GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

H                                                                                                                                                    1

HOUSE BILL 96

 

 

Short Title:        Charter School Financial Accountability.

(Public)

Sponsors:

Representative L. Hall (Primary Sponsor).

For a complete list of Sponsors, refer to the North Carolina General Assembly Web Site.

Referred to:

Judiciary I, if favorable, Regulatory Reform, if favorable, Education ‑ K‑12.

February 23, 2015

A BILL TO BE ENTITLED

AN ACT to increase the financial accountability of charter schools.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 115C‑218.1(b) reads as rewritten:

"(b)      The application shall contain at least the following information:

(1)        A description of a program that implements one or more of the purposes in G.S. 115C‑218.

(2)        A description of student achievement goals for the school's educational program and the method of demonstrating that students have attained the skills and knowledge specified for those student achievement goals.

(3)        The governance structure of the school including the names of the initial members of the board of directors of the nonprofit, tax‑exempt corporation and the process to be followed by the school to ensure parental involvement. A teacher employed by the board of directors to teach in the charter school may serve as a nonvoting member of the board of directors for the charter school.

(4)        The local school administrative unit in which the school will be located.

(5)        Admission policies and procedures.

(6)        A proposed budget for the school and evidence that the financial plan for the school is economically sound.

(7)        Requirements and procedures for program and financial audits.

(7a)      The names and contact information for the principal officers of the school, or an organization that may operate the school, with the authority to maintain or expend funds of the charter school.

(7b)      The name of any individual with the authority to maintain or expend funds of the charter school who is currently, or was previously, listed in the database maintained by the Department of Public Instruction, Office of Charter Schools, pursuant to G.S. 115C‑218.100(d), related to prior incidences of financial and governance noncompliance.

(8)        A description of how the school will comply with G.S. 115C‑218.20, 115C‑218.25, 115C‑218.30, 115C‑218.40, 115C‑218.45, 115C‑218.50, 115C‑218.55, 115C‑218.60, 115C‑218.65, 115C‑218.70, 115C‑218.75, 115C‑218.80, 115C‑218.85, and 115C‑218.90.

(9)        Types and amounts of insurance coverage, including bonding insurance required pursuant to G.S. 115C‑218.20 for the principal officers of the school, school and any other individual with the authority to maintain or expend funds, to be obtained by the charter school.

(10)      The term of the charter.

(11)      The qualifications required for individuals employed by the school.

(12)      The procedures by which students can be excluded from the charter school and returned to a public school. Notwithstanding any law to the contrary, any local board may refuse to admit any student who is suspended or expelled from a charter school due to actions that would lead to suspension or expulsion from a public school under G.S. 115C‑390.5 through G.S. 115C‑390.11 until the period of suspension or expulsion has expired.

(13)      The number of students to be served, which number shall be at least 65, and the minimum number of teachers to be employed at the school, which number shall be at least three. However, the charter school may serve fewer than 65 students or employ fewer than three teachers if the application contains a compelling reason, such as the school would serve a geographically remote and small student population.

(14)      Information regarding the facilities to be used by the school and the manner in which administrative services of the school are to be provided."

SECTION 2.  G.S. 115C‑218.5 reads as rewritten:

"§ 115C‑218.5.  Final approval of applications for charter schools.

(a)        The State Board may grant final approval of an application if it finds the following:

(1)        The application meets the requirements set out in this Article and such other requirements as may be adopted by the State Board of Education.

(2)        The applicant has the ability to operate the school and would be likely to operate the school in an educationally and economically sound manner.

(2a)      The applicant is not employing, directly or indirectly by contract, an individual who is currently listed in the database maintained by the Department of Public Instruction, Office of Charter Schools, pursuant to G.S. 115C‑218.100(d), related to prior incidences of financial and governance noncompliance.

(3)        Granting the application would achieve one or more of the purposes set out in G.S. 115C‑269.1.

In reviewing applications for the establishment of charter schools within a local school administrative unit, the State Board is encouraged to give preference to applications that demonstrate the capability to provide comprehensive learning experiences to students identified by the applicants as at risk of academic failure.

…

(g)        A charter school shall notify the State Board of Education and the Department of Public Instruction, Office of Charter Schools, within 30 days of any change to the information provided in the charter application pursuant to subdivisions (7a) or (7b) of subsection (b) of G.S. 115C‑218.1."

SECTION 3.  G.S. 115C‑218.15(c) reads as rewritten:

"(c)       A charter school shall operate under the written charter signed by the State Board and the applicant. The written charter shall include terms requiring that individuals with the authority to maintain or expend funds for the charter school be held personally and individually liable for debts incurred by the charter school in accordance with G.S. 115C‑218.20(a2). A charter school is not required to enter into any other contract. The charter shall incorporate the information provided in the application, as modified during the charter approval process, and any terms and conditions imposed on the charter school by the State Board of Education. No other terms may be imposed on the charter school as a condition for receipt of local funds."

SECTION 4.  G.S. 115C‑218.20 reads as rewritten:

"§ 115C‑218.20.  Civil liability and liability; bond and insurance requirements.

(a)        Amount of Liability Insurance and Bonds. – The board of directors of a charter school may sue and be sued. The State Board of Education shall adopt rules to establish (i) reasonable amounts and types of liability insurance that the board of directors shall be required by the charter to obtain. obtain and (ii) the bond requirement for principal officers and any other individual with the authority to maintain or expend funds of the charter school as required by subsection (a1) of this section. The board of directors shall obtain at least the amount of and types of insurance required by these rules to be included in the charter. The board of directors shall also ensure that the bond requirement under subsection (a1) of this section is met for individuals employed, directly or indirectly by contract, by the charter school. Any sovereign immunity of the charter school, of the organization that operates the charter school, or its members, officers, or directors, or of the employees of the charter school or the organization that operates the charter school, is waived to the extent of indemnification by insurance.insurance or as otherwise provided in State law.

(a1)      Bond Required. – The principal officer of a charter school or any other individual with the authority to maintain or expend funds of a charter school must file a bond with the State Board of Education executed by the individual as a principal and by a bonding company authorized to do business in this State. The bond must be payable to the State Board of Education, must be conditioned on fulfillment of the obligations of the individual in their capacity as an employee of the charter school, and must remain in effect until cancelled by the bonding company. The bonding company may cancel the bond upon 30 days' notice to the State Board of Education.

(a2)      Personal Liability for Debts Incurred by the Charter School. – Upon the voluntary or involuntary closure of a charter school or charter schools, any individual with the authority to maintain or expend funds on behalf of the charter school may be held personally and individually liable for any outstanding debts incurred by a charter school in excess of any funds reserved for charter school closure proceedings or amounts applied from liability insurance held by the board of directors and bonds required under subsection (a1) of this section.

(b)        No Civil Liability for the State Board of Education. – No civil liability shall attach to the State Board of Education, or to any of their members or employees, individually or collectively, for any acts or omissions of the charter school."

SECTION 5.  G.S. 115C‑218.90 is amended by adding a new subsection to read:

"(c)       History of Financial and Governance Noncompliance. – The board of directors of a charter school shall not employ, directly or indirectly by contract, any individual who is currently listed in the database maintained by the Department of Public Instruction, Office of Charter Schools, pursuant to G.S. 115C‑218.100(d), related to prior incidences of financial and governance noncompliance for any services related to the maintenance or expenditure of charter school funds."

SECTION 6.  G.S. 115C‑218.100 is amended by adding new subsections to read:

"(c)       Debt Collection from Personally Liable Individuals. – Following the dissolution of a charter school, for any individuals who are personally and individually liable pursuant to G.S. 115C‑218.20 and have failed to pay the State Board of Education for any debt owed, the State Board may (i) submit the debt owed by the individual to the Department of Revenue, in accordance with Chapter 105A of the General Statutes or (ii) utilize an alternative means of collection for the debt owed, including establishing a repayment agreement with the individual or individuals who are held liable.

(d)        Database Related to Financial Governance Noncompliance. – The Department of Public Instruction, Office of Charter Schools, shall maintain a database of individuals with the authority to maintain or expend funds on behalf of charter schools who (i) had that authority at the time a charter school was dissolved, involuntarily or voluntarily, for reasons of financial and governance noncompliance and (ii) have failed to repay any debt owed to the State Board of Education for which the individual is held personally and individually liable pursuant to G.S. 115C‑218.20. The database shall contain the individual's name, the name of the charter school or charter schools for which the individual had financial authority, and the amount and nature of any outstanding debt owed to the State Board. An individual who is listed in the database shall not be employed, directly or indirectly by contract, by a charter school for services related to the maintenance or expenditure of funds until the individual pays in full any debt owed to the State Board. If the individual pays the debt in full, the individual's name shall be removed from the database at which time the individual shall be eligible to be employed, directly or indirectly by contract, to perform services for charter schools related to the maintenance or expenditure of charter school funds."

SECTION 7.  Within 60 days of the effective date of this act, the State Board of Education shall adopt (i) language to include in the written charter agreement for charter schools, including virtual charter schools, to implement the requirements of G.S. 115C‑218.15, as amended by this act, and (ii) bond requirements for individuals with the authority to maintain or expend funds of a charter school in accordance with G.S. 115C‑218.20(a1) of this act.

SECTION 8.  The State Board of Education may adopt policies setting forth debt collection methods for any individuals who are held personally and individually liable pursuant to G.S. 115C‑218.20(a2), as enacted by this act, and have failed to pay the State Board for any debt owed, as authorized by G.S. 115C‑218.100(c), as enacted by this act. Debt collection methods adopted by the State Board may include repayment plans and installment contracts.

SECTION 9.  Notwithstanding G.S. 115C‑218.20, as amended by this act, individuals with the authority to maintain or expend funds of a charter school shall meet the bond requirement under G.S. 115C‑218.20(a1) within 90 days of the effective date of this act.

SECTION 10.  This act is effective when it becomes law. Sections 1 through 3 of this act apply to an initial application for or the renewal of a charter school, including a virtual charter school. Section 5 applies to an individual initially employed or reemployed, directly or indirectly by contract, by a charter school, including a virtual charter school, on or after the effective date of this act.