HB557

SECTION 1. The legislature finds that its underlying objectives in authorizing the establishment of public charter schools were to:

(1) Improve student learning;

(2) Encourage the use of different and innovative teaching methods;

(3) Create new professional opportunities for teachers, including the opportunity to be responsible for the learning program at a school site;

(4) Provide parents and students with expanded choices in the types of educational opportunities that are available within the State's statewide system of public schools; and

(5) Provide a venue for promoting the study of Hawaii's culture, history, and language.

The legislature finds that charter schools provide an alternative and successful means of receiving a public education. Strengthening our charter school laws will bring more federal funding to charter schools, leading to even better educational opportunities.

The purposes of this Act is to increase the number of new public charter schools, to establish permanent facilities funding for public charter schools and transfer authority of the Charter School Administrative Office to the Charter School Review Panel.

In enacting this Act, 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 choices.

SECTION 2. Chapter 302B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302B-A__ Facilities funding and fiscal support. (a) The budget request for facilities, respectively, shall be based upon:

(1) The total enrollment of regular education and special education students at charter schools, verified as of October 15 of the current school year;

(2) The sums appropriated to the department for the most recently completed fiscal year for instructional activities, physical plant operations and maintenance, and facilities, less so much of such sums as are appropriated for employment taxes and fringe benefits, in all cost categories, and for all means of financing except federal funds; and

(3) The total enrollment of regular education and special education students enrolled in the schools established and maintained by the department for that same fiscal year;

(b) The funds appropriated by the legislature shall be allotted to the Charter School Administrative Office by the director of finance unless subject to a reduction or restriction by the governor or the director of finance. After retaining two per cent of funds appropriated for facilities for the office Charter School Administrative Office, and unless the charter schools agree that their allotments should be made under section 302B-13 instead, the remaining portion of the funds allotted shall be disbursed by the board to the charter schools as follows:

(1) Based upon each charter school's projected enrollment for the upcoming school year, one hundred per cent share of the funds allotted shall be disbursed to each charter school no later than July 20, provided the charter school submitted a projected student enrollment to the office no later than May 15 of that year;

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 Charter School Administrative Office, determines is appropriate. All sums disbursed to charter schools shall be deemed expended for purposes of chapter 37 and this chapter.

(c) 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, employment taxes and fringe benefits, and facilities, shall be expended for those specified purposes only.

(d) 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.

(e) The Charter School Administrative Office 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 Charter School Administrative Office the same deference accorded to the department for budget and fiscal planning under that chapter.

(f) 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.

(g) All appropriations for the Charter School Administrative Office not expended or disbursed by the Charter School Administrative Office 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 Charter School Administrative Office 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."

SECTION 3. Section 302B-5, Hawaii Revised Statutes, is amended to read as follows:

"§302B‑5 Start-up charter schools; establishment. (a) New start-up charter schools may be established pursuant to this section.

(b) Any community, group of teachers, group of teachers and administrators, or nonprofit organization may submit a letter of intent to the office to form a charter school, establish an interim local school board as its governing body, and develop a detailed implementation plan pursuant to subsection (d).

(c) The start-up charter school application process [~~and schedule shall be determined by the board, and shall provide for and~~] shall include the following elements:

(1) The submission of a letter of intent to operate a start-up charter school to the office;

(2) The timely transmittal of the application form and completion guidelines to the interim local school board;

(3) The timely submission [~~to the board of a completed application~~] of an applicaton for a charter to the office;

(4) The timely review of the application by the panel staff of the charter school review panel for completeness, and notification of the interim local school board if the application is complete or, if the application is insufficient, a written statement of the elements of the application that require completion;

(5) The timely resubmission of the application;

(6) Upon receipt of a completed application, the convening of the panel by the panel chairperson to begin review of the application;

(7) The timely notification of the applicant of any revisions the panel requests as necessary for a recommendation of approval to the board;

(8) The timely transmission of the panel's recommendation to the board for adjudication;

(9) [Following the submission of an application, issuance of a charter or denial of the application by the board by majority vote; provided that if the board does not approve the application and issue a charter, provisions requiring the board to] (A) If the board denies an application for a charter, the board shall:

(i) Clearly identify in writing its reasons for not issuing the charter, which may be used as guidelines for an amended plan; and

(ii) Allow the local public charter school board to revise its plan in accordance with the board's guidelines, and resubmit an amended plan within ten calendar days[;].

(B) If the board issues a charter, the board shall indicate when the charter school may begin operations, provided that the date indicated shall allow for sufficient time to secure funds from the Legislature to fund the new school’s operations.

