Provides organizational support to sustain the independence of charter schools. Sets forth the powers and responsibilities of charter schools clearly. Provides charter schools with the necessary resources.

A BILL FOR AN ACT

SECTION 1. Six years ago, the Legislature enacted Act 62, Session Laws of Hawaii 1999, to test a new approach for improving the quality and effectiveness of the State's public schools. The act authorized the creation of a new kind of public school for this purpose, public charter schools, and cloaked each charter school with express authority to act independently of the department of education, to devise and implement curriculum and programs tailored to the individual needs of its students.

Notwithstanding the commitment to achieving the independence and innovations in educational programming the act contemplated, basic operational demands have prevented charter schools from making meaningful progress toward these goals. Funding has been inadequate and not disbursed on a timely basis, in large part because the original funding formula was not well conceived. Charter schools have also been given only limited, if any, access to facilities, equipment, centralized services, and other state resources other public schools and state agencies enjoy.

Most critically, the charter schools have been frustrated in their efforts by the inconsistent and uncoordinated provisions of law that govern them, making necessary a comprehensive revision of the State's education laws, including the 1999 laws that authorized the establishment of charter schools.

This Act has four purposes: (1) to reiterate the objectives of the State's public charter schools; (2) to set out the powers and responsibilities of charter schools clearly; (3) to allow for the establishment of additional new charter schools; and (4) to provide charter schools with the resources they need to educate their students. This Act shall be known as "The Charter School Opportunities Act of 2006."

PART I

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to read as follows:

§302B-1 Purpose. The purposes of this chapter are to authorize the establishment of public charter schools, and to establish the public charter school authority as a separate subsystem of the State's single statewide system of public schools for the governance and to provide administrative organization and support for all public charter schools.

The legislature's underlying objectives in authorizing the establishment of public charter schools is to:

In enacting this chapter, it is the intention of the legislature to provide public charter schools with sufficient resources and support, and clear directions for their governance and administration to sustain their efforts to develop an alternative learning environment, school setting, curriculum, and educational services specifically suited to the needs of their students, and provide parents and students with an additional academic choice.

§302B-2 Definitions. Whenever used in this chapter, unless the context otherwise requires:

"Charter school" refers to those public schools holding charters to operate as charter schools under this chapter, or holding charters to operate as new century charter schools issued under section 302A-1182(g), or new century conversion charter schools issued under section 302A-1191(g), before these respective subsections were repealed by Act ___, Session Laws of Hawaii 2006.

"Chartering board" or "board" means the public school chartering board established by section 302B-4.

"Complex" means each of the geographic areas of the department of education supervised by a complex area superintendent.

"Department" means the department of education.

"Director" means the executive director of the charter school administrative office.

"Office" means the charter school administrative office.

§302B-3 Charter schools authorized. (a) To encourage the development and use of innovative educational settings and programs to improve student achievement in the public schools, the public school chartering board may issue up to a charters authorizing the establishment and operation of charter schools.

(b) Charter schools are state instrumentalities, part of the State's single statewide system of public schools, and an alternative means of providing students with the public education the State is required to provide under article X of the State Constitution.

(c) As public schools, charter schools shall be free from sectarian control, and shall not discriminate on the basis of race, religion, sex, or ancestry.

(d) As public schools, charter schools shall not charge tuition, but may require the payment of fees on the same basis and to the same extent as other public schools.

(e) Except to be subject to the statewide educational policies of the board of education applicable to charter schools, and the administrative control of the public school chartering board for purposes of ensuring their compliance with the requirements of this chapter, the provisions of their charters, and the budget and federal financial assistance consolidation processes of section 302B-7, every charter school shall be deemed an independent and autonomous public school and shall be responsible for its own operation including, but not limited to the preparation of an annual operating budget and a fiscal plan, personnel management, comprehensive recordkeeping, and timely and accurate reporting.

(f) Charter schools shall not be required to pay assessments levied by any county, nor shall they be required to pay state taxes of any kind. An applicant's or charter school operator's organization as a nonprofit corporation pursuant to chapter 414D shall not affect the charter school's status as a public school or as a state instrumentality for any purpose under state law.

(g) Except as limited by this chapter, charter schools may:

(h) Charter schools shall satisfy all achievement standards established by and made applicable to them by the public school chartering board, board of education, or state statutes, and any standards the federal government may impose as a condition for federal funding or otherwise.

(i) Charter schools may serve one or more of the grades kindergarten through twelve, and shall limit admission to students within the grade levels served.

(j) Any charter school that enrolls special education students or identifies one of its students as eligible for special education shall be responsible for providing the educational and related services required by a student's individualized education plan; provided that if the charter school is unable to provide all of the required services itself or by one or more contracts with an appropriate service provider or providers, then services to the student shall be provided by the authority in the least restrictive environment to the student and according to services determined by the student's individualized educational plan.

§302B-4 Governance of public charter schools; charter school authority established. (a) The public charter school authority is established as a subsystem of the State's single statewide system of public schools. The authority shall be responsible for providing administrative support and direction for the efficient operation and management of public charter schools. The authority shall be placed within the department of education for administrative purposes only. The authority shall constitute a local educational agency for purposes of all federal laws, federal educational programs, and federal funding programs, and shall serve as the central support system for the overall administration of education policy, compliance with federal and state laws, and the preparation of a budget for all public charter schools.

(b) The authority shall be headed by the public school chartering board. The board shall consist of nine members, including one member of the board of education designated by the chairperson of the board of education to serve for at least one year, the comptroller or the comptroller's designee, the director, the dean of the university of Hawaii's college of education or the dean's designee, and five members appointed by the governor pursuant to section 26-34. Of the members appointed by the governor, one member shall be a parent of a student enrolled at a public charter school, one member shall have business or fiscal work experience, one member shall be a licensed teacher, one member shall be a current or retired administrator of a private school, and one member shall have been nominated by an organization of charter schools operating within the State.

(c) Board members shall receive no compensation. Members shall be reimbursed for necessary travel expenses incurred in the conduct of official board business.

(d) The chairperson shall be elected by a majority of the members of the board, and the office's staff shall provide administrative support for the board.

(e) The authority is authorized and shall be responsible for:

(f) The authority, through its board, may delegate all of its powers and responsibilities to the director except the power to designate entities to act as a chartering authority under subsection (e)(15).

(g) The authority may adopt rules pursuant to chapter 91 necessary for the purposes of this chapter.

§302B-5 Charter school administrative office; executive director. A charter school administrative office is established within the authority to provide day-to-day support for all of the authority's functions and responsibilities. The office shall be administered by an executive director who shall be appointed by and serve at the pleasure of the public school chartering board, without regard to chapters 76, 89 and 377. The executive director may hire necessary staff without regard to chapters 76 and 89 to assist in the administration of the office. The salary of the executive director and staff shall be set by the public school chartering board. The director shall perform all tasks assigned by this chapter or delegated by the chartering board pursuant to section 302B-4(f).

§302B-6 Admission and enrollment of students. Any child who is qualified for admission to a department school is qualified for admission to a charter school. Charter schools shall enroll each eligible student who submits a timely application, unless the number of applications exceeds the capacity of a school's grade level or facility capacity. Charter schools shall have written admissions policies that include provisions for determining admission when applications exceed capacity. If more students apply than can be accommodated, students may be accepted from among applicants by a random selection process, or by enrollment preferences for returning students, students residing in the school district in which the charter school is located, and siblings of students already enrolled in the charter school.

A charter school may refuse admission to any student who has been expelled or suspended from a department school until the period of suspension or expulsion from that school has expired, consistent with the requirements of due process.

Students may withdraw from a charter school at any time.

§302B-7 Funding and fiscal support. (a) The authority shall prepare an annual budget for the public charter school authority, including the office, the chartering board, and all public charter schools, for submission to the board of education for inclusion, without modification or reduction by the board of education, in the budget the department submits to the director of finance and governor. The budget request shall include separate requests to cover expenses for instructional activities, including special education and support services, employment taxes and fringe benefits, and for facilities, utilizing appropriations in the general appropriations act for the most recently completed, next immediate fiscal year, and derived as follows:

provided that the authority may include any other amounts, including amounts for collectively bargained increases, and capital improvements, as it deems necessary.

(b) Each charter school shall prepare an annual budget for the next fiscal year and submit it to the director by October 1 of each year. The submission shall include separate amounts to cover expenses for instructional activities, including special education and support services, employment taxes and fringe benefits, and for facilities.

(c) The funds appropriated by the legislature shall be subject to any reduction or restrictions the governor may impose under chapter 37, and allotted to the authority by the director of finance. After retaining any amounts appropriated specifically for a specified purpose by the legislature for expenditure by the authority, and two per cent of all other funds appropriated for the authority, including the office and the charter schools, the remaining portion of the funds allotted shall be disbursed by the director to the charter schools as follows:

Any sum appropriated but not disbursed in accordance with this process may be further disbursed to the charter schools on a pro rata basis or any other basis the director, consistent with directions from the chartering board, determines is appropriate. All sums disbursed to charter schools shall be deemed expended for purposes of chapter 37 and this chapter.

(d) Appropriations may be used to pay personnel, and for facilities, materials, supplies, equipment, insurance, fringe benefits, and other goods and services each charter school purchases directly, or to contract for services provided by other state agencies or private vendors, including nonprofit and for-profit providers, provided that sums appropriated for specific purposes, including special education and support services, and facilities, shall be expended for those specified purposes only.

(e) Charter schools shall have complete discretion to expend any funds they generate themselves, or receive from sources other than appropriations by the legislature and federal grants, subsidies, or other forms of federal financial assistance, provided that annual fiscal reports identifying the amounts generated or received, and the purposes for which they were spent are provided to the director, authority, governor, and legislature twenty days prior to the convening of each regular legislative session.

(f) The director shall satisfy all of the requirements of chapter 37 that the director of finance deems necessary, provided that the director of finance shall accord the director the same deference accorded the department for budget and fiscal planning under that chapter.

(g) All funds appropriated and allotted to, or otherwise received by a charter school shall be deposited in a depository within the State in accounts insured by the Federal Deposit Insurance Corporation.

(h) All appropriations not expended or allotted by the authority in the fiscal year for which they are made shall not lapse until June 30 of the first fiscal year of the next fiscal biennium and may be disbursed or expended in the same manner specified in subsection (c) for sums remaining after appropriations are disbursed under that subsection. The director shall submit a report to the director of finance and the legislature, ninety days after the close of each fiscal year, which shall be prepared in the form prescribed by the director of finance and shall identify the total amount of funds that will carry over to the next fiscal year.

§302B-8 Reporting, assessments and review. (a) Each charter school shall submit an annual report to the director no later than the first day of August of each year for the preceding school year. The annual report shall include

§302B-9 Laws applicable to charter schools. (a) Charter schools shall be exempt from all state statutes, including the provisions of chapter 92, and implementing rules applicable to a public school, including the provisions of chapter 302A, unless they are restated in this chapter, or made applicable to charter schools by express reference.

(b) The following laws are applicable to charter schools:

(d) Charter schools shall be exempt from chapter 103D, the state procurement code, but the director shall develop internal policies and procedures for the procurement of goods, services, and construction consistent with goals of public accountability and public procurement practices.

§302B-10 Actions by or against charter schools. (a) Charter schools may sue or be sued in their own names, provided that charter schools shall not bring suit against the State or any agency or instrumentality of the State. Notwithstanding any other law to the contrary, all claims arising out of the acts or omissions of a charter school or its officers, or its employees, including claims permitted against the State under chapter 661, and claims for torts permitted against the State under chapter 662, may be brought only pursuant to this section, only against the charter school, and only in the manner provided for suits against the State. Further, only claims permitted against the State may be brought against a charter school, and all defenses available to the State as well as all limitations on actions brought by or against the State, shall be applicable to any suit that is brought, and the rights and remedies conferred by this section shall be exclusive and shall not be construed to authorize any other claim, suit, or action against the State. A judgment entered against a charter school, or a compromise or settlement of any claim made by or on behalf of a charter school shall not constitute a general obligation of the State, or be secured directly or indirectly by the full faith and credit of the State or the general credit of the State, or by any revenue or taxes of the State. Further, a judgment or compromise or settlement of any claim shall constitute a complete bar to any action brought by reason of the same subject matter against the State or any officer or employee of the charter school, or the State.

(b) Money judgments awarded against a charter school, and monetary claims compromised or settled by or on behalf of a charter school may be payable by the State but only after the judgment or claim is submitted to the legislature by the director, and funds are appropriated by the legislature for that purpose.

(c) No civil liability shall attach to the members of the chartering board, the members of the board of education, or executive director or employees, individually or collectively, of the public charter schools authority or charter school administrative office, for any act or omission of a charter school.

(d) The director may appoint or retain by contract one or more attorneys who are independent of the attorney general, to provide legal services for charter schools. The director may fix the compensation of the attorneys appointed pursuant to this section. Attorneys appointed or retained by contract shall be exempt from chapters 76 and 89. Nothing in this subsection precludes the director from requesting and securing legal services from the attorney general upon mutual agreement, provided that the services are provided by attorneys who are not assigned to furnish legal services to the department.

§302B-11 Transfers of educational, personnel and other records between the authority and the department. The department and the authority shall ensure that the educational and other records of a student, or the personnel and other records of an employee, who transfers to a public charter school from a public school established and maintained by the department, or from a public charter school to a public school established and maintained by the department, are transferred to or from the school the student or employee transfers from or to. Until such transfers are completely effected, officials from the department may inspect the records held by the authority or a charter school, and officials from the authority or a charter school may inspect the records held by the department, as though the authority or charter school officials were officials of the department or the department officials were officials of the authority or charter school.

§302B-12 Responsibilities of department of education. (a) By March 1 of each year, the department shall submit a list to the director of vacant and unused public school facilities and portions of excess equipment, and facilities that may be used for the operation of a charter school. Costs to rent, improve, modify, operate and maintain a vacant or unused facility shall be subject to negotiation between the charter school and the school's principal, if the facility is part of a public school, or the charter school and the district business and fiscal officer responsible for the facility.

(b) By July 1 of each year, the superintendent of education and the director shall develop a list of centralized services, including but not limited to payroll preparation, cafeteria services, information and communications support services, unemployment, workers compensation and temporary disability claims management services, school level maintenance and repair services, school custodian services, student transportation services, equipment leasing and rentals, procurement services, including access to procurement price lists for equipment, supplies and services, for which charter schools may contract with the departments of education, human resources development, and accounting and general service to provide at cost. Charter schools may also contract with private providers for these services.

(c) Students enrolled in charter schools shall have the same opportunity to participate in athletics provided to students at other public schools. If a charter school student wishes to participate in a sport for which there is no program at a charter school, the department shall allow that student to participate in a comparable program of any other public school in the complex in which the charter school is located.

(d) The department shall provide the authority and charter schools with information about the availability of federal funds and federal programs in which charter schools may participate, and collaborate with the director to develop and implement a system of technical assistance related to compliance, to assist charter schools in complying with all federal and state laws, and accessing federal and state funds.

(e) To the extent permitted by federal law, the department shall include all requests for federal financial assistance prepared by the executive director of the charter school administrative office, in the department's applications for federal assistance, without revision or reductions, provided that the director's requests may be commensurately reduced by the proportion of total charter school students to total department school students for which the request is made, to accommodate any federally prescribed cap.

(f) The department shall provide appropriate transitional resources for the first year of operation of a new charter school that was a department school in the previous year and converted to a charter school, based upon the department's allocation to the school for the year prior to its conversion to a charter school.

§302B-13 Cooperation of other state agencies. (a) By March 1 of each year, the comptroller and the official designated by the president of the university of Hawai`i shall each submit a list to the director of excess equipment, and vacant and unused state facilities and portions of facilities that may be used for the operation of a charter school. Costs to rent, improve, modify, operate and maintain a vacant or unused facility shall be subject to negotiation between the charter school and the comptroller or the president's designee.

(b) The department of the attorney general shall promptly respond to the public school chartering board's requests for federal and state criminal records history checks.

(c) State agencies shall make all services, particularly centralized services, including audit services, building repair and alterations, risk management, workers compensation and temporary disability claims management, office leasing, equipment leasing and rentals, surplus property management, procurement price lists, available to charter schools in the same manner they make them available to other state agencies, whether at no cost, for a fee, or the transfer of appropriations.

§302B-14 Applications for initial charters. (a) An application to establish a charter school may be submitted by teachers, parents, school administrators, community residents or any combination thereof, in conjunction with an educational institution including an existing public or private school, a college or a university, or a nonprofit organization under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or a for-profit entity authorized to do business in this state. Applications to establish a charter school affiliated with a for-profit entity shall specify the extent of the entity's participation in the management and operation of the charter school.

(b) The information provided in the application shall be consistent with the provisions of this chapter and other applicable laws, and, as appropriate should address the following:

(c) The person who signs the application for the applicant shall submit a full set of fingerprints to the office for the purpose of obtaining a state and federal criminal history records check. The department of the attorney general is authorized to provide this information to the federal bureau of investigation and to perform a state and federal criminal history records check on each applicant and report the results to the chartering board.

(d) All applications shall be submitted to the office. At the direction of the chartering board, the director may forward applications for review and processing under this section, to a chartering authority designated by the board, in which case every reference to the board in section 302B-16 shall be a reference to the designated chartering authority.

§302B-15 Charter renewals. Charters may be renewed for a term of up to five additional years. Applications for renewal shall be submitted to the office no later than six months prior to the expiration of a charter, provided that the chartering board may waive such deadline for good cause shown. A renewal application shall include:

§302B-16 Issuance of charters. (a) The chartering board or an entity the board designates and authorizes to act as a chartering authority under section 302B-4, shall have sixty working days to review an application for an initial charter or to renew a charter, after which it shall either issue a charter, issue a one year provisional charter, or reject the application for a charter or to renew a charter. The board shall be assisted in its review by the staff of the office.

(b) Not later than thirty calendar days after receiving an application for an initial charter or an application to renew a charter, the chartering board shall hold a public hearing on the application for the purpose of receiving information from the community, including parents and students, as well as administrators, teachers, and staff if the applicant is a department school, in order to assess the level of support for the application.

(c) The chartering board shall not issue or renew a charter unless it finds that:

(d) The chartering board is not required to approve an application, and may require an applicant to modify or supplement an application as a condition of approval of the application. If the chartering board rejects an application, the chartering board shall prepare a written decision describing all of its reasons for not issuing a charter or a provisional charter. The written decision and a certificate of service indicating the day the decision was mailed to the applicant, shall be mailed to the applicant's authorized representative. Copies of the written decision shall also be filed in the office, and the office of the board of education.

(e) If the chartering board determines that the applicant may reasonably be expected to expeditiously resolve concerns impeding the issuance of a charter, the board may issue a provisional charter which shall be effective for one year. The provisional charter may be extended beyond that one year period, or converted to a non-provisional charter as soon as all outstanding issues have been resolved.

(f) If a majority of the chartering board agrees that a charter or a provisional charter should be issued or renewed, the office shall prepare, and the applicant's authorized representative and the director as chairperson of the board shall execute, a written agreement which shall constitute the school's charter. The agreement or charter shall set out all of the terms and conditions for the school's operation, including all of the commitments regarding all of the items included or addressed in the school's application, and all other terms and conditions required by applicable laws or agreed to by the applicant and the chartering board. In addition, the charter shall include the specific commitments of the chartering board relating to its obligations to oversee the charter school. One copy of the charter shall be on file in the office.

§302B-17 Revocation of a charter; probationary status. (a) By a two-thirds majority vote of its members, the chartering board may revoke a charter school's charter and terminate its operations upon any of the following grounds:

(b) The chartering board shall provide the charter school's local school board with a written notice of intent to revoke the school's charter. This preliminary notice shall include a statement of reasons for the proposed revocation, including problems which the charter school may address to avoid the revocation, and specify a period of at least ninety days during which the charter school will be allowed to address and correct the problems cited in the preliminary notice.

(c) At the end of the period specified in the preliminary notice, the chartering board may place the school on probationary status to allow the implementation of a remedial action plan, or issue a notice of revocation. Every remedial action plan shall specify a tentative revocation date. The authority shall provide technical and advisory support to assist a charter school in complying with a remedial action plan. A notice of revocation shall be issued on the date specified in the remedial action plan, if a charter school fails to satisfy all of the terms and conditions of the remedial action plan after the school has been placed on probationary status.

(d) A notice of revocation shall specify the effective date of revocation, and inform the school of its right to appeal the chartering board's decision to revoke the school's charter under section 302B-19. If the chartering board's decision to revoke the school's charter is not appealed, the school shall proceed with its dissolution pursuant to the procedures set out in its charter.

§302B-18 Complaints against charter schools; remedial orders. Any individual or group with a complaint about a charter school's operation or management, or a school's alleged violation of the provisions of this chapter, its charter, or any other provision of law, shall first present the complaint to the school's local school board. If, after presentation of the complaint to the local school board, the individual or group determines that the board has not adequately addressed their complaint, they may present the complaint to the director of the charter schools administrative office, who shall investigate and respond. If, after presentation of the complaint to the director, the individual or group determines that the director has not adequately addressed their complaint, they may present the complaint to the chartering board, which shall investigate and respond. The chartering board shall have the power and the duty to issue appropriate remedial orders to charter schools to effectuate the provisions of this section.

§302B-19 Appeals from decisions of the chartering board. (a) An applicant or a charter school adversely affected by a decision of the public school chartering board may request that the board of education review the decision of the chartering board by filing a notice of appeal from the decision in the office of the board of education within thirty days of the day the chartering board mailed its decision to the applicant or charter school. The notice of appeal shall identify the decision the applicant or charter school challenges, and include a brief statement of the reasons the applicant or charter school contends the chartering board's decision is erroneous.

(b) The board of education shall afford the applicant or the charter school a hearing in accordance with chapter 91. The chartering board shall be a party to the hearing, and shall be given notice of the hearing and allowed to defend its decision through the director.

(c) When the appeal is from the unilateral imposition of a condition, or the denial of an application for an initial charter or to renew a charter, the board of education shall affirm the decision of the chartering board if it finds and concludes that the condition or conditions the chartering board imposed are necessary to ensure the best interests of students and the community, or the applicant has not satisfied all of the requirements for the issuance or renewal of a charter.

(d) When the appeal is from a decision to revoke and terminate a charter, the board of education shall affirm the chartering board's decision if, after the charter school has had an opportunity to be heard, the board finds and concludes that one or more grounds for termination specified in section 302B-17 exists."

PART III

SECTION 3. The purpose of this part is to propose amendments to the Hawaii Revised Statutes relating to education and the department of education to further the ability of the State's public charter schools to act independently of the department of education and the public schools that the department establishes and maintains.

SECTION 4. Section 13-1, of the Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The board of education shall consist of [thirteen members who] fifteen members. The thirteen elected members shall be elected by the registered voters of two at-large school board districts as follows:

First school board district: the island of Oahu, comprised of the 11^th through the 48^th and a portion of the 49^th (that portion found on the island of Oahu) representative districts, and the

Second school board district: the islands of Hawaii, Maui, Lanai, Molokai, Kahoolawe, Kauai, and Niihau, comprised of the 1st through the 10^th, a portion of the 49^th (that portion found on the island of Kauai), and the 50^th and 51^st representative districts."

SECTION 5. Section 13-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [Members] Elected members of the board of education shall be nominated at a primary election and elected at the general election. Except as otherwise provided by this chapter, the candidates for the board of education shall be elected in the manner prescribed by this title.

SECTION 6. Section 13-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The term of office of elected members of the board shall be for four years beginning on the day of the special election held in conjunction with the general election of the year in which they are elected and ending on the day of the special election held in conjunction with the second general election after their election, except as provided in subsection (c). Members of the board may be re-elected without restriction as to the number of terms. The voting member of the board of education appointed by the governor shall be appointed in the manner provided in section 26-34."

SECTION 7. Section 26-12, Hawaii Revised Statutes, is amended to read as follows:

"§26-12 Department of education. [The department of education shall be headed by an executive board to be known as the board of education.

Under policies established by the board, the superintendent shall administer programs of education and public instruction throughout the State, including education at the preschool, primary, and secondary school levels, adult education, school library services, health education and instruction (not including dental health treatment transferred to the department of health), and such other programs as may be established by law. The state librarian, under policies established by the board of education, shall be responsible for the administration of programs relating to public library services and transcribing services for the blind.]

(a) The department of education shall be headed by an executive board to be known as the board of education. As provided by law, the board of education shall formulate educational policies for the State's single statewide public school system. The public charter school authority established in chapter 302B is placed in the department for administrative purposes as defined in section 26-35.

(b) The department shall:

(c) The functions and authority heretofore exercised by the department of education (except dental health treatment transferred to the department of health), library of Hawaii, Hawaii county library, Maui county library, and the transcribing services program of the bureau of sight conservation and work with the blind, as heretofore constituted are transferred to the public library system established by [this chapter.] Act 1, Second Special Session Laws of Hawaii 1959.

(d) The management contract between the board of supervisors of the county of Kauai and the Kauai public library association shall be terminated at the earliest time after November 25, 1959, permissible under the terms of the contract and the provisions of this paragraph shall constitute notice of termination, and the functions and authority heretofore exercised by the Kauai county library as heretofore constituted and the Kauai public library association over the public libraries in the county of Kauai shall thereupon be transferred to the public library system established by [this chapter.] Act 1, Second Special Session Laws of Hawaii 1959.

(e) The management contracts between the trustees of the library of Hawaii and the Friends of the Library of Hawaii, and between the library of Hawaii and the Hilo library and reading room association, shall be terminated at the earliest time after November 25, 1959, permissible under the terms of the contracts, and the provisions of this paragraph shall constitute notice of termination.

(f) Upon the termination of the contracts, the State or the counties shall not enter into any library management contracts with any private association; provided that in providing library services the board of education may enter into contracts approved by the governor for the use of lands, buildings, equipment, and facilities owned by any private association.

(g) Notwithstanding any law to the contrary, the board of education may establish, specify the membership number and quorum requirements for, appoint members to, and disestablish a commission in each county to be known as the library advisory commission, which shall in each case sit in an advisory capacity to the board of education on matters relating to public library services in their respective county."

SECTION 8. Section 28-8.3, Hawaii Revised Statutes, is amended to read as follows:

"§28-8.3 Employment of attorneys. (a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

(b) For purposes of this section the term "department" includes any department, board, commission, agency, bureau, or officer of the State.

(c) Every attorney employed by any department on a full-time basis, except an attorney employed by the public utilities commission, the labor and industrial relations appeals board, the Hawaii labor relations board, the office of Hawaiian affairs, the Hawaii health systems corporation, the department of commerce and consumer affairs in prosecution of consumer complaints, insurance division, the division of consumer advocacy, the University of Hawaii, the Hawaiian home lands trust individual claims review panel, the charter school administrative office, or as grand jury counsel, shall be a deputy attorney general.

(d) All attorneys retained by contract, whether by the attorney general or a department, shall be retained in accordance with chapter 103D[.] unless the retention is otherwise excepted from chapter 103D."

SECTION 9. Section 89-6(g), Hawaii Revised Statutes, is amended to read as follows:

SECTION 10. Section 302A-301, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established in the state treasury a trust fund to be known as the incentive and innovation grant trust fund to provide incentive and innovation grants to qualified schools[.], including public charter schools. Expenditures from the trust fund shall be made by the department and shall be subject to the allotment and expenditure plan required under section 37-34.5. Notwithstanding any other law to the contrary, tax deductible donations may be made to, and received by, this trust fund."

SECTION 11. Section 302A-1101, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be a principal executive department to be known as the department of education, which shall be headed by [an elected] a policy-making board to be known as the board of education. The board shall have power in accordance with law to formulate statewide educational policy, adopt student performance standards and assessment models, monitor school success, and to appoint the superintendent of education as the chief executive officer of [the public school system.] that subsystem of the State's single statewide system of public schools that does not include the State's public charter schools. The public charter school authority established in chapter 302B is placed in the department for administrative purposes as defined in section 26-35."

SECTION 12. Section 302A-1102, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1102[]] Department of education; statewide and regional administrative services. [The department shall serve as the central support system responsible for the overall administration of statewide educational policy, interpretation, and development of standards for compliance with state and federal laws, and coordination and preparation of a systemwide budget for the public schools.] The department shall serve as the as the central support system responsible for the overall administration of statewide educational policy, development of standards for compliance with federal laws, and the submission of a single budget for the public schools, including the public charter schools. The department shall also serve as the central support system responsible for the overall administration of education policy, compliance with federal and state laws, and the preparation of a budget for the department and all public schools other than public charter schools. The department may establish regional administrative units to provide administrative support to the schools for personnel, fiscal, and procurement services. The regional administrative units may also be assigned responsibility for the administration and operation of special education programs and special schools."

SECTION 13. Section 302A-1111, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1111[]] Duties of superintendent. (a) Under policies established by the board, the superintendent shall be designated as the chief executive officer [of the public school system having] of that subsystem of the State's single statewide system of public schools that does not include the State's public charter schools. The superintendent shall have jurisdiction over the internal organization, operation, and management of [the public school system, as provided by law;] all public schools other than public charter schools; and shall administer programs of education and public instruction [throughout the State,] in those public schools, including education at the preschool, primary, and secondary school levels, and such other programs as may be established by law.

(b) Except as otherwise provided, the superintendent shall sign all drafts for the payment of moneys, all commissions and appointments, all deeds, official acts, or other documents of the department[.], except documents prepared or received by the public charter school authority established under chapter 302B. The superintendent may use a printed facsimile signature in approving appointments, contracts, and other documents. The superintendent, at such time as may be prescribed by the board, shall present to the board full annual reports of the principal transactions within the department during the last completed year, which reports together with such recommendations as the board may think proper, shall be presented to the governor and the legislature."

SECTION 14. Section 302A-1128, Hawaii Revised Statutes, is amended to read as follows:

"§302A-1128 Department powers and duties. (a) The department shall have entire charge and control and be responsible for the conduct of all affairs pertaining to public instruction[.] in the public schools the department establishes and maintains. The department may establish and maintain schools for secular instruction at such places and for such terms as in its discretion it may deem advisable and the funds at its disposal may permit. The schools may include high schools, kindergarten schools, schools or classes for pregrade education, boarding schools, Hawaiian language medium education schools, and evening and day schools. The department may also maintain classes for technical and other instruction in any school where there may not be pupils sufficient in number to justify the establishment of separate schools for these purposes.

(b) The department shall regulate the courses of study to be pursued in all grades of the public schools it establishes and maintains, and classify them by methods the department deems proper; provided that:

The department shall develop statewide education policies and guidelines based on this subsection without regard to chapter 91.

For the purposes of this subsection, the terms "progressively competent in the use of computer technology" and "competence in a language in addition to English" shall be defined by policies adopted by the board. The board shall formulate statewide education policies allowing the superintendent to exempt certain students from the requirements of paragraphs (2) and (3) without regard to chapter 91.

(c) Nothing in this section shall interfere with those persons attending a summer school."

SECTION 15. Section 302A-1402, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1402[]] Custodian of federal funds. The director of finance is designated as custodian of all funds received as the state apportionment under any federal appropriations for public education purposes and the director shall disburse the funds, pursuant to the requirements, restrictions, and regulations of the federal acts under which the funds may be provided, on vouchers approved by the board, or by any subordinate thereunto duly authorized by the board[.], or as appropriate, by the public charter school authority established under chapter 302B."

SECTION 16. Section 302A-1403, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1403[]] Authority to secure federal funds. The department, the public charter school authority, director of finance, and governor may take such steps and perform such acts as may be necessary or proper in order to secure any such federal funds for the purposes specified in sections 302A-1401 and 302A-1402."

SECTIION 17. Section 302A-1404, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1404[]] Federal indirect overhead reimbursements. The department and the public charter school authority, as appropriate, may retain and expend federal indirect overhead reimbursements for discretionary grants in excess of the negotiated rate for such reimbursements as determined by the director of finance and the superintendent[.] or the director of finance and the executive director of the public charter school office."

SECTION 18. Chapter 302A, part IV, subpart D, Hawaii Revised Statutes, is repealed.

SECTION 19. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 20. No later than twenty days prior to the convening of the regular session of 2007, the superintendent of education and the public charter school authority, through the executive director of the charter school administrative office established by this Act, shall identify and submit a list of a sufficient number of positions authorized to the department of education in units and locations other than its schools, for the purpose of delivering special education services in the public schools, so that the positions may be transferred to the public charter school authority by the legislature to enable the authority to satisfy all of the responsibilities of a local educational agency for the State's public charter schools as contemplated under this Act.

SECTION 21. This Act shall take effect on July 1, 2006; provided that