Reference Title: charter school; omnibus

AN ACT
AMENDING TITLE 15, CHAPTER 1, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 15-103; AMENDING SECTIONS 15-182, 15-183, 15-184, 15-185, 15-203 AND 15-341, ARIZONA REVISED STATUTES; MAKING AN APPROPRIATION; RELATING TO CHARTER SCHOOLS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 15, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 15-103, to read:

15-103 . Charter schools; laws; applicability

EACH LAW IN THIS TITLE THAT IS ADDED OR AMENDED AFTER JANUARY 1, 1999 SHALL INCLUDE A PROVISION STATING WHETHER THE LAW APPLIES TO CHARTER SCHOOLS.

Sec. 2. Section 15-182, Arizona Revised Statutes, is amended to read:

15-182 . State board for charter schools; membership; terms; compensation; duties

A. The state board for charter schools is established consisting of the following members:

1. The superintendent of public instruction or the superintendent's designee.

2. Six members of the general public, at least two of whom shall reside in a school district where at least sixty per cent of the children who attend school in the district meet the eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free lunches, who are appointed by the governor pursuant to section 38-211.

3. Two members of the business community who are appointed by the governor pursuant to section 38-211.

4. Three members of the legislature who shall serve as advisory members and who are appointed jointly by the president of the senate and the speaker of the house of representatives.

B. The superintendent of public instruction shall serve a term on the state board for charter schools that runs concurrently with the superintendent's term of office. The members appointed pursuant to subsection A, paragraph 4 of this section shall serve two year terms on the state board for charter schools that begin and end on the third Monday in January and that run concurrently with their respective terms of office. Members appointed pursuant to subsection A, paragraphs 2 and 3 of this section shall serve staggered four year terms that begin and end on the third Monday in January.

C. The state board for charter schools shall annually elect a president and such other officers as it deems necessary from among its membership.

D. Members of the state board for charter schools are not eligible to receive compensation but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2.

E. The state board for charter schools shall:

1. Exercise general supervision over charter schools sponsored by the board and recommend legislation pertaining to charter schools to the legislature.

2. Grant charter status to qualifying applicants for charter schools pursuant to section 15-183.

3. Adopt and use an official seal in the authentication of its acts.

4. Keep a record of its proceedings.

5. Adopt rules for its own government.

6. Determine the policy of the board and the work undertaken by it.

7. Delegate to the superintendent of public instruction the execution of board policies.

8. Prepare a budget for expenditures necessary for the proper maintenance of the board and the accomplishment of its purpose.

9. MONITOR AND PROVIDE DIRECTION AND ASSISTANCE TO ALL CHARTER SCHOOLS SPONSORED BY THE STATE BOARD FOR CHARTER SCHOOLS TO ENSURE COMPLIANCE WITH THEIR CHARTERS AND ALL LAWS AND RULES APPLICABLE TO CHARTER SCHOOLS.

F. The state board for charter schools may:

1. Contract.

2. Sue and be sued.

Sec. 3. Section 15-183, Arizona Revised Statutes, is amended to read:

15-183 . Charter schools; application; requirements; immunity; exemptions; renewal of application; reprisal

A. An applicant seeking to establish a charter school shall submit a written application to a proposed sponsor as prescribed in subsection C of this section. The application may include a mission statement for the charter school, a description of the charter school's organizational structure and the governing body, a financial plan for the first three years of operation of the charter school, a description of the charter school's hiring policy, the name of the charter school's applicant or applicants and requested sponsor, a description of the charter school's facility and the location of the school, a description of the grades being served and an outline of criteria designed to measure the effectiveness of the school.

B. The sponsor of a charter school may contract with a public body, private person or private organization for the purpose of establishing a charter school pursuant to this article.

C. The sponsor of a charter school may be either a school district governing board, the state board of education or the state board for charter schools, subject to the following requirements:

1. An applicant for a charter school may submit its application to a school district governing board, which shall either accept or reject sponsorship of the charter school within ninety days. An applicant may submit a revised application for reconsideration by the governing board. If the governing board rejects the application, the governing board shall notify the applicant in writing of the reasons for the rejection. The applicant may request, and the governing board may provide, technical assistance to improve the application.

2. The applicant may submit the application to the state board of education or the state board for charter schools. The state board of education or the state board for charter schools may approve the application if the application meets the requirements of this article and may approve the charter if the proposed sponsor determines, within its sole discretion, that the applicant is sufficiently qualified to operate a charter school. THROUGH FISCAL YEAR 1998-1999, the state board of education or the state board for charter schools may each approve up to twenty-five charter schools each fiscal year. BEGINNING WITH FISCAL YEAR 1999-2000, THE STATE BOARD OF EDUCATION AND THE STATE BOARD FOR CHARTER SCHOOLS MAY EACH APPROVE UP TO TWENTY-FIVE CHARTER SCHOOLS EVERY THIRD FISCAL YEAR. If the state board of education or the state board for charter schools rejects the preliminary application, the state board of education or the state board for charter schools shall notify the applicant in writing of the reasons for the rejection and of suggestions for improving the application. An applicant may submit a revised application for reconsideration by the state board of education or the state board for charter schools. The applicant may request, and the state board of education or the state board for charter schools may provide, technical assistance to improve the application.

3. Each applicant seeking to establish a charter school shall submit a full set of fingerprints to the approving agency for the purpose of obtaining a state and federal criminal HISTORY records check. Such records checks shall be conducted pursuant to section 41-1750. The Arizona department of public safety is authorized to exchange this fingerprint data with the federal bureau of investigation. The criminal records check shall be completed prior to the issuance of a charter.

4. All noncertificated personnel shall be fingerprint checked pursuant to section 15-512.

D. A board that is authorized to sponsor charter schools pursuant to this article has no legal authority over or responsibility for a charter school sponsored by a different board. This subsection does not apply to the state board of education's duty to exercise general supervision over the public school system pursuant to section 15-203, subsection A, paragraph 1.

E. The charter of a charter school shall ensure the following:

1. Compliance with federal, state and local rules, regulations and statutes relating to health, safety, civil rights and insurance AS DESIGNATED BY THE STATE BOARD OF EDUCATION PURSUANT TO SECTION 15-203 . The department of education shall publish a list of relevant rules, regulations and statutes to notify charter schools of their responsibilities under this paragraph.

2. That it is nonsectarian in its programs, admission policies and employment practices and all other operations.

3. That it provides a comprehensive program of instruction for at least a kindergarten program or any grade between grades one and twelve, except that a school may offer this curriculum with an emphasis on a specific learning philosophy or style or certain subject areas such as mathematics, science, fine arts, performance arts or foreign language.

4. That it designs a method to measure pupil progress, toward the pupil outcomes adopted by the state board of education pursuant to section 15-741.01 including participation in the essential skills tests and the nationally standardized norm-referenced achievement test as designated by the state board OF EDUCATION and the completion and distribution of an annual report card as prescribed in chapter 7, article 3 of this title.

5. That, except as provided in this article and in its charter, it is exempt from all statutes and rules relating to schools, governing boards and school districts.

6. That, except as provided in this article, it is subject to the same financial requirements as a school district including the uniform system of financial records as prescribed in chapter 2, article 4 of this title, procurement rules as prescribed in section 15-213 and audit requirements. The auditor general shall conduct a comprehensive review and revision of the uniform system of financial records to ensure that the provisions of the uniform system of financial records that relate to charter schools are in accordance with commonly accepted accounting principles used by private business. A school's charter may include exceptions to the requirements of this paragraph that are necessary as determined by the district governing board, the state board of education or the state board for charter schools. The department of education or the office of the auditor general may conduct financial, program or compliance audits.

7. Compliance with all federal and state laws relating to the education of children with disabilities in the same manner as a school district.

8. That it provides for a governing body for the charter school that is responsible for the policy and operational decisions of the charter school , INCLUDING COMPLIANCE WITH ALL APPLICABLE LAWS AND RULES . THE CHARTER OF A CHARTER SCHOOL SHALL INCLUDE DESCRIPTIONS OF:

(a) THE SELECTION PROCESS FOR THE INITIAL GOVERNING BODY.

(b) THE SELECTION PROCESS FOR FUTURE GOVERNING BODIES AND THE METHODS DESIGNED TO ALLOW PARENTS AND MEMBERS OF THE PUBLIC TO PARTICIPATE IN THE SELECTION PROCESS.

(c) THE PROCESS FOR APPEALS OF ADMINISTRATIVE AND GOVERNING BODY DECISIONS.

9. THAT THE CHARTER SCHOOL IS A PUBLIC, NONPROFIT ENTITY FOR THE DURATION OF TIME THAT IT HOLDS A CHARTER WITH THIS STATE OR A POLITICAL SUBDIVISION OF THIS STATE.

10. COMPLIANCE WITH THE FOLLOWING IN THE SAME MANNER AS A SCHOOL DISTRICT:

(a) OPEN MEETING REQUIREMENTS PRESCRIBED IN TITLE 38, CHAPTER 3, ARTICLE 3.1.

(b) PUBLIC RECORDS REQUIREMENTS PRESCRIBED IN TITLE 39, CHAPTER 1, ARTICLE 2.

(c) LIMITATIONS AGAINST NEPOTISM AND CONFLICT OF INTEREST PRESCRIBED IN TITLE 38, CHAPTER 3, ARTICLE 8.

F. The charter of a charter school shall include a description of the charter school's personnel policies, personnel qualifications and method of school governance and the specific role and duties of the sponsor of the charter school.

G. The charter of a charter school may be amended at the request of the governing body of the charter school and on the approval of the sponsor.

H. Charter schools may contract, sue and be sued.

I. An approved plan to establish a charter school is effective for fifteen years from the first day of operation. At the conclusion of the first fourteen years of operation, the charter school may apply for renewal. The sponsor may deny the request for renewal if, in its judgment, the charter school has failed to complete the obligations of the contract or has failed to comply with this article. A sponsor shall give written notice of its intent not to renew the charter school's request for renewal to the charter school at least twelve months before the expiration of the approved plan to allow the charter school an opportunity to apply to another sponsor to transfer the operation of the charter school. If the operation of the charter school is transferred to another sponsor, the fifteen year period shall be repeated. A sponsor shall review a charter at five year intervals and may revoke a charter at any time if the charter school breaches one or more provisions of its charter. At least ninety days before the effective date of the proposed revocation the sponsor shall give written notice to the operator of the charter school of its intent to revoke the charter. Notice of the sponsor's intent to revoke the charter shall be delivered personally to the operator of the charter school or sent by certified mail, return receipt requested, to the address of the charter school. The notice shall incorporate a statement of reasons for the proposed revocation of the charter. The sponsor shall allow the charter school at least ninety days to correct the problems associated with the reasons for the proposed revocation of the charter. The final determination of whether to revoke the charter shall be made at a public hearing called for such purpose.

J. After renewal of the charter at the end of the fifteen year period described in subsection I of this section, the charter may be renewed for successive periods of fifteen years if the charter school and its sponsor deem that the school is in compliance with its own charter and the provisions of this article.

K. A charter school that is sponsored by the state board of education or the state board for charter schools may not be located on the property of a school district unless the district governing board grants this authority.

L. A governing board or a school district employee who has control over personnel actions shall not take unlawful reprisal against another employee of the school district because the employee is directly or indirectly involved in an application to establish a charter school. A governing board or a school district employee shall not take unlawful reprisal against an educational program of the school or the school district because an application to establish a charter school proposes the conversion of all or a portion of the educational program to a charter school. As used in this subsection, "unlawful reprisal" means an action that is taken by a governing board or a school district employee as a direct result of a lawful application to establish a charter school and that is adverse to another employee or an education program and:

1. With respect to a school district employee, results in one or more of the following:

(a) Disciplinary or corrective action.

(b) CHANGE OF detail, transfer or reassignment.

(c) Suspension, demotion or dismissal.

(d) An unfavorable performance evaluation.

(e) A reduction in pay, benefits or awards.

(f) Elimination of the employee's position without a reduction in force by reason of lack of monies or work.

(g) Other significant changes in duties or responsibilities that are inconsistent with the employee's salary or employment classification.

2. With respect to an educational program, results in one or more of the following:

(a) Suspension or termination of the program.

(b) Transfer or reassignment of the program to a less favorable department.

(c) Relocation of the program to a less favorable site within the school or school district.

(d) Significant reduction or termination of funding for the program.

M. Charter schools shall secure insurance for liability and property loss. The governing body of a charter school that is sponsored by the state board of education or the state board for charter schools may enter into an intergovernmental agreement or otherwise contract to participate in an insurance program offered by a risk retention pool established pursuant to section 11-952.01 or the charter school may secure its own insurance coverage. The pool may charge the requesting charter school reasonable fees for any services it performs in connection with the insurance program.

N. Charter schools do not have the authority to acquire property by eminent domain.

O. A school district governing board and its agents and employees are not liable for any acts or omissions of a charter school that is sponsored by the school district, including acts or omissions relating to the application submitted by the charter school, the charter of the charter school, the operation of the charter school and the performance of the charter school.

P. A sponsor other than a school district governing board, including members, officers and employees of the sponsor, are immune from personal liability for all acts done and actions taken in good faith within the scope of their authority during duly constituted regular and special meetings.

Q. Charter school sponsors and this state are not liable for the debts or financial obligations of a charter school or persons who operate charter schools.

R. The sponsor of a charter school shall establish procedures to conduct administrative hearings upon determination by the sponsor that grounds exist to revoke a charter. Procedures for administrative hearings shall be similar to procedures prescribed for adjudicative proceedings in title 41, chapter 6, article 10. Final decisions of the state board of education and the state board for charter schools from hearings conducted pursuant to this subsection are subject to judicial review pursuant to title 41, chapter 6, article 10.

S. The sponsoring entity of a charter school shall have oversight and administrative responsibility for the charter schools that it sponsors.

T. Charter schools may pledge, assign or encumber their assets to be used as collateral for loans or extensions of credit.

U. All property accumulated by a charter school shall remain the property of the charter school.

U. ANY PURCHASES OR CAPITAL IMPROVEMENTS MADE BY A CHARTER SCHOOL WITH PUBLIC MONIES AND ANY GIFTS AND DONATIONS RECEIVED BY A CHARTER SCHOOL ARE PUBLIC PROPERTY. CHARTER SCHOOL SPONSORS SHALL ESTABLISH A MECHANISM FOR THE PERSONS WHO FORMERLY OPERATED THE CHARTER SCHOOL TO PURCHASE, ON THE TERMINATION OF A CHARTER SCHOOL'S CHARTER, ANY EQUIPMENT, MATERIALS AND CAPITAL IMPROVEMENTS THAT WERE ORIGINALLY PURCHASED WITH PUBLIC MONIES OR RECEIVED BY A CHARTER SCHOOL DURING THE DURATION OF THE CHARTER WITH THIS STATE OR A POLITICAL SUBDIVISION OF THIS STATE.

Sec. 4. Section 15-184, Arizona Revised Statutes, is amended to read:

15-184 . Charter schools; admission requirements

A. A charter school shall enroll all eligible pupils who submit a timely application, unless the number of applications exceeds the capacity of a program, class, grade level or building. A charter school shall give enrollment preference to pupils returning to the charter school in the second or any subsequent year of its operation and to siblings of pupils already enrolled in the charter school. A charter school that is sponsored by a school district governing board shall give enrollment preference to eligible pupils who reside within the boundaries of the school district where the charter school is physically located. If capacity is insufficient to enroll all pupils who submit a timely application, the charter school shall select pupils through an equitable selection process such as a lottery except that preference shall be given to siblings of a pupil selected through an equitable selection process such as a lottery.

B. ANY CHILD WHO IS QUALIFIED UNDER THE LAWS OF THIS STATE FOR ADMISSION TO A PUBLIC SCHOOL IS QUALIFIED FOR ADMISSION TO A CHARTER SCHOOL. Except AS EXPRESSLY PROVIDED IN THIS CHAPTER AND PERMITTED BY STATE AND FEDERAL LAWS, RULES AND REGULATIONS AND as provided in subsection C, a charter school shall not limit OR DISCRIMINATE admission based on ethnicity, national origin, gender, income level, disabling condition, INTELLECTUAL ABILITY, MEASURES OF ACHIEVEMENT OR APTITUDE, proficiency in the English language or athletic ability.

C. A charter school may limit admission to pupils within a given age group or grade level.

D. A charter school shall admit pupils who reside in the attendance area of a school or who reside in a school district that is under a court order of desegregation or that is a party to an agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination unless notice is received from the resident school that the admission would violate the court order or agreement. If a charter school admits a pupil after notice is received that the admission would constitute such a violation, the charter school is not allowed to include in its student count the pupils wrongfully admitted.

Sec. 5. Section 15-185, Arizona Revised Statutes, is amended to read:

15-185 . Charter schools; financing; definition

A. Financial provisions for a charter school that is sponsored by a school district governing board are as follows:

1. The charter school shall be included in the district's budget and financial assistance calculations pursuant to section 15-185.01, subsection B and chapter 9 of this title. The charter of the charter school shall include a description of the methods of funding the charter school by the school district. The school district shall send a copy of the charter and charter school application, including a description of how the school district plans to fund the school, to the state board of education before the start of the first fiscal year of operation of the charter school. The charter school charter or charter school application shall include an estimate of the student count for the charter school for its first fiscal year of operation. This estimate shall be computed pursuant to the requirements of paragraph 3 of this subsection.

2. A school district is not financially responsible for any charter school that is sponsored by the state board of education or the state board for charter schools.

3. A school district that sponsors a charter school may:

(a) Increase its student count as provided in subsection B, paragraph 2 of this section during the first year of the charter school's operation to include those charter school pupils who were not previously enrolled in the school district.

(b) Increase its transportation support level as provided in subsection B, paragraph 3 of this section to include the increases caused by the transportation of eligible pupils enrolled in the charter school.

(c) Increase its student count and transportation support level as provided in subdivisions (a) and (b) of this paragraph in subsequent years if the school meets the requirements of subsection B, paragraph 5 of this section.

4. If a school district uses the provisions of paragraph 3 of this subsection, the school district is not eligible to include those pupils in its student count for the purposes of computing an increase in its revenue control limit and district support level as provided in section 15-948.

5. Beginning July 1, 1997, A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing an increase in its capital outlay revenue limit as provided in section 15-961, subsection C, except that if the charter school was previously a school in the district, the district may include in its student count any charter school pupils who were enrolled in the school district in the prior year.

6. Beginning July 1, 1997, A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing the revenue control limit which is used to determine the maximum budget increase as provided in chapter 4, article 4 of this title unless the charter school is located within the boundaries of the school district.

B. Financial provisions for a charter school that is sponsored by the state board of education or the state board for charter schools are as follows:

1. The charter school shall calculate a base support level as prescribed in section 15-943, a transportation support level as prescribed in section 15-945 and paragraph 3 of this subsection, a capital outlay revenue limit as prescribed in section 15-961 and a capital levy revenue limit as prescribed in section 15-962, except that sections 15-941 and 15-942 do not apply to these charter schools.

