SB2704.DOC

SECTION 1. The legislature finds that the American Recovery and Reinvestment Act of 2009 signed by President Obama has made billions of dollars in federal funding available to the states to invest in innovative strategies that are intended to spur meaningful reform in public education. It is the federal government's intent that the education expenditures in the federal stimulus package will lead to improved results for students, long-term gains in school and school system capacity, and increased productivity and effectiveness.

The legislature further finds that the American Recovery and Reinvestment Act includes the Race to the Top, a competitive grant that will make $4,350,000,000 in new federal funding available to states for education. Race to the Top money will be awarded to states that comply with specific conditions for education innovation and reform.

President Obama has identified that one of the key areas of innovation currently taking place in the public education system is occurring within public charter schools. Therefore, the President has called on states to eliminate barriers to public charter school growth by removing legal impediments that limit the number of high-performing public charter schools allowed to operate within their state. The President's guidance to states on public charter schools has also been reiterated by the United States Secretary of Education, Arne Duncan, who has affirmed that states that place a limit on the number of public charter schools in their state will be at a competitive disadvantage in the Race to the Top program.

The legislature finds that during the 2008-2009 school year there were over 2,800 students on the Hawaii public charter school wait list and that the State does not have the capacity to meet the educational needs of these students. The demand for quality public charter schools in Hawaii has consistently exceeded the supply. Changes are immediately needed to facilitate quality public charter school growth.

The legislature also finds that the Center for Education Reform gave Hawaii's public charter school law a "D" grade in an evaluation of Hawaii's ability to compete for Race to the Top funding. The areas that are hindering Hawaii's ability to aggressively compete in the federal program are the public charter school cap, the lack of multiple public charter school authorizers, and an ambiguous commitment to equitable funding for students at public charter schools.

The purpose of this Act is to improve the State's educational system, remove barriers to public charter school innovation and expansion, and improve Hawaii's ability to rigorously compete for new federal funding by:

(1) Repealing the limit on the number of new start-up and conversion public charter schools allowed in the State;

(2) Allowing multiple public charter school authorizers to operate within the State;

(3) Establishing a public charter reauthorization process;

(4) Transferring the oversight of the charter school administrative office from an executive director to a deputy superintendent for public charter schools appointed by the superintendent of education; and

(5) Ensuring that public charter school students are funded at an equitable level to students at non-charter public schools.

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

"§302B‑ Charter contracts. (a) An authorizer shall grant a charter for an initial term of four operating years. The charter term shall commence on the public charter school's first day of operation. An approved public charter school may delay its opening for one school year in order to plan and prepare for the school's opening. If the school requires an opening delay of more than one year, the school must request an extension from its authorizer.

(b) Upon approval of a charter application, the authorizer and the local school board or nonprofit organization, operating a public conversion charter school pursuant to section 302B-6, shall execute a charter contract that sets forth the academic and operational performance expectations and measures by which the public charter school will be judged and the administrative relationship between the authorizer and the public charter school, including each party's rights and duties.

(c) No public charter school may commence or continue operations without a charter contract executed in accordance with this section and approved in an open meeting of the authorizer's governing board or panel.

(d) Upon the completion of the initial four-year term of the charter contract, a charter may be renewed for successive five-year terms, although the authorizer may vary the term based on the performance, demonstrated capacities, and other circumstances of each public charter school.

(e) In making charter renewal decisions, the authorizer shall:

(1) Ground its decisions in evidence of the school's performance over the term of the charter contract;

(2) Ensure that data used in making renewal decisions are available to the school and public; and

(3) Provide a public report summarizing the evidence basis for its decision;

provided that, if the authorizer revokes or does not renew a charter, the authorizer shall clearly state the reasons for revocation or nonrenewal. Public charter schools whose charters are revoked or not renewed may appeal to the superintendent for a final decision pursuant to section 302B‑3.5."

SECTION 3. Section 302A-1101, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The [~~board~~] governor shall appoint pursuant to section 26-34 the charter school review panel, which shall serve as the principal charter authorizer for public charter schools, with the power and duty to issue charters, oversee and monitor public charter schools, hold public charter schools accountable for their performance, and revoke charters[.] in accordance with chapter 302B. The superintendent may designate additional public charter school authorizers pursuant to section 302B-4."

SECTION 4. Section 302A-1506.5, Hawaii Revised Statutes, is amended to read as follows:

"§302A-1506.5 [~~Early learning facilities; identifying sites.~~] Prioritization of the use of empty classrooms. (a) The department of education shall identify unused public school facilities to be used for educational programs, with first preference given to public charter schools and second preference given to early learning programs and services. Suitable empty classrooms, as determined by the department, shall be inventoried for potential use for [~~early learning~~] priority educational programs and services. Priority shall be given to facilities on sites with sufficient space for three or more classrooms to be renovated or constructed.

(b) The department shall assist in the identification of possible construction sites for private providers to build early learning facilities.

(c) The department shall submit an annual report to the legislature, the charter school administrative office, and the early learning council no later than twenty days prior to the convening of each regular session on:

(1) The number of classrooms that would be suitable for public charter schools and programs and services in the early learning system established by chapter 302L; and

(2) The cost of renovating these classrooms to meet the standards of public charter schools and programs and services in the early learning system."

SECTION 5. Section 302B-1, Hawaii Revised Statutes, is amended as follows:

(1) By adding a definition of "charter authorizer" to be appropriately inserted and to read as follows:

""Charter authorizer" or "authorizer" means the charter school review panel and the entities designated pursuant to section 302B-4 with the powers and duties to issue and revoke charters, approve detailed implementation plan revisions, and conduct public charter school evaluations."

(2) By amending the definition of "charter schools " to read as follows:

" "[~~Charter~~] Public charter school" or "charter school" refers to those public schools holding charters to operate as charter schools under this chapter, including start-up and conversion charter schools, and that have the flexibility and independent authority to implement alternative frameworks with regard to curriculum, facilities management, instructional approach, virtual education, length of the school day, week, or year, and personnel management."

(3) By amending the definition of "nonprofit organization" to read as follows:

"Nonprofit organization" means a private, nonprofit, tax-exempt entity that:

(1) Is recognized as a tax-exempt organization under section 501(c)(3) or (6) of the Internal Revenue Code of 1986, as amended; and

(2) [~~Is domiciled in this State~~] Is registered with the department of the attorney general."

(4) By repealing the definition of "executive director" as follows:

"[~~"Executive director" means the executive director of the charter school administrative office.~~]".

SECTION 6. Section 302B-3, Hawaii Revised Statutes, is amended to read as follows:

"§302B-3 Charter school review panel; establishment; powers and duties. (a) There is established the charter school review panel, that shall be placed within the department for administrative purposes only. [~~The panel shall be accountable to the charter schools and the board.~~] Notwithstanding section 302B-9 and any other law to the contrary, the panel shall be subject to chapter 92.

(b) The panel shall consist of [~~twelve~~] eleven members, and shall include:

(1) Two licensed teachers regularly engaged in teaching; provided that one teacher is employed at a start-up public charter school, and one teacher is employed at a conversion public charter school;

(2) Two educational officers; provided that one educational officer is employed at a start-up public charter school, and one educational officer is employed at a conversion public charter school;

(3) One member or former member of a public charter school local school board;

[~~(4) The chair of the board of education or the chair's designee;~~

~~(5)~~] (4) A representative of Hawaiian culture-focused public charter schools;

[~~(6)~~] (5) Two representatives of the University of Hawaii who are not affiliated with public charter schools;

[~~(7)~~] (6) One member with a background in business or accounting who is not affiliated with public charter schools;

[~~(8)~~] (7) One member with a background in the building trades or real estate who is not affiliated with public charter schools; and

[~~(9)~~] (8) A representative from the Hawaii Association of Independent Schools;

provided that the initial appointments for representatives in paragraphs [~~(7) to (9)~~] (6) to (8) shall be made by September 1, 2007. From June 1, 2007, until such time that the panel has [~~twelve~~] eleven members, five members of the panel shall constitute a quorum to conduct business and a concurrence of at least five members shall be necessary to make any action of the panel valid; provided that, upon filling the [~~twelve~~] eleven seats as required under this subsection, a majority of the panel shall constitute a quorum to conduct business, and the concurrence of a majority of all the members to which the panel is entitled shall be necessary to make any action of the panel valid.

(d) Appointed panel members shall serve not more than three consecutive three-year terms, with each term beginning on July 1; provided that the initial terms of the appointed members that commence after June 30, 2006, shall be staggered as follows:

(1) Four members to serve three-year terms;

(2) Four members to serve two-year terms; and

(3) Three members to serve a one-year term.

(e) Notwithstanding the terms of members, the [~~board~~] governor may add panel members at any time and replace panel members at any time when their positions become vacant through resignation, through non-participation, upon request of a majority of panel members, or upon termination by the [~~board~~] governor for cause.

(f) Panel members shall receive no compensation. When panel duties require that a panel member take leave of the panel member's duties as a state employee, the appropriate state department shall allow the panel member to be placed on administrative leave with pay and shall provide substitutes, when necessary, to perform that panel member's duties. Panel members shall be reimbursed for necessary travel expenses incurred in the conduct of official panel business.

(g) The panel shall establish operating procedures that shall include conflict of interest provisions for any member whose school of employment or local school board membership is before the panel.

(h) The chair of the panel shall be designated by the members of the panel for each school year beginning July 1 and whenever there is a vacancy. If the panel does not designate its chair for the next school year by July 1, the [~~board~~] governor shall designate the panel chair. When the panel chair is vacant, the [~~board~~] governor shall designate an interim chair to serve until the panel designates its chair.

(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)~~] (1) Review[,] and approve[,] or deny charter applications for new public 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~~] superintendent for a final decision pursuant to section 302B-3.5;

[~~(3)~~] (2) Review[,] and 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~~] Public charter schools that are denied a significant amendment to their detailed implementation plan may appeal to the [~~board~~] superintendent for a final decision pursuant to section 302B‑3.5;

(3) Review and approve or deny applications from public charter schools to renew charter contracts pursuant to section 302B- .

(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 public 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 public charter schools; and

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

~~(9)~~ ~~Review, modify, and approve charter schools' all means of finance budget, based upon criteria and an approval process established by the panel; and~~

~~(10)~~ Survey all charter school facilities prior to, and in preparation for, determining recommendations to allocate non-per-pupil facilities funds to charter schools with facilities needs. The survey shall include, at minimum, for each charter school facility:

~~(A)~~ ~~The current status of the facility;~~

~~(B)~~ ~~Facilities costs, including all rents, leases, purchases, and repair and maintenance for lands and buildings;~~

~~(C)~~ ~~A prioritized list of facilities needs;~~

~~(D)~~ ~~Any capital improvement projects underway or scheduled; and~~

~~(E)~~ ~~Whether the facility is a conversion or start-up charter school, and current and projected enrollment.~~]

(j) In the case that the panel decides not to issue a new charter, or to approve significant amendments to detailed implementation plans, the [~~board~~] superintendent may adopt rules for an appeals process pursuant to section 302B-3.5.

(k) The [~~office shall provide for the staff support and expenses of the~~] panel shall be administratively attached to the department of education."

SECTION 7. Section 302B-3.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302B‑3.5[]] Appeals; charter school applications, revocations, or detailed implementation plan amendments. The [~~board~~] superintendent shall have the power to decide appeals from decisions of the panel and other public charter school authorizers to deny the approval of a charter school application, revoke a public charter school's charter, deny an application for reauthorization of a charter, or deny the approval of an amendment to a public charter school's detailed implementation plan. An appeal shall be filed with the [~~board~~] superintendent within twenty-one calendar days of the receipt of the notification of denial or revocation. Only a party whose charter school application has been denied, whose charter has been revoked, whose application for charter reauthorization has been denied, or whose amendment to a detailed implementation plan has been denied may initiate an appeal under this section for cause. The [~~board~~] superintendent shall review an appeal and issue a final decision within sixty calendar days of the filing of the appeal. The [~~board~~] superintendent may adopt applicable rules and procedures pursuant to chapter 91 for implementing the appeals process."

SECTION 8. Section 302B-4, Hawaii Revised Statutes, is amended to read as follows:

"§302B‑4 [~~Limits on charter schools.~~ ~~The panel may authorize one new start-up charter school~~ for each existing start-up charter school that has received a three-year or longer accreditation from the Western Association of Schools and Colleges or a comparable accreditation authority as determined by the panel, or for each start-up charter school whose charter is revoked. The total number of conversion charter schools authorized by the panel shall not exceed twenty-five.] Public charter school authorizers. (a) The charter school review panel shall serve as the State's principal chartering authority; provided that the superintendent may authorize an entity that meets the eligibility qualifications under subsection (c) to serve as a public charter school authorizer.

(b) Charter authorizers designated by the superintendent shall adopt and maintain chartering policies and procedures consistent with those established by the National Association of Charter School Authorizers. Evidence of material or persistent failure to do so shall constitute grounds for losing charter authorizing powers, as determined by the superintendent.

(c) Governing boards of the following public or private institutions may apply to the superintendent to be designated and serve as a public charter school authorizer:

(1) Public or private postsecondary institutions, including community colleges and technical colleges, that grant two- or four-year degrees and are accredited by the Western Association of Schools and Colleges; provided that any subsequent chartering authority granted by the superintendent shall be in accordance with each institution's regular operating jurisdiction; and

(2) Nonprofit organizations as defined in section 302B-1 with education as a component of its core mission; provided that the superintendent may grant chartering authority on a statewide, regional, or local chartering basis. Nonpublic sectarian or religious organizations, and any other charitable organization that in their federal Internal Revenue Service Form 1023, part IV, describe activities indicating a religious purpose, are not eligible to apply to become an authorizer.

(d) The superintendent shall establish an application and approval process, including cycles and deadlines during the fiscal year, for all entities eligible to apply for chartering authority. Eligible organizations interested in being designated as a public charter school authorizer shall submit an application to the superintendent that shall include but not be limited to:

(1) Written notification of intent to serve as a charter authorizer;

(2) The applicant's strategic vision for chartering;

(3) A plan to support the vision presented, including explanation and evidence of the applicant entity's budget and personnel capacity and commitment to execute the responsibilities of quality charter authorizing;

(4) A draft or preliminary outline of the request for proposals that the applicant entity would, if approved as a charter authorizer, issue to solicit public charter school applicants;

(5) A draft of the performance framework that the applicant entity would, if approved as a charter authorizer, use to guide the establishment of a charter contract and for ongoing oversight and evaluation of public charter schools, consistent with the policies and procedures established by the panel;

(6) A draft of the applicant entity's renewal, revocation, and non-renewal processes; and

(7) A statement of assurance that the applicant entity seeks to serve as a charter authorizer in fulfillment of the expectations, spirit, and intent of this chapter, and that if approved as a charter authorizer, the entity will fully participate in any applicable training required by the superintendent or the State.

(e) By January 1 of each year, the superintendent shall decide whether to grant or deny chartering authority to each applicant. The superintendent shall make a decision based on the merits of each applicant's proposal and plans.

(f) Within sixty days of the superintendent's decision, the superintendent shall execute a renewable authorizing contract with each entity the superintendent has approved for chartering authority. The authorizing contract shall specify each approved entity's agreement to serve as a charter authorizer in accordance with the expectations and duties of charter authorization as established by the panel or the superintendent, and in accordance with this chapter. The contract shall specify performance terms based on the applicant's proposal and implementation plan for chartering. No approved entity shall commence charter authorizing without an authorizing contract in effect.

(g) Charter authorizers approved by the superintendent shall be responsible for executing powers and duties relating to charter authorization and oversight of their public charter school applicants and schools as follows:

(1) Review and approve or deny charter applications for new public charter schools pursuant to sections 302B-5 and 302B-6;

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

(3) Review and approve or deny applications for the reauthorization of charter contracts pursuant to section 302B- .

(4) Adopt reporting requirements for public charter schools;

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

(6) Evaluate any aspect of a public charter school that the authorizer's governing board may have concerns with and take appropriate action, which may include probation or revocation.

(h) A charter authorizing entity shall not approve an application for a charter or renewal charter if the application or applicant does not comply with the processes and requirements established by the superintendent or this chapter.

(i) An authorizer, including members of an authorizer's governing board and its employees, shall be immune from suit and liability, either personally or in their official capacities, for any claim for damage to or loss of property or personal injury or other civil liability caused, arising out of, or relating to any actual or alleged act, error, or omission that occurred, or that the person had a reasonable basis for believing occurred within the scope of the authorizer's duties or responsibilities; provided that nothing in this subsection shall be construed to protect any person from suit or liability for any damage, loss, injury, or liability caused by the intentional or wilful and wanton misconduct of the person.

The liability of any authorizer acting within the scope of its duties for acts, errors, or omissions occurring within the state may not exceed the limits of liability set forth under the constitution and laws of that state for state officials, employees, and agents.

(j) If an authorizer granted chartering authority under this section fails, after due notice from the superintendent, to remedy identified authorizing problems, the superintendent shall notify the authorizer that it intends to revoke the authorizer's chartering authority unless the authorizer demonstrates a timely and satisfactory remedy for the violation or deficiencies.

(k) In the event of the revocation of any authorizer's chartering authority, the superintendent shall arrange for the timely and orderly transfer of each charter contract held by that authorizer to another authorizer in good standing within the State, provided that there is mutual agreement of each affected public charter school and proposed new authorizer. The new authorizer shall assume the existing charter contract for the remainder of the charter term.

The superintendent, the panel, and charter authorizers shall not impose a cap on the number of public charter schools allowed to operate within the State nor arbitrarily restrict the number of students a public charter school may enroll.

The superintendent may adopt applicable rules and procedures pursuant to chapter 91 for designating charter authorizers."

SECTION 9. 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~~] an authorizer to form a public 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 public charter school application process and schedule shall be determined by the [~~panel,~~] charter school authorizer, and shall provide for and include the following elements:

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

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

(3) The timely submission to the [~~panel~~] authorizer of a completed application;

(4) The timely review of the application by the [~~panel~~] authorizer 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 or the convening of the authorizing entity by its governing board to begin review of the application;

(7) The timely notification of the applicant of any revisions the [~~panel~~] authorizer requests as necessary for a recommendation of approval;

(8) Following the submission of an application, issuance of a charter or denial of the application by the [~~panel~~] authorizer by majority vote; provided that if the [~~panel~~] authorizer does not approve the application and issue a charter, provisions requiring the [~~panel~~] authorizer to:

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

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

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

(10) A provision that no start-up public charter school may begin operation before obtaining [~~panel~~] authorizer approval of its charter.

(d) An application to become a start-up public 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)~~] (1) A plan for identifying, recruiting, and retaining highly-qualified instructional faculty[;] and administrative staff;

[~~(3)~~] (2) A plan for identifying, recruiting, and selecting students that is not [~~exclusive, elitist, or segregationist;~~] based on ethnicity, national origin, religion, gender, income level, disabling condition, or proficiency in the English language; provided that a public charter school may limit admission to students within a given age group or grade level and may be organized around a special emphasis, theme, or concept as outlined in the implementation plan;

[~~(4)~~] (3) The curriculum and instructional framework to be used to achieve student outcomes, including an assessment plan;

[~~(5)~~] (4) 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;~~

~~(C)~~] (A) 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)~~] (B) Provides for program audits and [~~annual~~] financial audits;

[~~(6)~~] (5) A governance structure for the public 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)~~] (6) A financial plan based on the most recent fiscal year's per-pupil public 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~~] payroll, faculty recruitment, professional development, and facilities costs; and

[~~(8)~~] (7) A facilities plan."

SECTION 10. Section 302B-6, Hawaii Revised Statutes, is amended to read as follows:

"§302B-6 Conversion public charter schools; establishment. (a) A conversion public charter school may be established pursuant to this section.

(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~~] an authorizer designated under section 302B-4 to convert a department school to a public 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 public charter school application process and schedule shall be determined by the [~~panel~~] authorizer, and shall provide for and include the following elements:

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

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

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

(5) The timely resubmission of the application;

(6) Upon receipt of a completed application, the convening of the panel by the panel chairperson or the convening of the authorizing entity by its governing board to begin review of the application;

(7) The timely notification of the applicant of any revisions the [~~panel~~] authorizer may request as necessary for a recommendation of approval;

(8) Following the submission of an application, issuance of a charter or denial of the application by the [~~panel~~] authorizer by majority vote; provided that, if the [~~panel~~] authorizer does not approve the application and issue a charter, provisions requiring the [~~panel~~] authorizer to:

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

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

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

(10) A provision that no conversion public charter school may begin operation before obtaining [~~panel~~] authorizer approval of its charter.