(10) A provision for a final date on which a decision must be made, upon receipt of an amended plan;

(11) A provision that no start-up charter school may begin operation before obtaining board approval of its charter; and

(12) A requirement that upon approval of the start-up charter school, the office shall submit to the board a proposed budget for funding of the start-up school for submittal to the governor and legislature.

(d) An application to become a start-up charter school shall include a detailed implementation plan that meets the requirements of this subsection and section 302B-9. The plan shall include the following:

(1) A description of employee rights and management issues and a framework for addressing those issues that protects the rights of employees;

(2) A plan for identifying, recruiting, and retaining highly-qualified instructional faculty;

(3) A plan for identifying, recruiting, and selecting students that [~~is not exclusive, elitist, or segregationist~~] meets federal and State equal opportunity requirements;

(4) The curriculum and instructional framework to be used to achieve student outcomes, including an assessment plan;

(5) A plan for the assessment of student, administrative support, and teaching personnel performance that:

(A) Recognizes the interests of the general public;

(B) Incorporates or exceeds the educational content and performance standards [~~developed by the department for the public school system~~] adopted by the board of education for the State’s school system; and

(C) [Includes a system of faculty and staff accountability that holds faculty and staff both individually and collectively accountable for their performance, and that is at least equivalent to the average system of accountability in public schools throughout the State; and

~~(D)~~] Provides for program audits and annual financial audits;

(6) A governance structure for the charter school that incorporates a conflict of interest policy and a plan for periodic training to carry out the duties of local school board members;

(7) A financial plan based on the most recent fiscal year's per-pupil charter school allocation that demonstrates the ability to meet the financial obligations of one-time, start-up costs and ongoing costs such as monthly payrolls, faculty recruitment, professional development, and facilities costs; and

(8) A facilities plan."

SECTION 4. Section 302B-6, Hawaii Revised Statutes, is amended to read as follows:

"§302B-6 Conversion charter schools; establishment. (a) A conversion charter school may be established pursuant to this section and any additional rules adopted by the board.

(b) Any department school, school community council, group of teachers, group of teachers and administrators, or nonprofit organization may submit a letter of intent to the office to convert a department school to a charter school, establish an interim local school board as its governing body, and develop a detailed implementation plan pursuant to subsection (d).

(c) The conversion charter school application process [~~and schedule shall be determined by the board, and shall provide for and~~] shall include the following elements:

(1) The submission of a letter of intent to convert to a charter school to the office;

(2) The timely transmittal of the application form and completion guidelines by the office to the interim local school board;

(3) The timely initial submission [~~to the board of a completed application; provided that the application shall include~~] of an application for a charter to the charter school review panel, with a certification [~~and documentation~~] from the interim school board that the application and the proposed detailed implementation plan was approved by a majority of the votes cast by existing [~~administrative, support,~~] teaching personnel, and parents of students at the proposed conversion charter school;

(4) The timely review of the application by the [~~panel~~] office for completeness, and notification of the interim local school board if the application is complete or, if the application is insufficient, a written statement of the elements of the application that require completion;

(5) The timely resubmission of the application;

(6) Upon receipt of a completed application, the convening of the panel by the panel chairperson to begin review of the application;

(7) The timely notification of the applicant of any revisions the panel may request as necessary for a recommendation of approval to the board;

(8) The timely transmission of the panel's recommendation to the board for adjudication;

[~~(A)~~] (i) Clearly identify in writing its reasons for not issuing the charter, which may be used as guidelines for an amended plan; and

[~~(B)~~] (ii) Allow the local school board to revise its plan in accordance with the board's guidelines, and resubmit an amended plan within ten calendar days[; ~~and~~].

(B) If the board issues a charter, the board shall indicate when the conversion charter school may begin operations, provided that the date indicated shall allow for sufficient time to secure funds from the Legislature to fund the new school’s operations.

(10) A provision for a final date on which a decision must be made upon receipt of an amended plan;

(11) A provision that no conversion charter school may begin operation before obtaining board approval of its charter; and

(12) A requirement that upon approval of the conversion charter school, the office shall submit to the board a proposed budget for funding of the start-up school for submittal to the governor and legislature.

(d) An application to become a conversion charter school shall include a detailed implementation plan that meets the requirements of this subsection and section 302B-9. The plan shall include the following:

(1) A description of employee rights and management issues and a framework for addressing those issues that protects the rights of employees;

(2) A plan for identifying, recruiting, and retaining highly-qualified instructional faculty;

(3) A plan for identifying, recruiting, and selecting students that [~~is not exclusive, elitist, or segregationist~~] meets federal and State equal opportunity requirements;

(4) The curriculum and instructional framework to be used to achieve student outcomes, including an assessment plan;

(5) A plan for the assessment of student, administrative support, and teaching personnel performance that:

(A) Recognizes the interests of the general public;

~~(D)~~] Provides for program audits and annual financial audits;

(6) A governance structure for the charter school that incorporates a conflict of interest policy and a plan for periodic training to carry out the duties of local school board members;

(8) A facilities plan.

(e) A nonprofit organization may submit a letter of intent to the office to convert a department school to a conversion charter school, operate and manage the school, establish a local school board as its governing body, and develop a detailed implementation plan pursuant to subsection (d); provided that:

(1) As the governing body of the conversion charter school, the local school board shall be composed of the board of directors of the nonprofit organization and not representatives of the participant groups specified in section 302B-7. The nonprofit organization may also appoint advisory groups of community representatives for each school managed by the nonprofit organization; provided that these groups shall not have governing authority over the school and shall serve only in an advisory capacity to the nonprofit organization;

(2) The detailed implementation plan for each conversion charter school to be operated by the nonprofit organization shall be formulated, developed, and submitted by the nonprofit organization, and shall be approved by a majority of the votes cast by existing administrative, support, and teaching personnel, and parents of the students of the proposed conversion charter school;

(3) The board of directors of the nonprofit organization, as the governing body for the conversion charter school that it operates and manages, shall have the same protections that are afforded to the board in its role as the conversion charter school governing body;

(4) Any conversion charter school that is managed and operated by a nonprofit organization shall be eligible for the same federal and state funding as other public schools; provided that the nonprofit organization makes a minimum annual contribution of $1 per pupil toward the operation of a conversion charter school for every $4 per pupil allocated by the office for the operation of the conversion charter school; provided that in no event shall the nonprofit organization be required to contribute more than the total required contribution per pupil per year. As used in this section, "total required contribution" means:

(A) $1,500 for school years 2006‑2007 through 2010‑2011;

(B) $1,650 for school years 2011‑2012 through 2015‑2016; and

(5) If, at any time, the board of directors of the nonprofit organization governing the conversion charter school votes to discontinue its relationship with the charter school, the charter school may submit an application with a revised detailed implementation plan to the panel to continue as a conversion school without the participation of the nonprofit organization.

(f) Any nonprofit organization that seeks to manage or operate a conversion charter school as provided in subsection (e) shall comply with the following at the time of application:

(1) Have bylaws or policies that describe the manner in which business is conducted and policies that relate to the management of potential conflict of interest situations;

(2) Have experience in the management and operation of public or private schools or, to the extent necessary, agree to obtain appropriate services from another entity or entities possessing such experience;

(3) Comply with all applicable federal, state, and county laws, including licensure or accreditation, as applicable; and

(4) Comply with any other requirements prescribed by the department to ensure adherence with applicable federal, state, and county laws, and the purposes of this chapter.

(g) Any public school or schools, programs, or sections of existing public school populations that are part of a separate Hawaiian language immersion program using existing public school facilities may submit a letter of intent to the office to form a conversion charter school pursuant to this section.

(h) In the event of a conflict between the provisions in this section and other provisions in this chapter, this section shall control."

SECTION 5. Section 302B-8, Hawaii Revised Statutes, is amended to read as follows:

"§302B-8 Charter school administrative office. (a) There is established a charter school administrative office, which shall be attached to the department for administrative purposes only. The office shall be administered by an executive director, who shall be appointed without regard to chapters 76 and 89 by the [~~board~~] charter school review panel based upon the recommendations of an organization of charter schools operating within the State or from a list of nominees submitted by a majority of the charter schools in operation three years or longer. The [~~board~~] panel may hire the executive director on a multi-year contract. The executive director may hire necessary staff without regard to chapters 76 and 89 to assist in the administration of the office.

(b) The executive director, under the direction of the [~~board~~] panel and in consultation with the charter schools, shall be responsible for the internal organization, operation, and management of the charter school system, including:

(1) Preparing and executing the budget for the charter schools, including submission of the budget request to the board, the governor, and the legislature;

(2) [~~Allocating annual~~] Disbursing appropriations to the charter schools and [~~distribution of~~] distributing federal funds to charter schools;

(3) [~~Complying with applicable state laws related to the administration of the charter schools;~~

~~(4)~~] Preparing contracts between the charter schools and the department for centralized services to be provided by the department;

[~~(5)~~] (4) Preparing contracts between the charter schools and other state agencies for financial or personnel services to be provided by the agencies to the charter schools;

[~~(6)~~] (5) Providing independent analysis and recommendations on charter school issues;

[~~(7)~~] (6) Representing charter schools and the charter school system in communications with the panel, board, the governor, and the legislature;

[~~(8)~~] (7) Providing advocacy, assistance, and support for the development, growth, progress, and success of charter schools and the charter school system;

[~~(9)~~] (8) Providing guidance and assistance to charter applicants and charter schools to enhance the completeness and accuracy of information for [~~board~~] panel review;

[ ~~(10)~~ ~~Assisting charter applicants and charter schools in coordinating their interactions with the board as needed;~~]

[~~(11)~~] (9) Assisting the board to coordinate with charter schools in board investigations and evaluations of charter schools;

[~~(12)~~] (10) Serving as the conduit to disseminate communications from the board and department to all charter schools;

[~~(13)~~] (11) Determining charter school system needs and communicating such needs with the panel, board and department; and

[~~(14)~~ ~~Establishing a dispute resolution and mediation panel; and~~

~~(15)~~] (12) Upon request by one or more charter schools, assisting in the negotiation of a collective bargaining agreement with the exclusive representative of its employees.

(d) The salary of the executive director and staff shall be set by the board based upon the recommendations of charter schools within the State; provided that the salaries and operational expenses of the office shall be paid from the annual charter school appropriation and shall not exceed two per cent of the total allocation in any fiscal year.

(e) The office shall include in its annual budget request additional funds to cover the estimated costs of:

(1) Vacation and sick leave accrued by employees transferring to a charter school from another state agency or department;

(2) Substitute teachers needed when a teacher is out on vacation or sick leave;

(3) Adjustments to enrollments; and

(4) Arbitration in the grievance process.

(f) The office shall withhold funds for charter school enrollments that are inconsistent with approved detailed implementation plans.

(g) The office shall withhold funds to repay overpayments or over-allocations received by charter schools when not repaid in a timely manner in accordance with rules adopted by the board.

(h) The office may carry over funds from previous year allocations as permitted under section 302B- (j). Funds distributed to charter schools shall be considered expended."

SECTION 6. Section 302B-9, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"§302B-9 Exemptions from state laws. (a) Charter schools shall be exempt from chapters 91 and 92 and all other state laws in conflict with this chapter, except those regarding:

(1) [~~Collective bargaining under chapter 89; provided that:~~

~~(A)~~ The exclusive representatives as defined in chapter 89 and the local school board of the charter school may enter into supplemental agreements that contain cost and noncost items to facilitate decentralized decision-making;

~~(B)~~ The agreements shall be funded from the current allocation or other sources of revenue received by the charter school; provided that collective bargaining increases for employees shall be allocated by the department of budget and finance to the charter school administrative office for distribution to charter schools; and

~~(C)~~ ~~These supplemental agreements may differ from the master contracts negotiated with the department;~~

~~(2)~~] Discriminatory practices under section 378-2; and

[~~(3)~~] (2) Health and safety requirements."

SECTION 7. Section 302B-13, Hawaii Revised Statutes, is repealed.

["§302B-13 Weighted student formula. (a) Notwithstanding section [302B-12] and beginning September 1, 2006, charter schools shall elect whether to receive allocations according to the department's weighted student formula adopted pursuant to section 302A-1303.6; provided that:

~~(1)~~ All charter schools, as a group, with each local school board being accorded one vote, shall elect, by greater than two-thirds agreement among the local school boards, whether to receive allocations through the department's weighted student formula; provided that the nonprofit that governs more than one conversion charter school may cast one vote representing each school it governs;

~~(2)~~ Any election by charter schools to receive department allocations, or not to receive allocations, through the department's weighted student formula shall be made by September 1 of each even-numbered year, and the election shall apply to the fiscal biennium beginning July 1 of the following year; provided that the appropriate funds shall be transferred by the department to the charter school administrative office for distribution to the charter schools; and

~~(3)~~ ~~The election to receive allocations, or not to receive allocations, through the department's weighted student formula shall be communicated to the department through the office.~~

(b) The charter schools, through the office, may propose to the board an alternative weighted student formula, approved of by more than two-thirds of the local school boards, with each local school board being accorded one vote, to be administered by the office and to apply to the per-pupil allocation for charter schools."]

SECTION 8. Section 302B-14, Hawaii Revised Statutes, is amended to read as follows:

"§302B-14 Accountability; probationary status; revocation of charter. (a) Every charter school shall conduct annual self-evaluations that shall be submitted to the board within sixty working days after the completion of the school year. The self-evaluation process shall include but not be limited to:

(1) The identification and adoption of benchmarks to measure and evaluate administrative and instructional programs;

(2) The identification of any innovations or research that may assist other public schools;

(3) The identification of any administrative and legal barriers to meeting the adopted benchmarks, and recommendations for improvements and modifications to address the barriers;

(4) An evaluation of student achievement within the charter school;

(5) A profile of the charter school's enrollment and the community it serves, including a breakdown of regular education and special education students; and

(6) An evaluation of the school's organizational viability.

(b) The board shall conduct multi-year evaluations of charter schools that have been chartered for four or more years. The board shall adopt rules pursuant to chapter 91 for its evaluations.

(d) The [~~board~~] charter school review panel may place a charter school on probationary status; provided that:

(1) The [~~panel~~] executive director evaluates the charter school or reviews an evaluation of the charter school and [ ~~makes recommendations to the board~~] recommends probation to the panel;

(2) The [~~board~~] charter school review panel and the office are involved in substantive discussions with the charter school regarding the areas of deficiencies; and

(3) The notice of probation is delivered to the charter school and specifies the deficiencies requiring correction, the probation period, and monitoring and reporting requirements[;

~~(4)~~ ~~For deficiencies related to student performance, a charter school shall be allowed two years to improve student performance; and~~

~~(5)~~ ~~For deficiencies related to financial plans, a charter school shall be allowed one year to develop a sound financial plan~~].

For deficiencies related to student performance, a charter school shall be allowed two years to improve student performance. For deficiencies related to financial plans, a charter school shall be allowed one year to develop a sound financial plan. The charter school shall remain on probationary status until the [~~board~~] panel votes to either remove the charter school from probationary status or revoke its charter.

(e) If a charter school fails to resolve deficiencies by the end of the probation period, the [~~board~~] panel may revoke the charter; provided that the vote of two-thirds of all the members to which the [~~board~~] panel is entitled shall be required to revoke the charter.

(f) [~~The board~~] Notwithstanding the provisions of subsection (d), the panel may place a charter school on probationary status or revoke the charter for serious student or employee health or safety deficiencies; provided that:

(1) The charter school is given notice of specific health or safety deficiencies and is afforded an opportunity to present its case to the [~~board~~] panel;

(2) The [~~board~~] panel chair appoints a task group, which may be an investigative task group, the panel, or the office, to visit the charter school and conduct meetings with its local school board and its school community to gather input;

(3) Based on its findings, the task group shall recommend to the [~~board~~] panel to revoke the charter, place the charter school on probation, or continue the charter;

(4) The vote of two-thirds of all the members to which the [~~board~~] panel is entitled shall be required to revoke the charter;

(5) The best interest of the school's students guide all decisions; and

(6) After a decision to revoke a charter, the charter school shall be allowed to remain open until a plan for an orderly shutdown or transfer of students and assets is developed and executed, or until the school year ends, whichever comes first.

(g) [If] Notwithstanding the provisions of subsections (d) and (f), if there is an immediate concern for student or employee health or safety at a charter school, the [~~board~~] panel, in consultation with the office, may adopt an interim restructuring plan that may include the appointment of an interim local school board, an interim local school board chairperson, or a principal to temporarily assume operations of the school; provided that if possible without further jeopardizing the health or safety of students and employees, the charter school's stakeholders and community are first given the opportunity to elect a new local school board which shall appoint a new interim principal.

(h) The board shall adopt rules pursuant to chapter 91 for placing charter schools on probation and for revoking a charter.

(i) If, at any time, a charter school dissolves or the charter is revoked, the State shall have first right, at no cost to the State, to all the assets and facilities of the charter school[~~, except as otherwise provided by law~~] ~~purchased with state appropriations or provided by the department or another state agency.~~"

SECTION 9. Section 302B-15, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"§302B-15 Responsibilities of department of education; special education services. (a) The department shall collaborate with the [office] charter school review panel to develop a system of technical assistance related to compliance with federal and state laws and access to federal and state funds. The department and the [~~office~~] panel shall collaborate to develop a list of central services that the department may offer for purchase by [~~a charter school at an annual cost to be negotiated between an individual charter school~~] the executive director and the department. The department shall enter into a contract [~~with a charter school~~] annually to provide these services, [which shall be re-negotiated on an annual basis] with the executive director acting on behalf of one of more charter schools. The contract may be renegotiated on an annual basis."

SECTION 10. Section 89-10.55, Hawaii Revised Statutes, is repealed.

SECTION 11. Section 302B-12, Hawaii Revised Statutes, is repealed.

SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $2,000,000, or so much thereof as may be necessary for fiscal year 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, for the purposes of carrying out this Act, including the hiring of staff.

The sums appropriated shall be expended by the public charter school authority for the purposes of this Act.

SECTION 13. This Act shall take effect on July 1, 2007.

INTRODUCED BY:

_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	557
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII