HB1081.DOC

SECTION 1. The Hawaii State Legislature continues to affirm that charter schools, as a legitimate part of the State’s public educational system, should receive funding that is equitable to that of other state public schools. The Act shall be known as the Charter School Restoration and Improvement Act.

SECTION 2. Section 302B-3, Hawaii Revised Statutes, is

amended by amending subsection (i) to read as follows:

"(i) The powers and duties of the panel shall be to:

(1) Appoint and evaluate the executive director and approve staff and salary levels for the charter school administrative office;

(2) Review, approve, or deny charter applications for new charter schools in accordance with section 302B‑5 for the issuance of new charters; provided that applicants that are denied a charter may appeal to the board for a final decision pursuant to section 302B‑3.5;

(3) Review, approve, or deny significant amendments to detailed implementation plans to maximize the school's financial and academic success, long-term organizational viability, and accountability. Charter schools that are denied a significant amendment to their detailed implementation plan may appeal to the board for a final decision pursuant to section 302B‑3.5;

(4) Adopt reporting requirements for charter schools;

(5) Review annual self-evaluation reports from charter schools and take appropriate action;

(6) Evaluate any aspect of a charter school that the panel may have concerns with and take appropriate action, which may include probation or revocation;

(7) Periodically adopt improvements in the panel's monitoring and oversight of charter schools; [~~and~~]

(8) Periodically adopt improvements in the office's support of charter schools and management of the charter school system[.];

(9) Approve the charter schools' budget submission, including any request for capital improvement funding; and

(10) Review, modify, or approve recommendations of the office to allocate funds to charter schools as needed."

SECTION 3. Section 302B-8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The executive director, under the direction of the 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,~~] panel, the governor, and the legislature;

(2) Allocating annual appropriations to the charter schools and distribution of 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) 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) Providing independent analysis and recommendations on charter school issues;

(7) Representing charter schools and the charter school system in communications with the board, the governor, and the legislature;

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

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

(10) Assisting charter applicants and charter schools in coordinating their interactions with the panel as needed;

(11) Assisting the panel to coordinate with charter schools in panel investigations and evaluations of charter schools;

(12) Serving as the conduit to disseminate communications from the panel, the board, and the department to all charter schools;

(13) Determining charter school system needs and communicating those needs to the panel, the board, and the department;

(14) Establishing a dispute resolution and mediation process; and

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

SECTION 4. Chapter 302B, Hawaii Revised Statutes, is amended by adding a new section to read as follows:

"§302B- Facilities funding. (a) Beginning with fiscal year 2009-2010, and for each fiscal year thereafter, a facilities funding amount for charter school students shall be appropriated provided that:

(1) A facilities funding amount shall be funded based on actual lease and rent costs incurred by charter schools that are not conversion charter schools.

(2) Repair and maintenance monies for conversion and non conversion charter schools shall be based on the actual projected repair and maintenance needs for the budget period."

SECTION 5. Section 302B-12, Hawaii Revised Statutes, is amended to read as follows:

"§302B-12 Funding and finance. (a) Beginning with fiscal year [~~2006-2007,~~] 2011-2012, and each fiscal year thereafter, [~~the office shall submit a request for general fund appropriations for each charter school based upon:~~] the per-pupil funding amount for charter school students shall:

(1) [~~The~~] Provide funding for actual and projected enrollment figures in the current school year for each charter school[;], including projected enrollment counts for schools that have applied to the panel for a charter prior to August 31; and

(2) A per-pupil amount for each regular education and special education student, which shall be equivalent to the total per-pupil cost based upon average enrollment in all regular education cost categories, including comprehensive school support services but excluding special education services, and [~~for~~] shall include all means of financing appropriated in the most recently enacted department of education budget except [federal funds, as reported in the most recently-approved executive budget recommendations for the department; provided that in preparing the budget the executive director shall include an analysis of the proposed budget in relationship to the most recently published department consolidated annual financial report; provided further that the legislature may make an adjustment to the per-pupil allocation for the purposes of this section; and] fringe benefit costs, debt service, and federal funds.

[~~(3)~~ Those fringe benefit costs requested shall be included in the department of budget and finance's annual budget request. No fringe benefit costs shall be charged directly to or deducted from the charter school per-pupil allocations unless they are already included in the funds distributed to the charter school.

The legislature shall make an appropriation based upon the budget request; provided that the legislature may make additional appropriations for fringe, workers' compensation, and other employee benefits, facility costs, and other requested amounts.

~~The governor, pursuant to chapter 37, may impose restrictions or reductions on charter school appropriations similar to those imposed on other public schools.~~]

(b) Beginning with fiscal year 2011-2012, and for each fiscal year thereafter, the office shall submit a request for capital improvement project funding based on a prioritized matrix of projects approved by the panel.

(c) Fringe benefit costs for charter school employees shall be included in the department of budget and finance's annual budget appropriation. Fringe benefit costs paid directly by a charter school to a payroll system provider shall be reimbursed by the department of budget and finance to the charter school on a quarterly basis. No fringe benefit costs shall be charged directly to or deducted from the charter school per-pupil allocation.

(d) The legislature shall provide funding for charter schools based upon the requirements of subsections (a) and (b) and (c); provided that the legislature shall make additional appropriations for fringe benefits, workers' compensation, and other employee benefits. The legislature may make additional appropriations for other requested amounts that benefit charter schools including capital improvement projects.

The governor, pursuant to chapter 37, may impose restrictions or reductions on charter school appropriations similar to those imposed on other public schools.

[~~(b)~~](e) Charter schools shall be eligible for all federal financial support to the same extent as all other public schools. The department shall provide the office with all state-level federal grant proposals submitted by the department that include charter schools as potential recipients and timely reports on state-level federal grants received for which charter schools may apply or are entitled to receive. Federal funds received by the department for charter schools shall be transferred to the office for distribution to charter schools in accordance with the federal requirements. If administrative services related to federal grants and subsidies are provided to the charter school by the department, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that shall not exceed six and one-half per cent of the charter school's federal grants and subsidies.

Any charter school shall be eligible to receive any supplemental federal grant or award for which any other public school may submit a proposal, or any supplemental federal grants limited to charter schools; provided that if department administrative services, including funds management, budgetary, fiscal accounting, or other related services, are provided with respect to these supplemental grants, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that shall not exceed six and one-half per cent of the supplemental grant for which the services are used.

All additional funds generated by the local school boards, that are not from a supplemental grant, shall be held separate from allotted funds and may be expended at the discretion of the local school boards.

[~~(c)~~](f) To enable charter schools to access state funding prior to the start of each school year, foster their fiscal planning, and enhance their accountability, the office shall:

(1) Provide fifty per cent of a charter school's per-pupil allocation based on the charter school's projected student enrollment no later than July 20 of each fiscal year; provided that the charter school shall have submitted to the office a projected student enrollment no later than May 15 of each year;

(2) Provide an additional forty per cent of a charter school's per-pupil allocation no later than November 15 of each year; provided that the charter school shall have submitted to the office:

(A) Student enrollment as verified on October 15 of each year; provided that the student enrollment shall be verified on the last business day immediately prior to October 15 should that date fall on a weekend; and

(B) An accounting of the percentage of student enrollment that transferred from public schools established and maintained by the department; provided that these accountings shall also be submitted by the office to the legislature no later than twenty days prior to the start of each regular session; and

(3) Retain the remaining ten per cent of a charter school's per-pupil allocation no later than January 1 of each year as a contingency balance to ensure fiscal accountability;

provided that the panel may make adjustments in allocations based on noncompliance with federal and state reporting requirements, the office's administrative procedures, and board-approved accountability requirements.

[~~(d)~~](g) The department shall provide appropriate transitional resources to a conversion charter school for its first year of operation as a charter school based upon the department's allocation to the school for the year prior to the conversion.

[~~(e)~~](h) No start-up charter school or conversion charter school may assess tuition."

SECTION 6. Not withstanding any existing section of chapter 302B-12 subsection (a) is not effective for fiscal year 2009-2010 and fiscal year 2010-2011.

SECTION 7. In order to accommodate new charter school students, there is appropriated out of the general revenues of the state of Hawaii the sum of $12,000,000, or so much thereof as may be necessary for fiscal year 2009-2010, and $12,000,000, or so much thereof as may be necessary for fiscal year 2010-2011, for costs associated with the operation of charter schools. This appropriation is in addition to the monies appropriated pursuant to the state biennium budget enacted in the 2009 legislative session. The sums appropriated shall be expended by the charter school administrative office.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect July 1, 2009.

INTRODUCED BY:

_____________________________

By Request

HOUSE OF REPRESENTATIVES	H.B. NO.	1081
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII