SF 2716

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 03/08/2010 11:46am

A bill for an act
relating to education; modifying charter school provisions; creating an authority;
permitting certain charter schools to purchase facilities; amending Minnesota
Statutes 2008, sections 124D.11, subdivisions 4, 7, by adding subdivisions;
326B.103, subdivision 11; Minnesota Statutes 2009 Supplement, sections
124D.10, subdivisions 3, 4, 4a, 6, 8, 17, 23, 23a; 124D.11, subdivision 9;
proposing coding for new law in Minnesota Statutes, chapter 124D; repealing
Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 17a.

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

Section 1.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 3,
is amended to read:

Subd. 3.

Authorizer.

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

"Application" to receive approval as an authorizer means the proposal an eligible
authorizer submits to the commissioner under paragraph (c) before that authorizer is able
to submit any affidavit to charter to a school.

"Application" under subdivision 4 means the charter school business plan a
school developer submits to an authorizer for approval to establish a charter school that
documents the school developer's mission statement, school purposes, program design,
financial plan, governance and management structure, and background and experience,
plus any other information the authorizer requests. The application also shall include a
"statement of assurances" of legal compliance prescribed by the commissioner.

"Affidavit" means a written statement the authorizer submits to the commissioner
for approval to establish a charter school under subdivision 4 attesting to its review and
approval process before chartering a school.

deleted text begin "Affidavit" means the form an authorizer submits to the commissioner that is a
precondition to a charter school organizing an affiliated nonprofit building corporation
under subdivision 17a.
deleted text end

(b) The following organizations may authorize one or more charter schools:

(1) a school board; intermediate school district school board; education district
organized under sections 123A.15 to 123A.19;

(2) a charitable organization under section 501(c)(3) of the Internal Revenue Code
of 1986, excluding a nonpublic sectarian or religious institution, any person other than a
natural person that directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with the nonpublic sectarian or religious
institution, and any other charitable organization under this clause that in the federal IRS
Form 1023, Part IV, describes activities indicating a religious purpose, that:

(i) is a member of the Minnesota Council of Nonprofits or the Minnesota Council on
Foundations;

(ii) is registered with the attorney general's office;

(iii) reports an end-of-year fund balance of at least $2,000,000; and

(iv) is incorporated in the state of Minnesota;

(3) a Minnesota private college, notwithstanding clause (2), that grants two- or
four-year degrees and is registered with the Minnesota Office of Higher Education under
chapter 136A; community college, state university, or technical college governed by the
Board of Trustees of the Minnesota State Colleges and Universities; or the University of
Minnesota; or

(4) a nonprofit corporation subject to chapter 317A, described in section 317A.905,
and exempt from federal income tax under section 501(c)(6) of the Internal Revenue Code
of 1986, may authorize one or more charter schools if the charter school has operated
for at least three years under a different authorizer and if the nonprofit corporation has
existed for at least 25 years.

(5) no more than three single-purpose sponsors that are charitable, nonsectarian
organizations formed under section 501(c)(3) of the Internal Revenue Code of 1986 and
incorporated in the state of Minnesota whose sole purpose is to charter schools. Eligible
organizations interested in being approved as a sponsor under this paragraph must submit a
proposal to the commissioner that includes the provisions of paragraph (c) and a five-year
financial plan. Such authorizers shall consider and approve applications using the criteria
provided in subdivision 4 and shall not limit the applications it solicits, considers, or
approves to any single curriculum, learning program, or method.

(c) An eligible authorizer under this subdivision must apply to the commissioner for
approval as an authorizer before submitting any affidavit to the commissioner to charter
a school. The application for approval as a charter school authorizer must demonstrate
the applicant's ability to implement the procedures and satisfy the criteria for chartering a
school under this section. The commissioner must approve or disapprove an application
within 60 business days of the application deadline. If the commissioner disapproves
the application, the commissioner must notify the applicant of the deficiencies and the
applicant then has 20 business days to address the deficiencies to the commissioner's
satisfaction. Failing to address the deficiencies to the commissioner's satisfaction makes
an applicant ineligible to be an authorizer. The commissioner, in establishing criteria for
approval, must consider the applicant's:

(1) capacity and infrastructure;

(2) application criteria and process;

(3) contracting process;

(4) ongoing oversight and evaluation processes; and

(5) renewal criteria and processes.

(d) The affidavit to be submitted to and evaluated by the commissioner must include
at least the following:

(1) how chartering schools is a way for the organization to carry out its mission;

(2) a description of the capacity of the organization to serve as a sponsor, including
the personnel who will perform the sponsoring duties, their qualifications, the amount of
time they will be assigned to this responsibility, and the financial resources allocated
by the organization to this responsibility;

(3) a description of the application and review process the authorizer will use to make
decisions regarding the granting of charters, which will include at least the following:

(i) how the statutory purposes defined in subdivision 1 are addressed;

(ii) the mission, goals, program model, and student performance expectations;

(iii) an evaluation plan for the school that includes criteria for evaluating educational,
organizational, and fiscal plans;

(iv) the school's governance plan;

(v) the financial management plan; and

(vi) the administration and operations plan;

(4) a description of the type of contract it will arrange with the schools it charters
that meets the provisions of subdivision 6 and defines the rights and responsibilities of the
charter school for governing its educational program, controlling its funds, and making
school management decisions;

(5) the process to be used for providing ongoing oversight of the school consistent
with the contract expectations specified in clause (4) that assures that the schools chartered
are complying with both the provisions of applicable law and rules, and with the contract;

(6) the process for making decisions regarding the renewal or termination of
the school's charter based on evidence that demonstrates 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; and

(7) an assurance specifying that the organization is committed to serving as a
sponsor for the full five-year term.

A disapproved applicant under this paragraph may resubmit an application during a
future application period.

(e) The authorizer must participate in department-approved training.

(f) An authorizer that chartered a school before August 1, 2009, must apply by
June 30, 2011, to the commissioner for approval, under paragraph (c), to continue as an
authorizer under this section. For purposes of this paragraph, an authorizer that fails to
submit a timely application is ineligible to charter a school.

(g) The commissioner shall review an authorizer's performance every five years in
a manner and form determined by the commissioner and may review an authorizer's
performance more frequently at the commissioner's own initiative or at the request of a
charter school operator, charter school board member, or other interested party. The
commissioner, after completing the review, shall transmit a report with findings to the
authorizer. If, consistent with this section, the commissioner finds that an authorizer
has not fulfilled the requirements of this section, the commissioner may subject the
authorizer to corrective action, which may include terminating the contract with the
charter school board of directors of a school it chartered. The commissioner must notify
the authorizer in writing of any findings that may subject the authorizer to corrective
action and the authorizer then has 15 business days to request an informal hearing before
the commissioner takes corrective action.

(h) The commissioner may at any time take corrective action against an authorizer,
including terminating an authorizer's ability to charter a school for:

(1) failing to demonstrate the criteria under paragraph (c) under which the
commissioner approved the authorizer;

(2) violating a term of the chartering contract between the authorizer and the charter
school board of directors; or

(3) unsatisfactory performance as an approved authorizer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 4, is
amended to read:

Subd. 4.

Formation of school.

(a) An authorizer, after receiving an application from
a school developer, may charter 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 paragraph (b). The school must be organized and operated
as a deleted text begin cooperative under chapter 308A or deleted text end nonprofit corporation under chapter 317A and
the provisions under the applicable chapter shall apply to the school except as provided
in this section.

Notwithstanding sections 465.717 and 465.719, a school district, subject to this
section and section 124D.11, may create a corporation for the purpose of establishing a
charter school.

(b) Before the operators may establish and operate a school, the authorizer must file
an affidavit with the commissioner stating its intent to charter a school. An authorizer
must file a separate affidavit for each school it intends to charter. The affidavit must
state the terms and conditions under which the authorizer would charter a school and
how the authorizer intends to oversee the fiscal and student performance of the charter
school and to comply with the terms of the written contract between the authorizer
and the charter school board of directors under subdivision 6. The commissioner must
approve or disapprove the authorizer's affidavit within 60 business days of receipt of the
affidavit. If the commissioner disapproves the affidavit, the commissioner shall notify
the authorizer of the deficiencies in the affidavit and the authorizer then has 20 business
days to address the deficiencies. If the authorizer does not address deficiencies to the
commissioner's satisfaction, the commissioner's disapproval is final. Failure to obtain
commissioner approval precludes an authorizer from chartering the school that is the
subject of this affidavit.

(c) The authorizer may prevent an approved charter school from opening for
operation if, among other grounds, the charter school violates this section or does not meet
the ready-to-open standards that are part of the authorizer's oversight and evaluation
process or are stipulated in the charter school contract.

(d) The operators authorized to organize and operate a school, before entering into a
contract or other agreement for professional or other services, goods, or facilities, must
incorporate deleted text begin as a cooperative under chapter 308A or deleted text end as a nonprofit corporation under
chapter 317A and must establish a board of directors composed of at least five members
who are not related parties until a timely election for members of the ongoing charter
school board of directors is held according to the school's articles and bylaws under
paragraph (f). A charter school board of directors must be composed of at least five
members who are not related parties. Staff members employed at the school, including
teachers providing instruction under a contract with a cooperative, and all parents or legal
guardians of children enrolled in the school are the voters eligible to elect the members
of the school's board of directors. A charter school must notify eligible voters of the
school board election dates at least 30 days before the election. Board of director meetings
must comply with chapter 13D.

(e) Upon the request of an individual, the charter school must make available in
a timely fashion the minutes of meetings of the board of directors, and of members
and committees having any board-delegated authority; financial statements showing all
operations and transactions affecting income, surplus, and deficit during the school's last
annual accounting period; and a balance sheet summarizing assets and liabilities on the
closing date of the accounting period. A charter school also must post on its official Web
site information identifying its authorizer and indicate how to contact that authorizer and
include that same information about its authorizer in other school materials that it makes
available to the public.

(f) Every charter school board member shall attend department-approved training
on board governance, the board's role and responsibilities, employment policies and
practices, and financial management. A board member who does not begin the required
training within six months of being seated and complete the required training within 12
months of being seated on the board is ineligible to continue to serve as a board member.

(g) The ongoing board must be elected before the school completes its third year
of operation. Board elections must be held during a time when school is in session. The
charter school board of directors shall be composed of at least five nonrelated members
and include: (i) at least one licensed teacher employed at the school or a licensed teacher
providing instruction under a contact between the charter school and a cooperative; (ii) the
parent or legal guardian of a student enrolled in the charter school; and (iii) an interested
community member who is not employed by the charter school and does not have a
child enrolled in the school. The board may be a teacher majority board composed of
teachers described in this paragraph. The chief financial officer and the chief administrator
are ex-officio nonvoting board members. Board bylaws shall outline the process and
procedures for changing the board's governance model, consistent with chapter 317A. A
board may change its governance model only:

(1) by a majority vote of the board of directors and the licensed teachers employed
by the school, including licensed teachers providing instruction under a contract between
the school and a cooperative; and

(2) with the authorizer's approval.

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

(h) The granting or renewal of a charter by an authorizer must not be conditioned
upon the bargaining unit status of the employees of the school.

(i) The granting or renewal of a charter school by an authorizer must not be
contingent on the charter school being required to contract, lease, or purchase services
from the authorizer. Any potential contract, lease, or purchase of service from an
authorizer must be disclosed to the commissioner, accepted through an open bidding
process, and be a separate contract from the charter contract. The school must document
the open bidding process. An authorizer must not enter into a contract to provide
management and financial services for a school that it authorizes, unless the school
documents that it received at least two competitive bids.

(j) An authorizer may permit the board of directors of a charter school to expand
the operation of the charter school to additional sites or to add additional grades at the
school beyond those described in the authorizer's original affidavit as approved by
the commissioner only after submitting a supplemental affidavit for approval to the
commissioner in a form and manner prescribed by the commissioner. The supplemental
affidavit must show that:

(1) the expansion proposed by the charter school is supported by need and projected
enrollment;

(2) the charter school expansion is warranted, at a minimum, by longitudinal data
demonstrating students' improved academic performance and growth on statewide
assessments under chapter 120B;

(3) the charter school is fiscally sound and has the financial capacity to implement
the proposed expansion; and

(4) the authorizer finds that the charter school has the management capacity to
carry out its expansion.

(k) The commissioner shall have 30 business days to review and comment on the
supplemental affidavit. The commissioner shall notify the authorizer of any deficiencies in
the supplemental affidavit and the authorizer then has 30 business days to address, to the
commissioner's satisfaction, any deficiencies in the supplemental affidavit. The school
may not expand grades or add sites until the commissioner has approved the supplemental
affidavit. The commissioner's approval or disapproval of a supplemental affidavit is final.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 4a, is
amended to read:

Subd. 4a.

Conflict of interest.

(a) An individual is prohibited from serving as a
member of the charter school board of directors if the individual, an immediate family
member, or the individual's partner is an owner, employee or agent of, or a contractor with
a for-profit or nonprofit entity new text begin or an individual new text end with whom the charter school contracts,
directly or indirectly, for professional services, goods, or facilities. A violation of this
prohibition 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
this prohibition is individually liable to the charter school for any damage caused by
the violation.

(b) No member of the board of directors, employee, officer, or agent of a charter
school shall participate in selecting, awarding, or administering a contract if a conflict
of interest exists. A conflict exists when:

(1) the board member, employee, officer, or agent;

(2) the immediate family of the board member, employee, officer, or agent;

(3) the partner of the board member, employee, officer, or agent; or

(4) an organization that employs, or is about to employ any individual in clauses
(1) to (3),

has a financial or other interest in the entity with which the charter school is contracting.
A violation of this prohibition renders the contract void.

(c) Any employee, agent, or board member of the authorizer who participates
in the initial review, approval, ongoing oversight, evaluation, or the charter renewal or
nonrenewal process or decision is ineligible to serve on the board of directors of a school
chartered by that authorizer.

(d) An individual may serve as a member of the board of directors if no conflict of
interest under paragraph (a) exists.

(e) new text begin A charter school board member or employee must not receive any remuneration
in conjunction with a financial transaction involving the charter school.
new text end

new text begin (f) new text end The conflict of interest provisions under this subdivision do not apply to
compensation paid to a teacher employed by the charter school who also serves as a
member of the board of directors.

deleted text begin (f) deleted text end new text begin (g) new text end The conflict of interest provisions under this subdivision do not apply to a
teacher who provides services to a charter school through a cooperative formed under
chapter 308A when the teacher also serves on the charter school board of directors.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 6, is
amended to read:

Subd. 6.

Charter contract.

The authorization for a charter school must be in the
form of a written contract signed by the authorizer and the board of directors of the charter
school. The contract must be completed within 45 business days of the commissioner's
approval of the authorizer's affidavit. The authorizer shall submit to the commissioner a
copy of the signed charter contract within ten business days of its execution. The contract
for a charter school must be in writing and contain at least the following:

(1) a declaration of the purposes in subdivision 1 that the school intends to carry out
and how the school will report its implementation of those purposes;

(2) a description of the school program and the specific academic and nonacademic
outcomes that pupils must achieve;

(3) a statement of admission policies and procedures;

(4) a governance, management, and administration plan for the school;

(5) signed agreements from charter school board members to comply with all
federal and state laws governing organizational, programmatic, and financial requirements
applicable to charter schools;

(6) the criteria, processes, and procedures that the authorizer will use for ongoing
oversight of operational, financial, and academic performance;

(7) the performance evaluation that is a prerequisite for reviewing a charter contract
under subdivision 15;

(8) types and amounts of insurance liability coverage to be obtained by the charter
school;

(9) the term of the contract, which may be up to three years for an initial contract
plus an additional preoperational planning year, and up to five years for a renewed contract
if warranted by the school's academic, financial, and operational performance;

(10) how the board of directors or the operators of the charter school will provide
special instruction and services for children with a disability under sections 125A.03
to 125A.24, and 125A.65, a description of the financial parameters within which the
charter school will operate to provide the special instruction and services to children
with a disability;

(11) the process and criteria the authorizer intends to use to monitor and evaluate the
fiscal and student performance of the charter school, consistent with subdivision 15; and

(12) the plan for an orderly closing of the school under chapter deleted text begin 308A or deleted text end 317A, if the
closure is a termination for cause, a voluntary termination, or a nonrenewal of the contract,
and that includes establishing the responsibilities of the school board of directors and the
authorizer and notifying the commissioner, authorizer, school district in which the charter
school is located, and parents of enrolled students about the closure, the transfer of student
records to students' resident districts, and procedures for closing financial operations.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 8, is
amended to read:

Subd. 8.

Federal, state, and local requirements.

(a) A charter school shall meet all
federal, state, and local health and safety requirements applicable to school districts.

(b) A school must comply with statewide accountability requirements governing
standards and assessments in chapter 120B.

(c) A school sponsored by a school board may be located in any district, unless the
school board of the district of the proposed location disapproves by written resolution.

(d) A charter school must be nonsectarian in its programs, admission policies,
employment practices, and all other operations. A sponsor may not authorize a charter
school or program that is affiliated with a nonpublic sectarian school or a religious
institution. A charter school student must be released for religious instruction, consistent
with section 120A.22, subdivision 12, clause (3).

(e) Charter schools must not be used as a method of providing education or
generating revenue for students who are being home-schooled.

(f) The primary focus of a charter school must be to provide a comprehensive
program of instruction for at least one grade or age group from five through 18 years
of age. Instruction may be provided to people younger than five years and older than
18 years of age.

(g) A charter school may not charge tuition.

(h) A charter school is subject to and must comply with chapter 363A and section
121A.04.

(i) A charter school is subject to and must comply with the Pupil Fair Dismissal
Act, sections 121A.40 to 121A.56, and the Minnesota Public School Fee Law, sections
123B.34 to 123B.39.

(j) A charter school is subject to the same financial audits, audit procedures, and
audit requirements as a district. Audits must be conducted in compliance with generally
accepted governmental auditing standards, the Federal Single Audit Act, if applicable,
and section 6.65. 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; 471.38; 471.391; 471.392; and
471.425. The audit must comply with the requirements of sections 123B.75 to 123B.83,
except to the extent deviations are necessary because of the program at the school.
Deviations must be approved by the commissioner and authorizer. The Department of
Education, state auditor, legislative auditor, or authorizer may conduct financial, program,
or compliance audits. A charter school determined to be in statutory operating debt under
sections 123B.81 to 123B.83 must submit a plan under section 123B.81, subdivision 4.

(k) A charter school is a district for the purposes of tort liability under chapter 466.

(l) A charter school must comply with chapters 13 and 13D; and sections 120A.22,
subdivision 7; 121A.75; and 260B.171, subdivisions 3 and 5.

(m) A charter school is subject to the Pledge of Allegiance requirement under
section 121A.11, subdivision 3.

(n) A charter school offering online courses or programs must comply with section
124D.095.

(o) A charter school and charter school board of directors are subject to chapter 181.

(p) A charter school must comply with section 120A.22, subdivision 7, governing
the transfer of students' educational records and sections 138.163 and 138.17 governing
the management of local records.

new text begin (q) A charter school eligible to seek endorsement from the Charter School Facilities
Authority under section 124D.1105 must receive a positive review and comment under
section 123B.71, subdivision 8, for facilities projects in excess of $1,400,000 and must
submit a proposal to the commissioner that contains the information required under
section 123B.71, subdivision 9, to be eligible to issue bonds under section 124D.1108.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 6.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 17, is
amended to read:

Subd. 17.

Leased space.

new text begin (a) new text end A charter school may lease space from an independent
or special school board eligible to be an authorizer, other public organization, private,
nonprofit nonsectarian organization, private property owner, or a sectarian organization if
the leased space is constructed as a school facility. new text begin A charter school may not lease space
from any organization whose primary purpose is to provide a facility for the charter school
or which has financed the acquisition of the school facility through rent paid by the charter
school from building lease aid under section 124D.11, subdivision 4. new text end The department must
review and approve or disapprove leases in a timely manner.

new text begin (b) If an independent or special school board finds it advantageous to enter into a
lease agreement with a charter school, it may request the Department of Education to
count the charter school student data as part of the school district data for the purposes of
determining adequate yearly progress. As part of the district's request to the Department
of Education, it must provide the department with the resolution from the district school
board and a resolution from the charter school board stating the agreement for inclusion
of the charter school data into the district data for the purposes of determining adequate
yearly progress.
new text end

new text begin (c) Notwithstanding paragraph (a), a charter school that is eligible to receive
building lease transition aid under section 124D.11, subdivision 4d, may lease space
from an independent or special school board eligible to be an authorizer or other public
organization, private, nonprofit nonsectarian organization, private property owner, or
a sectarian organization, if the leased space is constructed as a school facility. The
department must review and approve or disapprove leases in a timely manner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 7.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 23, is
amended to read:

Subd. 23.

Causes for nonrenewal or termination of charter school contract.

(a)
The duration of the contract with an authorizer must be for the term contained in the
contract according to subdivision 6. The authorizer may or may not renew a contract at
the end of the term for any ground listed in paragraph (b). An authorizer may unilaterally
terminate a contract during the term of the contract for any ground listed in paragraph
(b). At least 60 days before not renewing or terminating a contract, the authorizer shall
notify the board of directors of the charter school of the proposed action in writing. The
notice shall state the grounds for the proposed action in reasonable detail and that the
charter school's board of directors may request in writing an informal hearing before the
authorizer within 15 business days of receiving notice of nonrenewal or termination of the
contract. Failure by the board of directors to make a written request for a hearing within
the 15-business-day period shall be treated as acquiescence to the proposed action. Upon
receiving a timely written request for a hearing, the authorizer shall give ten business days'
notice to the charter school's board of directors of the hearing date. The authorizer shall
conduct an informal hearing before taking final action. The authorizer shall take final
action to renew or not renew a contract no later than 20 business days before the proposed
date for terminating the contract or the end date of the contract.

(b) A contract may be terminated or not renewed upon any of the following grounds:

(1) failure to meet the requirements for pupil performance contained in the contract;

(2) failure to meet generally accepted standards of fiscal management;

(3) violations of law; or

(4) other good cause shown.

If a contract is terminated or not renewed under this paragraph, the school must be
dissolved according to the applicable provisions of chapter deleted text begin 308A or deleted text end 317A.

(c) If the sponsor and the charter school board of directors mutually agree to
terminate or not renew the contract, a change in sponsors is allowed if the commissioner
approves the transfer to a different eligible authorizer to authorize the charter school.
Both parties must jointly submit their intent in writing to the commissioner to mutually
terminate the contract. The sponsor that is a party to the existing contract at least must
inform the approved different eligible sponsor about the fiscal and operational status
and student performance of the school. Before the commissioner determines whether
to approve a transfer of authorizer, the commissioner first must determine whether the
charter school and prospective new authorizer can identify and effectively resolve those
circumstances causing the previous authorizer and the charter school to mutually agree to
terminate the contract. If no transfer of sponsor is approved, the school must be dissolved
according to applicable law and the terms of the contract.

(d) The commissioner, after providing reasonable notice to the board of directors of
a charter school and the existing authorizer, and after providing an opportunity for a public
hearing, may terminate the existing contract between the authorizer and the charter school
board if the charter school has a history of:

(1) failure to meet pupil performance requirements contained in the contract;

(2) financial mismanagement or failure to meet generally accepted standards of
fiscal management; or

(3) repeated or major violations of the law.

(e) If the commissioner terminates a charter school contract under subdivision 3,
paragraph (g), the commissioner shall provide the charter school with information about
other eligible authorizers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 23a,
is amended to read:

Subd. 23a.

Related party lease costs.

(a) A charter school is prohibited from
entering a lease of real property with a related party unless the lessor is a nonprofit
corporation under chapter 317A deleted text begin or a cooperative under chapter 308A deleted text end , and the lease cost is
reasonable under section 124D.11, subdivision 4, clause (1).

(b) For purposes of this section and section 124D.11:

(1) "related party" means an affiliate or immediate relative of the other party in
question, an affiliate of an immediate relative, or an immediate relative of an affiliate;

(2) "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;

(3) "immediate family" means an individual whose relationship by blood, marriage,
adoption, or partnering is no more remote than first cousin;

(4) "person" means an individual or entity of any kind; and

(5) "control" means the ability to affect the management, operations, or policy
actions or decisions of a person, whether through ownership of voting securities, by
contract, or otherwise.

(c) A lease of real property to be used for a charter school, not excluded in paragraph
(a), must contain the following statement: "This lease is subject to Minnesota Statutes,
section 124D.10, subdivision 23a."

(d) If a charter school enters into as lessee a lease with a related party and the
charter school subsequently closes, the commissioner has the right to recover from the
lessor any lease payments in excess of those that are reasonable under section 124D.11,
subdivision 4, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

new text begin [124D.101] VACANT BUILDING INVENTORY.
new text end

new text begin The Department of Administration, in conjunction with the Department of
Education, shall annually publish a list of vacant and unused buildings and vacant and
unused portions of buildings that are owned by the state or by school districts in the state
and that may be suitable for the long-term operation of a charter school. The Department
of Education shall make the list available to applicants for charter schools and to existing
charter schools. The list shall include the address of each building, a short description
of the building, and the name of the owner of the building. Nothing in this section
requires the owner of a building on the list to sell or lease the building or a portion of the
building to a charter school or to any other school or to any other prospective buyer or
tenant. The Department of Education may request information from school districts to
compile the vacant building list under this section. School districts must comply with
the department's request.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2008, section 124D.11, subdivision 4, is amended to read:

Subd. 4.

Building lease aid.

new text begin (a) new text end When a charter school finds it economically
advantageous to rent or lease a building or land for any instructional purposes and it
determines that the total operating capital revenue under section 126C.10, subdivision 13,
is insufficient for this purpose, it may apply to the commissioner for building lease aid
for this purpose. The commissioner must review and either approve or deny a lease aid
application using the following criteria:

(1) the reasonableness of the price based on current market values;

(2) the extent to which the lease conforms to applicable state laws and rules; deleted text begin and
deleted text end

(3) the appropriateness of the proposed lease in the context of the space needs and
financial circumstances of the charter school new text begin ; and
new text end

new text begin (4) any other information the commissioner requests of the charter school in order to
implement this subdivision including, at a minimum, the following:
new text end

new text begin (i) the owner of the building;
new text end

new text begin (ii) a list of the lessor's current board members or principals, whichever applies;
new text end

new text begin (iii) a copy of the lessor's annual audit or annual report, whichever applies;
new text end

new text begin (iv) the terms of the proposed lease and a copy of the proposed lease;
new text end

new text begin (v) the enrollment projections of the school;
new text end

new text begin (vi) the long-range strategic and financial plan of the school;
new text end

new text begin (vii) a copy of the certificate of occupancy from the local jurisdiction; and
new text end

new text begin (viii) a copy of the state fire marshal's fire inspection report or orders and
accompanying documentation of costs associated with bringing the proposed lease site
up to code.
new text end

new text begin (b) If the commissioner determines that a charter school has not provided
information required under this subdivision, the commissioner must deny the charter
school's lease aid application under this subdivision.
new text end

new text begin (c) If the commissioner determines that the primary purpose of the organization
proposing to lease a building or land to the charter school is to provide a facility for
the charter school, or the organization has financed the acquisition of the school facility
through rent paid by the charter school from building lease aid under this subdivision, the
commissioner must deny the charter school's lease aid application under this subdivision new text end .

new text begin (d) new text end A charter school must not use the building lease aid it receives for custodial,
maintenance service, utility, or other operating costs. The amount of building lease aid per
pupil unit served for a charter school for any year shall not exceed the lesser of deleted text begin (a) deleted text end new text begin (1) new text end 90
percent of the approved cost or deleted text begin (b) deleted text end new text begin (2) new text end the product of the pupil units served for the current
school year times deleted text begin the greater of the charter school's building lease aid per pupil unit served
for fiscal year 2003, excluding the adjustment under Laws 2002, chapter 392, article 6,
section 4, or deleted text end $1,200. new text begin A charter school that receives facilities aid under subdivision 4a is
not eligible for building lease aid under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 11.

Minnesota Statutes 2008, section 124D.11, is amended by adding a
subdivision to read:

new text begin Subd. 4a. new text end

new text begin Facilities aid. new text end

new text begin An endorsed charter school under section 124D.1106 is
eligible to receive facilities aid under this subdivision in the first fiscal year in which the
school must make loan payments to be applied to principal and interest payments on an
outstanding debt obligation of the Charter School Facilities Authority. Facilities aid under
this section shall not exceed the lesser of:
new text end

new text begin (1) 84 percent of the amount needed to meet when due the principal and interest
payments on the obligations of the Charter School Facilities Authority for eligible projects
endorsed by the authority under section 124D.1106; or
new text end

new text begin (2) the product of the pupil units served for the current school year times $1,120.
new text end

new text begin Aid received under this section may be used only to pay loan payments to be applied
to the principal and interest payments due on obligations of the Charter School Facilities
Authority for eligible projects endorsed by the authority.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 12.

Minnesota Statutes 2008, section 124D.11, is amended by adding a
subdivision to read:

new text begin Subd. 4b. new text end

new text begin Charter school facilities credit enhancement account. new text end

new text begin (a) A charter
school credit enhancement account is created in the special revenue fund in the state
treasury for the purpose of providing credit enhancement to charter school facilities.
new text end

new text begin (b) For fiscal year 2011 and later, an amount equal to six percent of an endorsed
charter school's loan payments to be applied to principal and interest payments on bonds
issued under section 124D.1108 shall be credited to the charter school facilities credit
enhancement account.
new text end

new text begin (c) When the principal and interest payments on bonds issued under section
124D.1108 to finance a school facility for an endorsed charter school have been satisfied,
any remaining funds credited to the charter school facilities credit enhancement account
on behalf of that specific charter school's debt obligation shall credit to the general fund.
new text end

new text begin (d) The charter school facilities credit enhancement account may receive grants or
gifts and must be used for the purpose of the account under paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 13.

Minnesota Statutes 2008, section 124D.11, is amended by adding a
subdivision to read:

new text begin Subd. 4c. new text end

new text begin Sale or transfer of assets. new text end

new text begin A charter school board must notify the
commissioner if the board intends to sell or transfer property financed by building
lease transition aid under subdivision 4d or facilities aid under subdivision 4a. The
commissioner must approve the sale or transfer of any property financed by building lease
transition aid under subdivision 4d or facilities aid under subdivision 4a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2008, section 124D.11, is amended by adding a
subdivision to read:

new text begin Subd. 4d. new text end

new text begin Building lease transition aid. new text end

new text begin (a) For fiscal years 2011 through 2017, an
eligible charter school may apply to the commissioner for building lease transition aid.
Building lease transition aid may be used for the same purpose as building lease aid under
subdivision 4. The commissioner must review and either approve or deny a building lease
transition aid application using the following criteria:
new text end

new text begin (1) the reasonableness of the price based on current market values;
new text end

new text begin (2) the extent to which the lease conforms to applicable state laws and rules; and
new text end

new text begin (3) the appropriateness of the proposed lease in the context of the space needs and
financial circumstances of the charter school.
new text end

new text begin (b) To retain eligibility for facilities lease transition aid, an eligible charter school
must submit the following information to the commissioner:
new text end

new text begin (1) the owner of the building;
new text end

new text begin (2) a list of the lessor's current board members or principals, whichever applies;
new text end

new text begin (3) a copy of the lessor's annual audit or annual report, whichever applies;
new text end

new text begin (4) the terms of the proposed lease and a copy of the proposed lease;
new text end

new text begin (5) the enrollment projections of the school;
new text end

new text begin (6) the long-range strategic and financial plan of the school;
new text end

new text begin (7) a copy of the certificate of occupancy from the local jurisdiction; and
new text end

new text begin (8) a copy of the state fire marshal's fire inspection report or orders.
new text end

new text begin (c) If the commissioner determines that a charter school that is eligible to receive
building lease transition aid has not provided information required under this subdivision,
the commissioner must deny the charter school's building lease transition aid.
new text end

new text begin (d) A charter school must not use the building lease transition aid for custodial,
maintenance service, utility, or other operating costs. The amount of building lease
transition aid per pupil unit served for a charter school in any year shall not exceed the
lesser of:
new text end

new text begin (1) 90 percent of the approved cost; or
new text end

new text begin (2) the product of the pupil units served for the current school year times $1,200.
new text end

new text begin A charter school that receives building lease aid under subdivision 4, or charter school
facilities aid under subdivision 4a, is not eligible for building lease transition aid under
this subdivision.
new text end new text begin new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 15.

Minnesota Statutes 2008, section 124D.11, subdivision 7, is amended to read:

Subd. 7.

Use of state money.

Money received from the state may not be used to
purchase land or buildings new text begin unless endorsed by the Charter School Facilities Authority
under section 124D.1106 for the purpose of making loan payments on principal or interest
payments on a debt obligation new text end . The school may own land and buildings if obtained
through nonstate sources.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 16.

Minnesota Statutes 2009 Supplement, section 124D.11, subdivision 9, is
amended to read:

Subd. 9.

Payment of aids to charter schools.

(a) Notwithstanding section 127A.45,
subdivision 3, aid payments for the current fiscal year to a charter school shall be of an
equal amount on each of the 24 payment dates.

(b) Notwithstanding paragraph (a) and section 127A.45, for a charter school ceasing
operation on or prior to June 30 of a school year, for the payment periods occurring after
the school ceases serving students, the commissioner shall withhold the estimated state aid
owed the school. The charter school board of directors and authorizer must submit to the
commissioner a closure plan under chapter 308A or 317A, and financial information about
the school's liabilities and assets. After receiving the closure plan, financial information,
an audit of pupil counts, documentation of lease expenditures, and monitoring of special
education expenditures, the commissioner may release cash withheld and may continue
regular payments up to the current year payment percentages if further amounts are
owed. If, based on audits and monitoring, the school received state aid in excess of the
amount owed, the commissioner shall retain aid withheld sufficient to eliminate the aid
overpayment. For a charter school ceasing operations prior to, or at the end of, a school
year, notwithstanding section 127A.45, subdivision 3, preliminary final payments may
be made after receiving the closure plan, audit of pupil counts, monitoring of special
education expenditures, documentation of lease expenditures, and school submission of
Uniform Financial Accounting and Reporting Standards (UFARS) financial data for the
final year of operation. Final payment may be made upon receipt of audited financial
statements under section 123B.77, subdivision 3.

(c) If a charter school fails to comply with the commissioner's directive to return,
for cause, federal or state funds administered by the department, the commissioner may
withhold an amount of state aid sufficient to satisfy the directive.

(d) If, within the timeline under section 471.425, a charter school fails to pay the state
of Minnesota, a school district, intermediate school district, or service cooperative after
receiving an undisputed invoice for goods and services, the commissioner may withhold
an amount of state aid sufficient to satisfy the claim and shall distribute the withheld
aid to the interested state agency, school district, intermediate school district, or service
cooperative. An interested state agency, school district, intermediate school district, or
education cooperative shall notify the commissioner when a charter school fails to pay an
undisputed invoice within 75 business days of when it received the original invoice.

(e) Notwithstanding section 127A.45, subdivision 3, and paragraph (a), 80 percent
of the start-up cost aid under subdivision 8 shall be paid within 45 days after the first day
of student attendance for that school year.

(f) In order to receive state aid payments under this subdivision, a charter school in
its first three years of operation must submit a school calendar in the form and manner
requested by the department and a quarterly report to the Department of Education. The
report must list each student by grade, show the student's start and end dates, if any,
with the charter school, and for any student participating in a learning year program,
the report must list the hours and times of learning year activities. The report must be
submitted not more than two weeks after the end of the calendar quarter to the department.
The department must develop a Web-based reporting form for charter schools to use
when submitting enrollment reports. A charter school in its fourth and subsequent year of
operation must submit a school calendar and enrollment information to the department in
the form and manner requested by the department.

(g) Notwithstanding sections 317A.701 to 317A.791, upon closure of a charter
school and satisfaction of creditors, cash deleted text begin and deleted text end new text begin , new text end investment balances new text begin , facilities, and all other
assets new text end remaining shall be returned to the state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 17.

new text begin [124D.1105] CHARTER SCHOOL FACILITIES AUTHORITY.
new text end

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin (a) The Charter School Facilities Authority shall
consist of eight members, five of which are appointed by the governor with the advice and
consent of the senate, the commissioner of management and budget or the commissioner's
designee, and the commissioner of education or the commissioner's designee. The
governor shall appoint members of the authority described in paragraph (b).
new text end

new text begin (b) All members to be appointed by the governor shall be residents of the state. At
least two members must reside outside the metropolitan area as defined in section 473.121,
subdivision 2. At least one of the members shall be a person having skill, knowledge, and
experience in the field of state and municipal finance; at least one of the members shall
be a person having skill, knowledge, and experience in the building construction field; at
least one of the members shall be a person having skill, knowledge, and experience in the
field of school facilities finance; at least one member shall be a representative of a member
of the Minnesota Association of Charter Schools; and at least one member shall be an
expert in education finance from the Department of Education. With the exception of the
representative of the Minnesota Association of Charter Schools, each appointed member
of the authority shall be independent and not affiliated with a charter school organization
or any entity working or contracting with a charter school.
new text end

new text begin Subd. 2. new text end

new text begin Minnesota School Boards Association. new text end

new text begin The president of the Minnesota
School Boards Association, or the president's designee, shall serve without compensation
as an advisory, nonvoting member of the board.
new text end

new text begin Subd. 3. new text end

new text begin Term; compensation; removal. new text end

new text begin The membership terms, compensation,
removal of members, and filling of vacancies for board members other than the
commissioner of management and budget, the commissioner of education, representative
of the Department of Education, and the president of the Minnesota School Boards
Association, shall be as provided in section 15.0575. The commissioner of management
and budget, or the commissioner's designee, shall convene the first meeting of the
authority no later than August 15, 2010. The authority shall elect a chair at its first meeting
and shall determine a rotation for the chair.
new text end

new text begin Subd. 4. new text end

new text begin Duties; applications; fees. new text end

new text begin The authority shall provide an efficient and
cost-effective method of financing charter school facilities in the state of Minnesota. The
authority shall determine which charter schools are in a financial and academic position
to develop a facility. The authority shall review applications for the issuance of bonds
under section 124D.1108 for specific projects. The authority shall solicit applications
from charter schools on an annual basis and may charge a charter school an application
or administrative fee. The annual application deadline and any fees must be determined
by the authority. Charter schools may apply annually to the authority, unless otherwise
directed by the authority. The authority may hire or contract for services.
new text end

new text begin Subd. 5. new text end

new text begin Considerations of the authority; submission requirements. new text end

new text begin (a) A charter
school that has been enrolling students for five or more years may seek endorsement
from the authority to purchase an existing building or purchase and renovate an existing
building within two years of purchase. The charter school must submit to the authority
the following information:
new text end

new text begin (1) a statement from the Department of Education that a satisfactory percentage of
students at the school are making high growth on statewide tests under section 120B.299,
subdivision 9;
new text end

new text begin (2) documentation that the school's charter has been renewed;
new text end

new text begin (3) financial statements showing that the charter school has had a net positive
unreserved general fund balance as of June 30 in the preceding five fiscal years;
new text end

new text begin (4) a long-range strategic and financial plan, including the physical space needs
of the school;
new text end

new text begin (5) a feasibility study of available buildings;
new text end

new text begin (6) documents showing sustainable enrollment projections and the need to renovate
or purchase an existing facility to serve as a school;
new text end

new text begin (7) a statement adopted by the charter school's board of directors acknowledging
that the building and any assets related to it will revert to the state in the event of the
charter school closing;
new text end

new text begin (8) a statement from the charter school authorizer indicating its support of the
charter school's proposed facility; and
new text end

new text begin (9) for projects in excess of $1,400,000, a positive review and comment from the
commissioner of education under section 123B.71.
new text end

new text begin (b) A charter school that has been enrolling students for eight or more years may
seek endorsement from the authority to construct a facility. The charter school must
submit to the authority the following information:
new text end

new text begin (1) a statement from the Department of Education that a satisfactory percentage of
students at the school are making high growth on statewide tests according to section
120B.299, subdivision 9;
new text end

new text begin (2) documentation that the school's charter has been renewed;
new text end

new text begin (3) financial statements showing that the charter school has had a net positive
unreserved general fund balance as of June 30 in the preceding eight fiscal years;
new text end

new text begin (4) a long-range strategic and financial plan, including the physical needs of the
school;
new text end

new text begin (5) a feasibility study of facility options, including evidence of the lack of existing
facilities available to serve as a school;
new text end

new text begin (6) documents showing sustainable enrollment projections and the need to construct
a new school facility;
new text end

new text begin (7) a statement adopted by the charter school's board of directors acknowledging
that the building and any assets related to it will revert to the state in the event of the
charter school closing;
new text end

new text begin (8) a statement from the charter school authorizer indicating its support of the
charter school's proposed facility; and
new text end

new text begin (9) for projects in excess of $1,400,000, a positive review and comment from the
commissioner of education under section 123B.71.
new text end

new text begin Subd. 6. new text end

new text begin Determination. new text end

new text begin The authority may make additional requests of the charter
school to make their determination. The authority must use the criteria submitted as
required by subdivision 5 and any additional information the authority receives to make a
determination about whether or not to allow a charter school to purchase, purchase and
renovate, or construct a school facility and use debt financing to pay for the costs of a
school facility. The authority must notify the charter school of their determination within
90 business days of the application deadline. The decision of the authority is final.
new text end

new text begin Subd. 7. new text end

new text begin Expiration. new text end

new text begin The authority is permanent and the provisions of section
15.059, subdivision 5, do not apply.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 18.

new text begin [124D.1106] ENDORSED CHARTER SCHOOL BORROWING;
DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Endorsement. new text end

new text begin The authority shall approve a charter school to
purchase, purchase and renovate, or construct a school facility and finance that school
facility through the issuance of bonds. The authority shall only approve the sale of
bonds on behalf of charter schools that are issued through the authority. The authority
shall not approve the sale of bonds by a charter school if the projected facilities aid
receivable under section 124D.11, subdivision 4a, is less than 84 percent of the principal
and interest payments on the proposed debt obligation in any fiscal year. The decision
of the authority is final.
new text end

new text begin Subd. 2. new text end

new text begin Definition. new text end

new text begin For the purpose of sections 124D.1106 to 124D.1109, an
"endorsed charter school" is one that has received approval to purchase, purchase and
renovate, or construct a school facility and finance that school facility through the issuance
of bonds by the authority under subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 19.

new text begin [124D.1107] AUTHORITY TO BORROW MONEY; LIMITATIONS.
new text end

new text begin The board of an endorsed charter school, by a two-thirds majority, may vote to
acquire school facilities financed with the proceeds of bonds issued by the Charter School
Facilities Authority in the manner and subject to the limitations set forth in section
124D.1108 in anticipation of the receipt of charter school facilities aid under section
124D.11, subdivision 4a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 20.

new text begin [124D.1108] CHARTER SCHOOL BONDS; REPAYMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Issuance of bonds. new text end

new text begin (a) The Charter School Facilities Authority may
issue revenue bonds, in anticipation of the collection of facilities aid revenues under
section 124D.11, subdivision 4a, from an endorsed charter school, to finance, in whole or
in part, the cost of the acquisition, acquisition and renovation, or construction of a charter
school building. It may enter into a loan agreement with an endorsed charter school so
that payments required to be made by the endorsed charter school are fixed and revised as
necessary to produce income and revenue sufficient to provide for the prompt payment of
principal and interest on all bonds issued when due. The loan agreement must also provide
that the endorsed charter school is required to pay all expenses of the operation and
maintenance of the charter school building, including adequate insurance and insurance
against all liability for injury to persons or property arising from its operation, and all taxes
and special assessments levied upon or with respect to the charter school building and
payable during the term of the loan agreement.
new text end

new text begin (b) The Charter School Facilities Authority by resolution may exercise the powers of
a municipality under sections 469.152 to 469.165, without an election, for the purposes of
financing charter school buildings, including the issuance of bonds and the application
of the bond proceeds and investment income pursuant to a loan or other agreement. The
bonds must be issued, sold, and secured on the terms and conditions and in the manner
determined by resolution of the authority. The bonds must be sold at a public sale at not
less than par. Bonds issued by the Charter School Facilities Authority to finance a school
facility and bonds issued to refund bonds issued by the Charter School Facilities Authority
to finance a school facility must mature within 30 years from the date of issue of the first
bonds issued to finance the school facility.
new text end

new text begin (c) Bonds issued under this section are not general obligations of the state or the
authority. The full faith and credit and taxing powers of the state and the authority are not
and may not be pledged for the payment of the bonds. No person may compel the levy of
a tax for the payment or compel the appropriation of money of the state or the authority
for the payment of the bonds, except as specifically provided in section 124D.1109.
new text end

new text begin Subd. 2. new text end

new text begin Income tax exemption. new text end

new text begin In the issuance of bonds by the authority, the
authority must comply with all federal laws and regulations governing the exemption of
interest on bonds from federal income taxation. If, for any reason, whether existing at
the date of issue of any bonds or thereafter, the interest on any bonds becomes subject to
federal income taxes, the validity of the bonds or the provisions made for the security of
those bonds is not affected.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 21.

new text begin [124D.1109] STATE PAYMENT OF ENDORSED CHARTER SCHOOL
DEBT OBLIGATION UPON POTENTIAL DEFAULT; REPAYMENT; STATE
OBLIGATION NOT DEBT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the term "debt
obligation" means bonds issued by the Charter School Facilities Authority under section
124D.1108.
new text end

new text begin Subd. 2. new text end

new text begin Notifications; payment; appropriation. new text end

new text begin (a) If an endorsed charter school
believes that it may be unable to pay the amount sufficient to permit the Charter School
Facilities Authority to make a principal or interest payment on an outstanding debt
obligation on the date that payment is due, it must notify the commissioner of education
as soon as possible, but not less than 15 business days before the date that principal or
interest payment is due. The notice must include the name of the endorsed charter school,
an identification of the debt obligation issue in question, the date the payment is due, the
amount of principal and interest due on the payment date, the amount of principal or
interest that the endorsed charter school will be unable to repay on that date, the trustee or
paying agent for the debt obligation, the wire transfer instructions to transfer funds to that
trustee or paying agent, and an indication as to whether a payment is being requested by the
endorsed charter school under this section. If a trustee or paying agent becomes aware of a
potential default, it shall inform the commissioner of education of that fact. After receipt
of a notice that requests a payment under this section, after consultation with the endorsed
charter school and the trustee or paying agent, and after verification of the accuracy of the
information provided, the commissioner of education shall notify the commissioner of
management and budget of the potential default. The notice must include a statement of
the amount due that the endorsed charter school will be unable to repay on the date due.
new text end

new text begin (b) Except as provided in subdivision 6, upon receipt of this notice from the
commissioner of education, the commissioner of management and budget shall issue a
warrant and authorize the commissioner of education to pay to the trustee or paying agent
for the debt obligation the specified amount on or before the date due. The amounts
needed for the purposes of this subdivision are annually appropriated to the Department
of Education from the charter school credit enhancement account in the special revenue
fund in the state treasury.
new text end

