1.1 	A bill for an act
1.2 	relating to education; eliminating teacher majority requirement on board of 
1.3 	directors; extending admission preference to children of teachers, staff, and 
1.4 	board members; extending conflict of interest provisions to nonprofit entities; 
1.5 	authorizing use of state money to purchase land and buildings; amending 
1.6 	Minnesota Statutes 2004, sections 124D.10, subdivisions 4a, 9, 23a; 124D.11, 
1.7 	subdivision 7; Minnesota Statutes 2005 Supplement, section 124D.10, 
1.8 	subdivision 4.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	Section 1. Minnesota Statutes 2005 Supplement, section 124D.10, subdivision 4, 
1.11 	is amended to read:
1.12 		Subd. 4.Formation of school. (a) A sponsor may authorize one or more licensed 
1.13 	teachers under section 122A.18, subdivision 1, to operate a charter school subject to 
1.14 	approval by the commissioner. A board must vote on charter school application for 
1.15 	sponsorship no later than 90 days after receiving the application. After 90 days, the 
1.16 	applicant may apply to the commissioner. If a board elects not to sponsor a charter school, 
1.17 	the applicant may appeal the board's decision to the commissioner who may elect to assist 
1.18 	the applicant in finding an eligible sponsor. The school must be organized and operated as 
1.19 	a cooperative under chapter 308A or nonprofit corporation under chapter 317A and the 
1.20 	provisions under the applicable chapter shall apply to the school except as provided in this 
1.21 	section. Notwithstanding sections 465.717 and 465.719, a school district may create a 
1.22 	corporation for the purpose of creating a charter school.
1.23 	(b) Before the operators may form and operate a school, the sponsor must file an 
1.24 	affidavit with the commissioner stating its intent to authorize a charter school. The 
1.25 	affidavit must state the terms and conditions under which the sponsor would authorize a 
1.26 	charter school and how the sponsor intends to oversee the fiscal and student performance 
2.1 	of the charter school and to comply with the terms of the written contract between the 
2.2 	sponsor and the charter school board of directors under subdivision 6. The commissioner 
2.3 	must approve or disapprove the sponsor's proposed authorization within 90 days of 
2.4 	receipt of the affidavit. Failure to obtain commissioner approval precludes a sponsor from 
2.5 	authorizing the charter school that was the subject of the affidavit.
2.6 	(c) The operators authorized to organize and operate a school, before entering into 
2.7 	a contract or other agreement for professional or other services, goods, or facilities, 
2.8 	must incorporate as a cooperative under chapter 308A or as a nonprofit corporation 
2.9 	under chapter 317A and must establish a board of directors composed of at least five 
2.10 	members until a timely election for members of the charter school board of directors is 
2.11 	held according to the school's articles and bylaws. A charter school board of directors 
2.12 	must be composed of at least five members. Any staff members who are employed at the 
2.13 	school, including teachers providing instruction under a contract with a cooperative, and 
2.14 	all parents of children enrolled in the school may participate in the election for members 
2.15 	of the school's board of directors. Licensed teachers employed at the school, including 
2.16 	teachers providing instruction under a contract with a cooperative, must be a majority 
2.17 	of the members of the board of directors before the school completes its third year of 
2.18 	operation, unless the commissioner waives the requirement for a majority of licensed 
2.19 	teachers on the board. Board of director meetings must comply with chapter 13D.
2.20 	(d) The granting or renewal of a charter by a sponsoring entity must not be 
2.21 	conditioned upon the bargaining unit status of the employees of the school.
2.22 	(e) A sponsor may authorize the operators of a charter school to expand the operation 
2.23 	of the charter school to additional sites or to add additional grades at the school beyond 
2.24 	those described in the sponsor's application as approved by the commissioner only 
2.25 	after submitting a supplemental application to the commissioner in a form and manner 
2.26 	prescribed by the commissioner. The supplemental application must provide evidence that:
2.27 	(1) the expansion of the charter school is supported by need and projected enrollment;
2.28 	(2) the charter school is fiscally sound;
2.29 	(3) the sponsor supports the expansion; and
2.30 	(4) the building of the additional site meets all health and safety requirements to 
2.31 	be eligible for lease aid.
2.32 	(f) The commissioner annually must provide timely financial management training 
2.33 	to newly elected members of a charter school board of directors and ongoing training to 
2.34 	other members of a charter school board of directors. Training must address ways to:
2.35 	(1) proactively assess opportunities for a charter school to maximize all available 
2.36 	revenue sources;
3.1 	(2) establish and maintain complete, auditable records for the charter school;
3.2 	(3) establish proper filing techniques;
3.3 	(4) document formal actions of the charter school, including meetings of the charter 
3.4 	school board of directors;
3.5 	(5) properly manage and retain charter school and student records;
3.6 	(6) comply with state and federal payroll record-keeping requirements; and
3.7 	(7) address other similar factors that facilitate establishing and maintaining complete 
3.8 	records on the charter school's operations.

3.9 	Sec. 2. Minnesota Statutes 2004, section 124D.10, subdivision 4a, is amended to read:
3.10 		Subd. 4a.Conflict of interest. (a) A member of a charter school board of directors 
3.11 	is prohibited from serving as a member of the board of directors or as an employee or 
3.12 	agent of or a contractor with a for-profit any entity with whom the charter school contracts, 
3.13 	directly or indirectly, for professional services, goods, or facilities. A violation of this 
3.14 	prohibition renders a contract voidable at the option of the commissioner. A member of a 
3.15 	charter school board of directors who violates this prohibition shall be individually liable 
3.16 	to the charter school for any damage caused by the violation.
3.17 	(b) An individual may serve as a member of the board of directors if no conflict of 
3.18 	interest under paragraph (a) exists.
3.19 	(c) A member of a charter school board of directors that serves as a member of the 
3.20 	board of directors or as an employee or agent of or a contractor with a nonprofit entity 
3.21 	with whom the charter school contracts, directly or indirectly, for professional services, 
3.22 	goods, or facilities, must disclose all potential conflicts to the commissioner.
3.23 	(d) The conflict of interest provisions under this subdivision do not apply to 
3.24 	compensation paid to a teacher employed by the charter school who also serves as a 
3.25 	member of the board of directors.
3.26 	(e) (d) The conflict of interest provisions under this subdivision do not apply to a 
3.27 	teacher who provides services to a charter school through a cooperative formed under 
3.28 	chapter 308A when the teacher also serves on the charter school board of directors.

3.29 	Sec. 3. Minnesota Statutes 2004, section 124D.10, subdivision 9, is amended to read:
3.30 		Subd. 9.Admission requirements. A charter school may limit admission to:
3.31 	(1) pupils within an age group or grade level;
3.32 	(2) people who are eligible to participate in the graduation incentives program 
3.33 	under section  124D.68; or 
4.1 	(3) residents of a specific geographic area where the percentage of the population 
4.2 	of non-Caucasian people of that area is greater than the percentage of the non-Caucasian 
4.3 	population in the congressional district in which the geographic area is located, and as 
4.4 	long as the school reflects the racial and ethnic diversity of the specific area.
4.5 	A charter school shall enroll an eligible pupil who submits a timely application, 
4.6 	unless the number of applications exceeds the capacity of a program, class, grade level, 
4.7 	or building. In this case, pupils must be accepted by lot. If a charter school is the only 
4.8 	school located in a town serving pupils within a particular grade level, then pupils that 
4.9 	are residents of the town must be given preference for enrollment before accepting pupils 
4.10 	by lot. If a pupil lives within two miles of a charter school and the next closest public 
4.11 	school is more than five miles away, the charter school must give those pupils preference 
4.12 	for enrollment before accepting other pupils by lot.
4.13 	A charter school shall give preference for enrollment to a sibling of an enrolled pupil 
4.14 	and to a foster child of that pupil's parents and to children of teachers, staff, and school 
4.15 	board members of that school before accepting other pupils by lot.
4.16 	A charter school may not limit admission to pupils on the basis of intellectual ability, 
4.17 	measures of achievement or aptitude, or athletic ability.

4.18 	Sec. 4. Minnesota Statutes 2004, section 124D.10, subdivision 23a, is amended to read:
4.19 		Subd. 23a.Related party lease costs. (a) A charter school is prohibited from 
4.20 	entering a lease of real property with a related party as defined in this subdivision, unless 
4.21 	the lessor is a nonprofit corporation under chapter 317A or a cooperative under chapter 
4.22 	308A, and the lease cost is reasonable under section  124D.11, subdivision 4, clause (1). 
4.23 	(b) For purposes of this subdivision:
4.24 	(1) A "related party" is an affiliate or close relative of the other party in question, an 
4.25 	affiliate of a close relative, or a close relative of an affiliate.
4.26 	(2) "Affiliate" means a person that directly, or indirectly through one or more 
4.27 	intermediaries, controls, or is controlled by, or is under common control with, another 
4.28 	person.
4.29 	(3) "Close relative" means an individual whose relationship by blood, marriage, or 
4.30 	adoption to another individual is no more remote than first cousin.
4.31 	(4) "Person" means an individual or entity of any kind.
4.32 	(5) "Control" includes the terms "controlling," "controlled by," and "under common 
4.33 	control with" and means the possession, direct or indirect, of the power to direct or cause 
4.34 	the direction of the management, operations, or policies of a person, whether through the 
4.35 	ownership of voting securities, by contract, or otherwise.
5.1 	(c) A lease of real property to be used for a charter school, not excluded in paragraph 
5.2 	(b), must contain the following statement: "This lease is subject to Minnesota Statutes, 
5.3 	section  124D.10, subdivision 23a." 
5.4 	(d) If a charter school enters into as lessee a lease with a related party and the 
5.5 	charter school subsequently closes, the commissioner has the right to recover from the 
5.6 	lessor any lease payments in excess of those that are reasonable under section  124D.11, 
5.7 	subdivision 4, clause (1). 

5.8 	Sec. 5. Minnesota Statutes 2004, section 124D.11, subdivision 7, is amended to read:
5.9 		Subd. 7.Use of state money. Money received from the state may not be used to 
5.10 	purchase land or buildings. The school may own land and buildings if obtained through 
5.11 	nonstate sources.