SF 3448

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/12/2024 04:47pm

A bill for an act
relating to education; modifying provisions for charter school facilities; amending
Minnesota Statutes 2022, sections 124E.13, by adding a subdivision; 124E.22;
124E.26; Minnesota Statutes 2023 Supplement, section 124E.13, subdivision 3.

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

Section 1.

Minnesota Statutes 2023 Supplement, section 124E.13, subdivision 3, is amended
to read:

Subd. 3.

Affiliated nonprofit building corporation.

(a) An affiliated nonprofit building
corporation may purchase, expand, or renovate an existing facility to serve as a school or
may construct a new school facility. One charter school may organize an affiliated nonprofit
building corporation that serves only that charter school if the charter school:.

(1) has operated for at least six consecutive years;

(2) as of June 30, has a net positive unreserved general fund balance in the preceding
three fiscal years;

(3) has long-range strategic and financial plans that include enrollment projections for
at least five years;

(4) completes a feasibility study of facility options that outlines the benefits and costs
of each option; and

(5) has a plan that describes project parameters and budget.

No charter school may create an affiliated nonprofit corporation after May 31, 2024.

(b) An affiliated nonprofit building corporation under this subdivision must:

(1) be incorporated under chapter 317A;

(2) comply with applicable Internal Revenue Service regulations, including regulations
for "supporting organizations" as defined by the Internal Revenue Service;

(3) post on the school website the name, mailing address, bylaws, minutes of board
meetings, and names of the current board of directors of the affiliated nonprofit building
corporation;

(4) submit to the commissioner a copy of its annual audit by December 31 of each year;
and

(5) comply with government data practices law under chapter 13.

(c) An affiliated nonprofit building corporation must not serve as the leasing agent for
property or facilities it does not own. A charter school that leases a facility from an affiliated
nonprofit building corporation that does not own the leased facility is ineligible to receive
charter school lease facility aid. The state is immune from liability resulting from a contract
between a charter school and an affiliated nonprofit building corporation.

(d) The board of directors of the charter school must ensure the affiliated nonprofit
building corporation complies with all applicable legal requirements. The charter school's
authorizer must oversee the efforts of the board of directors of the charter school to ensure
legal compliance of the affiliated building corporation. A school's board of directors that
fails to ensure the affiliated nonprofit building corporation's compliance violates its
responsibilities and an authorizer must consider that failure when evaluating the charter
school.

(e) Title and ownership of facilities and land owned by an affiliated nonprofit building
corporation shall be transferred to the charter school when the nonprofit building corporation
refinances the facilities and land or when the nonprofit building corporation fulfills the
terms of the mortgage or bonds.

(f) When a charter school closes before the facilities or land has been transferred under
paragraph (e), the nonprofit building corporation must sell the facilities at fair market value
and any proceeds from the sale after mortgage or bond obligations have been paid shall be
returned to the state of Minnesota.

Sec. 2.

Minnesota Statutes 2022, section 124E.13, is amended by adding a subdivision to
read:

Subd. 5.

School-owned facilities.

(a) A charter school may purchase, expand, renovate
or construct a new school facility if the charter school:

(1) has operated for at least seven consecutive years;

(2) has a current letter of school standing from its authorizer;

(3) has a net positive unreserved general fund balance in the preceding three fiscal years,
documented in annual audits;

(4) has long-range strategic plans that include enrollment projections for at least five
years;

(5) documents completion of a feasibility study of facility options that outlines the
benefits and costs of each option;

(6) has a financial plan and budget for the facility reviewed by a certified public
accountant;

(7) documents that the scope and project parameters have been reviewed by an architect
or engineer as appropriate;

(8) documents that the proposed location is zoned appropriately for a school;

(9) documents that purchase and construction agreements have been reviewed by
competent legal counsel; and

(10) submits plans for positive review and comment to meet the requirements of section
123B.71, subdivision 8.

(b) A charter school that owns a school facility must:

(1) use long-term maintenance revenue for the purposes defined in section 123B.595;

(2) maintain the funding reserve required by bond or mortgage holders; and

(3) maintain exclusive use of the facility for school or community activities.

Sec. 3.

Minnesota Statutes 2022, section 124E.22, is amended to read:

124E.22 BUILDING LEASE FACILITY AID.

(a) When A charter school finds it economically advantageous to rent may own or lease
a building or land for any instructional purpose 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 facility aid. The commissioner must
review and either approve or deny a lease facility aid application using the following criteria:

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

(2) the extent to which the lease facility conforms to applicable state laws and rules; and

(3) the appropriateness of the proposed lease facility in the context of the space needs
and financial circumstances of the charter school. The commissioner must approve aid only
for a facility lease that has (i) a sum certain annual cost and (ii) if the school is leasing space,
a closure clause to relieve the charter school of its lease obligations at the time the charter
contract is terminated or not renewed. The closure clause under item (ii) must not be
constructed or construed to relieve the charter school of its lease obligations in effect before
the charter contract is terminated or not renewed.

(b) A charter school must not use the building lease facility aid it receives for custodial,
maintenance service, utility, or other operating costs.

(c) The amount of annual building lease facility aid for a charter school shall not exceed
the lesser of (1) 90 percent of the approved cost or (2) the product of the charter school
building lease facilities aid pupil units served for the current school year times $1,314.

(d) A charter school's building lease facility aid pupil units equals the sum of the charter
school pupil units under section 126C.05 and the pupil units for the portion of the day that
the charter school's enrolled students are participating in the Postsecondary Enrollment
Options Act under section 124D.09 and not otherwise included in the pupil count under
section 126C.05.

Sec. 4.

Minnesota Statutes 2022, section 124E.26, is amended to read:

124E.26 USE OF STATE MONEY.

A charter school may not use state money to purchase land or buildings. The If the
amount of a purchase agreement or construction contract exceeds the review and comment
threshold, a charter school must receive a positive review and comment from the
commissioner before initiating any purchase agreement or construction contract. For purposes
of this section, "review and comment threshold" means the dollar amount specified in section
123B.71, subdivision 8, applicable to a school entity that is not a recipient of a maximum
effort capital loan. A charter school may also own land and buildings if obtained through
nonstate sources.