HB622

SECTION 1. Chapter 302D, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§302D-A Federal investigations. (a) If any employee of a charter school receives written notification from a department or agency of the United States regarding the existence of a criminal investigation of or criminal charges against any employee of the charter school for actions taken in the course of employment at the charter school, that employee shall inform the charter school's authorizer of the criminal investigation or criminal charges within five days of the notification. A person who fails to comply with this subsection shall be guilty of a misdemeanor.

(b) Upon notification of any criminal investigation or criminal charges pursuant to subsection (a), the authorizer shall cease payment of any purchase orders submitted pursuant to section 302D-28(f). Upon notification of either:

(1) That the criminal investigation has closed with no charges filed; or

(2) A finding of not guilty rendered by a court of competent jurisdiction,

the authorizer shall disburse funds for any validly submitted purchase order.

§302D-B Legislative appropriations; state treasury. All funds appropriated to charter schools by the legislature shall remain in the state treasury until requested for disbursement pursuant to section 302D-28(f) or, if a public charter school closes, expended after approval of the authorizer or order of the court."

SECTION 2. Section 302D-17, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) An authorizer shall continually monitor the performance and legal compliance of the public charter schools it oversees, including collecting and analyzing data to support ongoing evaluation according to the charter contract. Every authorizer shall have the authority to conduct or require oversight activities that enable the authorizer to fulfill its responsibilities under this chapter, including conducting appropriate inquiries, audits, and investigations, so long as those activities are consistent with the intent of this chapter and adhere to the terms of the charter contract."

SECTION 3. Section 302D-28, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Each authorizer shall develop and maintain a purchase order system that its charter schools shall use to pay for expenses. Charter schools shall submit a purchase order to the authorizer and the authorizer shall disburse funds to the vender. No funds, except those collected pursuant to subsection (h), shall be disbursed except through the purchase order system. To enable charter schools to access state funding prior to the start of each school year, foster their fiscal planning, enhance their accountability, and avoid over-allocating general funds to charter schools based on self-reported enrollment projections, authorizers shall:

(1) [~~Provide~~] Make available for payment of purchase orders not more than sixty 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 its authorizer a projected student enrollment no later than May 15 of each year;

(2) [~~Provide~~] Make available for payment of purchase orders not more than an additional thirty per cent of a charter school's per-pupil allocation no later than December 1 of each year, based on the October 15 student enrollment, as reviewed and verified by the authorizer[~~, only to schools~~]; provided that the school is in compliance with all financial reporting requirements; and

(3) [~~Retain no more than~~] Deny payment of any purchase orders if payment of those purchase orders would reduce the balance of the remaining ten per cent of a charter school's per-pupil allocation, as a contingency balance to ensure fiscal accountability and compliance[~~, no later than~~] until June 30 of each year;

provided that authorizers may make adjustments in allocations based on noncompliance with charter contracts and the board may make adjustments in allocations based on noncompliance with board policies made in the board's capacity as the state education agency, department directives made in the department's capacity as the state education agency, the board's administrative procedures, and board-approved accountability requirements. Authorizers shall withhold payment of purchase orders in compliance with section 302D-A(b)."
SECTION 4. Section 302D-32, Hawaii Revised Statutes, is amended to read as follows:

"§302D-32 Annual audit [~~or financial review~~]. Each charter school shall annually complete an independent financial audit that complies with the requirements of its authorizer and the department[~~; provided that the authorizer shall have the discretion to allow a financial review in lieu of an independent financial audit~~]. The authorizer shall be responsible for the selection of independent auditors to fulfill the requirement of this section."

SECTION 5. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	622
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII