ARIZONA
HOUSE OF REPRESENTATIVES
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SB1394: charter schools; training; information; procurement |
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PRIME SPONSOR: Senator Brophy McGee, LD 28 BILL STATUS: Education |
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Modifies procurement statute
relating to charter schools and requires each charter school to adopt
procurement policies. Requires a charter school sponsor to compile and post on
a public website outlined information for each school it sponsors. Outlines
membership and training requirements for a charter school governing body. 
History
Charter School Structure and Governance
Charter schools are public schools funded by the State and operated through a charter between a charter holder and a sponsor. The charter of a charter school must provide for a governing body that is responsible for the school's policy decisions.
An applicant who wants to establish a charter school must apply to a proposed sponsor and may be approved if all requirements are met and the proposed sponsor determines the applicant is qualified to operate a charter school based on outlined factors. A sponsor may contract with a public body, private person or private organization to establish a charter school and has oversight and administrative responsibility for the charter schools it sponsors (A.R.S. § 15-183).
The State Board for Charter Schools (SBCS) exercises general supervision over charter schools that are sponsored by the SBCS and recommends legislation pertaining to charter schools to the Legislature. The SBCS approves applications, grants, charters, adopts rules and policies for charter schools under its jurisdiction, and monitors academic performance and fiscal compliance (A.R.S. § 15-182). The SBCS currently oversees over 500 charter schools (SBCS).
Procurement
The charter of a charter school must ensure the charter school is subject to the same financial and electronic data submission requirements as a school district, including the uniform system of financial records (USFR), procurement rules and audit requirements. A charter may include exceptions to these requirements, if determined necessary by the sponsor. The Auditor General must review and revise the USFR to ensure that provisions relating to charter schools align with accepted accounting principles used by private businesses (A.R.S. § 15-183(E)(6)). Nonexempt charter schools must meet certain procurement requirements outlined in school district statute (A.R.S. § 15-213(E) and (F)).
The State Board of Education (SBE) must adopt rules for procurement of goods and information services by school districts and charter schools using electronic, online bidding for all school districts in Arizona that are consistent with the Arizona Procurement Code, with modifications as necessary. The Auditor General may conduct discretionary reviews, investigations and audits of financial and operational procurement activities of school districts, nonexempt charter schools and school purchasing cooperatives and has final review and approval authority over cooperative audit contracts and audit reports (A.R.S. § 15-213(E) and (F)).
Charter School Reporting Requirements
By October 1 of each year, a sponsor must submit an annual report to the Auditor General that includes:
· the number of charters authorized and the number of schools operated by authorized charter holders;
· the academic operational and financial performance of the sponsor's charter portfolio, measured by the sponsor's performance framework;
· the number of new charters approved, the number of charter schools closed and the closure reasons for the prior year; and
· the sponsor's application, amendment, renewal and revocation processes, charter contract template and performance framework. (A.R.S. § 15-183(HH))
The Auditor General prescribes the annual report format, reviews the reports to ensure inclusion of required items, and, in the case of significant noncompliance or failure to report, the Auditor General must report to the Governor and Legislature for the Legislature to consider revoking the sponsor's authority (A.R.S. § 15-183(II)).
A charter school must post on its website the average salary of all teachers employed by the charter school for the current and previous years, and the dollar and percentage increase for the current year. The Arizona Department of Education (ADE) must annually compile this information for all charter schools in Arizona and submit a report to the Joint Legislative Budget Committee and the Governor's Office of Strategic Planning and Budgeting (A.R.S. § 15-189.05).
Provisions
State Board for Charter Schools
1. Requires the SBCS to develop a training course for governing board membership and key administrative personnel of charter schools with input from current charter school operators, the ADE, the Attorney General's Office, and a statewide association of charter schools. (Sec. 1)
2. Directs the SBCS to make these course materials available online and cover the following topics:
a. Open Meeting Law;
b. Public records requirements;
c. Enrollment laws and regulations;
d. Applicable procurement rules; and
e. Student discipline.
3. Requires each new governing body member and each new key administrative personnel member of a charter school to complete this training within the first year after the governing body member's appointment to the charter school governing body or the key administrative personnel member's employment at the charter school. (Sec. 2)
4. Mandates that a charter school maintain training records for review during its annual audit. (Sec. 2)
5. Defines key administrative personnel as persons who the charter school determines have administrative responsibilities associated with Open Meeting Law, public records, student enrollment, procurement, or student discipline. (Sec. 1)
Charter Schools
6. Repeals the requirement that a charter school is subject to procurement rules as prescribed in A.R.S. § 15-213. (Sec. 2 and 5)
7. Requires a charter school governing body to have at least three members. (Sec. 2)
8. Prohibits a charter school governing body from having more than two immediate family members serving simultaneously. (Sec. 2)
9. Forbids immediate family members for being a majority of a charter school's governing body. (Sec. 2)
10. Requires the sponsor of a charter school to annually compile information on the governance and operations of each charter school it sponsors. (Sec. 2).
11. Requires a charter school sponsor to post on a public website the following information for each charter school it sponsors:
a. The names of voting members of the charter school governing body;
b. The number of independent voting members of the charter school governing body;
c. The names of voting members of the charter holder;
d. The number of independent voting members of the charter holder;
e. The total annual state revenues;
f. The total annual revenues from other sources, including grants, donations, and investment income;
g. The total annual expenses;
h. The total annual revenues minus total annual expenses;
i. The total assets and liabilities;
j. Authorization of any related party transaction and the individuals or entities that are party to the transaction, the services or goods provided and the total transaction cost;
k. Whether the charter school sold, exchange, disposed of or transferred more than 25% of the charter school's assets in the previous fiscal year;
l. Confirmation of adopted conflict of interest policy and a copy of this policy;
m. If the charter school contracts with a charter management organization, a written statement from the charter school identifying the charter management organization and describing the services provided to the charter school and the total aggregate amount the charter school spends for the charter management organization's services; and
n. The following spending data that the charter school sponsor compiles from annual financial reports for each charter holder:
i. Teacher salaries;
ii. Classroom instruction;
iii. Student support services;
iv. Other support services and operations;
v. Special education;
vi. Administration;
vii. Federal projects; and
viii. Facilities expenses. (Sec. 2)
12. Allows the non-profit charter holder that is responsible for annually filing a Form 990 with the Internal Revenue Service to meet some data requirements above by submitting the charter holder's Form 990 to the school's sponsor. (Sec. 2)
13. Mandates that the website of each charter school include a link to the information that is required to be posted on the charter school sponsor's website. (Sec. 2)
14. Defines the following terms:
a. Charter management organization as the organization that contracts with a charter school or charter holder to provide academic services and administrative services to one or more charter schools, which may include an educational management organization or an educational service provider. (Sec. 2)
b. Immediate family as individuals who are married to each other and any children of those individuals. (Sec. 2)
c. Independent voting members as charter school governing body members who are not employed by the school or who do not have immediate family or business relationships with the charter school. (Sec. 2)
Charter School Procurement
15. Requires each charter school in Arizona to adopt and comply with procurement policies that must include:
a. A requirement that any purchase of goods or services by the charter school or by the charter holder on behalf of the charter school be made in the best interests of the charter school after considering the totality of circumstances surrounding the procurement, which may include price, quality, availability, timeliness, reputation and prior dealings;
b. A description of the officers and personnel who are authorized to procure goods or services or make authorized expenditures on behalf of a charter school;
c. Accounting policies and procedures that comply with Generally Accepted Accounting Principles;
d. A prohibition on purchasing any good or service from any of the following persons, unless a majority of disinterested members of the charter school governing body authorize the purchase after fully disclosing any substantial conflict of interest and include this information and a description of the justification for why the purchase is in the best interest of the school in meeting minutes:
i. Any member of the charter holder or charter school governing body;
ii. An immediate family member of any member of the charter holder or charter school governing body;
iii. Any other entity in which any member of the charter holder or charter school governing body or an immediate family member of a member of the charter holder or charter school governing body may have a substantial interest in procurement; and
e. A requirement that the charter school maintain records demonstrating a purchase made on behalf of the charter school by the charter school or charter holder is in the best interest of the school, considering the totality of the circumstances, if the charter school or charter holder reasonably anticipates the purchase will exceed $50,000. (Sec. 3)
16. Requires a charter school to maintain records for review during the charter school's annual audit. (Sec. 3)
17. Prohibits a project or purchase from being divided or sequenced into separate projects or purchases to intentionally avoid the $50,000 limit on purchases made without demonstrated best interest. (Sec. 3)
18. Exempts, from the $50,000 cap on purchases made without demonstrated best interest, a management contract between a charter management organization and a charter school or charter holder that is disclosed on the sponsor's public website. (Sec. 3)
19. Mandates that a charter school's annual audit include a review of a charter school's procurement policies. (Sec. 3)
20. Specifies that:
a. Purchases that are aligned with the charter school's procurement and conflict of interest policies are presumed to be in the best interest of the charter school; and
b. Federal procurement requirements apply to the receipt of certain federal monies. (Sec. 3)
21. Prohibits a charter school employee responsible for personnel actions from taking reprisal against another employee for the employee's disclosure of information relating to a charter school's violation of the charter school procurement statute. (Sec. 3)
22. Directs a charter school sponsor to provide the charter school or charter holder a reasonable opportunity to respond to any allegations related to violations of the charter school procurement statute. (Sec. 3)
23. Allows the Attorney General to:
a. Seek relief for violations of the charter school procurement statute through appropriate civil action in superior court if the Attorney General has reasonable cause to believe a violation has occurred;
b. Seek relief for violations of charter school procurement statute through appropriate criminal action in superior court in addition to currently authorized action relating to the misappropriation of charter school monies; and
c. Use the Auditor General's audit authority to conduct financial, program or compliance audits to enforce procurement statute. (Sec. 3)
24. Removes the requirements that:
a. The SBE adopt rules for the procurement of goods and information services using electronic, online bidding by charter schools;
b. A charter ensure the charter school is subject to outlined school district procurement rules, and removes permission for a charter to exempt a school from those rules; and
c. Nonexempt charter schools, in connection with any audit conducted by a certified accountant, contract for systematic review of purchasing practices using methodology consistent with sampling guidelines established by the Auditor General, to determine consistency with procurement law. (Sec. 5)
25. Removes Auditor General's authority over nonexempt charter schools to conduct discretionary reviews for schools not required to contract for independent audits and review and approve audit contracts and reports. (Sec. 5)
26. Removes permission for a charter school to evaluate U.S. General Services Administration contracts for materials and services and for the governing body to authorize current contract purchases of materials or services if the governing body determines certain conditions are met. (Sec. 5)
Charter School Admissions Requirements
27. Forbids a charter school from limiting admission based on ability to provide a financial contribution to the charter school or any agreement to volunteer at or for the charter school. (Sec. 4)
Miscellaneous
28. States that this law may be cited as the Charter School Transparency and Accountability Act. (Sec. 6)
29. Makes technical changes. (Sec. 1, 2, and 5)
30. Makes conforming changes. (Sec. 4 and 5)
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33. ---------- DOCUMENT FOOTER ---------
34. Fifty-fourth Legislature SB 1394
35. First Regular Session Version 1: Education
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