2011 Montana Legislature

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HOUSE BILL NO. 603

INTRODUCED BY M. BLASDEL, HANSEN, KNOX, STAHL, OSMUNDSON, ESSMANN, TAYLOR, C. SMITH, ROSENDALE, MCGILLVRAY, EVANS, WINDY BOY, RANDALL, MCNIVEN, PRIEST, STEWART-PEREGOY

A BILL FOR AN ACT ENTITLED: "AN ACT AUTHORIZING THE ESTABLISHMENT OF PUBLIC CHARTER SCHOOLS AS A MEANS OF PROVIDING ADDITIONAL EDUCATIONAL OPPORTUNITIES FOR THE CHILDREN OF MONTANA; ESTABLISHING A PUBLIC CHARTER SCHOOL COMMISSION; ESTABLISHING CHARTER AUTHORIZERS FOR OVERSEEING CHARTER SCHOOLS; PROVIDING AN OVERSIGHT FEE FOR CHARTER AUTHORIZERS; PROVIDING FOR CREATION, RENEWAL, AND REVOCATION OF PUBLIC CHARTER SCHOOLS; PROVIDING FOR PERFORMANCE MEASURES FOR PUBLIC CHARTER SCHOOLS; PROVIDING FOR AUTONOMY FOR PUBLIC CHARTER SCHOOLS; PROVIDING FOR FUNDING OF PUBLIC CHARTER SCHOOLS; PROVIDING RULEMAKING AUTHORITY; PROVIDING FOR AN APPROPRIATION FOR COMMISSION COSTS; PROVIDING SPENDING AUTHORITY; AMENDING SECTIONS 15-6-201, 20-5-323, 20-6-104, 20-9-313, 61-3-321, AND 61-10-214, MCA; AND PROVIDING AN EFFECTIVE DATE."

WHEREAS, it is in the best interests of the people of the state that any school or educational program operated by the state must establish high expectations and create conditions for meeting those expectations; and

WHEREAS, educational rigor in every public educational program is necessary to continuously strengthen the academic achievement of elementary and secondary students; and

WHEREAS, parents and guardians are the most qualified to make decisions regarding choice of educational options for the children; and

WHEREAS, parents and educators have a right and a responsibility to participate in the educational institutions that serve the parents' children and students; and

WHEREAS, students learn differently and programs offered by state-operated schools should be customized to fit the needs of individual students; and

WHEREAS, there are parents, educators, and other citizens in the state who are willing and able to offer educational programs but who lack a channel through which the efforts of the parents, educators, and other citizens can be directed; and

WHEREAS, it is the purpose of public charter schools to improve student learning by creating high-quality schools with high standards for student performance; to close achievement gaps between high-performing and low-performing groups of public school students; and to increase high-quality educational opportunities within the public education system for all students, especially those at risk of academic failure; and

WHEREAS, it is the purpose of public charter schools to create new professional opportunities for teachers, school administrators, and other school personnel that allow these individuals to have a direct voice in the operation of the schools in which they are involved and to allow public schools freedom and flexibility in exchange for exceptional levels of results-driven accountability; and

WHEREAS, it is the purpose of public charter schools to encourage the use of different high-quality models of teaching, governing, scheduling, or other aspects of instruction that meet a variety of student needs; and

WHEREAS, it is the purpose of public charter schools to encourage the use of different high-quality models of teaching, governing, scheduling, or other aspects of schooling that meet a variety of student needs; and

WHEREAS, it is the purpose of public charter schools to provide students, parents, community members, and local entities with expanded opportunities for involvement in the public education system to encourage the replication of successful public charter schools; and

WHEREAS, all public charter schools in the state established under this act are public schools and are part of the state's public education system, and the provisions of this act should be interpreted liberally to support the findings and purposes of this act and to advance a refocused commitment by the state to the mission, goals, and diversity of public education that include providing viable educational options to parents and students.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

NEW SECTION. Section 1. Short title. [Sections 1 through 17] may be cited as the "Public Charter Schools Act".

NEW SECTION. Section 2. Definitions. As used in [sections 1 through 17], the following definitions apply:

(1) "Applicant" means a person or group that submits an application for a public charter school to an authorizer.

(2) "Application" means a proposal from an applicant to an authorizer to enter into a charter contract for obtaining public charter school status.

(3) "At-risk student" means a student who is affected by environmental conditions that negatively impact the student's educational performance or threaten a student's likelihood of promotion or graduation.

(4) "Authorizer" means an entity authorized under [sections 1 through 17] to review applications, determine whether to approve applications for entering into a charter contract, enter into charter contracts with applicants, oversee public charter schools, and determine whether to renew or revoke charter contracts.

(5) "Charter contract" means a fixed-term, renewable contract between a public charter school and an authorizer that outlines the roles, powers, responsibilities, and performance expectations for each party to the contract.

(6) "Commission" means the state public charter school commission provided for in [section 3].

(7) "Conversion public charter school" means a charter school that existed as a noncharter public school before becoming a public charter school.

(8) "Education service provider" means a for-profit education management organization, nonprofit charter management organization, school design provider, or other partner entity with which a public charter school intends to contract for educational design, implementation, or comprehensive management.

(9) "Governing board" means the independent board of a public charter school that is party to the charter contract with the authorizer and whose members have been elected or selected pursuant to the school's application.

(10) "Local school board" means a school board exercising management and control of a local school district pursuant to the laws of the state of Montana.

(11) "Noncharter public school" means a public school that is under the direct management, governance, and control of a local school board or the state.

(12) "Parent" means a parent, guardian, or other person or entity having legal custody of a child.

(13) "Public charter school" means a public school that:

(a) has autonomy over decisions including but not limited to matters concerning finance, personnel, scheduling, curriculum, and instruction;

(b) is governed by an independent governing board;

(d) is a school in which parents choose to enroll their children;

(e) is a school that admits students on the basis of a lottery if more students apply for admission than can be accommodated;

(f) provides a program of education that may include preschool, prekindergarten, any or all grades between kindergarten and grade 12, and adult community, continuing, and vocational education programs;

(g) operates in pursuit of a specific set of educational objectives as defined in its charter contract; and

(h) operates under the oversight of its authorizer in accordance with its charter contract.

(14) "School district" has the meaning provided in chapter 6, part 7, of this title.

(15) "Startup public charter school" means a public charter school that did not exist as either a public charter school or a noncharter public school prior to becoming a public charter school.

(16) "Student" means a child who is eligible for attendance in a public school in the state.

(17) "Virtual public charter school" means a public charter school that offers educational services predominantly through an online program.

NEW SECTION. Section 3. Public charter school commission -- creation -- appointments. (1) There is a state public charter school commission. The commission is an independent state agency with statewide chartering jurisdiction and authority. THERE IS AN INDEPENDENT STATE PUBLIC CHARTER SCHOOL COMMISSION WITH STATEWIDE CHARTERING JURISDICTION AND AUTHORITY.

(2) The commission is responsible for approving authorizers for high-quality public charter schools throughout the state, including schools designed to expand opportunities for at-risk students, consistent with the purposes of [sections 1 through 17].

(3) The commission consists of nine members who are appointed by the governor and are subject to the following qualifications: AS FOLLOWS:

(A) THREE MEMBERS APPOINTED BY THE GOVERNOR;

(B) THREE MEMBERS APPOINTED BY THE PRESIDENT OF THE SENATE; AND

(4) THE COMMISSION MEMBERS ARE SUBJECT TO THE FOLLOWING QUALIFICATIONS:

(a) no more than five of the members may be from the same political party; and

(B) NO MORE THAN TWO MEMBERS MAY BE PUBLIC EMPLOYEES;

(b)(D) in making the appointments, the governor, PRESIDENT OF THE SENATE, AND SPEAKER OF THE HOUSE shall ensure statewide geographic diversity among commission members.

(4)(5) Members appointed to the commission must collectively possess substantial experience and expertise in public and nonprofit governance, management and finance, public school leadership, assessment, curriculum, instruction, and public education law. All members of the commission must have a demonstrated understanding of and commitment to charter schools as a strategy for strengthening public education.

(5)(6) (a) Members of the commission shall serve staggered terms. At the discretion of the governor, three members shall serve an initial term of 4 years, three members shall serve an initial term of 3 years, and three members shall serve an initial term of 2 years. EACH APPOINTING AUTHORITY SHALL APPOINT ONE MEMBER TO A 4-YEAR TERM, ONE MEMBER TO A 3-YEAR TERM, AND ONE MEMBER TO A 2-YEAR TERM.

(b) All terms after the initial term must be for 3 years. Appointment to the initial terms must be made no later than 60 days following [the effective date of this act].

(6)(7) A member is responsible for the member's own expenses of participation on the commission but is entitled to reasonable travel and per diem expenses.

(7)(8) A member of the commission may be removed for any cause that renders the member unable or unfit to discharge the duties of the office, INCLUDING BUT NOT LIMITED TO FAILURE TO APPROVE AN AUTHORIZER WITHOUT JUST CAUSE AND INTERFERENCE WITH THE FUNCTIONS OF THE COMMISSION AS SET FORTH IN [SECTIONS 1 THROUGH 17]. Whenever a vacancy on the commission exists, the original appointing authority shall appoint a member for the remaining portion of the term consistent with the requirements of subsection (3) SUBSECTIONS (3) AND (4).

