12. Minnesota Statutes 2008, section 124D.10, subdivision 9, is amended to read:
14.19 		Subd. 9.Admission requirements. A charter school may limit admission to:
14.20 	(1) pupils within an age group or grade level;
14.21 	(2) people pupils who are eligible to participate in the graduation incentives program 
14.22 	under section 124D.68; or 
14.23 	(3) residents of a specific geographic area where the percentage of the population 
14.24 	of non-Caucasian people of that area is greater than the percentage of the non-Caucasian 
14.25 	population in the congressional district in which the geographic area is located, and as 
14.26 	long as the school reflects the racial and ethnic diversity of the specific area when the 
14.27 	school serves low-income students at risk of academic failure.
14.28 	A charter school shall enroll an eligible pupil who submits a timely application, 
14.29 	unless the number of applications exceeds the capacity of a program, class, grade level, 
14.30 	or building. In this case, pupils must be accepted by lot. If a charter school is the only 
14.31 	school located in a town serving pupils within a particular grade level, then pupils that 
14.32 	are residents of the town must be given preference for enrollment before accepting pupils 
14.33 	by lot. If a pupil lives within two miles of a charter school and the next closest public 
15.1 	school is more than five miles away, the charter school must give those pupils preference 
15.2 	for enrollment before accepting other pupils by lot. The charter school must develop and 
15.3 	publish a lottery policy and process that it must use when accepting pupils by lot.
15.4 	A charter school shall give preference for enrollment to a sibling of an enrolled pupil 
15.5 	and to a foster child of that pupil's parents before accepting other pupils by lot.
15.6 	A charter school may not limit admission to pupils on the basis of intellectual ability, 
15.7 	measures of achievement or aptitude, or athletic ability and may not establish any criteria 
15.8 	or requirements for admission that are inconsistent with this subdivision.
15.9 	The charter school shall not distribute any services or goods of value to students, 
15.10 	parents or guardians as an inducement, term, or condition of enrolling a student in a 
15.11 	charter school.

15.12 	EFFECTIVE DATE. This section is effective the day following final enactment 
15.13 	and applies to the 2010-2011 school year.

15.14 	Sec. 13. Minnesota Statutes 2008, section 124D.10, subdivision 11, is amended to read:
15.15 		Subd. 11.Employment and other operating matters. (a)  A charter school must 
15.16 	employ or contract with necessary teachers, as defined by section 122A.15, subdivision 
15.17 	1, who hold valid licenses to perform the particular service for which they are employed 
15.18 	in the school. The charter school's state aid may be reduced under section 127A.42
15.19 	127A.43 if the school employs a teacher who is not appropriately licensed or approved 
15.20 	by the board of teaching. The school may employ necessary employees who are not 
15.21 	required to hold teaching licenses to perform duties other than teaching and may contract 
15.22 	for other services. The school may discharge teachers and nonlicensed employees. The 
15.23 	charter school board of directors must comply with section 181.932 and a school shall not 
15.24 	discharge, discipline, threaten or discriminate against, or penalize an employee regarding 
15.25 	the employee's compensation, terms or conditions of work location or privileges of 
15.26 	employment because the employee, or person acting on the employee's behalf, in good 
15.27 	faith transmits to the department, the state of Minnesota or a local law enforcement 
15.28 	agency information about the school's financial circumstances, educational performance, a 
15.29 	conflict of interest, or other violation of law or school policy. The charter school board 
15.30 	of directors must enter into a written contract with each teacher that outlines the terms 
15.31 	and conditions of employment. 
15.32 	(b) A person, without holding a valid administrator's license, may perform 
15.33 	administrative, supervisory, or instructional leadership duties.  The board of directors shall 
15.34 	establish qualifications for persons that hold administrative, supervisory, or instructional 
15.35 	leadership roles. The qualifications shall include at least the following areas: instruction 
16.1 	and assessment; human resource and personnel management; financial management; 
16.2 	legal and compliance management; effective communication; and board, sponsor, and 
16.3 	community relationships. The board of directors shall use those qualifications as the basis 
16.4 	for job descriptions, hiring, and performance evaluations of those who hold administrative, 
16.5 	supervisory, or instructional leadership roles. The board of directors and an individual 
16.6 	who does not hold a valid administrative license and who serves in an administrative, 
16.7 	supervisory, or instructional leadership position shall develop a professional development 
16.8 	plan. Documentation of the implementation of the professional development plan of these 
16.9 	persons shall be included in the school's annual report.
16.10 	 The board of directors also shall decide matters related to the operation of the school, 
16.11 	including budgeting, curriculum and operating procedures.

16.12 	EFFECTIVE DATE. This section is effective the day following final enactment.

16.13 	Sec. 14. Minnesota Statutes 2008, section 124D.10, subdivision 14, is amended to read:
16.14 		Subd. 14.Annual public reports. A charter school must publish an annual report at 
16.15 	least annually to its sponsor and the commissioner the information required by the sponsor 
16.16 	or the commissioner approved by the board of directors.  The annual report must at least 
16.17 	include information on school enrollment, student attrition, governance and management, 
16.18 	staffing, finances, academic performance, operational performance, innovative practices 
16.19 	and implementation, and future plans. A charter school must distribute the annual report 
16.20 	by publication, mail, or electronic means to the commissioner, sponsor, school employees, 
16.21 	and parents and legal guardians of students enrolled in the charter school and must also 
16.22 	post the report on the charter school's official Web site. The reports are public data under 
16.23 	chapter 13.

16.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

16.25 	Sec. 15. Minnesota Statutes 2008, section 124D.10, subdivision 15, is amended to read:
16.26 		Subd. 15.Review and comment. (a) The department must review and comment on 
16.27 	the evaluation, by the sponsor, of the performance of a charter school before the charter 
16.28 	school's contract is renewed for another contract term. The sponsor must submit to the 
16.29 	commissioner timely information for the review and comment The sponsor shall provide 
16.30 	a formal written evaluation of the school's performance before the sponsor renews the 
16.31 	charter contract. The department must review and comment on the sponsor's evaluation 
16.32 	process at the time the sponsor submits its application for approval and each time the 
16.33 	sponsor undergoes its five-year review under subdivision 3, paragraph (e).
17.1 	(b) A sponsor shall monitor and evaluate the fiscal, operational,  and student 
17.2 	performance of the school, and may for this purpose annually assess a charter school: (1) 
17.3 	in its first, second, or third year of operation up to $30 per student up to a maximum of 
17.4 	$10,000; and (2) in its fourth or a subsequent year of operation up to $10 per student up to 
17.5 	a maximum of $3,500 a fee according to paragraph (c). The agreed upon fee structure 
17.6 	must be stated in the charter school contract.
17.7 	(c) The fee that each charter school pays to a sponsor each year is the greater of: 
17.8 	(1) the basic formula allowance for that year; or 
17.9 	(2) the lesser of: 
17.10 	(i) the maximum fee factor times the basic formula allowance for that year; or
17.11 	(ii) 1.0 percent of the basic formula allowance for that year times the charter school's 
17.12 	adjusted marginal cost pupil units for that year. The maximum fee factor equals 1.5 in 
17.13 	fiscal year 2010, 2.0 in fiscal year 2011, 3.0 in fiscal year 2012, and 4.0 in fiscal years 
17.14 	2013 and later.
17.15 	(d) The department and any charter school it sponsors must not assess or pay a 
17.16 	fee under paragraphs (b) and (c).
17.17 	(e) For the preoperational planning period, the sponsor may assess a charter school a 
17.18 	fee equal to the basic formula allowance.
17.19 	(f) By September 30 of each year, a sponsor shall submit to the commissioner a 
17.20 	statement of expenditures related to sponsoring activities during the previous school year 
17.21 	ending June 30. A copy of the statement shall be given to all schools chartered by the 
17.22 	sponsor.

17.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.24 	Sec. 16. Minnesota Statutes 2008, section 124D.10, subdivision 17, is amended to read:
17.25 		Subd. 17.Leased space.  A charter school may lease space from a an independent 
17.26 	or special school board eligible to be a sponsor or other public or private nonprofit 
17.27 	nonsectarian organization. The department must review and approve or disapprove the 
17.28 	lease agreement within 60 business days of receiving an application for lease aid. If 
17.29 	a charter school is unable to lease appropriate space from an eligible board or other 
17.30 	public or private nonprofit nonsectarian organization, the school may lease space from 
17.31 	another nonsectarian organization if the Department of Education, in consultation with 
17.32 	the Department of Administration, approves the lease. If the school is unable to lease 
17.33 	appropriate space from public or private nonsectarian organizations, the school may lease 
17.34 	space from a sectarian organization if the leased space is constructed as a school facility 
18.1 	and the Department of Education, in consultation with the Department of Administration, 
18.2 	approves the lease.

18.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

18.4 	Sec. 17. Minnesota Statutes 2008, section 124D.10, is amended by adding a 
18.5 	subdivision to read:
18.6 		Subd. 17a.Building corporation. (a) A charter school is prohibited from 
18.7 	organizing the nonprofit building corporation until the sponsor files a supplementary 
18.8 	affidavit with and receives approval from the commissioner.
18.9 	(b) Upon approval by the sponsor and the commissioner, a charter school that has 
18.10 	operated for at least three consecutive years and is not currently in statutory operating debt 
18.11 	may form a separate affiliated nonprofit building corporation to purchase or renovate 
18.12 	an existing facility. The nonprofit building corporation must elect a board of directors. 
18.13 	Members of the building corporation board of directors must not be members of the 
18.14 	charter school board of directors. The state is immune from any liability as a result of the 
18.15 	contractual arrangement and the facility. The sponsor shall submit a supplemental affidavit 
18.16 	to the commissioner stating that the sponsor has reviewed:
18.17 	(1) the school's feasibility study on facility options;
18.18 	(2) documents showing the school's need and projected enrollment for such a 
18.19 	facility; and
18.20 	(3) the school's financial plan and financial status.
18.21 	(c) Upon approval by the sponsor and the commissioner, a charter school that has 
18.22 	operated for at least eight consecutive years and is not currently in statutory operating 
18.23 	debt may form a separate affiliated nonprofit building corporation to construct a school 
18.24 	facility. The nonprofit building corporation must elect a board of directors. Members of 
18.25 	the building corporation board of directors must not be members of the charter school 
18.26 	board of directors. The state is immune from any liability as a result of the contractual 
18.27 	arrangement and the facility. The sponsor shall submit a supplemental affidavit to the 
18.28 	commissioner stating that the sponsor has reviewed:
18.29 	(1) the school's feasibility study on facility options;
18.30 	(2) documents showing the school's need and projected enrollment for such a facility; 
18.31 	(3) the school's financial plan and financial status; and
18.32 	(4) the lack of other available existing facilities that could be renovated or purchased.

18.33 	EFFECTIVE DATE. This section is effective the day following final enactment 
18.34 	and applies to building corporations formed after July 1, 2009.

19.1 	Sec. 18. Minnesota Statutes 2008, section 124D.10, subdivision 20, is amended to read:
19.2 		Subd. 20.Leave to teach in a charter school. If a teacher employed by a district 
19.3 	makes a written request for an extended leave of absence to teach at a charter school, 
19.4 	the district must grant the leave. The district must grant a leave not to exceed a total of 
19.5 	five years. Any request to extend the leave shall be granted only at the discretion of the 
19.6 	school board. The district may require that the request for a leave or extension of leave 
19.7 	be made up to 90 days before the teacher would otherwise have to report for duty before 
19.8 	February 1 in the school year preceding the school year in which the teacher wishes 
19.9 	to begin the leave, or February 1 of the calendar year in which the teacher's leave is 
19.10 	scheduled to terminate. Except as otherwise provided in this subdivision and except for 
19.11 	section 122A.46, subdivision 7, the leave is governed by section 122A.46, including, but 
19.12 	not limited to, reinstatement, notice of intention to return, seniority, salary, and insurance. 
19.13 	During a leave, the teacher may continue to aggregate benefits and credits in the 
19.14 	Teachers' Retirement Association account by paying both the employer and employee 
19.15 	contributions based upon the annual salary of the teacher for the last full pay period before 
19.16 	the leave began. The retirement association may impose reasonable requirements to 
19.17 	efficiently administer this subdivision according to chapters 354 and 354A.

19.18 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.19 	Sec. 19. Minnesota Statutes 2008, section 124D.10, subdivision 23, is amended to read:
19.20 		Subd. 23.Causes for nonrenewal or termination of charter school contract.
 19.21 	(a) The duration of the contract with a sponsor must be for the term contained in the 
19.22 	contract according to subdivision 6. The sponsor may or may not renew a contract at 
19.23 	the end of the term for any ground listed in paragraph (b). A sponsor may unilaterally 
19.24 	terminate a contract during the term of the contract for any ground listed in paragraph (b). 
19.25 	At least 60 days before not renewing or terminating a contract, the sponsor shall notify 
19.26 	the board of directors of the charter school of the proposed action in writing. The notice 
19.27 	shall state the grounds for the proposed action in reasonable detail and that the charter 
19.28 	school's board of directors may request in writing an informal hearing before the sponsor 
19.29 	within 14 15 business days of receiving notice of nonrenewal or termination of the 
19.30 	contract. Failure by the board of directors to make a written request for a hearing within 
19.31 	the 14-day 15-business-day period shall be treated as acquiescence to the proposed action. 
19.32 	Upon receiving a timely written request for a hearing, the sponsor shall give reasonable
19.33 	ten business days notice to the charter school's board of directors of the hearing date. 
19.34 	The sponsor shall conduct an informal hearing before taking final action. The sponsor 
19.35 	shall take final action to renew or not renew a contract by the last day of classes in the 
20.1 	school year. If the sponsor is a local board, the school's board of directors may appeal the 
20.2 	sponsor's decision to the commissioner no later than 20 business days before the proposed 
20.3 	date for terminating the contract or the end date of the contract.
20.4 	(b) A contract may be terminated or not renewed upon any of the following grounds:
20.5 	(1) failure to meet the requirements for pupil performance contained in the contract;
20.6 	(2) failure to meet generally accepted standards of fiscal management;
20.7 	(3) violations of law; or
20.8 	(4) other good cause shown.
20.9 	If a contract is terminated or not renewed under this paragraph, the school must be 
20.10 	dissolved according to the applicable provisions of chapter 308A or 317A, except when 
20.11 	the commissioner approves the decision of a different eligible sponsor to authorize the 
20.12 	charter school.
20.13 	(c) If at the end of a contract term, either the sponsor or and the charter school board 
20.14 	of directors wants mutually agree to voluntarily terminate or not renew the contract, a 
20.15 	change in sponsors is allowed if the commissioner approves the decision of transfer to a 
20.16 	different eligible sponsor to authorize the charter school. The party intending to terminate 
20.17 	the contract must notify the other party and the commissioner of its intent at least 90 days 
20.18 	before the date on which the contract ends Both parties must jointly submit their intent 
20.19 	in writing to the commissioner to mutually terminate the contract. The sponsor that is a 
20.20 	party to the existing contract at least must inform the approved different eligible sponsor 
20.21 	about the fiscal and operational status and student performance of the school. Before the 
20.22 	commissioner determines whether to approve a transfer of sponsor, the commissioner first 
20.23 	must determine whether the charter school and prospective new sponsor can identify and 
20.24 	effectively resolve those circumstances causing the previous sponsor and the charter 
20.25 	school to mutually agree to terminate the contract. If no different eligible transfer of
20.26 	sponsor is approved, the school must be dissolved according to applicable law and the 
20.27 	terms of the contract.
20.28 	(d) The commissioner, after providing reasonable notice to the board of directors of 
20.29 	a charter school and the existing sponsor, and after providing an opportunity for a public 
20.30 	hearing, may terminate the existing sponsorial relationship contract between the sponsor 
20.31 	and the charter school if the charter school has a history of:
20.32 	(1) sustained failure to meet pupil performance requirements contained in the 
20.33 	contract; 
20.34 	(2) financial mismanagement or failure to meet generally accepted standards of 
20.35 	financial management; or
20.36 	(2) (3) repeated or major violations of the law.

21.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

21.2 	Sec. 20. Minnesota Statutes 2008, section 124D.10, subdivision 23a, is amended to 
21.3 	read:
21.4 		Subd. 23a.Related party lease costs. (a) A charter school is prohibited from 
21.5 	entering a lease of real property with a related party as defined in subdivision 26, unless 
21.6 	the lessor is a nonprofit corporation under chapter 317A or a cooperative under chapter 
21.7 	308A, and the lease cost is reasonable under section 124D.11, subdivision 4, clause (1). 
21.8 	(b) For purposes of this section and section 124D.11:
21.9 	(1) "related party" means an affiliate or a close relative of the other party in question, 
21.10 	an affiliate of a close relative, or a close relative of an affiliate; 
21.11 	(2) "affiliate" means a person that directly or indirectly, through one or more 
21.12 	intermediaries, controls, is controlled by, or is under common control with another person; 
21.13 	(3) "close relative" means an individual whose relationship by blood, marriage, or 
21.14 	adoption to another individual is no more remote than first cousin; 
21.15 	(4) "person" means an individual or entity of any kind; and 
21.16 	(5) "control" means the ability to affect the management, operations, or policy 
21.17 	actions or decisions of a person, whether through ownership of voting securities, by 
21.18 	contract or otherwise.
21.19 	(c) A lease of real property to be used for a charter school, not excluded in paragraph 
21.20 	(a), must contain the following statement: "This lease is subject to Minnesota Statutes, 
21.21 	section 124D.10, subdivision 23a." 
21.22 	(c) (d) If a charter school enters into as lessee a lease with a related party and the 
21.23 	charter school subsequently closes, the commissioner has the right to recover from the 
21.24 	lessor any lease payments in excess of those that are reasonable under section 124D.11, 
21.25 	subdivision 4, clause (1). 

21.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

21.27 	Sec. 21. Minnesota Statutes 2008, section 124D.10, subdivision 25, is amended to read:
21.28 		Subd. 25.Extent of specific legal authority. (a) The board of directors of a charter 
21.29 	school may sue and be sued.
21.30 	(b) The board may not levy taxes or issue bonds.
21.31 	(c) The commissioner, a sponsor, members of the board of a sponsor in their official 
21.32 	capacity, and employees of a sponsor are immune from civil or criminal liability with 
21.33 	respect to all activities related to a charter school they approve or sponsor. The board 
21.34 	of directors shall obtain at least the amount of and types of insurance required by the 
22.1 	contract, according to subdivision 6 up to the applicable tort liability limits under chapter 
22.2 	466. The charter school board must submit a copy of the insurance policy to its sponsor 
22.3 	and the commissioner before starting operations. The charter school board must submit 
22.4 	changes in its insurance carrier or policy to its sponsor and the commissioner within 
22.5 	20 business days of the change.

22.6 	EFFECTIVE DATE. This section is effective August 1, 2009. 

22.7 	Sec. 22. Minnesota Statutes 2008, section 124D.11, subdivision 4, is amended to read:
22.8 		Subd. 4.Building lease aid. (a) When a charter school finds it economically 
22.9 	advantageous to rent or lease a building or land for any instructional purposes and it 
22.10 	determines that the total operating capital revenue under section 126C.10, subdivision 13, 
22.11 	is insufficient for this purpose, it may apply to the commissioner for building lease aid 
22.12 	for this purpose. The commissioner must review and either approve or deny a lease aid 
22.13 	application using the following criteria:  
22.14 	(1) the reasonableness of the price based on current market values;
22.15 	(2) the extent to which the lease conforms to applicable state laws and rules; and
22.16 	(3) the appropriateness of the proposed lease in the context of the space needs and 
22.17 	financial circumstances of the charter school.
22.18 	A charter school must not use the building lease aid it receives for custodial, maintenance 
22.19 	service, utility, or other operating costs. 
22.20 	(b) For a charter school without a separate affiliated nonprofit building corporation, 
22.21 	 the amount of building lease aid per pupil unit served for a charter school for any year 
22.22 	shall not exceed the lesser of:
22.23 	(a) (1) 90 percent of the approved cost;  or
22.24 	(b) (2) the product of the pupil units served for the current school year times the 
22.25 	greater of:
22.26 	(i) the charter school's building lease aid per pupil unit served for fiscal year 2003, 
22.27 	excluding the adjustment under Laws 2002, chapter 392, article 6, section 4,;  or 
22.28 	(ii) $1,200.
22.29 	(c) For charter schools with a separate affiliated nonprofit building corporation under 
22.30 	section 124D.10, subdivision 17a, the amount of building lease aid per pupil unit served 
22.31 	for a charter school for any year shall not exceed the lesser of: 
22.32 	(1) 90 percent of the approved cost; or
22.33 	(2) the product of the pupil units served for the current school year times the greater 
22.34 	of: 
23.1 	(i) the charter school's building lease aid per pupil unit served for fiscal year 2003, 
23.2 	excluding the adjustment under Laws 2002, chapter 392, article 6, section 4; or 
23.3 	(ii) $1,200.

23.4 	EFFECTIVE DATE. This section is effective for fiscal year 2010, and later.

23.5 	Sec. 23. Minnesota Statutes 2008, section 124D.11, subdivision 9, is amended to read:
23.6 		Subd. 9.Payment of aids to charter schools. (a) Notwithstanding section 
23.7 	127A.45, subdivision 3, aid payments for the current fiscal year to a charter school not in 
23.8 	its first year of operation shall be of an equal amount on each of the 23 24 payment dates. 
23.9 	A charter school in its first year of operation shall receive, on its first payment date, ten 
23.10 	percent of its cumulative amount guaranteed for the year and 22 payments of an equal 
23.11 	amount thereafter the sum of which shall equal the current year aid payment percentage 
23.12 	multiplied by the cumulative amount guaranteed.
23.13 	(b) Notwithstanding paragraph (a) and section 127A.45, for a charter school ceasing 
23.14 	operation on or prior to the end of a school year, the current year aid payment percentage 
23.15 	multiplied by the amount due for the school year may be paid to the school after audit 
23.16 	of prior fiscal year and current fiscal year pupil counts June 30 of a school year, for the 
23.17 	payment periods occurring after the school has ceased serving students, the commissioner 
23.18 	shall withhold state aid due to the school based on estimated state aid entitlements. The 
23.19 	charter school board of directors and sponsor must provide the commissioner with a 
23.20 	closure plan under chapter 308A or 317A, and financial information that details the 
23.21 	school's liabilities and assets. After receiving the closure plan, financial information, an 
23.22 	audit of pupil counts, and documentation of lease expenditures, and monitoring special 
23.23 	education expenditures, the commissioner may release cash withheld and may continue 
23.24 	regular payments up to the current year payment percentages if further amounts are 
23.25 	due. If, based on audits and monitoring, the school received state aid in excess of the 
23.26 	amount due, the commissioner shall retain cash withheld sufficient to eliminate the aid 
23.27 	overpayment. For a charter school ceasing operations prior to, or at the end of, a school 
23.28 	year, notwithstanding section 127A.45, subdivision 3, preliminary final payments may 
23.29 	be made after receiving the closure plan, audit of pupil counts, monitoring of special 
23.30 	education expenditures, and documentation of lease expenditures, and school submission 
23.31 	of Uniform Financial Accounting and Reporting Standards (UFARS) financial data for 
23.32 	the final year of operation. Final payment may be made upon receipt of audited financial 
23.33 	statements under section 123B.77, subdivision 3.
24.1 	(c) If a charter school fails to comply with the commissioner's directive to return, 
24.2 	for cause, federal or state funds administered by the department, the commissioner may 
24.3 	withhold an amount of state aid sufficient to satisfy the directive.
24.4 	(d) If a charter school, within the timeline under section 471.425, fails to pay a 
24.5 	school district, intermediate school district, education cooperative, or the state after 
24.6 	receiving an undisputed invoice for goods and services, the commissioner may withhold 
24.7 	an amount of state aid sufficient to satisfy the claim and shall distribute the withheld aid to 
24.8 	the school district, intermediate school district, or service cooperative. A school district, 
24.9 	intermediate school district, education cooperative, or a representative of the state shall 
24.10 	notify the commissioner when a charter school fails to pay an undisputed invoice within 
24.11 	75 business days of when it received the original invoice.
24.12 	 (e) Notwithstanding section 127A.45, subdivision 3, and paragraph (a), 80 percent 
24.13 	of the start-up cost aid under subdivision 8 shall be paid within 45 days after the first day 
24.14 	of student attendance for that school year. 
24.15 	(d) (f) In order to receive state aid payments under this subdivision, a charter school 
24.16 	in its first three years of operation must submit a school calendar in the form and manner 
24.17 	requested by the department and a quarterly report to the Department of Education. The 
24.18 	report must list each student by grade, show the student's start and end dates, if any, 
24.19 	with the charter school, and for any student participating in a learning year program, 
24.20 	the report must list the hours and times of learning year activities. The report must be 
24.21 	submitted not more than two weeks after the end of the calendar quarter to the department. 
24.22 	The department must develop a Web-based reporting form for charter schools to use 
24.23 	when submitting enrollment reports. A charter school in its fourth and subsequent year of 
24.24 	operation must submit a school calendar and enrollment information to the department in 
24.25 	the form and manner requested by the department.
24.26 	(e) (g) Notwithstanding sections 317A.701 to 317A.791, upon closure of a charter 
24.27 	school and satisfaction of creditors, cash and investment balances remaining shall be 
24.28 	returned to the state.

24.29 	EFFECTIVE DATE. This section is effective for fiscal year 2010 and later.

24.30 	Sec. 24. SINGLE-PURPOSE SPONSOR.
 24.31 	 The commissioner shall approve at least one but no more than two charitable 
24.32 	organizations formed under section 501(c)(3) of the Internal Revenue Code of 1986 whose 
24.33 	sole purpose is to sponsor charter schools, consistent with Minnesota Statutes, section 
24.34 	124D.10, subdivision 3, paragraph (b), clause (5), by June 30, 2011.

25.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

25.2 	Sec. 25.  REPEALER.
 25.3 	Minnesota Statutes 2008, section 124D.10, subdivisions 18, 19, and 26, are repealed.

25.4 	EFFECTIVE DATE. This section is effective the day following final enactment.