new text begin (c) The commissioners of education and management and budget must jointly
develop detailed procedures for endorsed charter schools to notify the state that they
have obligated themselves to be bound by the provisions of this section, procedures for
endorsed charter schools and trustees and paying agents to notify the state of potential
defaults and to request state payment under this section, and procedures for the state to
expedite payments to prevent defaults. The procedures are not subject to chapter 14.
new text end

new text begin Subd. 3. new text end

new text begin Endorsed charter school bound; interest rate on state-paid amount. new text end

new text begin If,
at the request of an endorsed charter school, the state has paid part or all of the principal or
interest due on an endorsed charter school's debt obligation on a specific date, the endorsed
charter school is bound by all provisions of this section and the amount paid shall bear
taxable interest from the date paid until the date of repayment at the invested cash rate as it
is certified by the commissioner of management and budget. Interest shall only accrue
on the amounts paid and outstanding, less the reduction in aid under subdivision 4, and
other payments received from the endorsed charter school.
new text end

new text begin Subd. 4. new text end

new text begin Aid reduction for repayment. new text end

new text begin (a) Except as provided in this subdivision,
the state must reduce the state aid payable to the endorsed charter school under section
124D.11 by the amount paid by the state under this section on behalf of the endorsed
charter school, plus the interest due on it, and the amount reduced must revert from the
appropriate account to the charter school facilities credit enhancement account. No federal
aid payments shall be reduced.
new text end

new text begin (b) If, after review of the financial situation of the endorsed charter school, the
commissioner of education advises the commissioner of management and budget that a
total reduction of aids would cause an undue hardship on or an undue disruption of the
educational program of the endorsed charter school, the commissioner of education, with
the approval of the commissioner of management and budget, may establish a different
schedule for reduction of aids to repay the state. The amount of aids to be reduced is
decreased by any amounts repaid to the state by the endorsed charter school from other
revenue sources.
new text end

new text begin Subd. 5. new text end

new text begin Mandatory plan; technical assistance. new text end

new text begin If the state makes payments on
behalf of an endorsed charter school under this section or the endorsed charter school
defaults in the payment of principal or interest on an outstanding debt obligation, it must
submit a plan to the commissioner of education for approval specifying the measures it
intends to implement to resolve the issues that led to its inability to make the payment and
to prevent further defaults. The commissioners must provide technical assistance to the
endorsed charter school in preparing its plan. If the commissioner of education determines
that an endorsed charter school's plan is not adequate, the commissioner shall notify the
endorsed charter school that the plan has been disapproved, the reasons for the disapproval,
and that the state shall not make future payments under this section for debt obligations
issued after the date specified in that notice until its plan is approved. The commissioner of
education may also notify the endorsed charter school that until its plan is approved, other
aids due to the endorsed charter school will be withheld after a date specified in the notice.
new text end

new text begin Subd. 6. new text end

new text begin State bond rating. new text end

new text begin If the commissioner of management and budget
determines that issuing warrants under subdivision 2 would adversely affect the credit
rating of the state, the commissioner shall not issue warrants for the payment of principal
or interest on debt obligations under this section.
new text end

new text begin Subd. 7. new text end

new text begin Continuing disclosure agreements. new text end

new text begin The commissioner of management
and budget may enter into written agreements or contracts relating to the continuing
disclosure of information with respect to bonds issued to finance the school facilities of
endorsed charter schools according to federal securities laws, rules, and regulations,
including Securities and Exchange Commission rules and regulations, section
240.15c2-12. The agreements or contracts may be in any form the commissioner of
management and budget deems reasonable and in the state's best interests.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2011
and later.
new text end

Sec. 22.

Minnesota Statutes 2008, section 326B.103, subdivision 11, is amended to
read:

Subd. 11.

Public building.

"Public building" means a building and its grounds the
cost of which is paid for by the state or a state agency regardless of its cost, and a new text begin public
new text end school deleted text begin district deleted text end building project the cost of which is $100,000 or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 23. new text begin TRANSITION ELIGIBILITY.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin A charter school under subdivision 2 is eligible to receive
building lease transition aid under Minnesota Statutes, section 124D.11, subdivision
4d, for the fiscal years indicated.
new text end

new text begin Subd. 2. new text end

new text begin Duration. new text end

new text begin (a) The following charter schools are eligible for building lease
transition aid in fiscal years 2011 and 2012:
new text end

new text begin (1) Charter School No. 4018, Achieve Language Academy;
new text end

new text begin (2) Charter School No. 4029, New Spirit; and
new text end

new text begin (3) Charter School No. 4043, Math and Science Academy.
new text end

new text begin (b) The following charter schools are eligible for building lease transition aid in
fiscal years 2011 through 2014:
new text end

new text begin (1) Charter School No. 4008, Pact Charter School;
new text end

new text begin (2) Charter School No. 4027, Higher Ground Academy;
new text end

new text begin (3) Charter School No. 4070, Hope Community Academy; and
new text end

new text begin (4) Charter School No. 4116, Lakes International Language Academy.
new text end

new text begin (c) The following charter schools are eligible for building lease transition aid in
fiscal years 2011 through 2015:
new text end

new text begin (1) Charter School No. 4074, Agricultural and Food Sciences Academy; and
new text end

new text begin (2) Charter School No. 4103, Hmong Academy.
new text end

new text begin (d) The following charter schools are eligible for building lease transition aid in
fiscal years 2011 through 2016:
new text end

new text begin (1) Charter School No. 4001, Bluffview Montessori;
new text end

new text begin (2) Charter School No. 4015, Community Peace Academy; and
new text end

new text begin (3) Charter School No. 4118, Kaleidoscope.
new text end

new text begin (e) The following charter schools are eligible for building lease transition aid in
fiscal years 2011 through 2017:
new text end

new text begin (1) Charter School No. 4120, Saint Croix Preparatory Academy; and
new text end

new text begin (2) Charter School No. 4126, Prairie Seeds Academy.
new text end

new text begin Subd. 3. new text end

new text begin Application requirements. new text end

new text begin Charter schools receiving building lease
transition aid must submit an application to the charter school facilities authority by the
application deadline prior to the end of a charter school's eligibility under subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Approval. new text end

new text begin The charter school facilities authority must approve the
applications of charter schools submitted under subdivision 3. The authority may only
approve complete applications.
new text end

new text begin Subd. 5. new text end

new text begin Program management. new text end

new text begin Notwithstanding Minnesota Statutes, section
124D.11, subdivisions 4a and 4d, the commissioner may adjust payments for a charter
school's eligibility for building lease transition aid and facilities aid in the fiscal year in
which the charter school is changing eligibility between programs to ensure efficient
management.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 24. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2009 Supplement, section 124D.10, subdivision 17a, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end