2. Notwithstanding paragraph 1 of this subsection, the student count shall be determined initially using an estimated student count based on actual registration of pupils before the beginning of the school year. After the first one hundred days in session the charter school shall revise the student count to be equal to the actual average daily membership, as defined in section 15-901, or the adjusted average daily membership, as prescribed in section 15-902, of the charter school. Before the one hundredth day in session, the state board of education or the state board for charter schools may require a charter school to report periodically regarding pupil enrollment and attendance and the department of education may revise its computation of equalization assistance based on the report. A charter school shall revise its student count, base support level, transportation support level and capital outlay revenue limit before May 15. A charter school that overestimated its student count shall revise its budget before May 15. A charter school that underestimated its student count may revise its budget before May 15.

3. Notwithstanding paragraph 1 of this subsection, the transportation support level shall be determined using an estimated transportation support level as prescribed in section 15-945 before the beginning of the school year. After the first one hundred days in session the charter school shall revise the transportation support level to be equal to the actual transportation support level of the charter school. Before the one hundredth day in session, the state board of education or the state board for charter schools may require a charter school to report periodically regarding the daily route mileage and the number of eligible students transported. A charter school that overestimated its transportation support level shall revise its budget before May 15. A charter school that underestimated its transportation support level may revise its budget before May 15.

4. A charter school may utilize section 15-855 for the purposes of this section. The charter school and the department of education shall prescribe procedures for determining average daily attendance and average daily membership.

5. Equalization assistance for the charter school shall be determined by adding the amount of the base support level, the transportation support level, the capital levy revenue limit and the capital outlay revenue limit as calculated pursuant to this section, and additional capital assistance calculated pursuant to section 15-185.01, subsection A.

6. The state board of education shall apportion state aid from the appropriations made for such purposes to the state treasurer for disbursement to the counties for the charter school in each county in an amount as determined by this paragraph. The apportionments shall be as follows:

(a) During the first year of operation:

(i) On July 1, one-third of the total amount to be apportioned during the fiscal year.

(ii) On October 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(iii) On December 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(iv) On January 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(v) On February 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(vi) On March 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(vii) On April 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(viii) On May 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(ix) On June 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(b) During the second and subsequent years of operation, one-twelfth of the total amount to be apportioned during the fiscal year on the fifteenth day of each month of the school year.

7. Notwithstanding the provisions of paragraph 8 6 of this subsection, if sufficient appropriated funds are available after the first forty days in session of the current year, a charter school may request additional state monies to fund the increased state aid due to anticipated student growth through the first one hundred days in session of the current year as provided in section 15-948. In no event shall a charter school have received more than three-fourths of its total apportionment before April 15 of the fiscal year. Early payments pursuant to this subsection PARAGRAPH must be approved by the state treasurer, the director of the department of administration and the superintendent of public instruction.

8. The charter school shall not charge tuition, levy taxes or issue bonds.

9. The superintendent of public instruction shall furnish to the county treasurer an abstract of the apportionment and shall certify the apportionment to the department of administration, which shall draw its warrant in favor of the county treasurer of each county for the amount apportioned.

C. If a pupil is enrolled in both a charter school and a public school that is not a charter school, the sum of the daily membership, which includes enrollment as prescribed in section 15-901, subsection A, paragraph 2, subdivisions (a) and (b) and daily attendance as prescribed in section 15-901, subsection A, paragraph 6, for that pupil in the school district and the charter school shall not exceed 1.0. If the pupil is enrolled in both a charter school and a public school that is not a charter school and the sum of the daily membership or daily attendance for that pupil is greater than 1.0, the sum shall be reduced to 1.0 and shall be apportioned between the public school and the charter school based on the percentage of total time that the pupil is enrolled or in attendance in the public school and the charter school. The uniform system of financial records shall include guidelines for the apportionment of the pupil enrollment and attendance as provided in this section.

D. Charter schools are allowed to accept grants and gifts to supplement their state funding but it is not the intent of the charter school law to require taxpayers to pay twice to educate the same pupils. The base support level for a charter school or for a school district sponsoring a charter school shall be reduced by an amount equal to the total amount of monies received by a charter school from a federal or state agency if the federal or state monies are intended for the basic maintenance and operations of the school. The superintendent of public instruction shall estimate the amount of the reduction for the budget year and shall revise the reduction to reflect the actual amount before May 15 of the current year. If the reduction results in a negative amount, the negative amount shall be used in computing all budget limits and equalization assistance, except that:

1. Equalization assistance shall not be less than zero.

2. For a charter school sponsored by the state board of education or the state board for charter schools, the total of the base support level, transportation support level, capital outlay revenue limit and the capital levy revenue limit shall not be less than zero.

3. For a charter school sponsored by a school district, the base support level for the school district shall not be reduced by more than the amount that the charter school increased the district's base support level, transportation support level, capital outlay revenue limit and capital levy revenue limit.

E. CHARTER SCHOOLS AND PERSONS WHO OPERATE CHARTER SCHOOLS SHALL NOT INCUR ANY DEBTS THAT ARE ASSOCIATED WITH CHARTER SCHOOL COSTS THAT IN TOTAL EXCEED TEN PER CENT OF THE STATE'S AVERAGE ASSESSED VALUATION PER PUPIL FOR UNIFIED SCHOOL DISTRICTS MULTIPLIED BY THE NUMBER OF PUPILS ENROLLED IN THE CHARTER SCHOOL.

E. F. For the purposes of this section, "monies intended for the basic maintenance and operations of the school" means monies intended to provide support for the educational program of the school, except that it does not include supplemental assistance for a specific purpose or P.L. 81-874 monies. The auditor general shall determine which federal or state monies meet the definition in this subsection.

Sec. 6. Section 15-203, Arizona Revised Statutes, is amended to read:

15-203 . Powers and duties

A. The state board of education shall:

1. Exercise general supervision over and regulate the conduct of the public school system.

2. Keep a record of its proceedings.

3. Make rules for its own government.

4. Determine the policy and work undertaken by it.

5. Appoint its employees, on the recommendation of the superintendent of public instruction.

6. Prescribe the duties of its employees if not prescribed by statute.

7. Delegate to the superintendent of public instruction the execution of board policies.

8. Recommend to the legislature changes or additions to the statutes pertaining to schools.

9. Prepare, publish and distribute reports concerning the educational welfare of this state.

10. Prepare a budget for expenditures necessary for proper maintenance of the board and accomplishment of its purposes and present the budget to the legislature.

11. Aid in the enforcement of laws relating to schools.

12. Prescribe a minimum course of study in the common schools, minimum competency requirements for the promotion of pupils from the third grade and minimum course of study and competency requirements for the promotion of pupils from the eighth grade.

13. Prescribe minimum course of study and competency requirements for the graduation of pupils from high school.

14. Supervise and control the certification of persons engaged in instructional work directly as any classroom, laboratory or other teacher or indirectly as a supervisory teacher, speech therapist, principal or superintendent in a school district, including school district preschool programs, or any other educational institution below the community college, college or university level, and prescribe rules for certification, including rules for certification of teachers who have teaching experience and who are trained in other states, which are not unnecessarily restrictive and are substantially similar to the rules prescribed for the certification of teachers trained in this state. The rules shall not require a teacher to obtain a master's degree or to take any additional graduate courses as a condition of certification or recertification.

15. Adopt a list of approved tests for determining special education assistance to gifted students as defined in section 15-761 and as provided in section 15-764. The adopted tests shall provide separate scores for quantitative reasoning, verbal reasoning and nonverbal reasoning and shall be capable of providing reliable and valid scores at the highest ranges of the score distribution.

16. Adopt rules governing the methods for the administration of all reading, grammar and mathematics proficiency examinations.

17. Adopt proficiency examinations for its use. The state board of education shall determine the passing score for the proficiency examination.

18. Include within its budget the cost of contracting for the purchase, distribution and scoring of the examinations as provided in paragraphs 16 and 17 of this subsection.

19. Supervise and control the qualifications of professional nonteaching school personnel and prescribe standards relating to qualifications.

20. Impose such disciplinary action, including the issuance of a letter of censure, suspension, suspension with conditions or revocation of a certificate, upon a finding of immoral or unprofessional conduct.

21. Establish an assessment, data gathering and reporting system for pupil performance as prescribed in chapter 7, article 3 of this title.

22. Adopt a rule to promote braille literacy pursuant to section 15-214.

23. Adopt rules prescribing procedures for the investigation by the department of education of every written complaint alleging that a certificated person has engaged in immoral conduct.

24. By December 15, 1995, review the time frame required pursuant to section 15-539, subsection C, in which a teacher is allowed to improve after receiving a preliminary notice of inadequacy of classroom performance and establish an equivalent time frame to accommodate teachers who are employed in year-round school year operation programs or other schools which do not use the traditional school year calendar.

25. EACH YEAR FORMALLY ADOPT AND SEND TO ALL CHARTER SCHOOLS IN THIS STATE A LIST OF THE LAWS:

(a) IN THIS TITLE THAT RELATE TO HEALTH, SAFETY, CIVIL RIGHTS AND INSURANCE.

(b) IN OTHER TITLES THAT ARE APPLICABLE TO CHARTER SCHOOLS.

(c) IN THIS TITLE THAT INCLUDE THE LEGISLATIVE PROVISION REQUIRED PURSUANT TO SECTION 15-103.

26. MONITOR AND PROVIDE DIRECTION AND ASSISTANCE TO ALL CHARTER SCHOOLS SPONSORED BY THE STATE BOARD OF EDUCATION TO ENSURE COMPLIANCE WITH THEIR CHARTERS AND ALL LAWS AND RULES APPLICABLE TO CHARTER SCHOOLS.

