SF 1858

as introduced - 93rd Legislature (2023 - 2024) Posted on 06/26/2023 12:50pm

A bill for an act
relating to education; modifying charter school provisions; amending Minnesota
Statutes 2022, sections 124E.02; 124E.06, subdivision 1; 124E.16.

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

Section 1.

Minnesota Statutes 2022, section 124E.02, is amended to read:

124E.02 DEFINITIONS.

(a) For purposes of this chapter, the terms defined in this section have the meanings
given them.

(b) "Affidavit" means a written statement the authorizer submits to the commissioner
for approval to establish a charter school under section 124E.06, subdivision 4, attesting to
its review and approval process before chartering a school.

(c) "Affiliate" means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with another person.

new text begin (d) "Charter management organization" or "CMO" means any nonprofit or for-profit
entity that contracts with a charter school board of directors to provide, manage, or oversee
all or substantially all of a school's education program or a school's administrative, financial,
business, or operational functions.
new text end

deleted text begin (d) deleted text end new text begin (e) new text end "Control" means the ability to affect the management, operations, or policy actions
or decisions of a person, whether by owning voting securities, by contract, or otherwise.

new text begin (f) "Educational management organization" or "EMO" means a nonprofit or for-profit
entity that provides, manages, or oversees all or substantially all of the education program,
or the school's administrative, financial, business, or operational functions.
new text end

deleted text begin (e) deleted text end new text begin (g) new text end "Immediate family" means an individual whose relationship by blood, marriage,
adoption, or partnership is no more remote than first cousin.

new text begin (h) "Market need and demand study" means a study that includes the following for the
proposed locations of the school or additional site:
new text end

new text begin (1) current and projected demographic information;
new text end

new text begin (2) student enrollment patterns;
new text end

new text begin (3) information on existing schools and types of educational programs currently available;
new text end

new text begin (4) characteristics of proposed students and families;
new text end

new text begin (5) availability of properly zoned and classified facilities; and
new text end

new text begin (6) quantification of existing demand for the school or site.
new text end

deleted text begin (f) deleted text end new text begin (i) new text end "Person" means an individual or entity of any kind.

deleted text begin (g) deleted text end new text begin (j) new text end "Related party" means an affiliate or immediate relative of the other interested
party, an affiliate of an immediate relative who is the other interested party, or an immediate
relative of an affiliate who is the other interested party.

deleted text begin (h) deleted text end new text begin (k) new text end For purposes of this chapter, the terms defined in section 120A.05 have the same
meanings.

Sec. 2.

Minnesota Statutes 2022, section 124E.06, subdivision 1, is amended to read:

Subdivision 1.

Individuals eligible to organize.

(a) An authorizer, after receiving an
application from a charter school developer, may charter either a licensed teacher under
section 122A.18, subdivision 1, or a group of individuals that includes one or more licensed
teachers under section 122A.18, subdivision 1, to operate a school subject to the
commissioner's approval of the authorizer's affidavit under subdivision 4.

(b) "Application" under this section means the charter school business plan a charter
school developer submits to an authorizer for approval to establish a charter school. This
application must include:

(1) the deleted text begin school developer's deleted text end new text begin proposed school's new text end :

(i) mission deleted text begin statement deleted text end new text begin and vision statements new text end ;

(ii) deleted text begin school deleted text end purposes new text begin and goals new text end ;

(iii) new text begin educational new text end program design new text begin and how the program will improve student learning,
success, and achievement new text end ;

new text begin (iv) plan to address the social and emotional learning needs of students and student
support services;
new text end

new text begin (v) plan to provide special education management and services;
new text end

new text begin (vi) plan for staffing the school with appropriately qualified and licensed personnel;
new text end

deleted text begin (iv) deleted text end new text begin (vii) new text end financial plan;

deleted text begin (v) deleted text end new text begin (viii) new text end governance and management structure new text begin and plan new text end ; deleted text begin and
deleted text end

deleted text begin (vi) background and experience;
deleted text end

new text begin (ix) market need and demand study; and
new text end

new text begin (x) plan for ongoing outreach and dissemination of information about the school's
offerings and enrollment procedure to families that reflect the diversity of Minnesota's
population and targeted groups under section 124E.17, subdivision 1, paragraph (a);
new text end

new text begin (2) the school developer's experience and background, including criminal history and
bankruptcy background checks;
new text end

deleted text begin (2) deleted text end new text begin (3) new text end any other information the authorizer requests; and

deleted text begin (3) deleted text end new text begin (4) new text end a "statement of assurances" of legal compliance prescribed by the commissioner.

(c) An authorizer shall not approve an application submitted by a charter school developer
under paragraph (a) if the application does not comply with subdivision 3, paragraph (e),
and section 124E.01, subdivision 1. The commissioner shall not approve an affidavit
submitted by an authorizer under subdivision 4 if the affidavit does not comply with
subdivision 3, paragraph (e), and section 124E.01, subdivision 1.

Sec. 3.

Minnesota Statutes 2022, 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 report, as supplemental information: (1) a copy of new text begin a new new text end management
deleted text begin agreements deleted text end new text begin agreement or an amendment to a current agreement new text end with a deleted text begin charter management
organization or 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 CMO or EMO signed during the audit year; and (2) a copy of a service
agreement or contract with a company or individual totaling over five percent of the audited
expenditures for the most recent audit year 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 EMO, 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 website. 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 accounting and reporting CMO and EMO agreements. new text end

new text begin (a) A charter
school that enters into a management agreement with a CMO or EMO must:
new text end

new text begin (1) publish on its website 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 website 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 EMO and that no board member, employee, or
agent of the CMO or EMO or any of the organization affiliates 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 EMO and publish the evaluation on the school's website at least 30 business days before
the end of the current contract.
new text end

new text begin (b) A management agreement with a CMO or EMO must contain the following:
new text end

new text begin (1) the term of the contract, not to exceed 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) a description and terms of the services to be provided during the term of the contract;
new text end

new text begin (4) notice that a charter school closure during the term of the contract by action of the
authorizer or the school's board results in the balance of the current contract becoming null
and void;
new text end

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

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

new text begin (8) the CMO or EMO must annually provide the charter school board a financial report
by July 31 that accounts for income and expenditures for the previous fiscal year using the
account categories in uniform financial accounting and reporting standards; and
new text end

new text begin (9) an annual assurance that all assets purchased on behalf of the charter school using
public funds remain assets of the school.
new text end

new text begin (c) Any agreement with a CMO or EMO 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 EMO to withdraw funds from a charter school
account; or
new text end

new text begin (4) authorization to allow a CMO or EMO to loan funds to the charter school.
new text end

new text begin (d) A CMO or EMO or its affiliates, employees, or agents may not contract with, be
employed by, or serve on the board of an authorizer. An authorizer or its affiliates, employees,
or agents may not contract with, be employed by, serve as a paid consultant for, or serve as
a board member of a CMO or EMO.
new text end