House Bill 530 is a charter school reform measure that was introduced on Feb. 18 by Rep. Mike Reese (R-Westmoreland) and approved by the House Education Committee on Feb. 25, 2015. It contains provisions similar to legislation that was considered by the General Assembly in the 2013-14 legislative session under House Bill 618 and Senate Bill 1085. House Bill 530 was passed by the Education Committee with no amendments with a vote of 15-10, with Republicans supporting the measure, and Democrats opposed.
PSBA is encouraged that Education Committee Chairman Rep. Stan Saylor (R-York) is moving legislation that begins the process of making charter schools’ spending and academic performance more accountable to the taxpayers who fund them. The association looks forward to working with legislators and staff in the House and Senate to pursue charter reform.
Key provisions of House Bill 530 as introduced Feb. 18, and approved by the House Education Committee on February 25, 2015:
Funding
Charter School Funding Advisory Commission. A 20-member statewide funding advisory commission is created to explore funding issues related to charter school entities and make recommendations in one year from the effective date of the act. The secretary of education and the chairman of the State Board of Education are seated on the commission. There are four members of the Senate on the commission and four House members, with two appointees from the majority party and two appointees from the minority party in each chamber. There are five appointees representing the interests of school districts to be seated on the commission: two school directors, one school administrator, one business manager, and one teacher in a public school that is not a charter school. In addition, there are five appointees to represent the interests of charter schools.
Among the duties of the panel are to explore the costs of educating a student in a cyber charter school, and to consider by which charters are funded, and make recommendations for appropriate funding for charters. The commission would consider establishing an independent state level board to authorize charter school entities and support charter school quality and accountability through performance monitoring and technical assistance.
Further, the group would consider a process for a performance matrix to compare the academic performance of each charter school entity with the academic performance of the district of residence.
Two-year allowable deduction for cyber tuition. During the 2015-16 and 2016-17 school years, school districts may deduct tuition payments to cyber charter schools for the preceding school year. The deduction for payments to cyber charter schools would sunset after two years. Permanent deduction for cyber school food costs. The bill allows school districts to make deductions for food service costs for the preceding school year from their per-student expenditures when calculating their cyber charter school payments. This would be a permanent allowable deduction.
Direct pay requirements. Payments to charter schools will flow directly from the Department of Education (PDE) to the charter school. The bill requires charter schools to provide documentation to PDE and the school district 30 days before any payment will be made. Prior to payment, charter schools must give PDE and a student’s school district of residence documentation of the student’s residence and enrollment, on a form to be developed by PDE, including copies of the actual documents used by the charter school to verify the student’s residence. No payments will be made until the documentation is provided to both the department and the school district. The charter can only make one request per month to PDE for payment.
A process and timeframe is created for a school district to raise concerns regarding an inaccurate deduction by PDE. A district has 30 days after a payment is made to notify PDE of inaccuracies and to request a hearing. The hearing must happen 30 days from the notice, and the burden of proof and production at the hearing is on the school district. Within 30 days from the hearing date the secretary must make a decision regarding the accuracy of the deduction and make an appropriate adjustment. The decision may be appealed to Commonwealth Court. The district is liable for the legal fees of the charter if the charter prevails, and the charter is liable for the district’s fees if the district prevails.
Payment for 4-year old kindergarten. Unless there is a contract between a school district and charter entity, a district will not be required to fund a four-year-old kindergarten program if it does not offer such a program in its own schools.
Debt payment. The charter school must supply its authorizer with an annual list of rental payments which are guarantees for school building debt or bonds coming due during the fiscal year and the amount paid on each item of indebtedness. The charter school must hold in escrow an amount sufficient to pay the annual amount due. If the charter fails to pay the principal or interest due, PDE will withhold payment due to the charter in the amount necessary to pay the bank.
Fund balance limits; return of excess. Limits are placed on the unassigned fund balance reserves of charter schools similar to the limits placed on school districts. Any excess over the established limit must be returned by the charter to school districts within 90 days after June 30. Charter schools must document annually to PDE and all school districts that paid tuition to the charter school information certifying compliance with these requirements by Sept. 30, 2016 and Sept. 30 of each year thereafter.
Accountability
Accountability issues. House Bill 530 requires members of charter school boards of trustees and administrators to comply with the Ethics Act, prohibits nepotism, requires certified audits and charter school budgets to be posted online. The bill also requires meetings of charter boards of trustees to comply with the Sunshine Act (open meetings).
Access to information. Charter schools must provide their local school boards with access to records such as financial reports, financial audits, aggregate standardized test scores (without student-identifying information), and teacher certification and personnel records. They also must identify the source of funding for all expenditures, the amount of funds received from a foundation and a description of the use of such funds, administrator salaries and expenses for an educational management service provider.
Audits. Charter schools are required to have an audit of the charter school entity’s operations conducted annually by a qualified independent certified public accountant. The audit and annual budget are public documents and must be made available on the charter’s website
Conflicts of interest. A charter school trustee or administrator may not participate in the selection, award or administration of a contract if he or she has a conflict of interest, subject to penalties imposed by the Ethics Commission. An administrator must be immediately dismissed upon conviction for a felony or offense pertaining to fraud, theft or mismanagement of public funds or any crime involving moral turpitude. Members of the board of trustees for their duties as trustees are prohibited from being compensated.
Performance matrix will be created and used to assess renewal terms. The bill requires the State Board of Education to create a performance matrix and create regulations to measure and assess the academic performance of charter school entities. In developing the matrix, the State Board must convene an advisory committee that includes representatives of charter schools, regional charter schools, cyber charter schools, and school district personnel. The State Board also must determine an academic quality benchmark which will qualify a charter school entity for longer charter terms. The matrix developed by the State Board is the only matrix that may be used for evaluating a charter school entity.
Teacher evaluation. House Bill 530 does not require charter school teachers and principals to participate in the state-developed evaluation system required for school districts. Rather, it requires all initial and renewal charter school applications to include an evaluation system for teachers only that includes at least four rating categories of educator performance and multiple measures of student performance which must include, but may not be limited to, value-added assessment system data and student performance on the most recent assessments for which results have been released to the public and may include goals specific to the mission of the charter school entity’s charter. The evaluations apply to all professional employees who are certified as teachers and noncertified staff members who teach in a charter school entity.
Applications, Terms
Charter applications. The State Board of Education must develop a standard application for charter applicants and for the renewal of existing charters. The application must include an organizational chart presenting the proposed governance structure of the school, with lines of authority between the board of trustees, administrators, staff and any educational management service provider (EMO). It also must include a clear description of the roles and responsibilities of all entities in the organizational chart and standards for the performance of the board. If the charter contracts with an EMO, it must provide detailed evidence of demonstrated student achievement, and management of school functions, conditions for oversight and enforcement, renewal and terminations of the contract. The application also must include a plan for satisfying the proper criminal history record clearances required for staff. A school board may not impose additional terms or use its own application or require additional information outside of the standard application form.
Multiple charter school organizations. Provisions here allow two or more high-performing charter schools to consolidate into an organization. A charter that has not met student performance requirements within either of the most recent two school years or has failed to meet accepted standards of fiscal management is not eligible to consolidate with another school. The organization may be managed by a single board of trustees and a single administrator, rather than having a board at each school. This requires the approval of PDE and each school district that granted the initial charter of any charter school included in the proposed consolidation. The provisions do not affect the terms or conditions of individual charters and the ability of local school districts to approve or deny individual charters. Each charter school remains under the oversight of its initial authorizing board of school directors.
Deadline for application. The date for a charter school application to be submitted is changed from November 15 to October 1 of the school year preceding the year in which the charter school wishes to commence operation.
Charter terms. The bill expands the initial charter period from three to five years and the renewal term from five to ten years. The ten year renewal is subject to the academic quality benchmark established by the performance matrix (until the performance matrix is established, renewal will be for 5 years). A charter or regional charter school that does not meet the benchmark is subject to a five year renewal.
Causes for Nonrenewal or Termination. A school board may choose to revoke or not renew a charter based on established criteria. New provisions are added regarding the removal of an administrator or a member of a board of trustees. If a school board, or PDE in the case of a cyber school, prove by a preponderance of evidence that an administrator or trustee has violated the law, PDE may require the person to be replaced and the findings may be referred to a district attorney or Office of the Attorney General.
Charter School Appeal Board. The bill expands the state Charter School Appeal Board from seven to nine members to include an administrator and a member of the board of trustees of a charter school entity. It also requires the parent member to have a school aged child enrolled at a charter school entity.
Enrollment
Admission and enrollment requirements. The bill requires PDE to create the enrollment form that limits the information collected to student, grade level and residency information. Students must submit a completed enrollment form to be qualified for admission to a charter school and its lottery. Preference in the lottery process must be given to students residing in the school district and may be given to a child of a parent actively involved in the charter school’s development and to siblings of students currently enrolled and to siblings of students. Charters are allowed to enroll out-of-district students once the waiting list has been exhausted. The charter school is prohibited from requesting additional information beyond the contents of the enrollment form, but it may limit its focus based on a particular grade level, targeted population group or area of study such as math, science or arts.
No cap on charter school enrollment. The bill clarifies that charter schools are not subject to an enrollment cap or otherwise limited by any past or future action of a school board, special board of control or any other governing authority. Enrollment of students due to the expansion of a charter school entity or expansion of the charter into additional grade levels cannot be subject to a cap. This applies regardless of whether the charter was approved prior to or is approved subsequent to the effective date of the act.
Other provisions
Truancy provisions of the School Code will apply to charters. All initial and renewal charter school applicants must address how the prosecution of truancy will be handled. The charter school must demonstrate, to the satisfaction of their authorizer that it is in compliance with the truancy laws of the School Code.
Charter first right of refusal to public school buildings. A charter school entity has the right of first refusal to purchase or lease an existing public school building, a part of an existing public school building or space in a public school building for educational purposes only. The bill includes process for pricing and sale.
Cyber charter access to buildings for testing. School districts, intermediate nits, community colleges and State System institutions of higher education must provide cyber charters with reasonable access to its facilities for testing. The cyber charter must provide 60 days advance notice of the need. Districts (and other entities listed) are not required to make their facilities available on dates and times that cause interference with its own educational programs, and they may charge a facility rental fee in accordance with the same policy that would be applied generally to other organizations and community groups.
Effect on existing charter schools. Existing charter schools must amend their current charter within one year as needed to reflect the requirements of the new provisions. The charters must demonstrate within 60 days, to the satisfaction of their authorizer, that the charter school is in compliance with the truancy laws of the School Code.
Establishment of cyber charter schools. School districts and intermediate units may establish cyber charter schools pursuant to the Charter School Law. It does not preclude school districts and intermediate units from offering online instruction that is not recognized as a cyber charter school.
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