HBA-JEK H.B. 6 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 6 By: Dunnam Public Education 3/20/2001 Introduced BACKGROUND AND PURPOSE On May 30, 1995, the Texas Legislature authorized an initial set of 20 open-enrollment charter schools to create competition and innovation in Texas public schools as a whole. The House Public Education Committee established an interim subcommittee on charter schools to evaluate the charter school program and report to the 77th Legislature. The subcommittee reports that there is little evidence to support that charter schools are using innovative teaching methods or that they are performing as well as traditional public schools. Financial troubles and statutory ambiguities have contributed to the abrupt failures of several charter schools. In some cases, the sudden closing of the schools resulted in displaced students having to repeat a grade. Yet the number of charter schools has grown to approximately 200, and the subcommittee reports that without restrictions, Texas could see over 1,000 charter campuses in the next few years. Unless the growth of charter schools is slowed and the accountability and oversight strengthened, the subcommittee concludes problems will continue to occur at a faster rate than the State Board of Education can discover and solve them. House Bill 6 establishes a two-year moratorium on new charters for open-enrollment charter schools and strengthens the accountability and oversight provisions regarding the operation of open-enrollment charter schools. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of education in SECTION 3 (Section 12.104, Education Code), SECTION 19 (Section 12.127, Education Code), SECTION 20 (Sections 12.153, 12.156, and 12.160, Education Code), and to the State Board of Education in SECTION 19 (Section 12.123, Education Code) and SECTION 27 of this bill. ANALYSIS House Bill 6 amends the Education Code to set forth provisions regarding open-enrollment charter schools (charter schools). Moratorium H.B. 6 prohibits the State Board of Education (board) from issuing a charter for a charter school after August 31, 2001. The bill also prohibits the board from approving an expansion of an existing charter school to an additional campus or site beyond the campuses or sites stated in the charter. The moratoriums expire September 1, 2003 (SECTION 1, Sec. 12.1015 and SECTION 10, Sec. 12.114). Minimum Student Enrollment H.B. 6 prohibits the State Board of Education (board) from granting or renewing a charter unless the board determines that the school will have and maintain an enrollment of at least 50 students, except that a school may have at least 20 students if the board specifically finds that the nature of the school requires an enrollment of fewer than 50 students (SECTION 1, Sec. 12.1014). Delegation The bill authorizes the board to delegate to the commissioner of education (commissioner) any power or duty regarding charter schools other than the power to grant, deny, modify, place on probation, deny renewal of, or revoke a charter for an open-enrollment charter school (SECTION 1, Sec. 12.1013). Applicability of Laws and Rules H.B. 6 specifies that a charter school is subject to the federal and state laws governing public school districts (SECTION 2, Sec. 12.103). The bill provides that the Local Government Records Act, the Professional Services Procurement Act, and laws regarding open meetings, public information, nepotism, preservation and management of local government records, real property held in trust, competitive bidding on public work contracts, authorized investments for local governments, and conflicts of interest apply to a charter school, the governing body of a charter holder, the governing body of a charter school, and charter school students to the same extent the laws apply to a public school district, the board of trustees of a school district, and public school students (SECTION 2, Sec. 12.103 and SECTION 5, Secs. 12.1051, 12.1052, and 12.1053). The bill requires a charter school in existence on September 1, 2001 to designate a records management officer, establish a records management program, and prepare and file records control schedules by September 1, 2002 (SECTION 31). H.B. 6 provides that a charter school is subject to requirements to notify parents concerning inappropriately certified or uncertified teachers. The bill also provides that charter schools are subject to provisions governing purchasing and contracting and the selection of a bank depository by a public school. The bill also specifies that a charter school is subject to the requirement that a school day be at least seven hours each day unless the commissioner grants the open-enrollment charter school a waiver. The bill authorizes the commissioner to adopt rules to apply other provisions of the Education Code to charter schools to the extent the commissioner determines these rules are necessary or advisable to provide and account for state funding of charter schools (SECTION 3, Sec. 12.104 and SECTION 4, Sec. 12.1041). Funding H.B. 6 restructures how charter schools receive funding under the foundation school program. The bill no longer entitles a charter school to the distribution from the available school fund and local taxes that the district in which the student resides would be entitled to, but instead provides that a charter holder is entitled to receive funds as if it were a school district without a tier one local share and without any local revenue. A charter school's allotment is to be calculated based on the average small and mid-sized district adjustment, the average sparsity adjustment, and the average district enrichment for the state (SECTION 6, Sec. 12.106). H.B. 6 provides that funds received by a charter holder after September 1, 2001 and land bought or leased by a charter holder with state funds after September 1, 2001 are considered to be public funds or public property. These funds or lands are to be held in trust for the benefit of the students of the charter school, and may be used only for a purpose for which a school district is authorized to use local school funds or property. The bill requires the commissioner to take possession and assume control of the property of a charter school that ceases to operate and to supervise the disposition of the property in accordance with law. The security interests in a lien on charter school property of secured property are not affected by such an occurrence. The bill authorizes the commissioner to adopt rules regarding the administration of an openenrollment charter school's property that has been bought or leased with state funds (SECTION 6, Sec. 12.106 and SECTION 19, Sec. 12.127). The bill authorizes the governing body of a charter school to require a student to pay only those fees that the board of trustees of a school district may charge (SECTION 6, Sec. 12.108). The bill amends the Local Government Code to require the governing body of an open-enrollment charter school to prepare and publish an annual financial statement for each fund subject to its authority (SECTION 24, Sec. 140.005 and SECTION 25, Sec. 140.006). Teachers and Employees H.B. 6 amends the Education Code to provide that a person employed as a teacher by a charter school must hold a bachelor's or more advanced degree from an institution of higher education (SECTION 19, Sec. 12.128). The bill provides an exception for a current teacher who does not have a bachelor's degree and is under contract as a teacher for the 2001-2002 school year if the person enrolls in an institution of higher education no later than January 1, 2002 and obtains a bachelor's degree no later than July 1, 2007 (SECTION 19, Sec. 12.1281). H.B. 6 provides that an employee of a charter school's management company who qualifies for membership under the Teacher Retirement System of Texas (TRS) shall be covered under TRS to the same extent a qualified employee of a school district is covered (SECTION 5, Sec. 12.1055). Charter Applications and Revisions H.B. 6 requires the board to adopt an application form and procedure that must be used to apply for the renewal of a charter. The bill provides that an application for a charter or renewal of a charter must include a description of each instructional approach to be used and the program to be provided during the school day (SECTION 7, Sec. 12.110). The bill provides that the charter must specify the powers or duties of the school's governing body that may be delegated and prohibit discrimination in the school's admission policy on the basis of artistic ability (SECTION 8, Sec. 12.111). The bill requires the Texas Education Agency (TEA) to investigate existing charter schools to determine if any of them are operating in a manner that effectively requires students to possess special artistic, athletic, or other abilities to be considered for admission and to report any violations to the board by January 1, 2002 (SECTION 26). The bill requires a charter school that receives more acceptable applications for admission than available positions to fill the available positions by lottery (SECTION 14, Sec. 12.117). H.B. 6 establishes that the grant of a charter does not create a property right to the charter or an entitlement to a renewal of a charter on the same terms as it was originally issued (SECTION 9, Sec. 12.113). The bill provides that a charter holder that seeks to increase grade levels or enrollment or expand to an additional campus or site beyond what is stated in the charter must submit an application for approval in a form approved by the board. The bill provides that the board must interview appropriate school representatives and carefully review an application for revision (SECTION 10, Sec. 12.114). The bill requires a charter holder to file a copy of its articles of incorporation with the board if applicable (SECTION 17, Sec. 12.119). Evaluation of Open-Enrollment Charter Schools The bill authorizes the board to modify, place on probation, revoke, or deny the renewal of an openenrollment charter school's charter if the board determines that the charter holder failed to protect the health, safety, or welfare of the students enrolled at the school (SECTION 11, Sec. 12.115). The bill authorizes the commissioner to temporarily withhold funding, suspend the authority of an open-enrollment charter school to operate, or take any other reasonable action to protect the health, safety, or welfare of the school's students based on evidence until further determination is made by the commissioner or the board that conditions did not or no longer present a danger (SECTION 13, Sec. 12.1162). The Administrative Procedure Act does not apply to a hearing that is related to a modification, placement on probation, revocation, denial of renewal, or suspension of a charter under these provisions (SECTION 12, Sec. 12.116 and SECTION 13, Sec. 12.1162). H.B. 6 prohibits a charter school whose charter has been revoked or surrendered from continuing to operate or receive state funds, and authorizes an open-enrollment charter school whose renewal is denied by the board to continue to operate and receive state funds only for the remainder of the school year (SECTION 13, Sec. 12.1161). H.B. 6 provides that the evaluation of charter schools must include an evaluation of whether a school district or its employees are informing students at risk of dropping out of school of the opportunity to attend an open-enrollment charter school for the purpose of enabling the district or campus to avoid responsibility for those students (SECTION 15, Sec. 12.118). The bill requires the commissioner to authorize a special accreditation investigation of the school district in response to such an allegation (SECTION 22, Sec. 39.075). The bill establishes criteria for the evaluation of a charter school that assists students in earning a high school diploma or high school equivalency certificate (SECTION 15, Sec. 12.118). H.B. 6 requires TEA to study the use of and effectiveness of innovative instructional methods by charter schools and the procedures TEA uses to obtain information regarding the performance of charter schools. The bill requires TEA to report its assessment and recommendations in the comprehensive biennial report by December 1, 2002. These provisions expire January 1, 2003 (SECTION 16, Secs. 12.1181 and 12.1182). Governing Body of a Charter School H.B. 6 prohibits a person or a person whose spouse has a substantial interest in a management company from serving as a member of the governing body of a charter holder or as an officer or employee of an open-enrollment charter school (SECTION 18, Sec. 12.120). The bill requires the governing body of a charter school to govern and oversee the management of the school including the use of state funds. The bill prohibits the governing body of a charter school from delegating the governing body's powers and duties unless the charter provides for such a delegation. The bill requires the governing body of a charter school to provide for appeals to the governing body or its designee concerning student disciplinary matters (SECTION 19, Sec. 12.121). H.B. 6 provides that a member of the governing body of a charter holder or a member of the governing body of a charter school is personally liable for a misuse of state funds or property purchased or leased with state funds (SECTION 19, Sec. 12.122). The bill authorizes the board to adopt rules prescribing training for officers and members of governing bodies of open-enrollment charter schools by January 1, 2002. The bill describes what the rules must include and establishes penalties for a person who does not complete the minimum training (SECTION 19, Sec. 12.123 and SECTION 27). Management Contracts H.B. 6 requires the governing body of a charter school to enter into a contract for management services if the governing body determines that contracting is necessary and desirable (SECTION 19, Sec. 12.121). The bill prohibits the charter holder or the governing body of a charter school from accepting a loan and entering into a contract to provide management services with the same management company (SECTION 19, Sec. 12.124). H.B. 6 requires a charter school to submit to the commissioner any proposed contract between the school and a management company and provides that such a contract may not take effect until approved by the commissioner. The bill requires the commissioner to adopt criteria concerning the approval of management contracts by November 1, 2001 (SECTION 19, Sec. 12.125 and SECTION 28). The bill establishes that a management company is liable for damages incurred by the state or an affected school district as a result of the company's failure to comply with its legal obligations to the charter school. The bill authorizes the attorney general on request of the board to bring suit on behalf of the state or any affected school district against a management company liable under these provisions. The bill does not entitle an affected school district to bring suit on its own behalf against a management company, but does authorize such a district to participate in a suit brought by the attorney general (SECTION 19, Sec. 12.126). H.B. 6 requires the commissioner by rule to adopt minimum standards no later than November 1, 2001 that must be met by an applicant who is registering to provide management services. The bill prescribes criteria the standards must include and describes registration application, issuance, and renewal procedures. The bill prohibits a person from providing or offering to provide management services to an openenrollment charter school after September 1, 2002 unless the person holds a registration issued by the commissioner. The bill prohibits a registration holder from assigning a registration issued by the commissioner (SECTION 20, Secs. 12.152-12.157 and SECTIONS 28 and 29). H.B. 6 sets forth provisions regarding the commissioner's authority to suspend, revoke, or refuse to renew a registration (SECTION 20, Sec. 12.158). The bill provides that providing or offering to provide management services to a charter school without holding a registration is a Class B misdemeanor (SECTION 20, Sec. 12.159). The bill authorizes the commissioner to adopt rules to establish the fee for registration or registration renewal and rules to administer the registration provisions (SECTION 20, Secs. 12.156 and 12.160). Access to Criminal History Records H.B. 6 requires a charter school to obtain criminal history record information that relates to a person who serves as or agrees to serve as a member of the school's governing body or a person whom the school intends to employ as an educator who is not certified by the State Board for Educator Certification. The bill authorizes a charter school to obtain from any law enforcement or criminal justice agency all criminal history information regarding a person the school intends to employ in the above or other capacities, or a person who has indicated in writing an intention to serve as a volunteer with the school (SECTION 21, Sec. 22.083). The bill amends the Government Code to entitle a charter school to obtain from the Department of Public Safety criminal history information for members of the governing body of the school (SECTION 23, Sec. 411.097). EFFECTIVE DATE The Act takes effect September 1, 2001. The provision regarding criminal penalties for a person who provides or offers to provide management services to a charter school without registration takes effect September 1, 2002.