(d) An application to become a conversion public 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)~~] (1) A plan for identifying, recruiting, and retaining highly-qualified instructional faculty[;] and administrative staff;

[~~(3)~~] (2) A plan for identifying, recruiting, and selecting students that is not [~~exclusive, elitist, or segregationist;~~] based on ethnicity, national origin, gender, income level, disabling condition, or proficiency in the English language; provided that a public charter school may limit admission to students within a given age group or grade level and may be organized around a special emphasis, theme, or concept as outlined in the implementation plan;

[~~(4)~~] (3) The curriculum and instructional framework to be used to achieve student outcomes, including an assessment plan;

[~~(5)~~] (4) 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;~~

~~(C)~~] (A) 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)~~] (B) Provides for program audits and [~~annual~~] financial audits;

[~~(7)~~] (6) A financial plan based on the most recent fiscal year's per-pupil [~~charter school~~] allocation that [~~demonstrates the ability to meet the financial obligation~~s ~~of one-time, start-up costs and ongoing costs such as~~ ~~monthly payrolls, faculty recruitment, professional development, and facilities costs; and~~] the school received as a conventional public school and a transaction plan that reflects adjustments to the most recent per pupil public charter school budget.

[~~(8) A facilities plan.~~]

(e) A nonprofit organization may submit a letter of intent to the [~~office~~] authorizer to convert [~~a department~~] an existing non-charter public school to a conversion public charter school, operate and manage the school, and establish a local school board as its governing body[~~, and develop~~]. The nonprofit organization may also notify the department of its intent to convert an existing non-charter public school to a conversion public charter school. The nonprofit organization shall include a detailed implementation plan pursuant to subsection (d)[~~; provided that~~]:

(1) As the governing body of the conversion public 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 public 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 public charter school that it operates and manages, shall have the same protections that are afforded to the board in its role as the conversion public charter school governing body;

(4) Any conversion public 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~~

~~(C)~~ ~~$1,815 for school years 2016-2017 through 2020-2021~~]; and

(5) If, at any time, the board of directors of the nonprofit organization governing the conversion public charter school votes to discontinue its relationship with the public charter school, the public charter school may submit an application with a revised detailed implementation plan to the [~~panel~~] authorizer 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 public 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 public 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 11. 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~~] and administered by [an executive director, who shall be appointed without regard to chapters 76 and 89 by the panel based upon the recommendations of an organization of charter schools operating within the State or from a list of nominees submitted by the charter schools. The panel shall hire the executive director, who may be contracted for a term of up to four years; shall offer the executive director a written contract; and may terminate the executive director's contract only for cause.] a deputy superintendent assigned by the superintendent to oversee public charter schools.

The [~~executive director, with the approval of the panel,~~] deputy superintendent of public charter schools may hire necessary staff without regard to chapters 76 and 89 to assist in the administration of the office and public charter schools.

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

(1) Preparing and executing the budget and the capital improvement projects request for the public charter schools;[, including submission of the all means of finance budget request that reflects all anticipated expenditures to the panel, the board, the governor, and the legislature; provided that, in preparing the budget request with regard to facilities funding, the executive director shall ensure that, as a budget item separate from other operating costs, the request provides:]

[~~(A) Funding for projected enrollment for the next school year for each charter school;~~]

[(B) A calculation showing the per-pupil funding based on the department of budget and finance's debt service appropriation for the department of education divided by the department of education's actual enrollment that school year; and]

[(C) That no less than seventy per cent of the amount appropriated shall be allocated by the office to start-up charter schools on a per-pupil basis; provided that the funds remaining shall be allocated to charter schools with facilities needs as recommended by the office and approved by the panel;]

(2) Allocating annual appropriations to the public charter schools and distribution of federal funds to public charter schools;

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

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

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

(6) Providing independent analysis and recommendations on public charter school issues;

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

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

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

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

(11) Assisting the panel and authorizers to coordinate with public charter schools in [~~panel~~] investigations and evaluations of public charter schools;

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

(13) Determining public charter school system needs and communicating those needs to authorizers [~~the panel the board,~~] and the department;

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

[~~(15)~~] (14) Upon request by one or more public charter schools, assisting in the negotiation of a collective bargaining agreement with the exclusive representative of its employees.

[(c) The executive director shall be evaluated annually by the panel. The annual evaluation shall be conducted sufficiently in advance of the end of a term to provide the executive director the opportunity to respond to concerns and improve performance.

(d) The salary of the executive director and staff shall be set by the panel 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 general fund allocation at an amount to be determined annually by the panel.

~~(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)~~] (c) The [~~office shall~~] deputy superintendent may withhold funds for charter school enrollments that are inconsistent with approved detailed implementation plans.

[~~(g)~~] (d) The [~~office shall~~] deputy superintendent may 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.~~] superintendent.

[~~(h)~~] (e) The [~~office~~] deputy superintendent may carry over funds from previous year allocations. Funds distributed to charter schools shall be considered expended."

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

"§302B-12 Funding and finance. (a) Beginning with fiscal year 2009-2010, and each fiscal year thereafter, the non‑facility per‑pupil funding [~~request~~] for public charter school students shall not be less than the per-pupil amount to non-charter public schools in the department in the most recently [~~approved executive~~] enacted budget [~~recommendation~~] for the department, as set forth in paragraph (2); provided that:

(1) The per-pupil funding [~~request~~] shall include funding for projected enrollment figures for each public charter school[;] and for proposed conversion and new start up charters over the biennium budget period; and

(2) The per-pupil [~~request~~] funding for each regular education and special education student shall:

(A) Include all regular education cost categories, including comprehensive school support services but excluding special education services; provided that [~~special education services are provided and funded by~~] the department[;] shall provide and fund special education services to students enrolled in public charter schools on the same basis as such services are provided to special education students enrolled in non-charter public schools; provided further that if the department fails to provide special education services to special education services at public charter schools, the department shall transfer directly to a public charter school any federal or state aid attributable to a special education student attending a public charter school;

(B) Include all means of financing [~~except federal funds~~], as [~~reported~~] appropriated in the most [~~recently-approved executive~~] recently enacted department of education 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]; and

(D) Include any federal or state aid attributable to a student for the provision of and payment for special education services in proportion to the level of services for such student that the public charter school directly provides; provided that a public charter school and its authorizer may contract with the department for alternate arrangements for the provision and payment for special educations services, the payment for which shall be excluded

(b) Fringe benefit costs for public charter school employees, regardless of the payroll system utilized by a public charter school, shall be included in the department of budget and finance's annual budget request[.], consistent with the treatment of fringe benefits costs of non-charter public schools. No fringe benefit costs shall be charged directly to or deducted from the public charter school per-pupil allocations.

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 and facility costs. The legislature may make additional appropriations for other requested amounts that benefit public charter schools.

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

(c) [~~Charter~~] Public 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~~] deputy superintendent of public charter schools with all state-level federal grant proposals submitted by the department that include public charter schools as potential recipients and timely reports on state-level federal grants received for which public charter schools may apply or are entitled to receive. Federal funds received by the department for public charter schools shall be [~~transferred to the office for distribution~~] distributed to public charter schools in accordance with the federal requirements. If administrative services related to federal grants and subsidies are provided to the public charter school by the department, the public 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 public charter school's federal grants and subsidies.

Any public 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 public 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 public 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.

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

(1) [~~Provide fifty~~] Fifty per cent of a public 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~~] An additional forty per cent of a public charter school's per-pupil allocation no later than November 15 of each year; provided that the public charter school shall have submitted[~~to the office~~]:

(A) Student [~~enrollment~~] enrollments 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 non-charter 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) Ensure the appropriate transfer between EDN 100 (school-based budgeting) and EDN 600 (charter schools) of those per-pupil amounts that reflect students transferring between public charter schools and public non-charter schools; and

[~~(3) Retain no more than~~] (4) Release the remaining ten per cent of a public charter school's per-pupil allocation no later than [~~June~~] March 30 of each year [~~as a contingency balance to ensure fiscal accountability and compliance~~];

provided that the [~~panel~~] superintendent may make adjustments in allocations based on noncompliance with [~~board~~] department policies made in the [~~board's~~] department's capacity as the state education agency, department directives made in the department's capacity as the state education agency, and the office's administrative procedures[~~, and board-approved accountability requirements~~].

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

(f) No start-up public charter school or conversion public charter school may assess tuition."

SECTION 13. Subsection 302B-13(b), Hawaii Revised Statutes, is amended to read as follows:

"(b) The charter schools, through the [~~office,~~] deputy superintendent of public charter schools, may propose to the [~~board~~] department 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 14. Section 302B-14, Hawaii Revised Statutes, is amended to read as follows:

"§302B-14 Accountability; probationary status; revocation of charter. (a) Every public charter school shall conduct [~~annual~~] periodic self-evaluations that shall be submitted to [~~the panel within sixty working days after the completion of the school year, or~~ ] the public charter school's authorizer and the charter school administrative office in accordance with reporting requirements adopted by the [~~panel~~] authorizer. 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[;] as measured against nationally recognized benchmarks such as National Assessment of Educational Progress scores;

(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 [~~panel~~] authorizer shall conduct a multi-year evaluation of each public charter school for which it holds a charter, beginning on its fourth anniversary year and every five years thereafter. The [~~panel~~] authorizer may from time to time establish a schedule to stagger the multi-year evaluations.

(c) The [~~panel~~] authorizer may conduct special evaluations of public charter schools for which it holds a charter at any time.

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

(1) [~~The panel evaluates~~] Authorizers evaluate the public charter school or [~~reviews~~] review an evaluation of the public charter school;

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

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

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

(5) For deficiencies related to financial plans, a public charter school shall be allowed one year to develop and implement a sound financial plan; and

(6) For deficiencies related to organizational viability, a public charter school may be allowed one year to improve administrative compliance.

The public charter school shall remain on probationary status until the [~~panel~~] authorizer votes either to remove the public charter school from probationary status or revoke its charter.

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

(f) The [~~panel~~] authorizer may place a public charter school on probationary status or revoke the charter for serious student or employee health or safety deficiencies; provided that:

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

(2) The [~~panel chair~~] chair of the board of the authorizing entity appoints a task group, which may be an investigative task group or the charter school administrative office, to visit the public 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 [~~panel~~] board of the authorizing entity to revoke the charter, place the public charter school on probation, or continue the charter;

(4) The vote of two-thirds of all the members to which the [~~panel~~] board of the authorizing entity 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 public 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 there is an immediate concern for student or employee health or safety at a public charter school, the [~~panel,~~] authorizer, in consultation with the [~~office,~~] deputy superintendent, 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. The [~~board~~] superintendent shall have the authority to direct the [~~panel~~] authorizer to take appropriate action to immediately address serious health and safety issues that may exist at a public charter school in order to ensure the health and safety of students and employees and mitigate significant liability to the State.

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

(i) If, at any time, a public charter school dissolves, the charter is not reauthorized, 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 public charter school, except as otherwise provided by law[.]; provided that, upon dissolution, denial of charter reauthorization, or charter revocation, the authorizer and the charter school administrative office, acting in concert and on behalf of the State, shall be granted open and immediate access to the public charter school's assets and facilities, including its records and accounts, to facilitate this process."

SECTION 15. The executive director of the charter school administrative office shall serve as the interim deputy superintendent for public charter schools from the effective date of this Act until the appointment of the deputy superintendent for public charter schools by the superintendent of education.

SECTION 16. All public charter school policies or bylaws adopted, and all decisions made, by the board of education or the charter school review panel prior to the effective date of this Act shall remain in effect until repealed or revised by the superintendent of education or the superintendent's designee, which may include the deputy superintendent of public charter schools.

SECTION 17. The charter school review panel shall serve as the authorizer for start-up and conversion public charter schools in operation prior to the effective date of this Act; provided that such public charter schools may request to be placed under the purview of a new authorizer established pursuant to section 8 of this Act; provided further that the charter school review panel and the authorizer that will receive the transferring public charter school have reached a mutual agreement and completed a transfer plan.

SECTION 18. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 19. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	2704
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII