HF 1580

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2017 12:01pm

A bill for an act
relating to education; making policy and technical changes for charter schools;
amending Minnesota Statutes 2016, sections 124E.05, subdivisions 4, 7, by adding
a subdivision; 124E.06, subdivision 7; 124E.07, subdivisions 3, 4, 7; 124E.10, by
adding a subdivision; 124E.11; 124E.16; 124E.17, subdivision 1; repealing
Minnesota Statutes 2016, sections 124E.05, subdivision 2; 124E.10, subdivision
5.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 124E.05, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Role, responsibilities, and requirements of authorizers. new text end

new text begin (a) The role of an
authorizer is to ensure that the schools it authorizes fulfill the purposes for chartered public
schools and the agreed upon terms of the charter contract in order to safeguard quality
educational opportunities for students and maintain public trust and confidence.
new text end

new text begin (b) An authorizer has the following responsibilities:
new text end

new text begin (1) to review applications for new schools and grade and site expansions of current
schools, and determine whether to approve or deny the applications based on sound criteria
and needs;
new text end

new text begin (2) to negotiate and execute performance charter contracts with the schools it authorizes;
new text end

new text begin (3) to conduct ongoing monitoring and oversight of the school's academic, operational,
and financial performance commensurate with the school's circumstances during the term
of charter contract; and
new text end

new text begin (4) to evaluate the academic, operational, and financial performance of the school as
defined in the charter contract prior to the end of the contract to determine the renewal status
or termination of the contract.
new text end

new text begin (c) The commissioner shall not require an authorizer to undertake any role or
responsibility beyond those in statute or the charter contract, or perform any function which
the department exercises in relation to any other public school.
new text end

new text begin (d) The authorizer shall document in the annual income and expenditure report under
subdivision 8 the training its staff and consultants participated in during the previous school
year relative to chartering and authorizer role and responsibilities.
new text end

Sec. 2.

Minnesota Statutes 2016, section 124E.05, subdivision 4, is amended to read:

Subd. 4.

Application content.

(a) To be approved as an authorizer, an applicant must
include in its application to the commissioner at least the following:

(1) how the organization carries out its mission by chartering schools;

(2) a description of the capacity of the organization to serve as an authorizer, including
the positions allocated to authorizing duties, the qualifications for those positions, the
full-time equivalencies of those positions, and the financial resources available to fund the
positions;

(3) the application and review process the authorizer uses to decide whether to grant
charters;

(4) the type of contract it arranges with the schools it charters to meet the provisions of
section 124E.10;

(5) the process for overseeing the school, consistent with clause (4), to ensure that the
schools chartered comply with applicable law and rules and the contract;

(6) the criteria and process the authorizer uses to approve applications adding grades or
sites under section 124E.06, subdivision 5; new text begin and
new text end

(7) the process for renewing or terminating the school's charter based on evidence
showing the academic, organizational, and financial competency of the school, including
its success in increasing student achievement and meeting the goals of the charter school
agreement deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (8) an assurance specifying that the organization is committed to serving as an authorizer
for the full five-year term.
deleted text end

(b) Notwithstanding paragraph (a), an authorizer that is a school district may satisfy the
requirements of paragraph (a), clauses (1) and (2), and any requirement governing a conflict
of interest between an authorizer and its charter schools or ongoing evaluation or continuing
education of an administrator or other professional support staff by submitting to the
commissioner a written promise to comply with the requirements.

Sec. 3.

Minnesota Statutes 2016, section 124E.05, subdivision 7, is amended to read:

Subd. 7.

Withdrawal.

If the governing board of an approved authorizer votes to withdraw
as an approved authorizer for a reason unrelated to any cause under section 124E.10,
subdivision 4, the authorizer must notify all its chartered schools and the commissioner in
writing by March 1 of its intent to withdraw as an authorizer on June 30 in the next calendar
year, regardless of when the authorizer's five-year term of approval ends. The commissioner
may approve the transfer of a charter school to a new authorizer under section 124E.10,
subdivision deleted text begin 5 deleted text end new text begin 5a new text end .

Sec. 4.

Minnesota Statutes 2016, section 124E.06, subdivision 7, is amended to read:

Subd. 7.

Merger.

(a) Two or more charter schools may merge under chapter 317A. The
effective date of a merger must be July 1. The merged school must continue under the
identity of one of the merging schools. The authorizer and the merged school must execute
a new charter contract under section 124E.10, subdivision 1, by July 1. The authorizer must
submit to the commissioner a copy of the new signed charter contract within ten business
days of executing the contract.

(b) Each merging school must submit a separate year-end report for the previous fiscal
year for that school only. After the final fiscal year of the premerger schools is closed out,
each of those schools must transfer the fund balances and debts to the merged school.

(c) For its first year of operation, the merged school is eligible to receive aid from
programs requiring approved applications equal to the sum of the aid of all of the merging
schools. For aids based on prior year data, the merged school is eligible to receive aid for
its first year of operation based on the combined data of all of the merging schools.

new text begin (d) A charter school notified that its contract is not being renewed or terminated under
section 124E.10, subdivision 4, may merge with another school only if the school proposing
to take over the school: (1) has a compatible academic or learning program; (2) had, as of
June 30 of the previous year, a net positive unreserved general fund balance for at least
three fiscal years; and (3) submits a plan for the assimilation of the schools into a merged
school that is approved by the authorizers of the schools involved in the merger.
new text end

Sec. 5.

Minnesota Statutes 2016, section 124E.07, subdivision 3, is amended to read:

Subd. 3.

Membership criteria.

(a) The ongoing charter school board of directors shall
have at least five nonrelated members and include: (1) at least one licensed teacher who is
employed as a teacher deleted text begin at deleted text end new text begin by new text end the school or provides instruction under contract between the
charter school and a cooperative; (2) at least one parent or legal guardian of a student enrolled
in the charter school who is not an employee of the charter school; and (3) at least one
interested community member who resides in Minnesota, is not employed by the charter
school, and does not have a child enrolled in the school. The board structure may include
a majority of teachers under this paragraph or parents or community members, or it may
have no clear majority. The deleted text begin chief financial officer and the deleted text end chief administrator may only
serve as ex-officio nonvoting board members. No charter school employees shall serve on
the board other than teachers under clause (1). Contractors providing facilities, goods, or
services to a charter school shall not serve on the board of directors of the charter school.

(b) An individual is prohibited from serving as a member of the charter school board of
directors if: (1) the individual, an immediate family member, or the individual's partner is
a full or part owner or principal with a for-profit or nonprofit entity or independent contractor
with whom the charter school contracts, directly or indirectly, for professional services,
goods, or facilities; or (2) an immediate family member is an employee of the school. An
individual may serve as a member of the board of directors if no conflict of interest exists
under this paragraph, consistent with this section.

(c) A violation of paragraph (b) renders a contract voidable at the option of the
commissioner or the charter school board of directors. A member of a charter school board
of directors who violates paragraph (b) is individually liable to the charter school for any
damage caused by the violation.

(d) Any employee, agent, or board member of the authorizer who participates in initially
reviewing, approving, overseeing, evaluating, renewing, or not renewing the charter school
is ineligible to serve on the board of directors of a school chartered by that authorizer.

Sec. 6.

Minnesota Statutes 2016, section 124E.07, subdivision 4, is amended to read:

Subd. 4.

Board structure.

Board bylaws shall outline the process and procedures for
changing the board's governance structure, consistent with chapter 317A. A board may
change its governance structure only:

(1) by a majority vote of the board of directors deleted text begin and deleted text end new text begin ;
new text end

new text begin (2) new text end a majority vote of the licensed teachers employed by the school as teachers, including
licensed teachers providing instruction under a contract between the school and a cooperative;
and

deleted text begin (2) deleted text end new text begin (3) new text end with the authorizer's approval.

Any change in board governance structure must conform with the board composition
established under this section.

Sec. 7.

Minnesota Statutes 2016, section 124E.07, subdivision 7, is amended to read:

Subd. 7.

Training.

Every charter school board member new text begin , including voting and nonvoting
ex-officio members, new text end shall attend annual training throughout the member's term. All new
board members shall attend initial training on the board's role and responsibilities,
employment policies and practices, and financial management. A new board member who
does not begin the required initial training within deleted text begin six deleted text end new text begin three new text end months after being seated and
complete that training within 12 months after being seated is automatically ineligible to
continue to serve as a board member. The school shall include in its annual report the training
each board member attended during the previous year.

Sec. 8.

Minnesota Statutes 2016, section 124E.10, is amended by adding a subdivision to
read:

new text begin Subd. 5a. new text end

new text begin School transfer of authorizers. new text end

new text begin (a) If the authorizer and the charter school
board mutually agree to not renew the contract for a reason unrelated to any cause under
subdivision 4, the authorizer and charter school must jointly submit to the commissioner a
written and signed letter of their intent to mutually not renew the contract. The authorizer
that is a party to the existing contract must inform the proposed authorizer about the fiscal,
operational, and student performance status of the school, including unmet contract outcomes
and other contractual obligations. The charter contract between the proposed authorizers
and the school must identify and provide a plan to address any outstanding obligations. If
the commissioner does not approve the transfer of authorizer, the current authorizer and the
school may withdraw their letter of nonrenewal and enter into a new contract. If the
commissioner does not approve the transfer and the authorizer and school enter into a new
contract without withdrawing their letter of nonrenewal, the school must be dissolved
according to applicable law and the terms of the contract.
new text end

new text begin (b) If, at the end of a contract, a charter school board votes to not renew its contract with
the authorizer and is not subject to action of the authorizer under subdivision 4, the charter
school board must notify the authorizer and commissioner that it does not plan to renew the
relationship with the authorizer. The authorizer that is party to the existing contract must
inform the proposed authorizer about the fiscal, operational, and student performance status
of the school. The charter contract between the proposed authorizer and the school must
identify and provide a plan to address any performance issues identified by the current
authorizer. If the commissioner does not approve the transfer, the school must be dissolved
according to applicable law and the terms of the contract.
new text end

new text begin (c) If the governing board of an approved authorizer votes to withdraw as an authorizer
under section 124E.05, subdivision 7, the proposed authorizer may submit a transfer request
to the commissioner at any time after the withdrawing authorizer has given proper notice
to the commissioner and the schools it authorizes. The commissioner shall have 20 business
days to review the transfer request and notify the proposed authorizer and the school of the
commissioner's decision. The proposed authorizer and the school have 15 business days to
address any issues identified by the commissioner's review. The commissioner shall have
20 business days after the proposed authorizer and the school address any issues identified
by the commissioner's initial review to make a final determination.
new text end

new text begin (d) If the commissioner withdraws the authority of the authorizer to authorize schools
under section 124E.05, subdivision 6, the commissioner shall develop a transfer of authorizer
plan with the authorizer, the charter school, and the proposed authorizer. This paragraph
applies to schools not subject to nonrenewal for any cause under subdivision 4.
new text end

new text begin (e) Transfer requests with the proposed contracts under paragraphs (a) and (b) shall be
submitted to the commissioner at least 100 business days before the end of an existing
contract. The commissioner shall have 20 business days to review the transfer request and
notify the proposed authorizer and the school of the commissioner's decision. The proposed
authorizer and the school shall have 15 business days to address any issues identified by
the commissioner's review. The commissioner shall make a final determination of the transfer
request not later than 45 business days before the end of the current contract.
new text end

Sec. 9.

Minnesota Statutes 2016, section 124E.11, is amended to read:

124E.11 ADMISSION REQUIREMENTS AND ENROLLMENT.

(a) A charter school may limit admission to:

(1) pupils within an age group or grade level;

(2) pupils who are eligible to participate in the graduation incentives program under
section 124D.68; or

(3) residents of a specific geographic area in which the school is located when the
majority of students served by the school are members of underserved populations.

(b) A charter school shall enroll an eligible pupil who submits a timely application,
unless the number of applications exceeds the capacity of a program, class, grade level, or
building. In this case, pupils must be accepted by lot. The charter school must develop and
publish, including on its Web site, a lottery policy and process that it must use when accepting
pupils by lot.

(c) A charter school shall give enrollment preference to a sibling of an enrolled pupil
and to a foster child of that pupil's parents and may give preference for enrolling children
of the school's staff before accepting other pupils by lot. A charter school that is located in
Duluth township in St. Louis County and admits students in kindergarten through grade 6
must give enrollment preference to students residing within a five-mile radius of the school
and to the siblings of enrolled children. A charter school may give enrollment preference
to children currently enrolled in the school's free preschool or prekindergarten program
under section 124E.06, subdivision 3, paragraph (a), who are eligible to enroll in kindergarten
in the next school year.

(d) A person shall not be admitted to a charter school (1) as a kindergarten pupil, unless
the pupil is at least five years of age on September 1 of the calendar year in which the school
year for which the pupil seeks admission commences; or (2) as a first grade student, unless
the pupil is at least six years of age on September 1 of the calendar year in which the school
year for which the pupil seeks admission commences or has completed kindergarten; except
that a charter school may establish and publish on its Web site a policy for admission of
selected pupils at an earlier age, consistent with the enrollment process in paragraphs (b)
and (c).

(e) Except as permitted in paragraph (d), a charter school may not limit admission to
pupils on the basis of intellectual ability, measures of achievement or aptitude, or athletic
ability and may not establish any criteria or requirements for admission that are inconsistent
with this section.

(f) The charter school new text begin or any agent of the school new text end shall not distribute any services deleted text begin or deleted text end new text begin , new text end
goods new text begin , payments, or other incentives new text end of value to students, parents, or guardians as an
inducement, term, or condition of enrolling a student in a charter school.

(g) Once a student is enrolled in the school, the student is considered enrolled in the
school until the student formally withdraws or is expelled under the Pupil Fair Dismissal
Act in sections 121A.40 to 121A.56. A charter school is subject to and must comply with
the Pupil Fair Dismissal Act, sections 121A.40 to 121A.56.

(h) A charter school with at least 90 percent of enrolled students who are eligible for
special education services and have a primary disability of deaf or hard-of-hearing may
enroll prekindergarten pupils with a disability under section 126C.05, subdivision 1,
paragraph (a), and must comply with the federal Individuals with Disabilities Education
Act under Code of Federal Regulations, title 34, section 300.324, subsection (2), clause
(iv).

Sec. 10.

Minnesota Statutes 2016, section 124E.16, is amended to read:

124E.16 REPORTS.

Subdivision 1.

Audit report.

(a) A charter school is subject to the same financial audits,
audit procedures, and audit requirements as a district, except as required under this
subdivision. Audits must be conducted in compliance with generally accepted governmental
auditing standards, the federal Single Audit Act, if applicable, and section 6.65 governing
auditing procedures. A charter school is subject to and must comply with sections 15.054;
118A.01; 118A.02; 118A.03; 118A.04; 118A.05; 118A.06 governing government property
and financial investments; and sections 471.38; 471.391; 471.392; and 471.425 governing
municipal contracting. The audit must comply with the requirements of sections 123B.75
to 123B.83 governing school district finance, except when the commissioner and authorizer
approve a deviation made necessary because of school program finances. The commissioner,
state auditor, legislative auditor, or authorizer may conduct financial, program, or compliance
audits. A charter school in statutory operating debt under sections 123B.81 to 123B.83 must
submit a plan under section 123B.81, subdivision 4.

(b) The charter school must submit an audit report to the commissioner and its authorizer
annually by December 31.

(c) The charter school, with the assistance of the auditor conducting the audit, must
include with the new text begin audit new text end report, as supplemental information deleted text begin : (1) deleted text end a copy of management
agreements with a deleted text begin charter management organization deleted text end new text begin CMO new text end or deleted text begin an educational management
organization and (2) service agreements or contracts over the lesser of $100,000 or ten
percent of the school's most recent annual audited expenditures deleted text end new text begin online education service
provider as defined in this section new text end . The agreements must detail the terms of the agreement,
including the services provided and the annual costs for those services. deleted text begin If the entity that
provides the professional services to the charter school is exempt from taxation under section
501 of the Internal Revenue Code of 1986, that entity must file with the commissioner by
February 15 a copy of the annual return required under section 6033 of the Internal Revenue
Code of 1986.
deleted text end

(d) A charter school independent audit report shall include audited financial data of an
affiliated building corporation under section 124E.13, subdivision 3, or other component
unit.

(e) If the audit report finds that a material weakness exists in the financial reporting
systems of a charter school, the charter school must submit a written report to the
commissioner explaining how the charter school will resolve that material weakness. An
auditor, as a condition of providing financial services to a charter school, must agree to
make available information about a charter school's financial audit to the commissioner and
authorizer upon request.

Subd. 2.

Annual public reports.

(a) A charter school must publish an annual report
approved by the board of directors. The annual report must at least include information on
school enrollment, student attrition, governance and management, staffing, finances,
new text begin management agreements with a CMO or online education service provider, new text end academic
performance, innovative practices and implementation, and future plans. A charter school
may combine this report with the reporting required under section 120B.11 governing the
world's best workforce. A charter school must post the annual report on the school's official
Web site. A charter school also must distribute the annual report by publication, mail, or
electronic means to its authorizer, school employees, and parents and legal guardians of
students enrolled in the charter school. The reports are public data under chapter 13.

(b) An authorizer must submit an annual public report in a manner specified by the
commissioner by January 15 for the previous school year ending June 30 that shall at least
include key indicators of school academic, operational, and financial performance. The
report is part of the system to evaluate authorizer performance under section 124E.05,
subdivision 5.

new text begin Subd. 3. new text end

new text begin Public accountability and reporting of education management and online
education service provider agreements. new text end

new text begin (a) For the purposes of this section, "education
management provider" means a nonprofit charter management organization (CMO) or a
for-profit educational management organization (EMO) that contracts with a charter school
board of directors to provide educational design and implementation or school management
services. A charter school shall not enter into a contract or other agreement with an EMO.
new text end

new text begin (b) For the purposes of this section, "online education service provider" means an
organization that provides the online learning management system or virtual learning
environment or student management system.
new text end

new text begin (c) A charter school that enters into a management agreement with a CMO or an online
education service provider must:
new text end

new text begin (1) publish on its Web site for at least 20 business days the proposed final agreement
for public review and comment before the school board may adopt the contract or agreement.
Any changes made to the posted agreement during the public review period or any proposed
amendments to the agreement once adopted must be posted for 20 business days before the
board may adopt the amendments to the contract;
new text end

new text begin (2) annually publish on its Web site a statement of assurance that no member of the
school board, staff, or any agent of the school has been promised or received any form of
compensation or gifts from the CMO or online education service provider and that no person
involved as a board member, employee, or agent of the CMO or online education service
provider or any of the affiliates of these organizations or providers serve on the charter
school board; and
new text end

new text begin (3) conduct an independent review and evaluation of the services provided by the CMO
or online education service provider and publish the evaluation on the school's Web site at
least 60 business days before the end of the current contract.
new text end

new text begin (d) All management agreements with a CMO or online education service provider must
contain the following provisions:
new text end

new text begin (1) the term of the contract, which may not be longer than five years;
new text end

new text begin (2) the total dollar value of the contract, including the annual projected costs of services;
new text end

new text begin (3) the description and terms of the services to be provided during the term of the contract;
new text end

new text begin (4) a statement that if the charter school closes during the term of the contract by action
of the authorizer or the school's board, the balance of the current contract becomes null and
void;
new text end

new text begin (5) an annual statement of assurance to the school board that the CMO or online education
service provider provided no compensation or gifts to any school board member, staff
member, or agent of the school;
new text end

new text begin (6) an annual statement of assurance that no board member, employee, contractor, or
agent of the CMO or online education service provider or any affiliated organization is a
board member of the school;
new text end

new text begin (7) the policies and protocols that meet federal and state laws regarding student and
personnel data collection, usage, access, retention, disclosure and destruction, and
indemnification and warranty provisions in case of data breaches by the CMO or online
education service provider; and
new text end

new text begin (8) the CMO or online education service provider must annually provide the school
board a financial report that details income and expenses attributed to the contract by July
31 for the previous fiscal year that accounts for using the account categories in UFARS.
new text end

new text begin (e) Any agreement with a CMO or an online education service provider containing any
of the following provisions is null and void:
new text end

new text begin (1) restrictions on the charter school's ability to operate a school upon termination of
the agreement;
new text end

new text begin (2) restrictions on the annual or total amount of the school's operating surplus or fund
balance;
new text end

new text begin (3) authorization to allow a CMO or online education service provider to withdraw funds
from a charter school account; or
new text end

new text begin (4) authorization to allow a CMO or online education service provider to loan funds to
the school.
new text end

Sec. 11.

Minnesota Statutes 2016, section 124E.17, subdivision 1, is amended to read:

Subdivision 1.

Charter school information.

(a) Charter schools must disseminate
information about how to use the charter school offerings to targeted groups, among others.
Targeted groups include low-income families and communities, students of color, and
students who are at risk of academic failure.

(b) Authorizers and the commissioner must disseminate information to the public on
how to form and operate a charter school. Authorizers, operators, and the commissioner
also may disseminate information to interested stakeholders about the successful best
practices in teaching and learning demonstrated by charter schools.

new text begin (c) A charter school must document its dissemination efforts in its annual report.
new text end

Sec. 12. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, sections 124E.05, subdivision 2; and 124E.10, subdivision 5, new text end new text begin
are repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: 17-2742

124E.05 AUTHORIZERS.

Subd. 2.

Requirements for authorizers.

The authorizer must participate in department-approved training.

124E.10 CHARTER CONTRACT.

Subd. 5.

Mutual nonrenewal.

If the authorizer and the charter school board of directors mutually agree not to renew the contract, or if the governing board of an approved authorizer votes to withdraw as an approved authorizer for a reason unrelated to any cause under subdivision 4, a change in authorizers is allowed. The authorizer and the school board must jointly submit a written and signed letter of their intent to the commissioner to mutually not renew the contract. The authorizer that is a party to the existing contract must inform the proposed authorizer about the fiscal, operational, and student performance status of the school, including unmet contract outcomes and other outstanding contractual obligations. The charter contract between the proposed authorizer and the school must identify and provide a plan to address any outstanding obligations from the previous contract. The proposed authorizer must submit the proposed contract at least 105 business days before the end of the existing charter contract. The commissioner has 30 business days to review and make a determination on the change in authorizer. The proposed authorizer and the school have 15 business days to respond to the determination and address any issues identified by the commissioner. The commissioner must make a final determination no later than 45 business days before the end of the current charter contract. If the commissioner does not approve a change in authorizer, the school and the current authorizer may withdraw their letter of nonrenewal and enter into a new contract. If the commissioner does not approve a change in authorizer and the current authorizer and the school do not withdraw their letter and enter into a new contract, the school must be dissolved according to applicable law and the terms of the contract.