HF 2361 (LSB 5230YH (12) 83)

HOUSE FILE 2361

BY  FORD

A BILL FOR

An Act providing for the establishment, funding, and bonding authority of a state charter school institute and institute charter schools.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 257.31, subsection 3, Code Supplement 2009, is amended to read as follows:
   3.  The committee shall review the proposed budget and certified budget of each school district and institute charter school, and may make recommendations to a school district, the department of education, the state board of education, and to the charter school institute. The committee may make decisions affecting budgets to the extent provided in this chapter. The costs and computations referred to in this section relate to the budget year unless otherwise expressly stated.
    Sec. 2.  NEW SECTION.  256I.1  Definitions.
   As used in this chapter, unless the context otherwise requires:

   1.  “Area education agency” means an area education agency established in accordance with section 273.2.
   2.  “At-risk student” means a student who meets any of the following criteria:
   a.  Is eligible to receive free or reduced-cost lunch pursuant to the provisions of the federal National School Lunch Act, 42 U.S.C. § 1751 et seq.
   b.  Has performed at the proficiency level of low or unsatisfactory on an assessment utilized by more than ninety percent of the school districts in this state or on model assessments developed pursuant to section 256.9, subsection 52, paragraph “a”.
   3.  “Department” means the department of education.
   4.  “Director” means the director of the department of education.
   5.  “Institute board” means the governing board of the state charter school institute that is appointed pursuant to section 256I.4.
   6.  “Institute charter school” means a charter school authorized pursuant to section 256I.3.
   7.  “School board” means the board of directors of a school district, a collaboration of boards of directors of school districts, or the board of directors of an area education agency, as the context requires.
   8.  “School district” means a school corporation organized under chapter 274.
   9.  “State board” means the state board of education.
   10.  “State charter school institute” or “institute” means the entity created pursuant to section 256I.2.
    Sec. 3.  NEW SECTION.  256I.2  State charter school institute

—— established.
   1.  A state charter school institute is established within the department.
   2.  The institute is established to do the following:
   a.  Review institute charter school applications and assist in the establishment of institute charter schools throughout the state.
   b.  Assist in the conversion of a school district charter school to an institute charter school.
   c.  Approve or deny institute charter school applications and revoke, renew, or refuse to renew institute charter school contracts.
   d.  Monitor the operations of institute charter schools and the academic achievement of students attending institute charter schools, including compliance with applicable state and federal accountability requirements.
   e.  Model best practices in authorizing institute charter schools and make those practices available to school districts.
   3.  The institute is authorized to enter into contracts or service agreements with any public or private contractor to provide administrative services or technical assistance to institute charter schools pursuant to this chapter. Any such contract or service agreement shall also include provisions establishing liquidated damages and penalties for failure to comply with the terms and conditions of the contract or service agreement and shall be in accordance with rules adopted by the institute board.
   4.  For purposes of federal law, the state charter school institute shall be a local educational agency, deemed to be a public authority legally constituted within the state for the administrative control and direction of, and to perform a service function for, public elementary schools and secondary schools in the state.
   5.  For purposes of the requirements of chapter 256B, the state charter school institute shall be considered an administrative unit of the department, responsible for assisting in the delivery of federally required services to students enrolled in institute charter schools. The institute may provide or contract for the provision of services to a student enrolled in an institute charter school.
   6.  The state charter school institute, in collaboration with the school budget review committee, shall be responsible for monitoring the fiscal management of each institute charter school. Each institute charter school shall annually provide to the institute the results of an independent financial audit of the institute charter school. The institute shall report to the state board and the school budget review committee the same financial information in the same format that school districts are required to report to the state board and the school budget review committee. Institute charter schools shall submit to the institute any financial information required by the institute.
   7.  The institute and institute charter schools shall be deemed part of the uniform system of free public schools to be established and maintained by the state. The state board shall have general supervisory authority over institute charter schools.
   8.  The institute, by virtue of its functions and duties, shall not be deemed to be a school district for any purpose.
    Sec. 4.  NEW SECTION.  256I.3  Institute chartering authority

—— institute charter schools.
   1.  The institute may approve or deny an application submitted for the establishment of an institute charter school pursuant to this chapter.
   2.  An institute charter school applicant may submit an application to the institute only if the school district in which the institute charter school is to be located has not retained exclusive authority to authorize all types of charter schools as provided in subsection 5. If a school district has not retained exclusive authority to authorize all types of charter schools as provided in subsection 5, the school district and the institute shall have concurrent authority to authorize charter schools and institute charter schools, respectively, to be located within the geographic boundaries of the school district. The school district shall monitor and oversee all charter schools authorized by the school district pursuant to chapter 256F and the institute shall monitor and oversee all institute charter schools authorized by the institute pursuant to this chapter.
   3.  Nothing in this chapter shall be construed to eliminate the ability of a school district to authorize charter schools pursuant to chapter 256F. A school district shall retain the authority to reauthorize and to oversee any charter school which it has authorized, except with respect to any charter school that is converted to an institute charter school pursuant to this chapter.
   4.  a.  For the school year beginning July 1, 2012, and for each school year thereafter, a school board may seek to retain exclusive authority to authorize all types of charter schools within the geographic boundaries of the school district by presenting to the state board, on or before March 1 of the school year prior to that for which the exclusive authority is to apply, a written resolution adopted by the school board indicating the intent to retain exclusive authority to authorize all types of charter schools. The written resolution shall be accompanied by a written description of those portions of subsection 5 that the school district intends to demonstrate. The school board shall provide a complete copy of the resolution, including the description, to each charter school authorized by the school board on or before the date the school board submits the resolution to the state board.
   b.  A party may challenge the grant of exclusive authority made by the state board pursuant to subsection 5 by filing with the state board a notice of challenge within thirty days after the state board grants exclusive authority. The notice shall be accompanied by a specific written description of the basis for the challenge. The challenging party, at the time of filing notice with the state board, shall provide a copy of the notice of challenge to the school district that has been granted exclusive authority. The state board shall permit the school district the opportunity to appear and respond in writing to the challenge. The state board shall make a determination upon the challenge within sixty days after receipt of the notice of challenge.
   c.  For the school years beginning July 1, 2010, and July 1, 2011, a school board may seek to retain the exclusive authority to authorize all types of charters schools by presenting to the state board the written resolution on or before a date sixty days after the effective date of this chapter. This paragraph is repealed July 1, 2012.
   5.  a.  The state board shall grant to the board of directors of a school district exclusive authority to authorize all types of charter schools within the geographic boundaries of the school district if the state board determines, after adequate notice and in a public hearing and after receiving input from any charter schools authorized by the school board, that the school board has provided fair and equitable treatment to its charter schools during the four years prior to the school board’s submission of the resolution described in subsection 4.
   b.  Notwithstanding any other provision of this subsection to the contrary, the state board shall grant to a school board exclusive authority to authorize all types of charter schools within the geographic boundaries of the school district if the school district certifies any of the following:
   (1)  The total pupil enrollment of the school district is less than three thousand pupils.
   (2)  The percentage of pupils who are eligible for free or reduced-cost lunch pursuant to the provisions of the federal National School Lunch Act, 42 U.S.C. § 1751, et seq., and who enrolled in all types of charter schools authorized by the school district is greater than the percentage that is one percentage point below the overall percentage of pupils eligible for free or reduced-cost lunch who are enrolled in the school district.
   (3)  The total number of students enrolled in all types of charter schools authorized by the school district, or the maximum number of students allowed to be enrolled pursuant to charter school contracts entered into by the school district, whichever is greater for the budget year, is equivalent to more than three percent of the school district’s certified enrollment for the budget year.
   (4)  The district has not been identified as a district in need of assistance under the federal No Child Left Behind Act of 2001, Pub. L. No. 107-110.
   c.  A grant of exclusive authority by the state board shall continue so long as a school district continues to comply with the provisions of this subsection and has presented a written resolution to the state board as set forth in subsection 4.
   d.  Notwithstanding any other provision of this section to the contrary, a school board may permit the establishment of one or more institute charter schools within the geographic boundaries of the school district by adopting a favorable resolution and submitting the resolution to the state board. The resolution shall be effective until it is rescinded by resolution of the school board.
    Sec. 5.  NEW SECTION.  256I.4  Institute board —— appointment

—— powers and duties.
   1.  The policymaking body for the institute is the institute board, the members of which are appointed pursuant to subsection 2. In accordance with available funding, the institute board may employ appropriate staff consistent with the merit system provisions of chapter 8A, subchapter IV, except that all positions classified by the institute board as professional officers and professional staff of the institute are declared to be educational in nature and exempt from the merit system. The institute board may contract for professional services with persons who are not state employees.
   2.  a.  The institute board shall consist of nine members. Seven of the members shall be appointed by the governor, subject to confirmation by the senate, and two of the members shall be appointed by the director. Appointments to the board are subject to sections 69.16, 69.16A, and 69.19, and in making appointments, the governor and the director shall ensure the institute board reflects the geographic diversity of the state. Members appointed to the institute board shall have experience in at least one of the following areas:
   (1)  Experience as a charter school board member or founder of a charter school.
   (2)  Experience as a public school administrator with experience working with charter schools.
   (3)  Financial management expertise.
   (4)  Detailed knowledge of charter school law.
   (5)  Other board or public service experience.
   (6)  Experience as a public school teacher.
   (7)  School district special education expertise.
   (8)  Curriculum and assessment expertise.
   b.  (1)  The members of the institute board shall serve terms of three years. No member shall serve more than six consecutive years.
   (2)  Notwithstanding subparagraph (1), of the members appointed by the governor to the initial board, two members shall serve a term of three years, three members shall serve a term of two years, and two members shall serve a term of one year; and of the members appointed by the director to the initial board, one member shall serve a term of three years and one member shall serve a term of one year. The governor and the director shall make the initial appointments no later than thirty days after the effective date of this Act. This subparagraph is repealed July 1, 2017.
   c.  An institute board member may be removed for any cause that renders the member incapable or unfit to discharge the duties of the office. Whenever a vacancy on the institute board exists, the person making the original appointment shall appoint a member for the remaining portion of the unexpired term created by the vacancy.
   3.  The mission of the institute board shall be to foster high-quality public school choices offered through institute charter schools, including particularly schools for at-risk students. In discharging its duties pursuant to this chapter, the institute shall do the following:
   a.  Act as a model of best practices in authorizing charter schools.
   b.  Use state and federal systems for ensuring the accountability of each institute charter school in meeting the obligations and goals set forth in its contract.
   c.  Measure the academic success of each institute charter school student through longitudinal indices.
   d.  Measure the academic success of each institute charter school through performance-based means and not process-based means.
   4.  In addition to any other powers granted by law to the institute board, the institute board shall have the following powers:
   a.  To sue and be sued in its own name.
   b.  To incur debts, liabilities, and obligations, subject to any limitations imposed thereon pursuant to law.
   c.  To cooperate and contract with the state or federal government or an agency or instrumentality thereof and to apply for and receive grants or financial assistance from any such entities.
   d.  To acquire, hold, lease, sell, or otherwise dispose of real or personal property or a commodity or service.
   e.  To do or perform an act authorized by this chapter by means of an agent or by contract with a person, firm, or corporation.
   f.  To provide for the necessary expenses of the institute board in the exercise of its powers and the performance of its duties and to reimburse a board member for necessary expenses incurred in the performance of the board member’s duties.
   g.  To provide for the proper keeping of accounts and records and for budgeting of funds.
   h.  To adopt rules pursuant to chapter 17A.
   5.  No later than ninety days after the date the institute commences operations, as described in section 256I.5, subsection 3, paragraph “a”, the institute board shall promulgate rules that set forth the procedures for the acceptance of institute charter school applications and the criteria for authorizing institute charter schools pursuant to this chapter.
   6.  a.  The institute may contract with boards of area education agencies or with any other qualified individual or public or private entity or organization, including a school district, for the provision of administrative or other support services directly to the institute or for the benefit of institute charter schools.
   b.  This chapter shall not be construed to require the institute to provide services to an institute charter school, to require an institute charter school to purchase services from the institute, or to prohibit an institute charter school from purchasing education-related services from any sources available, including a school district.
   7.  The institute shall ensure that each institute charter school complies with the requirements of section 256.7, subsection 21, relating to multiple assessments, the comprehensive school improvement plan, and reports. Each institute charter school shall be responsible for gathering and submitting to the institute the data necessary to prepare a comprehensive school improvement plan and to provide information as required by the department.
   8.  The institute shall ensure that each institute charter school adopts core content standards in a manner consistent with that required of school districts pursuant to section 256.7, subsection 28.
   9.  The institute shall ensure that each institute charter school addresses the expulsion, suspension, and education of expelled or suspended students in a manner consistent with the intents and purposes of sections 275.55A, 279.9A, 279.9B, 280.17B, 280.21B, and 282.4.
   10.  The institute may issue requests for proposals to solicit applications for an institute charter school to serve at-risk students.
   11.  The institute shall annually review each institute charter school’s accomplishment of the goals described in section 256I.8.
   12.  The members or employees or agents of the institute who act in accordance with the provisions of this chapter shall not be liable on account of any act or omission performed in good faith while engaged in the performance of their duties under this chapter, if the act or omission does not constitute willful misconduct, gross negligence, or recklessness.
    Sec. 6.  NEW SECTION.  256I.5  Fund —— created.
   1.  A charter school institute fund is created in the state treasury under the control of the institute.
   2.  The institute 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 this chapter, subject to the terms and conditions under which given; except that no gift, grant, or donation shall be accepted if the conditions attached require the use or expenditure of funds in a manner contrary to law. Any gifts, grants, or donations received pursuant to this subsection shall be transmitted to the treasurer of state, who shall credit the same to the charter school institute fund. Moneys in the fund shall be subject to annual appropriation by the general assembly to the institute, to offset the actual and reasonable costs incurred by the institute in administering this chapter. Notwithstanding section 12C.7, subsection 3, all investment earnings derived from the deposit and investment of the moneys in the fund shall be credited to the fund. Notwithstanding section 8.33, any unexpended and unencumbered moneys remaining in the fund at the end of any fiscal year shall remain in the fund and shall not be transferred to the general fund or any other fund.
   3.  a.  The institute shall not be obligated to commence operations necessary to receive applications, until such time as the balance in one fund reaches at least fifty thousand dollars, whether received from gifts, grants, donations, or other sources.
   b.  The institute shall not be obligated to commence review of applications actually received, until such time as the balance in the fund reaches at least one hundred fifty thousand dollars, whether received from gifts, grants, donations, or other sources.
    Sec. 7.  NEW SECTION.  256I.6  Institute charter school —— requirements —— authority.
   1.  a.  An institute charter school shall be a public, nonsectarian, nonreligious, nonhome-based school that operates pursuant to a charter contract authorized by the state charter school institute.
   b.  An institute charter school shall exist as a public school within the state, unaffiliated with a school district. Nothing in this chapter shall be construed to permit a school district to determine curriculum, policies, procedures, or operations of an institute charter school, including but not limited to compliance with the accountability provisions specified in this title, accreditation contracts, and statewide assessment requirements.
   c.  An institute charter school shall provide special education services in accordance with chapter 256B.
   2.  An institute charter school shall be all of the following:
   a.  Subject to the terms of the charter contract entered into with the institute.
   b.  Accountable to the institute for purposes of ensuring compliance with applicable laws and charter contract provisions.
   c.  Subject to the accreditation process established pursuant to section 256.11, subsections 10, 11, and 12.
   3.  An institute charter school shall be subject to all federal and state laws and constitutional provisions prohibiting discrimination on the basis of disability, race, creed, color, gender, sexual orientation, gender identity, national origin, religion, ancestry, or need for special education services. Enrollment in an institute charter school shall be open to any child who resides within the state; except that an institute charter school shall not be required to make alterations in the structure of the facility used by the institute charter school or to make alterations to the arrangement or function of rooms within the facility, except as may be required by state or federal law. Enrollment decisions shall be made in a nondiscriminatory manner specified by the applicant in the institute charter school application.
   4.  An institute charter school shall be administered and governed by a governing body in a manner agreed to and set forth in the charter contract.
   5.  An institute charter school shall not charge tuition to students who are residents between the ages of five and twenty-one years of age in accordance with section 282.6.
   6.  Pursuant to the charter contract, an institute charter school may operate free from specified statutes and state board rules in accordance with the process established under section 256I.7, subsection 2. The state board may waive state statutory requirements or rules promulgated by the state board; except that the state board shall not waive any state statute or rule relating to the assessments, the comprehensive school improvement plan, and reports required pursuant to section 256.7, subsection 21. Any waiver of state statute or state board rule made pursuant to this subsection shall be for the term of the contract for which the waiver is made. A request for a waiver may be submitted to the institute as a part of the application for an institute charter school.
   7.  a.  An institute charter school shall be responsible for its own operation including but not limited to preparation of a budget, contracting for services, and personnel matters.
   b.  An institute charter school may negotiate and contract with a school district, the governing body of a community college or institution of higher education governed by the state board of regents, or any third party for the use of a school building and grounds, the operation and maintenance thereof, and the provision of any service, activity, or undertaking that the institute charter school is required to perform in order to carry out the educational program described in its charter contract. The institute charter school shall have standing to sue and be sued in its own name for the enforcement of any contract created pursuant to this paragraph.
   8.  An institute charter school is authorized to offer any educational program, including but not limited to an online program that may be offered by a school district, unless expressly prohibited by its charter contract or by state law. An institute charter school that provides vocational education shall be eligible for federal funds.
   9.  All decisions regarding the planning, siting, and inspection of institute charter school facilities shall be made in accordance with the state building code in the absence of a local building code, and as specified by contract with the institute.
   10.  An institute charter school shall comply with federal and state laws and regulations relating to the federal National School Lunch Act and the federal Child Nutrition Act of 1966, 42 U.S.C. § 1751–1785, and chapter 283A, and shall be eligible for state and federal funds allocated for purposes of chapter 283A.
    Sec. 8.  NEW SECTION.  256I.7  Institute charter school —— contract contents —— regulations —— repeal.
   1.  An approved institute charter school application shall serve as the basis for a charter contract between the institute charter school and the institute.
   2.  The charter contract between the institute charter school and the institute shall reflect all requests for release from state statutes and rules made by the institute charter school applicant. Within forty-five days after a request for release is received by the state board, the state board shall either grant or deny the request. If the state board grants the request, it may orally notify the institute charter school of its decision. If the state board denies the request, it shall notify the institute charter school in writing that the request is denied and specify the reasons for denial. If the institute charter school does not receive notice of the state board’s decision within forty-five days after submittal of the request for release, the request shall be deemed granted. If the state board denies a request for release that includes multiple state statutes or rules, the denial shall specify the state statutes and rules for which the release is denied, and the denial shall apply only to those state statutes and rules so specified.
   3.  A material revision of the terms of the charter contract may be made only with the approval of the institute and the governing body of the institute charter school.
   4.  Any term included in a charter contract that would require an institute charter school to waive or otherwise forego receipt of any amount of operational or capital construction funds provided to the institute charter school pursuant to the provisions of this chapter or pursuant to any other provision of law is hereby declared null and void as against public policy and is unenforceable.
    Sec. 9.  NEW SECTION.  256I.8  Institute charter school application.
   1.  The institute charter school application shall be a proposed agreement that shall include all of the following:
   a.  The mission statement of the institute charter school.
   b.  The goals, objectives, and pupil performance standards, in compliance with state and federal law, to be achieved by the institute charter school for all students who enroll.
   c.  Evidence that an adequate number of parents, teachers, pupils, or any combination thereof, support the formation of an institute charter school.
   d.  A description of the institute charter school’s educational program and the plan for administration of the assessments required pursuant to section 256.7, subsection 21.
   e.  A description of the institute charter school’s plan for evaluating pupil performance, the types of assessments that will be used to measure pupil progress towards achievement of the institute charter school’s pupil performance goals for all students enrolled, the timeline for achievement of the goals, and the procedures for taking corrective action in the event that pupil performance at the institute charter school falls below such goals.
   f.  Evidence that the plan for the institute charter school is economically sound, a proposed budget for the term of the contract, and a description of the manner in which an annual audit of the financial and administrative operations of the institute charter school will be conducted.
   g.  A description of the governance and operation of the institute charter school, including the nature and extent of parental, professional educator, and community involvement in the governance and operation of the institute charter school.
   h.  An explanation of the relationship that will exist between the institute charter school and its employees, and the employment policies of the institute charter school.
   i.  A plan for the institute charter school to meet applicable insurance coverage requirements.
   j.  A plan for the institute charter school to conduct community outreach to recruit and retain at-risk students.
   k.  A description of the institute charter school’s enrollment policy, consistent with the requirements of section 256I.6, subsection 3, and the criteria for enrollment decisions.
   l.  A description and plan for a partnership with one or more businesses. Applicants are strongly encouraged to partner the proposed institute charter school with an accredited postsecondary educational institution and to include the description and plan for that partnership in the application.
   2.  a.  Except as otherwise provided in section 256I.5, subsection 3, paragraph “a”, the institute shall receive and review all applications for institute charter schools. An application for an institute charter school may be submitted by one or more individuals, by a nonprofit, governmental, or other entity or organization, or by an existing charter school authorized by a school district. The institute’s approval of an application from an existing charter school shall not relieve the charter school of any preexisting contractual obligations or relationships, including obligations of the charter school due to the school district that authorized the charter school. The transfer of oversight of a charter school from a school district to the institute shall not be deemed a dissolution or other event that empowers or obligates the school district to discontinue the charter school’s affairs or to dispose of the charter school’s assets. An entity applying for an institute charter school shall file an application with the institute by a date determined by rule of the institute board to be eligible for consideration for the following school year. Prior to any change in the application deadline, the institute shall notify each known institute charter school applicant of the proposed change by certified letter. If the institute finds the institute charter school application is incomplete, the institute shall request the necessary information from the applicant.
   b.  The institute board shall set forth by rule all necessary procedures for the application process and for application review by the institute and the institute board. The rules shall describe a rigorous review of the application that includes but is not limited to the following key evaluative areas involving the institute charter school:
   (1)  Curriculum and instructional program.
   (2)  Nonacademic program characteristics.
   (3)  Financial viability.
   (4)  Appropriate governance model and proposed practices.
   (5)  Appropriate, consistent, clear, and measurable accountability systems.
   (6)  The extent to which the instructional program fits the mission statement of the institute charter school.
   c.  The rules adopted pursuant to paragraph “b” shall require the applicant to provide written notification of the application to the board of directors of the school district in which the proposed institute charter school is intended to be located and that school district’s school improvement advisory committee. The rules shall permit the school board and the school improvement advisory committee to submit to the institute written comments concerning the institute charter school application.
   3.  The institute board shall hold a public hearing on the application for an institute charter school, following reasonable public notice, within sixty days after receiving the application filed pursuant to subsection 1. All negotiations between the institute charter school and the institute on the charter contract shall be concluded, and all terms of the charter contract agreed upon, no later than forty-five days after the institute board approves the application for an institute charter school.
   4.  The institute charter school applicant and the institute may jointly waive the deadlines set forth in this section.
   5.  If the institute denies an institute charter school application, it shall state its reasons for the denial. Within thirty days after the denial, the entity that submitted the institute charter school application may submit to the state board a notice of appeal, stating the grounds for the appeal.
   6.  Within sixty days after receipt of a notice of appeal by the state board and after reasonable public notice, the state board shall review the decision of the institute and determine whether the decision was arbitrary and capricious. The state board shall remand the matter to the institute with instructions to approve or deny the institute charter school application. The decision of the state board shall be final and not subject to appeal.
    Sec. 10.  NEW SECTION.  256I.9  Renewal, nonrenewal, or revocation of institute charter school contract —— term —— appeal.
   1.  a.  A new charter contract for an institute charter school may be approved for succeeding periods of at least three academic years but not more than five academic years, and the charter contract may be renewed for a period not to exceed five academic years.
   b.  Notwithstanding the provisions of paragraph “a”, an institute charter school and the institute may agree to extend the length of the charter contract beyond five academic years for the purpose of enhancing the terms of any lease or financial obligation.
   2.  An institute charter school shall submit an annual report to the institute on the institute charter school’s progress in achieving the goals, objectives, pupil performance standards, content standards, and other terms of the charter contract. The institute shall consider, during the review of a renewal application, the annual reports submitted by the institute charter school during the term of the charter contract.
   3.  The institute board may revoke or deny renewal of a charter contract if the institute board determines that the institute charter school did any of the following:
   a.  Committed a material violation of any of the conditions, standards, or procedures set forth in the charter contract of the institute charter school.
   b.  Failed to meet or make reasonable progress toward achievement of the core content standards or pupil performance standards identified in the charter contract of the institute charter school.
   c.  Received a substandard overall academic performance rating upon the completion of the third school year of operation under a comprehensive school improvement plan submitted pursuant to section 256.7, subsection 21, and the state board recommended that the institute charter school be converted to a charter school under contract with a school district in accordance with chapter 256F.
   d.  Failed to meet generally accepted accounting principles of fiscal management.
   e.  Violated any provision of law from which the institute charter school was not specifically exempted.
   4.  In addition, the institute board may deny renewal of a charter contract upon a determination by the institute board that it is not in the best interests of the pupils attending the institute charter school to continue the operation of the institute charter school.
   5.  a.  If the institute revokes or denies renewal of a charter contract of an institute charter school, the institute board shall state its reasons for the revocation or denial.
   b.  (1)  The state board, upon receipt of a notice of appeal or upon its own motion, may review decisions of the institute board concerning the revocation or nonrenewal of an institute charter school’s charter contract. An institute charter school or any other person who wishes to appeal a decision of the institute board concerning the revocation or nonrenewal of a charter contract shall provide the state board and the institute board with a notice of appeal within thirty days after the institute board’s decision. The person bringing the appeal shall limit the grounds of the appeal to the grounds for the revocation or the nonrenewal of the charter contract specified by the institute board. The notice shall include a brief statement of the reasons the person contends the institute board’s revocation or nonrenewal of the charter contract was in error.
   (2)  Within sixty days after receipt of the notice of appeal or the making of a motion to review by the state board and after reasonable public notice, the state board, at a public hearing which may be held in the school district in which the institute charter school is located, shall review the decision of the institute board and make its findings. If the state board finds that the institute board’s decision was contrary to the best interests of the pupils attending the institute charter school, the state board shall remand such final decision to the institute board with instructions to renew or reinstate the charter contract of the institute charter school. The decision of the state board shall be final and not subject to appeal.
    Sec. 11.  NEW SECTION.  256I.10  Institute charter schools

—— employee retirement funds.

   A school board shall determine by policy or by negotiated agreement, if one exists, the employment status of school district employees employed by an institute charter school who seek to return to employment with public schools in the school district. Employees of an institute charter school shall be members of the Iowa public employees’ retirement system created under chapter 97B. The institute charter school and the employee shall contribute the appropriate respective amounts as required pursuant to section 97B.11.
    Sec. 12.  NEW SECTION.  256I.11  Institute charter schools —— district charter schools —— funding.
   1.  A pupil enrolled in an institute charter school shall be counted, for state school foundation aid purposes, in the pupil’s district of residence. A pupil’s residence, for purposes of this section, means a residence under section 282.1. The board of directors of the district of residence shall pay to the institute the state cost per pupil for the previous school year, plus any moneys received for the pupil on a pro rata basis pursuant to section 279.51, and any moneys received for the pupil as a result of the non-English speaking weighting under section 280.4, subsection 3, for the previous school year multiplied by the state cost per pupil for the previous year. The school district of residence shall also pay to the institute the sales tax capacity per student amount the school district received for the pupil for the previous school year pursuant to section 423E.4. If the pupil enrolled in an institute charter school is also an eligible pupil under section 261E.6, the institute charter school shall pay the tuition reimbursement amount to an eligible postsecondary institution as provided in section 261E.7.
   2.  As part of the charter contract, the institute charter school and the institute shall agree on funding and any services to be provided by the institute or by other parties to the institute charter school.
   3.  a.  Each institute charter school and the institute shall negotiate funding under the charter contract at a minimum of ninety-five percent of the institute charter school’s per pupil revenues generated pursuant to subsection 1 for each pupil enrolled in the institute charter school. The institute may retain the actual amount of the institute charter school’s per pupil share of the administrative overhead costs for services actually provided to the institute charter school; except that the institute may retain no more than the actual cost of the administrative overhead costs not to exceed three percent of the institute charter school’s per pupil revenues for each pupil enrolled in the institute charter school pursuant to subsection 1.
   b.  Each institute charter school shall pay to the institute an amount equal to the per pupil cost incurred by the institute in providing federally required educational services, multiplied by the number of students enrolled in the institute charter school. At either party’s request, the institute charter school and the institute may negotiate and include in the charter contract alternate arrangements for the provision of and payment for federally required educational services, including but not limited to a reasonable reserve not to exceed five percent of the institute’s total budget for providing federally required educational services. The reserve shall only be used by the institute to offset excess costs of providing services to students with disabilities enrolled in any institute charter school.
   c.  As part of the institute charter school contract, the institute charter school and the institute board shall agree on the services, other than necessary administration, oversight, and management services, to be provided to the institute charter school by any third party with which the institute or institute charter school contracts and the costs of the services.
   4.  Within ninety days after the end of each fiscal year, the institute shall provide to each institute charter school an itemized accounting of all the institute’s administrative overhead costs. The actual administrative overhead costs shall be the amount charged to the institute charter school. Any difference, within the limitations of subsection 3, between the amount initially charged to the institute charter school and the actual cost shall be reconciled and paid to the owed party.
   5.  The funding provided by the institute to an institute charter school pursuant to this section shall be reduced by the amount of any direct payments of principal and interest due on bonds issued on behalf of an institute charter school by the charter school institute for the purpose of financing institute charter school capital construction in accordance with section 423E.5.
   6.  a.  The governing body of an institute charter school is authorized to accept gifts, donations, or grants of any kind made to the institute charter school and to expend or use said gifts, donations, or grants in accordance with the conditions prescribed by the donor; however, no gift, donation, or grant shall be accepted by the governing body if subject to any condition contrary to law or contrary to the terms of the charter contract between the institute charter school and the institute.
   b.  Moneys received by an institute charter school from any source and remaining in the institute charter school’s accounts at the end of a budget year shall remain in the institute charter school’s accounts for use by the institute charter school during subsequent budget years and shall not revert to the state. Moneys remaining in the institute charter school’s accounts upon revocation or nonrenewal of the charter contract shall revert to the institute; except that any gifts shall be disposed of in accordance with any conditions prescribed by the donor that are not contrary to law.
    Sec. 13.  NEW SECTION.  256I.12  Institute charter school —— capital reserve, risk management, and instructional purposes.
   1.  The institute shall require each institute charter school annually to allocate a minimum per pupil dollar amount specified by the institute to a fund created by the institute charter school for capital reserve purposes or for insurance to protect the institute charter school from tort liability, loss of property, environmental hazards, or any other risk associated with the operation of the institute charter school. Moneys in the fund shall be used only for the purposes set forth in this subsection and shall not be expended by the institute charter school for any other purpose.
   2.  Each institute charter school shall annually allocate a minimum per pupil dollar amount specified by the charter school institute to a fund created by the institute charter school for instructional supplies and materials, instructional capital outlays, or other instructional purposes agreed to by the institute and the institute charter school. The moneys in the fund shall be used for the purposes set forth in this subsection and shall not be expended by the institute charter school for any other purpose. Any moneys in the accounts that are not projected to be expended during a budget year shall be budgeted for the next budget year. Nothing in this subsection shall be construed to require that interest on moneys in the fund be specifically allocated to the fund.
    Sec. 14.  Section 423E.5, subsections 1 and 2, Code 2009, are amended to read as follows:
   1.  The board of directors of a school district and the board of directors of the charter school institute shall be authorized to issue negotiable, interest-bearing school bonds, without election, and utilize tax receipts derived from the sales and services tax for school infrastructure purposes and the supplemental school infrastructure amount distributed pursuant to section 423E.4, subsection 1, paragraph “b”, and revenues received pursuant to section 256I.11, subsection 1, or section 423F.2, for principal and interest repayment. Proceeds of the bonds issued pursuant to this section shall be utilized solely for school infrastructure needs as school infrastructure is defined in section 423E.1, subsection 3, Code 2007, and section 423F.3. Bonds issued under this section may be sold at public sale as provided in chapter 75, or at private sale, without notice and hearing as provided in section 73A.12. Bonds may bear dates, bear interest at rates not exceeding that permitted by chapter 74A, mature in one or more installments, be in registered form, carry registration and conversion privileges, be payable as to principal and interest at times and places, be subject to terms of redemption prior to maturity with or without premium, and be in one or more denominations, all as provided by the resolution of the board of directors authorizing their issuance. The resolution may also prescribe additional provisions, terms, conditions, and covenants which the board of directors deems advisable, including provisions for creating and maintaining reserve funds, the issuance of additional bonds ranking on a parity with such bonds and additional bonds junior and subordinate to such bonds, and that such bonds shall rank on a parity with or be junior and subordinate to any bonds which may be then outstanding. Bonds may be issued to refund outstanding and previously issued bonds under this section. The bonds are a contractual obligation of the school district or the charter school institute, as appropriate, and the resolution issuing the bonds and pledging local option sales and services tax revenues or its share of the revenues distributed pursuant to section 256I.11, subsection 1, or section 423F.2 to the payment of principal and interest on the bonds is a part of the contract. Bonds issued pursuant to this section shall not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and shall not be subject to any other law relating to the authorization, issuance, or sale of bonds.
   2.  A school district and the charter school institute shall be authorized to enter into a chapter 28E agreement with one or more cities or a county whose boundaries encompass all or a part of the area of the school district or an institute charter school. A city or cities entering into a chapter 28E agreement shall be authorized to expend its designated portion of the revenues for any valid purpose permitted in this chapter or authorized by the governing body of the city. A county entering into a chapter 28E agreement with a school district shall be authorized to expend its designated portion of the revenues to provide property tax relief within the boundaries of the school district located in the county. A school district is and the charter school institute are also authorized to enter into a chapter 28E agreement with another school district, a community college, or an area education agency which is located partially or entirely in or is contiguous to the county where the school district or institute charter school is located. The school district, charter school institute, or community college shall only expend its designated portion of the revenues for infrastructure purposes. The area education agency shall only expend its designated portion of the revenues for infrastructure and maintenance purposes.  The charter school institute shall only expend its designated portion of the revenues for infrastructure and maintenance purposes for the institute charter school for which the revenues were received pursuant to section 256I.11, subsection 1.
EXPLANATION
   This bill establishes a charter school institute within the department of education to review and assist in the establishment of institute charter schools, which are tuition-free public schools; assist in the conversion of a school district charter school to an institute charter school; approve or deny institute charter school applications and revoke, renew, or refuse to renew institute charter school contracts; monitor the operations of institute charter schools and the academic achievement of students attending institute charter schools; and to model best practices in authorizing charter schools and make those practices available to school districts. The policymaking body of the institute is the nine-member institute board, but the state board of education has general supervisory authority over institute charter schools.
   The institute is authorized to enter into contracts or service agreements with any public or private contractor to provide administrative services or technical assistance to institute charter schools. The institute, in collaboration with the school budget review committee, is responsible for monitoring the fiscal management of each institute charter school.
   An application for an institute charter school may be submitted by one or more individuals, by a nonprofit, governmental, or other entity or organization, or by an existing charter school authorized by a school district.
   An institute charter school applicant may submit an application to the institute only if the school district in which the school is to be located has not retained exclusive authority to authorize charter schools. Nothing in the bill shall be construed to eliminate the ability of a school district to authorize charter schools pursuant to Code chapter 256F. A party may challenge the grant of exclusive authority by filing with the state board a notice of challenge within 30 days after the state board grants exclusive authority. The notice shall be accompanied by a specific written description of the basis for the challenge. A school board may permit the establishment of one or more institute charter schools within the geographic boundaries of the school district by adopting a favorable resolution and submitting the resolution to the state board.
   The institute board, in accordance with available funding, may employ appropriate staff consistent with the Iowa merit system, except that professional officers and professional staff are exempt from the merit system. The institute board may contract for professional services with persons who are not state employees.
   Seven of the institute board members shall be appointed by the governor, with the consent of the senate, and two of the members shall be appointed by the director of the department. Members appointed to the institute board shall have experience in at least one of the following areas: as a charter school board member or founder, as a public school administrator with experience working with charter schools, financial management expertise, detailed knowledge of charter school law, other board or public service experience, as a public school teacher, school district special education expertise, or curriculum and assessment expertise.
   The mission of the institute board shall be to foster high-quality public school choices offered through institute charter schools, including particularly schools for at-risk students. The bill specifies the powers of the institute board.
   The institute may contract with area education agency boards or with any other qualified individual or public or private entity or organization, including a school district, for the provision of administrative or other support services directly to the institute or for the benefit of institute charter schools.
   The institute shall ensure that each institute charter school complies with the state statutory requirements relating to multiple assessments, the comprehensive school improvement plan, and reports. Each institute charter school must also adopt the state’s core content standards and address the expulsion, suspension, and education of expelled or suspended students in the same manner as school districts.
   The institute may issue requests for proposals to solicit applications for an institute charter school to serve at-risk students.
   The members or employees or agents of the institute shall not be liable on account of any act or omission in good faith while engaged in the performance of their duties, if the act or omission does not constitute willful misconduct, gross negligence, or recklessness.
   A charter school institute fund is created in the state treasury under the control of the institute. Any gifts, grants, or donations received by the institute shall be transmitted to the state treasurer, who shall credit the same to the state charter school institute fund. The institute is not obligated to commence operations necessary to receive applications until such time as there is at least $50,000 in the fund, and is not obligated to commence review of applications actually received until the balance in the fund reaches at least $150,000.
   An institute charter school shall be a public, nonsectarian, nonreligious, nonhome-based school that operates pursuant to a charter contract authorized by the charter school institute. An institute charter school shall provide special education services, be subject to the terms of the charter contract entered into with the institute, be accountable to the institute for purposes of ensuring compliance with applicable laws and charter contract provisions, and be subject to the accreditation process established by the state board.
   An institute charter school shall be subject to all federal and state laws and constitutional provisions prohibiting discrimination. Enrollment in a school shall be open to any child who resides within the state, except that the school shall not be required to make alterations in the structure of the facility used by the institute charter school or to make alterations to the arrangement or function of rooms within the facility, except as may be required by state or federal law. Enrollment decisions must be made in a nondiscriminatory manner.
   Pursuant to the charter contract, an institute charter school may operate free from specified statutes and state board rules; however, the institute charter school must submit a request for release from the state statutes and rules to the state board. The state board may waive state statutory requirements or rules promulgated by the state board; except that the state board may not waive any state statute or rule relating to assessments, the comprehensive school improvement plan, and reports required by the state board. Any waiver of state statute or state board rule made shall be for the term of the contract for which the waiver is made. A request for a waiver may be submitted to the institute as a part of the application for an institute charter school.
   An institute charter school may negotiate and contract with a school district, community college, or regents university, or any third party for the use of a school building and grounds, and the provision of any service, activity, or undertaking that the institute charter school is required to perform in order to carry out the educational program described in its charter contract. All decisions regarding the planning, siting, and inspection of institute charter school facilities shall be made in accordance with the state building code in the absence of a local building code.
   An institute charter school is authorized to offer any educational program, including an online program, unless expressly prohibited by its charter contract or by state law.
   An institute charter school must comply with federal and state laws and regulations relating to school meal programs, and shall be eligible for state and federal funds allocated for school meals.
   An institute charter school may organize as a nonprofit corporation pursuant to the “Revised Iowa Nonprofit Corporation Act”. For tax-exempt financing purposes, an institute charter school is a governmental entity.
   The bill specifies the content of the institute charter school application, which includes a mission statement; the goals, objectives, and pupil performance standards to be achieved by the school for all students who enroll; evidence that an adequate number of parents, teachers, and pupils support the formation of the school; a description of the school’s educational program and the plan for administration of the assessments; a description of the school’s plan for evaluating pupil performance and the procedures for taking corrective action in the event that pupil performance at the school falls below goal; evidence that the school plan is economically sound, a proposed budget for the term of the contract, and a description of the manner in which an annual audit of the financial and administrative operations of the school will be conducted; a description of the governance and operation of the school; an explanation of the relationship that will exist between the school and its employees; a plan for the school to meet insurance coverage requirements; a plan for the school to conduct community outreach to recruit and retain at-risk students; a description of the school’s enrollment policy; and a description and plan for a partnership with one or more businesses.
   The institute board shall set forth procedures for the application and application review process, and shall describe a rigorous review of the application that includes but is not limited to the following key evaluative areas: the curriculum and instructional program; nonacademic program characteristics; financial viability; appropriate governance model and proposed practices; appropriate, consistent, clear, and measurable accountability systems; and the extent to which the instructional program fits the school’s mission statement.
   The applicant must provide written notification of the application to the school board of the school district in which the proposed institute charter school is intended to be located. The school district’s board and school improvement committee may submit written comments to the institute concerning the application.
   The institute board must hold a public hearing on the application for an institute charter school, following reasonable public notice, within 60 days after receiving the application. The institute charter school applicant and the institute may jointly waive the deadlines set forth in the bill.
   If the institute denies an application, it shall state its reasons for the denial and the entity that submitted the application may appeal the decision to the state board. The decision of the state board shall be final and not subject to appeal.
   A new charter contract for an institute charter school may be approved for succeeding periods of at least three academic years but not more than five academic years, and the charter contract may be renewed for a period not to exceed five academic years unless both parties agree for the purpose of enhancing the terms of any lease or financial obligation.
   An institute charter school shall submit an annual report to the institute on the school’s progress. The institute board may revoke or deny renewal of a charter contract if the institute board determines that the school committed a material violation of any of the conditions, standards, or procedures set forth in the charter contract; failed to meet or make reasonable progress toward achievement of the core content standards or pupil performance standards identified in the charter contract; received a substandard overall academic performance rating upon the completion of the third school year of operation under a comprehensive school improvement plan and the state board recommended that the institute charter school be converted to a charter school under contract with a school district; failed to meet generally accepted accounting principles of fiscal management; or violated any provision of law from which the institute charter school was not specifically exempted. In addition, the institute board may deny renewal of a charter contract if it determines that it is not in the best interests of the pupils attending the school to continue the operation of the school.
   The state board may review decisions of the institute board concerning the revocation or nonrenewal of a school’s charter contract. Within 60 days after receipt of the notice of appeal or the making of a motion to review by the state board and after reasonable public notice, the state board, at a public hearing which may be held in the school district in which the institute charter school is located, shall review the decision of the institute board and make its findings. The decision of the state board shall be final and not subject to appeal.
   Employees of an institute charter school shall be members of the Iowa public employees’ retirement system and the school and the employee shall contribute the appropriate respective amounts as required in statute.
   A pupil enrolled in an institute charter school shall be counted, for state school foundation aid purposes, in the pupil’s district of residence. The board of directors of the district of residence shall pay to the institute the state cost per pupil for the previous school year, plus any moneys received for the pupil on a pro rata basis for programs for at-risk children, and any moneys received for the pupil as a result of the non-English speaking weighting for the previous school year multiplied by the state cost per pupil for the previous year. The school district of residence shall also pay to the institute the sales tax capacity per student amount the school district received for the pupil for the secure advanced vision for education fund. If the pupil enrolled in an institute charter school is also an eligible pupil under the postsecondary enrollment options program, the institute charter school shall pay the tuition reimbursement amount specified in statute to an eligible postsecondary institution.
   Each institute charter school and the institute shall negotiate funding under the charter contract at a minimum of 95 percent of the institute charter school’s per pupil revenues generated for each pupil enrolled in the institute charter school. The institute may retain the actual amount of the institute charter school’s per pupil share of the administrative overhead costs for services actually provided to the institute charter school; except that the institute may retain no more than the actual cost of the administrative overhead costs not to exceed 3 percent of the school’s per pupil revenues for each pupil enrolled in the school.
   Each institute charter school shall pay an amount equal to the per pupil cost incurred by the institute in providing federally required educational services, multiplied by the number of students enrolled in the school. At either party’s request, the school and the institute may negotiate and include in the charter contract alternate arrangements for the provision of and payment for federally required educational services, including but not limited to a reasonable reserve not to exceed 5 percent of the institute’s total budget for providing federally required educational services. The reserve shall only be used by the institute to offset excess costs of providing services to students with disabilities enrolled in any institute charter school.
   Within 90 days after the end of each fiscal year, the institute shall provide to each institute charter school an itemized accounting of all the institute’s administrative overhead costs. The actual administrative overhead costs shall be the amount charged to the school.
   The funding provided by the institute to an institute charter school shall be reduced by the amount of any direct payments of principal and interest due on bonds issued on behalf of a school by the institute for the purpose of financing institute charter school capital construction.
   The school budget review committee shall review the proposed budget and certified budget of each institute charter school and may make recommendations to the school, the department, the state board, and the institute.
   The institute shall require each institute charter school annually to allocate a minimum per pupil dollar amount specified by the institute to a fund created by the school for capital reserve purposes or for insurance to protect the school from tort liability, loss of property, environmental hazards, or any other risk associated with the operation of the school. Each school must also annually allocate a minimum per pupil dollar amount specified by the charter school institute to a fund created by the school for instructional supplies and materials, instructional capital outlays, or other instructional purposes agreed to by the institute and the school.
   Finally, the bill authorizes the board of directors of the charter school institute to issue negotiable, interest-bearing school bonds, without election, and utilize tax receipts derived from the sales and services tax for school infrastructure purposes and the supplemental school infrastructure amount distributed and revenues received for principal and interest repayment; and to enter into a Code chapter 28E agreement with one or more cities or a county whose boundaries encompass all or a part of the area of an institute charter school.