(8)(9) The commission shall operate with dedicated resources and HIRE staff qualified to execute the day-to-day responsibilities of public charter school authorizing in accordance with [sections 1 through 17].

(10) THE COMMISSION IS AUTHORIZED TO RECEIVE AND EXPEND GIFTS, GRANTS, AND DONATIONS OF ANY KIND FROM ANY PUBLIC OR PRIVATE ENTITY TO CARRY OUT THE PURPOSES OF [SECTIONS 1 THROUGH 17], SUBJECT TO THE TERMS AND CONDITIONS UNDER WHICH THEY ARE GIVEN.

(11) THE COMMISSION IS ALLOCATED TO THE DEPARTMENT OF ADMINISTRATION FOR ADMINISTRATIVE PURPOSES ONLY AS PRESCRIBED BY 2-15-121, WITH THE EXCEPTION OF 2-15-121(2)(D). THE COMMISSION SHALL HIRE EMPLOYEES NECESSARY TO CARRY OUT THE PURPOSES OF [SECTIONS 1 THROUGH 17].

NEW SECTION. Section 4. Authorizers. (1) The state public charter school commission created under [section 3] may authorize public charter schools in the state, provided that the commission fulfills the requirements of public charter school authorizers under [sections 1 through 17].

(2) (a) A local school board may register with the commission for chartering authority within the boundaries of the school district overseen by the local school board.

(b) If the commission determines that the local school board fulfills the requirements of subsection (4), the commission shall, within 60 days of receipt of a local school board's application, approve the local school board as an authorizer.

(c) Upon approval, the commission shall register the local school board with the school district's trustees and shall provide the local school district with a letter confirming its approval as an authorizer.

(3) The following organizations may apply to the commission for statewide, regional, or local chartering authority pursuant to subsection (4) THIS SECTION:

(a) governing boards of accredited public or private postsecondary institutions, including community colleges, technical colleges, tribal colleges, and 4-year colleges and universities, in accordance with each institution's regular operating jurisdiction;

(b) a local government unit, including a mayor, city council, or county commission; and

(c) governing boards of nonprofit or charitable organizations that are exempt from federal taxes under 26 U.S.C. 501(c)(3) or 501(c)(6), as amended.

(4) Nonpublic sectarian or religious organizations, and any other charitable organization which, in their federal Internal Revenue Service Form 1023, Part IV under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), describe activities indicating a religious purpose, are not eligible to become authorizers.

(5) (a) The commission shall establish the annual application and approval process, including cycles and deadlines during the fiscal year, for all entities eligible to apply for chartering authority as set forth in this section.

(b) By March 1 of each year, the commission shall make available information and guidelines for all eligible entities concerning the opportunity to apply for chartering authority under [sections 1 through 17]. (c) Each interested eligible entity shall submit an application that clearly explains or presents the following elements in a format to be established by the commission:

(i) written notification of intent to serve as a charter authorizer in accordance with [sections 1 through 17];

(ii) an explanation of the entity's strategic vision for chartering;

(iii) a plan supporting the entity's strategic vision and an explanation of the entity's budget and personnel capacity and commitment to execute the duties of quality charter authorizing in accordance with [sections 1 through 17];

(iv) a draft or preliminary outline of a request for proposal that will solicit public charter school applicants in accordance with [section 8];

(v) a description or outline of the performance framework the entity will use to guide the establishment of a charter contract and for ongoing oversight and evaluation of public charter schools consistent with the requirements of [sections 1 through 17];

(vi) a draft of the entity's renewal, revocation, and nonrenewal processes, consistent with [sections 11 and 12];

(vii) a statement of assurance that the entity commits to serving as a charter authorizer in fulfillment of the expectations, spirit, and intent of [sections 1 through 17] and will fully participate in any authorizer training provided or required by the state; and

(viii) a statement of assurance that the entity will be accountable and transparent in all matters concerning charter-authorizing practices, decisions, and expenditures.

(6) (a) Within 60 days of receipt of the application, the commission shall determine whether to approve an application based on a review of the documentation provided in subsection (5) and the quality of the applicant's proposal and plans. The commission shall provide a letter to the applicant either confirming or denying acceptance as an authorizer.

(b) Within 30 days of approval of an application for charter authorizing, the commission and the approved authorizer shall execute a renewable authorizing contract. The initial authorizing contract term is 6 years.

(7) An applicant entity may not engage in charter-authorizing functions without a fully executed authorizing contract.

(8) Once authorized, the authorizer shall continue from year to year during the term of the contract as long as the entity fulfills all charter-authorizing duties and expectations set forth in [sections 1 through 17] and remains an authorizer in good standing with the commission.

NEW SECTION. Section 5. Authorizer responsibilities. (1) In accordance with [sections 1 through 17], authorizers are responsible for executing the following essential powers and duties:

(a) soliciting and evaluating charter applications;

(b) approving quality charter applications that meet identified educational needs and promote a diversity of educational choices;

(d) negotiating and executing sound charter contracts with each approved public charter school;

(e) monitoring, in accordance with charter contract terms, the performance and legal compliance of public charter schools; and

(f) determining whether each charter contract merits renewal, nonrenewal, or revocation.

(2) An authorizing entity may delegate its duties to its officers, employees, and contractors.

(3) Regulation of charter schools by authorizers is limited to the powers and duties described in [sections 1 through 17], consistent with the intent of [sections 1 through 17].

(4) An authorizer shall develop, carry out, and maintain chartering policies and practices consistent with nationally recognized principles and standards for quality charter authorizing in all major areas of authorizing responsibility, including:

(a) organizational capacity and infrastructure;

(b) soliciting and evaluating charter applications;

(d) ongoing public charter school oversight and evaluation; and

(e) charter renewal decisionmaking.

(5) Evidence of material or persistent failure to carry out the duties enumerated in this section constitutes grounds for rescission of charter-authorizing powers.

(6) Each authorizer shall submit to the commission and the legislature an annual report summarizing:

(a) the authorizer's strategic vision for chartering and progress toward achieving that vision;

(b) the academic and financial performance of all operating public charter schools overseen by the authorizer, according to the performance expectations for public charter schools set forth in [sections 1 through 17];

(c) the status of the authorizer's public charter school portfolio, identifying all public charter schools approved but not yet open, operating, renewed, transferred, revoked, not renewed, voluntarily closed, or never opened;

(d) the authorizing functions provided by the authorizer to the public charter schools under its direction, including the authorizer's operating costs and expenses detailed in annual audited financial statements that conform with generally accepted accounting principles; and

(e) the services purchased from the authorizer by a public charter school under the authorizer's direction, including an itemized accounting of the actual costs of these services, as required in [section 6].

(7) An employee, trustee, agent, or representative of an authorizer may not simultaneously serve as an employee, trustee, agent, representative, vendor, or contractor of a public charter school authorized by that entity.

(8) A governmental unit or other entity, other than those expressly granted chartering authority as set forth in [sections 1 through 17], may not assume any charter authorizing function or duty in any form unless expressly allowed by law.

NEW SECTION. Section 6. Duties of commission for oversight of authorizer. (1) The commission shall establish a statewide formula for authorizer funding and an oversight fee, to be applied uniformly to every authorizer in the state. AUTHORIZER FUNDING IS FINANCED THROUGH AN OVERSIGHT FEE.

(2) The oversight fee must be calculated as a uniform percentage of the average number belonging operational funding allocated to each public charter school pursuant to Title 20, chapter 9, part 3, and is to be paid from the public charter school's share of the BASE aid, not to exceed 3% of each public charter school's ANB funding in a single school year.

(3) The commission may establish a sliding scale for authorizer funding, with the funding percentage decreasing after the authorizer has achieved a certain threshold after a certain number of years of authorizing, after a certain number of schools has been authorized, or for other reasons determined at the discretion of the commission.

(4) An authorizer's oversight fee may not include any costs incurred in delivering services that a public charter school may purchase at its discretion from the authorizer. The authorizer shall use the funding provided under this section exclusively for the purpose of fulfilling authorizing obligations in accordance with [sections 1 through 17].

(5) The commission is responsible for overseeing the performance and effectiveness of all authorizers established under [sections 1 through 17].

(6) The commission shall annually review the effectiveness of the state formula for authorizer funding and shall adjust the formula if necessary to maximize public benefit and strengthen the implementation of [sections 1 through 17].

(7) In accordance with [section 5], every authorizer shall submit to the commission and the legislature an annual report. By October 15 of each year, the commission shall communicate to every authorizer the requirements for the format, content, and submission of the annual report.

(8) Persistently unsatisfactory performance of an authorizer's portfolio of public charter schools, a pattern of well-founded complaints about the authorizer or its public charter schools, or other objective circumstances may trigger a special review by the commission.

(9) In reviewing or evaluating the performance of authorizers, the commission shall apply nationally recognized principles and standards for quality charter authorizing.

(10) If at any time the commission finds that an authorizer is not in compliance with an existing charter contract, its authorizing contract with the commission, or the requirements of authorizers under [sections 1 through 17], the commission shall notify the authorizer in writing of the identified problems and shall provide the authorizer reasonable opportunity to respond and remedy the problems.

(11) If an authorizer fails to respond and remedy the problems identified by the commission, the commission shall notify the authorizer, within a reasonable amount of time under the circumstances, that it intends to revoke the authorizer's chartering authority unless the authorizer demonstrates a timely and satisfactory remedy for the violation or deficiencies.

(12) In the event of revocation of an authorizer's chartering authority, the commission shall manage the timely and orderly transfer of each charter contract held by that authorizer to another authorizer in the state, with the 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.

NEW SECTION. Section 7. Purchase of services by charter school. (1) With the exception of oversight services as required by [section 6], a public charter school may not be required to purchase services from the public charter school's authorizer as an express or implied condition of charter approval or of executing a charter contract.

(2) A public charter school may choose to purchase services from its authorizer. In that event, the public charter school and authorizer shall execute an annual service contract, separate from the charter contract, stating the parties' mutual agreement concerning any services to be provided by the authorizer and any service fees to be charged to the public charter school. An authorizer may not charge more than market rates for services provided to a public charter school.

NEW SECTION. Section 8. Charter school application process -- request for proposal -- charter term. (1) To solicit, encourage, and guide the development of quality public charter schools, every authorizer operating under [sections 1 through 17] shall issue and broadly publicize a request for proposal by June 1 of each year. The content and dissemination of the request for proposal must be consistent with the purposes and requirements of [sections 1 through 17].

(2) Charter school applicants may submit a proposal for a particular public charter school to only one authorizer at a time.

(3) Each authorizer's request for proposal must present the authorizer's strategic vision for chartering, including a clear statement of any preferences the authorizer wishes to grant to applications that help at-risk students.

(4) A request for proposal must include or otherwise direct applicants to the performance framework that the authorizer has developed for public charter school oversight and evaluation in accordance with [section 5].

(5) A request for proposal must include the criteria that will guide the authorizer's decision to approve or deny a charter application.

(6) A request for proposal must include clear and detailed questions as well as guidelines concerning the format and content essential for applicants to demonstrate the capacities necessary to establish and operate a successful public charter school.

(7) A request for proposal must require charter applications to provide or describe thoroughly all of the following essential elements of the proposed school plan:

(a) an executive summary;

(b) the mission and vision of the proposed public charter school, including identification of the targeted student population and the community the school hopes to serve;

(d) the grades to be served each year for the full term of the charter contract;

(e) minimum, planned, and maximum enrollment per grade per year for the term of the charter contract;

(f) evidence of need and community support for the proposed public charter school;

(g) background information on the proposed founding governing board members and, if identified, the proposed school leadership and management team;

(h) the school's proposed calendar and sample daily schedule;

(i) a description of the academic program aligned with state standards;

(j) a description of the school's instructional design, including the type of learning environment, class size and structure, curriculum overview, and teaching methods;

(k) the school's plan for using internal and external assessments to measure and report student progress on the performance framework developed by the authorizer in accordance with [section 5];

(l) the school's plans for identifying and successfully serving students with disabilities, students who are English language learners, students who are academically challenged, and gifted students, including but not limited to compliance with applicable laws and regulations;

(m) a description of cocurricular or extracurricular programs and how the programs will be funded and delivered;

(n) plans and timelines for student recruitment and enrollment, including lottery procedures;

(o) the school's student discipline policies, including those for special education students;

(p) an organizational chart that clearly presents the school's organizational structure, including lines of authority and reporting between the governing board, staff, related bodies such as advisory bodies or parent and teacher councils, and external organizations that will play a role in managing the school;

(q) a clear description of the roles and responsibilities for the governing board, the school's leadership and management team, and other entities shown in the organizational chart;

(r) a staffing chart for the school's first year and a staffing plan for the term of the charter;

(s) plans for recruiting and developing school leadership and staff;

(t) the school's leadership and teacher employment policies, including performance evaluation plans;

(u) proposed governing bylaws;

(v) explanations of any partnerships or contractual relationships central to the school's operations or mission;

(w) the school's plans for providing transportation, food service, and all other significant operational or ancillary services;

(x) opportunities and expectations for parent involvement;

(y) a detailed school startup plan, identifying tasks, timelines, and responsible individuals;

(z) a description of the school's financial plan and policies, including financial controls and audit requirements;

(aa) a description of the insurance coverage the school will obtain;

(bb) startup and 5-year budgets with clearly stated assumptions;

(cc) startup and first-year cash flow projections with clearly stated assumptions;

(dd) evidence of anticipated fundraising contributions if claimed in the application; and

(ee) a sound facilities plan, including backup or contingency plans if appropriate.

(8) In the case of an application to establish a public charter school by converting an existing noncharter public school to public charter school status, a request for proposal must also require the applicants to demonstrate support for the proposed public charter school conversion by a petition signed by a majority of teachers and a petition signed by a majority of parents of students in the existing noncharter public school.

(9) In the case of a proposal to establish a virtual public charter school, a request for proposal must additionally require the applicants to describe the proposed school's system of course credits and how the school will:

(a) monitor and verify full-time student enrollment, student participation in a full course load, credit accrual, and course completion;

(b) monitor and verify student progress and performance in each course through regular, proctored assessments and submissions of coursework;

(d) administer state-required assessments to all students in a proctored setting.

(10) In the case of a proposed public charter school that intends to contract with an education service provider for substantial educational services, management services, or both, a request for proposal must additionally require the applicants to:

(a) provide evidence of the education service provider's success in serving student populations similar to the targeted population, including demonstrated academic achievement as well as successful management of nonacademic school functions if applicable;

(b) provide documentation setting forth:

(i) the proposed duration of the service contract;

(ii) roles and responsibilities of the governing board, the school staff, and the education service provider;

(iii) scope of services and resources to be provided by the education service provider;

(iv) performance evaluation measures and timelines;

(v) a compensation structure, including clear identification of all fees to be paid to the education service provider;

(vi) methods of contract oversight and enforcement;

(vii) investment disclosure;

(viii) conditions for renewal and termination of the contract; and

(c) disclose and explain any existing or potential conflicts of interest between the school governing board and the proposed education service provider or any affiliated business entities.

(11) In the case of a public charter school proposal from an applicant that currently operates one or more schools in any state or nation, a request for proposal must additionally require the applicant to provide evidence of past performance and current capacity for growth.

(12) In reviewing and evaluating charter applications, authorizers shall employ procedures, practices, and criteria consistent with nationally recognized principles and standards for quality charter authorizing. The application review process must include thorough evaluation of each written charter application, an in-person interview with the applicant group, and an opportunity in a public forum for local residents to learn about and provide input on each application.

(13) In deciding whether to approve charter applications, authorizers shall:

(a) grant charters only to applicants that have demonstrated competence in each element of the authorizer's published approval criteria and are likely to open and operate a successful public charter school;

(b) base decisions on documented evidence collected through the application review process; and

(c) follow charter-granting policies and practices that are transparent, are based on merit, and avoid conflicts of interest or any appearance of conflict.

(14) (a) Within 60 days after the filing of a charter application, the authorizer shall approve or deny the charter application. The authorizer shall adopt by resolution all charter approval or denial decisions in an open meeting of the authorizer's governing board.

(b) An approval decision may include, if appropriate, reasonable conditions that the charter applicant must meet before a charter contract may be executed pursuant to [section 9].

(c) For any charter denial, the authorizer shall clearly state, for public record, the reasons for denial. A denied applicant may subsequently reapply to that authorizer or apply to any other authorizer in the state.

(d) Within 10 days of taking action to approve or deny a charter application, the authorizer shall report its decision to the commission. The authorizer shall provide a copy of the report to the charter applicant at the same time that the report is submitted to the commission. The report must include a copy of the authorizer governing board's resolution setting forth the action taken and reasons for the decision and providing assurances of compliance with all of the procedural requirements and application elements set forth in this section.

NEW SECTION. Section 9. Charter contract -- terms. (1) An initial charter must be granted for a term of 5 operating years, commencing on the public charter school's first day of operation. An approved public charter school may delay its opening for 1 school year to plan and prepare for the school's opening. If the school requires an opening delay of more than 1 school year, the school shall request an extension from its authorizer. The authorizer may grant or deny the extension depending on the particular school's circumstances.

(2) Within 30 days of approval of a charter application, the authorizer and the governing board of the approved public charter school shall execute a charter contract that clearly 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 public charter school, including each party's rights and duties.

(3) The performance expectations and measures set forth in the charter contract must include at a minimum the applicable federal and state accountability requirements. The performance provisions may be refined or amended by mutual agreement after the public charter school is operating and has collected baseline achievement data for its enrolled students.

(4) The charter contract for a virtual public charter school must include a description and agreement regarding the methods by which the school will:

(a) monitor and verify full-time student enrollment, student participation in a full course load, credit accrual, and course completion;

(b) monitor and verify student progress and performance in each course through regular, proctored assessments and submissions of coursework;

(d) administer state-required assessments to all students in a proctored setting.

(5) The charter contract must be signed by the president of the authorizer's governing board and the president of the public charter school's governing body. Within 10 days of executing a charter contract, the authorizer shall submit to the commission written notification of the charter contract execution, including a copy of the executed charter contract and any attachments.

(6) A public charter school may not commence operations without a charter contract executed in accordance with this provision and approved in an open meeting of the authorizer's governing board.

(7) Authorizers may establish reasonable preopening requirements or conditions to monitor the startup progress of a newly approved public charter school to ensure that the school is prepared to open smoothly on the date agreed and to ensure that each school meets all building, health, safety, insurance, and other legal requirements for school opening.

NEW SECTION. Section 10. Enrollment. (1) (a) A public charter school must be open to any student residing in the state.

(b) A school district may not require any student enrolled in the school district to attend a public charter school.

(c) A public charter school may not limit admission based on ethnicity, national origin, religion, gender, income level, disabling condition, proficiency in the English language, or academic or athletic ability.

(d) A public charter school may limit admission to students within a given age group or grade level.

(e) A public charter school may be organized for a special emphasis, theme, or concept as stated in the school's application.

(f) A public charter school shall enroll all students who wish to attend the school unless the number of students exceeds the capacity of a program, class, grade level, or building.

(g) If capacity is insufficient to enroll all students who wish to attend the school, the public charter school shall select students through a lottery.

(2) A noncharter public school converting to a public charter school shall adopt and maintain a policy giving enrollment preference to students who reside within the former attendance area of that public school.

(3) (a) A public charter school shall give enrollment preference to students who were enrolled in the public charter school the previous school year and to siblings of students already enrolled in the public charter school. An enrollment preference for returning students excludes those students from entering into a lottery.

(b) A public charter school may give enrollment preference to children of a public charter school's founders, governing board, and full-time employees, limited to no more than 10% of the school's total student population.

(4) This section does not preclude the formation of a public charter school for the purpose of serving students with disabilities, students of the same gender, students who pose a sufficiently severe disciplinary problem to warrant a specific educational program, or students who are at risk of academic failure. If capacity is insufficient to enroll all students who wish to attend such a school, the public charter school shall select students through a lottery.

(5) If a student who was previously enrolled in a public charter school enrolls in any other public school in this state, the student's new school must accept credits earned by the student in courses or instructional programs at the public charter school in a uniform and consistent manner and according to the same criteria for accepting academic credits between other public schools.

(6) A school district shall provide or publicize to parents and the general public information about public charter schools authorized by the district as an enrollment option within the district to the same extent and through the same means that the district provides and publicizes information about noncharter public schools in the district.

(7) An authorizer may not restrict the number of students a public charter school may enroll. The capacity of the public charter school must be determined annually by the governing board of the public charter school in conjunction with the authorizer and in consideration of the public charter school's ability to facilitate the academic success of its students, to achieve the objectives specified in the charter contract, and to ensure that its student enrollment does not exceed the capacity of its facility or site.

NEW SECTION. Section 11. Charter school performance and renewal. (1) The performance provisions within the charter contract must be based on a performance framework that clearly sets forth the academic and operational performance indicators, measures, and metrics that will guide the authorizer's evaluations of each public charter school. The performance framework must include indicators, measures, and metrics for, at a minimum:

(a) student academic proficiency;

(b) student academic growth;

(d) attendance;

(e) recurrent enrollment from year to year;

(f) postsecondary readiness;

(g) financial performance and sustainability; and

(h) board performance and stewardship, including compliance with all applicable laws, regulations, and terms of the charter contract.

(2) Each public charter school, in conjunction with its authorizer, shall set annual performance targets designed to help each school meet applicable federal, state, and authorizer expectations.

(3) (a) The contract performance framework must allow the inclusion, with the authorizer's approval, of additional rigorous, valid, and reliable indicators proposed by a public charter school to augment external evaluations of its performance that are consistent with the purposes of [sections 1 through 17].

(b) The performance framework must require the disaggregation of all student performance data by major student subgroups, including gender, race, poverty status, special education status, English learner status, and gifted status.

(c) The authorizer shall collect state assessment data from each public charter school it oversees and shall analyze and report all data from state assessments in accordance with the performance framework.

(d) Multiple schools operating under a single charter contract or overseen by a single governing board shall report their performance as separate, individual schools, and each school must be held independently accountable for its performance.

(4) (a) An authorizer shall 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 has the authority to conduct or require oversight activities that do not unduly inhibit the autonomy granted to public charter schools but that enable the authorizer to fulfill its responsibilities under [sections 1 through 17], including conducting appropriate inquiries and investigations consistent with the intent of [sections 1 through 17], and to adhere to the terms of the charter contract.

(b) Each authorizer shall annually publish and provide, as part of its annual report to the commission and the legislature, a performance report for each public charter school it oversees, within the performance framework set forth in the charter contract and [section 9]. The authorizer may require each public charter school it oversees to submit an annual report to assist the authorizer in gathering complete information about each school, consistent with the performance framework.

(c) In the event that a public charter school's performance or legal compliance appears unsatisfactory, the authorizer shall promptly notify the public charter school of the perceived problem and provide reasonable opportunity for the school to remedy the problem.

(d) An authorizer may take appropriate corrective action or exercise sanctions short of revocation in response to apparent deficiencies in public charter school performance or legal compliance. The action or sanctions may include, if warranted, requiring a school to develop and execute a corrective action plan within a specified timeframe.

(5) (a) A charter may be renewed for successive 5-year terms, although the authorizer may vary the term based on the performance, demonstrated capacities, and particular circumstances of each public charter school. An authorizer may grant renewal with specific conditions for necessary improvement to a public charter school.

(b) No later than June 30 of each year, the authorizer shall issue a public charter school performance report and charter renewal application guide to any public charter school whose charter will expire the following year. The performance report must summarize the public charter school's performance record to date, based on the data required by [sections 1 through 17] and the charter contract, and must provide notice of any weaknesses or concerns perceived by the authorizer concerning the public charter school that may jeopardize renewal if not promptly rectified. The public charter school shall respond to the performance report and submit any corrections or clarifications within 90 days.

(6) The renewal application guide must, at a minimum, provide an opportunity for the public charter school to:

(a) present additional evidence, beyond the data contained in the performance report, supporting its case for charter renewal;

(b) describe improvements undertaken or planned for the school; and

(7) The renewal application guide must include or refer explicitly to the criteria that will guide the authorizer's renewal decisions, based on the performance framework set forth in the charter contract and consistent with [sections 1 through 17].

(8) (a) No later than February 1 of each year, the governing board of a public charter school seeking renewal shall submit a renewal application to the charter authorizer pursuant to the renewal application guide issued by the authorizer. The authorizer shall rule by resolution on the renewal application no later than 30 days after the filing of the renewal application.

(b) Every authorizer shall, when considering charter renewal:

(i) base its decision on evidence of the school's performance over the term of the charter contract in accordance with the performance framework set forth in the charter contract;

(ii) ensure that the data used in making renewal decisions is available to the school and the public; and

(iii) provide a public report summarizing the basis for each decision.

NEW SECTION. Section 12. Charter school revocation or nonrenewal. (1) A charter contract is subject to nonrenewal or revocation at any time if the authorizer determines that the public charter school:

(a) committed a material and substantial violation of any of the terms, conditions, standards, or procedures required under [sections 1 through 17] or the charter contract and from which the public charter school was not exempted;

(b) failed to meet or make sufficient progress toward the performance expectations set forth in the charter contract; or

(2) An authorizer shall develop revocation and nonrenewal processes that:

(a) provide the charter holders with timely notification of the prospect of revocation or nonrenewal and of the reasons for the possible closure;

(b) allow the charter holders a reasonable amount of time in which to prepare a response;

(c) provide the charter holders an opportunity to submit documents and testimony at a hearing to challenge the rationale for the closure recommendation and in support of the continuation of the school;

(d) allow the charter holders to be represented by counsel and call witnesses on their behalf;

(e) permit the recording of the proceedings; and

(f) provide for a final determination conveyed in writing to the charter holders.

(3) If an authorizer revokes or denies renewal of a charter, the authorizer shall clearly state, by resolution of its governing board, the reasons for the revocation or nonrenewal.

(4) Within 10 days of taking action to renew, not renew, or revoke a charter, the authorizer shall report to the commission the action taken and at the same time shall provide a copy of the report to the public charter school. The report must include a copy of the authorizer governing board's resolution setting forth the action taken and reasons for the decision and providing assurances of compliance with all of the requirements set forth in [sections 1 through 17]. The authorizer's decision is appealable to the commission in writing within 30 days of the commission's receipt of the authorizer's report.

(5) (a) Prior to any public charter school closure, an authorizer shall develop a public charter school closure protocol to ensure timely notification to parents, orderly transition of students and student records to new schools, and proper disposition of school funds, property, and assets in accordance with the requirements of [sections 1 through 17]. The protocol must specify responsible parties, transition and closure timelines, and a delineation of the respective duties of the school and the authorizer.

(b) The authorizer shall oversee the closure and work with the closing school to ensure a smooth and orderly closure and transition for students and parents.

(c) In the event of a public charter school closure for any reason, the assets of the school must be distributed first to satisfy outstanding payroll obligations for employees of the school, then to creditors of the school, and then to the state general fund. If the assets of the school are insufficient to pay all obligations, the prioritization of the distribution of assets may be determined by a court of law.

(d) If a closing public charter school was converted from an existing public school, the closing public charter school is not responsible for any financial obligation or debt of the previously existing public school unless the converting public charter school assumed the debt or obligation at the time of conversion.

(6) Transfer of a charter contract, and of oversight of that public charter school from one authorizer to another before the expiration of the charter term, may occur only if the authorizer violates the provisions of [section 5] or by special petition to the commission by a public charter school or its authorizer. The commission shall consider a petition for transfer on a case-by-case basis and may grant transfer requests in response to special circumstances and to evidence that the transfer would serve the best interests of the public charter school's students.

(7) On or before December 1 of each year, beginning in the first year public charter schools have been in operation for a full school year, the commission shall issue to the governor, the legislature, and the public an annual report on the state's public charter schools that includes data from the annual reports submitted by every authorizer, as well as any additional relevant data compiled by the commission, for the school year ending in the preceding calendar year. The annual report must include:

(a) a comparison of the performance of public charter school students with the performance of academically, ethnically, and economically comparable groups of students in noncharter public schools; and

(b) the commission's assessment of the successes, challenges, and areas for improvement in meeting the purposes of [sections 1 through 17], including the commission's assessment of the sufficiency of funding for public charter schools, the efficacy of the state formula for authorizer funding, and any suggested changes in state law or policy necessary to strengthen the state's public charter schools.

NEW SECTION. Section 13. Charter school operation and autonomy. (1) (a) A public charter school must be a nonprofit education organization.

(b) A public charter school is subject to all federal laws and authorities as provided in [sections 1 through 17] or arranged by charter contract with the school's authorizer consistent with applicable laws, rules, and regulations.

(c) Except as provided in [sections 1 through 17], a public charter school is not subject to the provisions of Title 20 or any state or local rule, regulation, policy, or procedure relating to noncharter public schools within an applicable local school district.

(d) A charter contract may consist of one or more schools, to the extent approved by the authorizer and consistent with applicable law. Each public charter school that is part of a charter contract is separate and distinct from any other public charter school.

(e) A single governing board may hold one or more charter contracts. Each public charter school that is part of a charter contract is separate and distinct from any other public charter school.

(2) A startup public charter school may not be created within the geographical boundaries of a class three elementary district, as defined in 20-6-201, or a class three high school district, as defined in 20-6-301, unless the public charter school is being converted from the existing public school or is a virtual public charter school:

(A) THE PUBLIC CHARTER SCHOOL IS BEING CONVERTED FROM AN EXISTING PUBLIC SCHOOL;

(B) THE SCHOOL DISTRICT ELECTS TO ESTABLISH A PUBLIC CHARTER SCHOOL;

(D) THE PUBLIC CHARTER SCHOOL IS A TRIBAL CHARTER SCHOOL; OR

(E) THE PUBLIC CHARTER SCHOOL IS A VIRTUAL PUBLIC CHARTER SCHOOL.

(3) (a) A public charter school shall function as a local educational agency. A public charter school is responsible for meeting the requirements of a local educational agency under applicable federal, state, and local laws, including those relating to special education.

(b) A public charter school is primarily responsible for special education at the school, including identification and service provisions, and is responsible for meeting the needs of enrolled students with disabilities. If a student's individualized education program team determines that a student's needs are so profound that they cannot be met in the public charter school and that the public charter school cannot provide a free, appropriate public education to that student, the student's district of residence shall place the student in a more appropriate setting.

(4) Except as provided in [sections 1 through 17], a public charter school shall comply with all budgeting requirements provided in Title 20, chapter 9, and is entitled to the same funding of public charter schools as are other public schools under those provisions. FUNDS MUST BE PAID FROM THE STATE DIRECTLY TO A PUBLIC CHARTER SCHOOL IN THE SAME MANNER AND AT THE SAME TIME AS FUNDS ARE PAID TO PUBLIC SCHOOL DISTRICTS UNDER THIS TITLE.

(5) For budgeting purposes, RECEIPT OF BASE AID AS DEFINED IN 20-9-306 OR OTHER COUNTY EQUALIZATION AID, a public charter school is considered to be in the same school district as that within whose geographical boundaries the public charter school is located.

(6) A public charter school has all the powers necessary for carrying out the terms of its charter contract, including the following powers:

(a) to receive and disburse funds for school purposes;

(b) to secure appropriate insurance and to enter into contracts and leases, free from prevailing wage laws;

(c) to contract with an education service provider for the management and operation of the public charter school only if the school's governing board retains oversight authority over the school;

(d) to incur debt in reasonable anticipation of the receipt of public or private funds;

(e) to pledge, assign, or encumber its assets to be used as collateral for loans or extensions of credit;

(f) to solicit and accept gifts or grants for school purposes subject to applicable laws and the terms of its charter contract;

(g) to acquire real property, for use as its facility or facilities, from public or private sources; and

(h) to sue and be sued in its own name.

(7) (a) A public charter school may not discriminate against any person on the basis of race, creed, color, sex, disability, or national origin or any other category that would be unlawful if done by a noncharter public school.

(b) A public charter school may not engage in any sectarian practices in its educational program, admissions policies, employment policies or practices, or operations.

(c) A public charter school may not discriminate against any student on the basis of national origin, minority status, or limited proficiency in English. Consistent with federal civil rights laws, a public charter school shall provide appropriate services designed to teach English and the general curriculum to students with limited English proficiency.

(d) The powers, obligations, and responsibilities set forth in the charter contract may not be delegated or assigned by either party, except as otherwise specifically provided in [sections 1 through 17].

(8) (a) A public charter school is subject to the same civil rights, health, and safety requirements applicable to other public schools in the state, except as otherwise specifically provided in [sections 1 through 17].

(b) A public charter school is subject to the student assessment and accountability requirements applicable to other public schools in the state, but [sections 1 through 17] do not preclude a public charter school from establishing additional student assessment measures that exceed state requirements if the school's authorizer approves those measures.

(c) A public charter school governing board is subject to and shall comply with state open meeting and freedom of information laws.

(9) (a) A public charter school shall comply with applicable federal laws, rules, and regulations regarding the qualification of teachers and other instructional staff. Public charter school teachers are exempt from state teacher certification requirements.

(b) Employees in public charter schools have the same rights and privileges as other public school employees except as otherwise provided in [sections 1 through 17].

(c) Employees in a public charter school are eligible for participation in retirement and other benefits programs of the state if the public charter school chooses to participate.

(d) Teachers and other school personnel, as well as governing board trustees, are subject to criminal history record checks and fingerprinting requirements as are other public schools.

(e) Public charter school employees may not be required to be members of any existing collective bargaining agreement between a school district and its employees. However, a public charter school may not interfere with laws and other applicable rules protecting the rights of employees to organize and be free from discrimination.

(10) (a) A public charter school is entitled to eligibility for state-sponsored or district-sponsored interscholastic leagues, competitions, awards, scholarships, and recognition programs for students, educators, administrators, and schools to the same extent as noncharter public schools.

(b) A public charter school student is eligible to participate in extracurricular activities not offered by the student's school at the school within whose attendance boundaries the student's custodial parent or legal guardian resides or the noncharter public school from which the student withdrew for the purpose of attending a public charter school.

(c) A public charter school student is eligible for extracurricular activities at a noncharter public school consistent with eligibility standards as applied to full-time students of the noncharter public school.

(d) A school district or noncharter public school may not impose additional requirements on a public charter school student to participate in extracurricular activities not imposed on full-time students of the noncharter public school.

(e) When selection to participate in an extracurricular activity at a noncharter public school is made on a competitive basis, a public charter school student is eligible to try out for and participate in the activity as provided in this section.

(f) The state superintendent of schools shall make rules establishing fees for public charter school students' participation in extracurricular activities at noncharter public schools. The rules must provide that:

(i) public charter school students pay the same fees as other students to participate in extracurricular activities;

(ii) public charter school students are eligible for fee waivers similar to other students;

(iii) for each public charter school student who participates in an extracurricular activity at a noncharter public school, the public charter school shall pay a share of the noncharter public school's costs for the extracurricular activity; and

(iv) a public charter school's share of the costs of having one or more students participate in an extracurricular activity at noncharter public schools must reflect state and local tax revenues expended, except capital facilities expenditures, for extracurricular activities in a noncharter public school divided by total student enrollment of the noncharter public school.

(g) In determining a public charter school's share of the costs of an extracurricular activity under subsections (10)(f)(iii) and (10)(f)(iv), the state superintendent of schools may establish uniform fees statewide based on average costs statewide or average costs within a sample of school districts.

NEW SECTION. Section 14. Funding of public charter schools. (1) A public charter school may not charge tuition and may only charge fees that may be imposed on BY other public schools in the state.

(2) Students of a public charter school are considered to be residents of the school district in which the public charter school is located for purposes of funding.

(3) In addition to those payments or funds specifically provided in [sections 1 through 17], a public charter school is entitled to all payments and funds available to school districts pursuant to Title 20, chapter 9, except for the quality educator payment described in 20-9-327.

(4) (a) Subject to 20-9-311, for its basic entitlement and per-ANB entitlement calculation in the first year that a public charter school is in existence, the ANB is based upon projections of initial year enrollment according to the charter contract and with as much factual information as may be available to the public charter school. The calculation must be performed in accordance with the ANB formula prescribed in 20-9-311 and approved by the superintendent of public instruction.

(b) (i) The initial year projections must be reconciled with actual enrollment counts no later than June 1 of the first fiscal year of operation.

(ii) If the initial ANB projections were underestimated, the public charter school may request additional funding from the state.

(iii) If the initial ANB projections were overestimated, the public charter school shall reimburse the state the amount resulting from the overestimation.

(5) The governing board of a public charter school shall adopt a general fund budget pursuant to 20-9-308 and to the general provisions of Title 20, chapter 9. The governing board shall provide the general fund budget directly to the superintendent of public instruction for disbursement of all payments available pursuant to Title 20, chapter 9. A PUBLIC CHARTER SCHOOL MAY EXPEND FUNDS ACCORDING TO ITS CHARTER CONTRACT AND IS NOT SUBJECT TO BUDGET RESTRICTIONS UNDER TITLE 20, CHAPTER 9.

(6) (a) The school district within which the public charter school is located is responsible for the transportation of students attending the public charter school in the same manner as students attending noncharter public schools if the student is a resident of the school district.

(b) Students who attend public charter schools and who reside outside of the school district may use existing bus routes and transportation services of the school district in which a public charter school is located. However, a school district may not be required to add or extend existing bus routes or other transportation services.

(c) The public charter school is responsible for providing transportation to students who reside within the school district and who attend the public charter school if the student is outside of the existing bus routes or other transportation services provided by the school district.

(d)(C) Any transportation costs incurred by a school district under this section are considered approved transportation costs in the same manner as transportation costs incurred by the school district for transporting students who attend noncharter public schools are considered approved transportation costs.

(e)(D) The public charter school may negotiate with a school district for the provision of transportation to students attending the public charter school.

(7) A public charter school may obligate the public charter school to indebtedness pursuant to and within the limitations of the bonding provisions pursuant to Title 20, chapter 9, part 4, and shall establish a building fund pursuant to 20-9-508. Any debt service obligations that exist in the school district in which the public charter school is located in the public charter school's initial year of operation must remain with the school district and may not be counted against the public charter school's budget.

(8) A public charter school or charter school district may receive money from any source for capital needs. In a report to the authorizer, a public charter school shall report the total amount of funds received from grants and other outside sources.

(8) NOTHING IN [SECTIONS 1 THROUGH 17] MAY BE CONSTRUED TO PROHIBIT ANY PERSON OR ORGANIZATION FROM PROVIDING FUNDING OR OTHER ASSISTANCE FOR THE ESTABLISHMENT OR OPERATION OF A PUBLIC CHARTER SCHOOL. THE GOVERNING BOARD OF A PUBLIC CHARTER SCHOOL IS AUTHORIZED TO ACCEPT GIFTS, DONATIONS, AND GRANTS OF ANY KIND MADE TO THE PUBLIC CHARTER SCHOOL AND TO EXPEND OR USE THE GIFTS, DONATIONS, OR GRANTS IN ACCORDANCE WITH THE CONDITIONS PRESCRIBED BY THE DONOR. A GIFT, DONATION, OR GRANT MAY NOT BE ACCEPTED IF THE GIFT, DONATION, OR GRANT IS SUBJECT TO A CONDITION THAT IS CONTRARY TO ANY PROVISION OF LAW OR TERM OF THE CHARTER CONTRACT.

(9) MONEY RECEIVED BY A PUBLIC CHARTER SCHOOL FROM ANY SOURCE AND REMAINING IN THE PUBLIC CHARTER SCHOOL'S ACCOUNTS AT THE END OF A BUDGET YEAR MUST REMAIN IN THE PUBLIC CHARTER SCHOOL'S ACCOUNTS FOR USE BY THE PUBLIC CHARTER SCHOOL IN SUBSEQUENT YEARS.

NEW SECTION. Section 15. Public charter school facility revolving loan account. (1) There is a public charter school facility revolving loan account in the state special revenue fund provided for in 17-2-102. The public charter school facility revolving loan account is composed of federal funds obtained by the state for public charter schools and any other funds appropriated or transferred to the fund by the state.

(2) (a) Loans may be made from funds in the public charter school facility revolving loan account to a public charter school upon application by a public charter school and approval by the authorizer.

(b) Money loaned to a public charter school pursuant to this section is for construction, purchase, renovation, and maintenance of public charter school facilities.

(c) A loan to a public charter school may not exceed $20 million over 15 years. A public charter school may receive multiple loans from the public charter school facility revolving loan program, as long as the total amount received from the program is within the conditions provided in this section.

(3) The authorizer may consider all of the following when making a determination as to the approval of a public charter school's loan application:

(a) soundness of the financial business plans of the applicant public charter school;

(b) availability of other sources of funding to the public charter school;

(d) the impact that loans received pursuant to this section will have on the public charter school's receipt of other private and public financing;

(e) plans for innovative enhancement or leveraging of funds received pursuant to this section, such as loan guarantees or other types of credit enhancements; and

(f) the financial needs of the public charter school.

(4) Commencing with the first fiscal year following the fiscal year the public charter school receives the loan, the public charter school shall repay the loan in equal annual amounts over a number of years agreed upon between the public charter school and the state.

(5) In the case of default of a loan made directly to a public charter school pursuant to this section, the public charter school is solely liable for repayment of the loan.

NEW SECTION. Section 16. Public charter school access to district facilities and land. (1) A public charter school has a right of first refusal to purchase or lease at or below fair market value a closed public school facility or property or unused portion of a public school facility or property located in a school district from which it draws its students if the school district decides to sell or lease the public school facility or property.

(2) A public charter school may negotiate and contract at or below fair market value with a school district, the governing body of a college or university or community college, or any other public entity or for-profit or nonprofit private entity for the use of a facility for a school building.

(3) Libraries, community service organizations, museums, performing arts organizations, theaters, cinemas, churches, community colleges, colleges, or universities may provide space to public charter schools within their facilities under their preexisting zoning and land use designations.

NEW SECTION. Section 17. Public charter school endowment fund. (1) There is an account in the state special revenue fund provided for in 17-2-102 to be known as the public charter school endowment account. The purpose of the account is the receipt and expenditure of gifts, grants, legacies, devises, and donations given specifically for the creation and operation of Montana public charter schools.

(2) All donations must be from a private source and may not be expended for any purpose other than for the benefit of qualifying public charter schools. A GIFT, DONATION, OR GRANT MADE DIRECTLY TO A PUBLIC CHARTER SCHOOL OR SCHOOLS IS NOT PROHIBITED BY THIS SUBSECTION.

(3) The administration of the public charter schools endowment fund must be conducted in accordance with 20-9-604.

Section 18. Section 15-6-201, MCA, is amended to read:

"15-6-201. Governmental, charitable, and educational categories -- exempt property. (1) The following categories of property are exempt from taxation:

(a) except as provided in 15-24-1203, the property of:

(i) the United States, except:

(A) if congress passes legislation that allows the state to tax property owned by the federal government or an agency created by congress; or

(B) as provided in 15-24-1103;

(ii) the state, counties, cities, towns, and school districts;

(iii) irrigation districts organized under the laws of Montana and not operated for gain or profit;

(iv) municipal corporations;

(v) public libraries;

(vi) rural fire districts and other entities providing fire protection under Title 7, chapter 33; and

(vii) special districts created pursuant to Title 7, chapter 11, part 10;

(b) buildings and furnishings in the buildings that are owned by a church and used for actual religious worship or for residences of the clergy, not to exceed one residence for each member of the clergy, together with the land that the buildings occupy and adjacent land reasonably necessary for convenient use of the buildings, which must be identified in the application, and all land and improvements used for educational or youth recreational activities if the facilities are generally available for use by the general public but may not exceed 15 acres for a church or 1 acre for a clergy residence after subtracting any area required by zoning, building codes, or subdivision requirements;

(d) property, not to exceed 80 acres, which must be legally described in the application for the exemption, used exclusively for educational purposes, including dormitories and food service buildings for the use of students in attendance and other structures necessary for the operation and maintenance of an educational institution that:

(i) is not operated for gain or profit;

(ii) has an attendance policy; and

(iii) has a definable curriculum with systematic instruction;

(e) property used exclusively for nonprofit health care facilities, as defined in 50-5-101, licensed by the department of public health and human services and organized under Title 35, chapter 2 or 3. A health care facility that is not licensed by the department of public health and human services and organized under Title 35, chapter 2 or 3, is not exempt.

(f) property that is:

(i) owned and held by an association or corporation organized under Title 35, chapter 2, 3, 20, or 21;

(ii) devoted exclusively to use in connection with a cemetery or cemeteries for which a permanent care and improvement fund has been established as provided for in Title 35, chapter 20, part 3; and

(iii) not maintained and not operated for gain or profit;

(g) subject to subsection (2), property that is owned or property that is leased from a federal, state, or local governmental entity by institutions of purely public charity if the property is directly used for purely public charitable purposes;

(h) evidence of debt secured by mortgages of record upon real or personal property in the state of Montana;

(i) public museums, art galleries, zoos, and observatories that are not operated for gain or profit;

(j) motor vehicles, land, fixtures, buildings, and improvements owned by a cooperative association or nonprofit corporation organized to furnish potable water to its members or customers for uses other than the irrigation of agricultural land;

(k) the right of entry that is a property right reserved in land or received by mesne conveyance (exclusive of leasehold interests), devise, or succession to enter land with a surface title that is held by another to explore, prospect, or dig for oil, gas, coal, or minerals;

(l) (i) property that is owned and used by a corporation or association organized and operated exclusively for the care of persons with developmental disabilities, persons with mental illness, or persons with physical or mental impairments that constitute or result in substantial impediments to employment and that is not operated for gain or profit; and

(ii) property that is owned and used by an organization owning and operating facilities that are for the care of the retired, aged, or chronically ill and that are not operated for gain or profit; and

(m) property owned by a nonprofit corporation that is organized to provide facilities primarily for training and practice for or competition in international sports and athletic events and that is not held or used for private or corporate gain or profit. For purposes of this subsection (1)(m), "nonprofit corporation" means an organization that is exempt from taxation under section 501(c) of the Internal Revenue Code and incorporated and admitted under the Montana Nonprofit Corporation Act; and

(n) property leased, owned, or used by a public charter school established pursuant to [sections 1 through 17].

(2) (a) For the purposes of subsection (1)(b), the term "clergy" means, as recognized under the federal Internal Revenue Code:

(i) an ordained minister, priest, or rabbi;

(ii) a commissioned or licensed minister of a church or church denomination that ordains ministers if the person has the authority to perform substantially all the religious duties of the church or denomination;

(iii) a member of a religious order who has taken a vow of poverty; or

(iv) a Christian Science practitioner.

(b) For the purposes of subsection (1)(g):

(i) the term "institutions of purely public charity" includes any organization that meets the following requirements:

(A) The organization offers its charitable goods or services to persons without regard to race, religion, creed, or gender and qualifies as a tax-exempt organization under the provisions of section 501(c)(3), Internal Revenue Code, as amended.

(B) The organization accomplishes its activities through absolute gratuity or grants. However, the organization may solicit or raise funds by the sale of merchandise, memberships, or tickets to public performances or entertainment or by other similar types of fundraising activities.

(ii) agricultural property owned by a purely public charity is not exempt if the agricultural property is used by the charity to produce unrelated business taxable income as that term is defined in section 512 of the Internal Revenue Code, 26 U.S.C. 512. A public charity claiming an exemption for agricultural property shall file annually with the department a copy of its federal tax return reporting any unrelated business taxable income received by the charity during the tax year, together with a statement indicating whether the exempt property was used to generate any unrelated business taxable income.

(iii) up to 15 acres of property owned by a purely public charity is exempt at the time of its purchase even if the property must be improved before it can directly be used for its intended charitable purpose. If the property is not directly used for the charitable purpose within 8 years of receiving an exemption under this section or if the property is sold or transferred before it entered direct charitable use, the exemption is revoked and the property is taxable. In addition to taxes due for the first year that the property becomes taxable, the owner of the property shall pay an amount equal to the amount of the tax due that year times the number of years that the property was tax-exempt under this section. The amount due is a lien upon the property and when collected must be distributed by the treasurer to funds and accounts in the same ratio as property tax collected on the property is distributed. At the time the exemption is granted, the department shall file a notice with the clerk and recorder in the county in which the property is located. The notice must indicate that an exemption pursuant to this section has been granted. The notice must describe the penalty for default under this section and must specify that a default under this section will create a lien on the property by operation of law. The notice must be on a form prescribed by the department.

(iv) not more than 160 acres may be exempted by a purely public charity under any exemption originally applied for after December 31, 2004. An application for exemption under this section must contain a legal description of the property for which the exemption is requested.

(c) For the purposes of subsection (1)(i), the term "public museums, art galleries, zoos, and observatories" means governmental entities or nonprofit organizations whose principal purpose is to hold property for public display or for use as a museum, art gallery, zoo, or observatory. The exempt property includes all real and personal property owned by the public museum, art gallery, zoo, or observatory that is reasonably necessary for use in connection with the public display or observatory use. Unless the property is leased for a profit to a governmental entity or nonprofit organization by an individual or for-profit organization, real and personal property owned by other persons is exempt if it is:

(i) actually used by the governmental entity or nonprofit organization as a part of its public display;

(ii) held for future display; or

(iii) used to house or store a public display."

Section 19. Section 20-5-323, MCA, is amended to read:

"20-5-323. Tuition and transportation rates. (1) Except as provided in subsections (2) through (5), whenever a child has approval to attend a school outside of the child's district of residence under the provisions of 20-5-320 or 20-5-321, the rate of tuition charged for a Montana resident student may not exceed 20% of the per-ANB maximum rate established in 20-9-306 for the year of attendance.

(2) The tuition for a child with a disability must be determined under rules adopted by the superintendent of public instruction for the calculation of tuition for special education pupils.

(3) The tuition rate for out-of-district placement pursuant to 20-5-321(1)(d) and (1)(e) for a student without disabilities who requires a program with costs that exceed the average district costs must be determined as the actual individual costs of providing that program according to the following:

(a) the district of attendance and the district, person, or entity responsible for the tuition payments shall approve an agreement with the district of attendance for the tuition cost;

(b) for a Montana resident student, 80% of the maximum per-ANB rate established in 20-9-306, received in the year for which the tuition charges are calculated, must be subtracted from the per-student program costs for a Montana resident student; and

(4) When a child attends a public school of another state or province, the amount of daily tuition may not be greater than the average annual cost for each student in the child's district of residence. This calculation for tuition purposes is determined by totaling all of the expenditures for all of the district budgeted funds for the preceding school fiscal year and dividing that amount by the October 1 enrollment in the preceding school fiscal year. For the purposes of this subsection, the following do not apply:

(a) placement of a child with a disability pursuant to Title 20, chapter 7, part 4;

(b) placement made in a state or province with a reciprocal tuition agreement pursuant to 20-5-314;

(d) out-of-state placement by a state agency.

(5) When a child is placed by a state agency in an out-of-state residential facility, the state agency making the placement is responsible for the education costs resulting from the placement.

(6) The amount, if any, charged for transportation may not exceed the lesser of the average transportation cost for each student in the child's district of residence or 35 cents a mile. The average expenditures for the district transportation fund for the preceding school fiscal year must be calculated by dividing the transportation fund expenditures by the October 1 enrollment for the preceding fiscal year.

(7) The provisions of this section do not apply to a public charter school established under [sections 1 through 17]."

Section 20. Section 20-6-104, MCA, is amended to read:

"20-6-104. Moratorium on creation of new district -- exceptions. (1) Except as provided in subsections (2) and (3), a school district may not initiate the creation of a new elementary district or a new high school district.

(2) Pursuant to the provisions of 20-6-326, the trustees or the electors of an existing elementary district may initiate the creation of a new high school district solely for the purpose of expanding into a K-12 district.

(3) The moratorium in subsection (1) does not apply to a district that results from the procedure for the dissolution of a K-12 school district pursuant to 20-6-704 or to a public charter school established in accordance with the provisions of [sections 1 through 17]."

Section 21. Section 20-9-313, MCA, is amended to read:

"20-9-313. Circumstances under which regular average number belonging may be increased. (1) The average number belonging of a school, calculated in accordance with the ANB formula prescribed in 20-9-311, may be increased when:

(a) the opening of a new elementary school or the reopening of an elementary school has been approved in accordance with 20-6-502. The average number belonging for the school must be established by the county superintendent and approved, disapproved, or adjusted by the superintendent of public instruction.

(b) the opening or reopening of a high school or a branch of the county high school has been approved in accordance with 20-6-503, 20-6-504, or 20-6-505. The average number belonging for the high school must be established by the county superintendent's estimate, after an investigation of the probable number of pupils that will attend the high school.

(c) a district anticipates an increase in the average number belonging due to the closing of a private or public school in the district or a neighboring district. The estimated increase in average number belonging must be established by the trustees and the county superintendent and approved, disapproved, or adjusted by the superintendent of public instruction no later than the fourth Monday in June.

(d) a district anticipates an unusual enrollment increase in the ensuing school fiscal year. The increase in average number belonging must be based on estimates of increased enrollment approved by the superintendent of public instruction and must be computed in the manner prescribed by 20-9-314.

(e) for the initial year of operation of a kindergarten program established under 20-7-117(1), the ANB to be used for budget purposes is:

(i) one-half the number of 5-year-old children residing in the district as of September 10 of the preceding school year, either as shown on the official school census or as determined by some other procedure approved by the superintendent of public instruction, for the purpose of implementing a half-time kindergarten program as provided in 20-1-301; or

(ii) the number of 5-year-old children residing in the district as of September 10 of the preceding school year, either as shown on the official school census or as determined by some other procedure approved by the superintendent of public instruction, for the purpose of implementing a full-time kindergarten program as provided in 20-1-301; or

(f) a high school district provides early graduation for a student who completes graduation requirements in less than eight semesters or the equivalent amount of secondary school enrollment. The increase must be established by the trustees as though the student had attended to the end of the school fiscal year and must be approved, disapproved, or adjusted by the superintendent of public instruction.; or

(g) the opening of a public charter school is approved under the provisions of [sections 1 through 17].

(2) This section does not apply to the expansion of a half-time kindergarten program to a full-time kindergarten program."

Section 22. Section 61-3-321, MCA, is amended to read:

"61-3-321. Registration fees of vehicles and vessels -- certain vehicles exempt from registration fees -- disposition of fees. (1) Except as otherwise provided in this section, registration fees must be paid upon registration or, if applicable, renewal of registration of motor vehicles, snowmobiles, watercraft, trailers, semitrailers, and pole trailers as provided in subsections (2) through (19):

(2) Unless a light vehicle is permanently registered under 61-3-562, the annual registration fee for light vehicles, trucks and buses under 1 ton, and logging trucks less than 1 ton is as follows:

(a) if the vehicle is 4 or less years old, $217;

(b) if the vehicle is 5 through 10 years old, $87; and

(3) Except as provided in subsection (14), the one-time registration fee based on the declared weight of a trailer, semitrailer, or pole trailer is as follows:

(a) if the declared weight is less than 6,000 pounds, $61.25; or

(b) if the declared weight is 6,000 pounds or more, $148.25.

(4) Except as provided in subsection (14), the one-time registration fee for motor vehicles owned and operated solely as collector's items pursuant to 61-3-411, based on the weight of the vehicle, is as follows:

(a) 2,850 pounds and over, $10; and

(b) under 2,850 pounds, $5.

(5) Except as provided in subsection (14), the one-time registration fee for off-highway vehicles other than a quadricycle or motorcycle is $61.25.

(6) The annual registration fee for heavy trucks, buses, and logging trucks in excess of 1 ton is $22.75.

(7) (a) The annual registration fee for a motor home, based on the age of the motor home, is as follows:

(i) less than 2 years old, $282.50;

(ii) 2 years old and less than 5 years old, $224.25;

(iii) 5 years old and less than 8 years old, $132.50; and

(iv) 8 years old and older, $97.50.

(b) The owner of a motor home that is 11 years old or older and that is subject to the registration fee under this section may permanently register the motor home upon payment of:

(i) a one-time registration fee of $237.50;

(ii) unless a new set of license plates is being issued, an insurance verification fee of $5, which must be deposited in the account established under 61-6-158; and

(iii) if applicable, five times the renewal fees for personalized license plates under 61-3-406.

(8) (a) Except as provided in subsection (14), the one-time registration fee for motorcycles and quadricycles registered for use on public highways is $53.25, and the one-time registration fee for motorcycles and quadricycles registered for both off-road use and for use on the public highways is $114.50.

(b) An additional fee of $16 must be collected for the registration of each motorcycle or quadricycle as a safety fee, which must be deposited in the state motorcycle safety account provided for in 20-25-1002.

(9) Except as provided in subsection (14), the one-time registration fee for travel trailers, based on the length of the travel trailer, is as follows:

(a) under 16 feet in length, $72; and

(b) 16 feet in length or longer, $152.

(10) Except as provided in subsection (14), the one-time registration fee for a motorboat, sailboat, personal watercraft, or motorized pontoon required to be numbered under 23-2-512 is as follows:

(a) for a personal watercraft or a motorboat, sailboat, or motorized pontoon less than 16 feet in length, $65.50;

(b) for a motorboat, sailboat, or motorized pontoon at least 16 feet in length but less than 19 feet in length, $125.50; and

(11) (a) Except as provided in subsections (11)(b) and (14), the one-time registration fee for a snowmobile is $60.50.

(b) (i) A snowmobile that is licensed by a Montana business and is owned exclusively for the purpose of daily rental to customers is assessed:

(A) a fee of $40.50 in the first year of registration; and

(B) if the business reregisters the snowmobile for a second year, a fee of $20.

(ii) If the business reregisters the snowmobile for a third year, the snowmobile must be permanently registered and the business is assessed the registration fee imposed in subsection (11)(a).

(12) (a) Except as provided in subsection (12)(b), a fee of $10 must be collected when a new set of standard license plates, a new single standard license plate, or a replacement set of special license plates required under 61-3-332 is issued. The $10 fee imposed under this subsection does not apply when previously issued license plates are transferred under 61-3-335. All registration fees imposed under this section must be paid if the vehicle to which the plates are transferred is not currently registered.

(b) Until January 1, 2015, an additional fee of $15 must be collected if a vehicle owner elects to keep the same license plate number from license plates issued on or after January 1, 2006, but before January 1, 2010, when replacement of those plates is required under 61-3-332(3).

(c) The fees imposed in this subsection (12) must be deposited in the account established under 61-6-158, except that $2 of the fee imposed in subsection (12)(a) must be deposited in the state general fund.

(13) The provisions of this part with respect to the payment of registration fees do not apply to and are not binding upon motor vehicles, trailers, semitrailers, snowmobiles, watercraft, or tractors owned or controlled by the United States of America or any state, county, city, or special district, as defined in 18-8-202, or to a vehicle or vessel that meets the description of property exempt from taxation under 15-6-201(1)(a), (1)(c), (1)(d), (1)(e), (1)(f), (1)(g), (1)(i), (1)(j), (1)(l), or (1)(m), or (1)(n), 15-6-203, or 15-6-215, except as provided in 61-3-520.

(14) Whenever ownership of a trailer, semitrailer, pole trailer, off-highway vehicle, motorcycle, quadricycle, travel trailer, motor home, motorboat, sailboat, personal watercraft, motorized pontoon, snowmobile, or motor vehicle owned and operated solely as a collector's item pursuant to 61-3-411 is transferred, the new owner shall title and register the vehicle or vessel as required by this chapter and pay the fees imposed under this section.

(15) A person eligible for a waiver under 61-3-460 is exempt from the fees required under this section.

(16) Except as otherwise provided in this section, revenue collected under this section must be deposited in the state general fund.

(17) The fees imposed by subsections (2) through (11) are not required to be paid by a dealer for the enumerated vehicles or vessels that constitute inventory of the dealership.

(18) (a) Unless a person exercises the option in subsection (18)(b), an additional fee of $4 must be collected for each light vehicle registered under this part. This fee must be accounted for and transmitted separately from the registration fee. The fee must be deposited in an account in the state special revenue fund to be used for state parks, for fishing access sites, and for the operation of state-owned facilities. Of the $4 fee, the department of fish, wildlife, and parks shall use $3.50 for state parks, 25 cents for fishing access sites, and 25 cents for the operation of state-owned facilities at Virginia City and Nevada City.

(b) A person who registers a light vehicle may, at the time of annual registration, certify that the person does not intend to use the vehicle to visit state parks and fishing access sites and may make a written election not to pay the additional $4 fee provided for in subsection (18)(a). If a written election is made, the fee may not be collected.

(19) For each light vehicle, trailer, semitrailer, pole trailer, heavy truck, motor home, motorcycle, quadricycle, and travel trailer subject to a registration fee under this section, an additional fee of $5 must be collected and forwarded to the state for deposit in the account established in 44-1-504.

(20) This section does not apply to a motor vehicle, trailer, semitrailer, or pole trailer that is governed by 61-3-721."

Section 23. Section 61-10-214, MCA, is amended to read:

"61-10-214. Exemptions. (1) Motor vehicles operating exclusively for transportation of persons for hire within the limits of incorporated cities or towns and within 15 miles from the limits are exempt from this part.

(2) Motor vehicles brought or driven into Montana by a nonresident, migratory, bona fide agricultural worker temporarily employed in agricultural work in this state when those motor vehicles are used exclusively for transportation of agricultural workers are exempt from this part.

(3) Vehicles lawfully displaying a dealer's or wholesaler's plate as provided in 61-4-102 and 61-4-125 are exempt from this part for a period not to exceed 7 days when moving to or from a dealer's or wholesaler's place of business when unloaded or loaded with dealer's or wholesaler's property only or while being demonstrated in the course of the dealer's or wholesaler's business. Vehicles being demonstrated may not be leased, rented, or operated for compensation by the licensed dealer or wholesaler.

(4) Vehicles exempt from property tax under 15-6-201(1)(a), (1)(c), (1)(d), (1)(e), (1)(f), (1)(g), (1)(i), (1)(j), (1)(l), or (1)(m), or (1)(n) or 15-6-228(4) are exempt from this part. The department of transportation may require documentation of tax-exempt status from the department of revenue before granting this exemption."

NEW SECTION. Section 24. Public charter schools -- exceptions. Except as provided in [sections 1 through 17], a public charter school is not subject to the provisions of Title 20.

NEW SECTION. Section 25. Appropriation. There is appropriated $250,000 from the general fund to the charter school commission as a one-time appropriation to commence operations, hire staff qualified to execute day-to-day operations, and hire APPROVE authorizers for the establishment or conversion of public charter schools. THE APPROPRIATION MUST BE MADE UPON PASSAGE AND APPROVAL OF [THIS ACT].

NEW SECTION. Section 25. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

NEW SECTION. Section 26. Notification to tribal governments. The secretary of state shall send a copy of [this act] to each tribal government located on the seven Montana reservations and to the Little Shell Chippewa tribe.

NEW SECTION. Section 27. Codification instruction. (1) [Sections 1 through 17] are intended to be codified as an integral part of Title 20, and the provisions of Title 20 apply to [sections 1 through 17].

(2) [Section 24] is intended to be codified as an integral part of Title 20, chapter 1, part 2, and the provisions of Title 20, chapter 1, part 2, apply to [section 24].

NEW SECTION. Section 28. Effective date. [This act] is effective July 1, 2011.

- END -

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