B. The state board of education may:

1. Contract.

2. Sue and be sued.

3. Distribute and score the tests prescribed in chapter 7, article 3 of this title.

4. Provide for an advisory committee and administrative law judges to conduct hearings to determine whether grounds exist to impose disciplinary action against a certificated person and whether grounds exist to reinstate a revoked or surrendered certificate. The board may delegate its responsibility to conduct hearings to its advisory committee and to administrative law judges. Hearings shall be conducted pursuant to title 41, chapter 6, article 10.

5. Proceed with the disposal of any complaint requesting disciplinary action or with any disciplinary action against a person holding a certificate as prescribed in subsection A, paragraph 14 of this section after the suspension or expiration of the certificate or surrender of the certificate by the holder.

6. Assess costs and reasonable attorney fees against a person who files a frivolous complaint or who files a complaint in bad faith. Costs assessed pursuant to this paragraph shall not exceed the expenses incurred by the state board in the investigation of the complaint.

Sec. 7. Section 15-341, Arizona Revised Statutes, is amended to read:

15-341 . General powers and duties; immunity; delegation

A. The governing board shall:

1. Prescribe and enforce policies and procedures for the governance of the schools, not inconsistent with law or rules prescribed by the state board of education.

2. Maintain the schools established by it for the attendance of each pupil for a period of not less than one hundred seventy-five school days, or its equivalent as approved by the superintendent of public instruction for a school district operating on a year-round operation basis, to offer an educational program on the basis of a four day school week or to offer an alternative kindergarten program on the basis of a three day school week, in each school year, and if the funds of the district are sufficient, for a longer period, and as far as practicable with equal rights and privileges.

3. Exclude from schools all books, publications, papers or audiovisual materials of a sectarian, partisan or denominational character.

4. Manage and control the school property within its district.

5. Acquire school furniture, apparatus, equipment, library books and supplies for the use of the schools.

6. Prescribe the curricula and criteria for the promotion and graduation of pupils as provided in sections 15-701 and 15-701.01.

7. Furnish, repair and insure the school property of the district.

8. Construct school buildings on approval by a vote of the district electors.

9. Make in the name of the district conveyances of property belonging to the district and sold by the board.

10. Purchase school sites when authorized by a vote of the district at an election conducted as nearly as practicable in the same manner as the election provided in section 15-481 and held on a date prescribed in section 15-491, subsection E, but such authorization shall not necessarily specify the site to be purchased and such authorization shall not be necessary to exchange unimproved property as provided in section 15-342, paragraph 23.

11. Construct, improve and furnish buildings used for school purposes when such buildings or premises are leased from the national park service.

12. Purchase school sites or construct, improve and furnish school buildings from the proceeds of the sale of school property only on approval by a vote of the district electors.

13. Hold pupils to strict account for disorderly conduct on school property.

14. Discipline students for disorderly conduct on the way to and from school.

15. Except as provided in section 15-1224, deposit all monies received by the district as gifts, grants and devises with the county treasurer who shall credit the deposits as designated in the uniform system of financial records. If not inconsistent with the terms of the gifts, grants and devises given, any balance remaining after expenditures for the intended purpose of the monies have been made shall be used for reduction of school district taxes for the budget year, except that in the case of accommodation schools the county treasurer shall carry the balance forward for use by the county school superintendent for accommodation schools for the budget year.

16. Provide that, if a parent or legal guardian chooses not to accept a decision of the teacher as provided in section 15-521, paragraph 3, the parent or legal guardian may request in writing that the governing board review the teacher's decision. Nothing in this paragraph shall be construed to release school districts from any liability relating to a child's promotion or retention.

17. Provide for adequate supervision over pupils in instructional and noninstructional activities by certificated or noncertificated personnel.

18. Use school monies received from the state and county school apportionment exclusively for payment of salaries of teachers and other employees and contingent expenses of the district.

19. Make an annual report to the county school superintendent on or before October 1 each year in the manner and form and on the blanks prescribed by the superintendent of public instruction or county school superintendent. The board shall also make reports directly to the county school superintendent or the superintendent of public instruction whenever required.

20. Deposit all monies received by school districts other than student activities monies or monies from auxiliary operations as provided in sections 15-1125 and 15-1126 with the county treasurer to the credit of the school district except as provided in paragraph 21 of this subsection and sections 15-1223 and 15-1224, and the board shall expend the monies as provided by law for other school funds.

21. Establish a bank account in which the board may during a month deposit miscellaneous monies received directly by the district. The board shall remit monies deposited in the bank account at least monthly to the county treasurer for deposit as provided in paragraph 20 of this subsection and in accordance with the uniform system of financial records.

22. Employ an attorney admitted to practice in this state whose principal practice is in the area of commercial real estate, or a real estate broker who is licensed by this state and who is employed by a reputable commercial real estate company, to negotiate a lease of five or more years for the school district if the governing board decides to enter into a lease of five or more years as lessor of school buildings or grounds as provided in section 15-342, paragraph 7 or 10. Any lease of five or more years negotiated pursuant to this paragraph shall provide that the lessee is responsible for payment of property taxes pursuant to the requirements of section 42-271, subsection A, paragraph 3.

23. Prescribe and enforce policies and procedures for disciplinary action against a teacher who engages in conduct which is a violation of the policies of the governing board but which is not cause for dismissal of the teacher or for revocation of the certificate of the teacher. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations which are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters.

24. Prescribe and enforce policies and procedures for disciplinary action against an administrator who engages in conduct which is a violation of the policies of the governing board regarding duties of administrators but which is not cause for dismissal of the administrator or for revocation of the certificate of the administrator. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations which are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters. For violations which are cause for dismissal, the provisions of notice, hearing and appeal in chapter 5, article 3 of this title shall apply. The filing of a timely request for a hearing suspends the imposition of a suspension without pay or a dismissal pending completion of the hearing.

25. Prescribe and enforce policies and procedures that prohibit a person from carrying or possessing a weapon on school grounds unless the person is a peace officer or has obtained specific authorization from the school administrator.

26. Prescribe and enforce policies and procedures relating to the health and safety of all pupils participating in district sponsored practice sessions, games or other interscholastic athletic activities, including the provision of water. A school district and its employees are immune from civil liability for the consequences of the good faith adoption and implementation of policies and procedures pursuant to this paragraph.

27. Prescribe and enforce policies and procedures regarding the smoking of tobacco within school buildings. The policies and procedures shall be adopted in consultation with school district personnel and members of the community and shall state whether smoking is prohibited in school buildings. If smoking in school buildings is not prohibited, the policies and procedures shall clearly state the conditions and circumstances under which smoking is permitted, those areas in a school building which may be designated as smoking areas and those areas in a school building which may not be designated as smoking areas.

28. Establish an assessment, data gathering and reporting system as prescribed in chapter 7, article 3 of this title.

29. Provide special education programs and related services pursuant to section 15-764, subsection A to all children with disabilities as defined in section 15-761.

30. Administer competency tests prescribed by the state board of education for the graduation of pupils from high school.

31. MONITOR AND PROVIDE DIRECTION AND ASSISTANCE TO ALL CHARTER SCHOOLS SPONSORED BY THE SCHOOL DISTRICT TO ENSURE COMPLIANCE WITH THEIR CHARTERS AND ALL LAWS AND RULES APPLICABLE TO CHARTER SCHOOLS.

B. Notwithstanding subsection A, paragraphs 8, 10 and 12 of this section, the county school superintendent may construct, improve and furnish school buildings or purchase or sell school sites in the conduct of an accommodation school.

C. A school district's governing board members and its school council members are immune from civil liability for the consequences of adoption and implementation of policies and procedures pursuant to subsection A of this section and section 15-342. This waiver does not apply if the school district's governing board members, or its school council members are guilty of gross negligence or intentional misconduct.

D. A governing board may delegate in writing to a superintendent, principal or head teacher the authority to prescribe procedures that are consistent with the governing board's policies.

E. Subsections C and D of this section shall apply to a county board of supervisors and a county school superintendent when operating and administering an accommodation school.

Sec. 8. Program authorization review

The joint legislative budget committee and the governor's office of strategic planning and budgeting shall conduct a program authorization review, pursuant to section 41-1275, Arizona Revised Statutes, of the charter school units at the state board of education, state board for charter schools and department of education to evaluate if changes are needed to the administration of the programs to ensure that the charter school units are efficiently and effectively providing technical assistance, oversight and monitoring of charter schools as required by law. If the program authorization review determines that additional staff or resources are needed by any or all of these entities to meet these requirements or otherwise fulfill the mission set forth of that agency's charter school unit, the joint legislative budget committee and the governor's office of strategic planning and budgeting shall include a recommendation for additional staff and resources needed in its program authorization review report.

Sec. 9. Evaluation

The department of education shall contract for an independent evaluation of the charter school program in this state and shall report the findings of the evaluation to the governor, speaker of the house of representatives and president of the senate by December 1, 1999. The evaluation shall include data related to types of charter schools, types of curriculum used by charter schools, frequency of private schools becoming charter schools, capital needs of charter schools, funding sources for charter schools, demographics of students enrolled in charter schools, special education programs at charter schools, programs at charter schools for children with limited English proficiency, academic achievement of students in charter schools, methods and cost of providing transportation to charter school students, mobility rates of charter school student, indicators of parental satisfaction with charter schools and any other information that the department of education deems relevant. The contractor shall also develop an evaluation tool for use by charter sponsors in evaluating charter schools for renewal or favorable five year review if the charter school has been granted a fifteen year charter.

Sec. 10. Appropriation

The sum of $1,500,000 is appropriated from the state general fund to the department of education in fiscal year 1998-1999 for the purpose of funding the requirements of section 9 of this act, relating to evaluation of charter schools.