Senate Bill 8

From the North Carolina School Board Association's Legislative Alert

 

Yesterday, the House Education Committee passed a new proposed committee substitute (PCS) for SB8:  No Cap on Number of Charter Schools.  Attached please find the latest version of the bill and a summary from Committee staff.  While the bill includes a number of improvements, many items have not been completely fixed.  Below is a detailed analysis of those changes.  The bill now travels to the House Finance Committee.  It will most likely be heard next week unless the committee calendar for tomorrow is changed.  After the House Finance Committee, the bill will then be voted on by the full House.  Upon the House completing its work on the bill, the Senate will vote to concur on the House changes or go to conference.  It is unclear how the Senate will react to the House changes.

 

Current Expense Funds – This version makes significant changes to the proposals in previous versions for funding charter schools.  The only changes this version makes to last year’s Sugar Creek fix are to strike sales tax revenues distributed using the ad valorem method pursuant to GS 105-472(b)(2) (Note:  this only applies to LEAs that have a supplemental tax whose county commissioners have elected this distribution method) and sales tax refunds from the list of items that can be placed into other funds.  This means that all the other things, including prekindergarten funds, gifts and grants restricted as to use, and federal appropriations made directly to LEAs, can be placed in other funds, i.e. Fund 8.  Additionally, interest income will now have to be construed as local current expense but fund balance will not (Section 5).

 

            Problem:  In addition to the fact that these funds (sales tax revenues distributed using the ad valorem method, sales tax refunds and interest income) would have to be shared with charter schools, Section 11 of the bill would make this change retroactive to the beginning of THIS fiscal year.  That means you would have to share funds that you have already spent. 

 

Supplemental Taxes - Additionally, the bill still requires LEAs who levy a supplemental tax to share the resulting proceeds with charter schools outside the taxing jurisdiction who enroll students from that LEA (115C-238.29H(b) in Section 2).  Current law only requires the sharing of those funds with charter schools physically located in the taxing jurisdiction. 

 

            Problem:  This will most likely invite a taxpayer lawsuit.  The people in the taxing jurisdiction voted to impose a tax on themselves to support the public SCHOOLS in their taxing district.

 

Capital Funds – The bill still allows, but does not require, county commissioners to appropriate money for charter school capital (115C-238.29H(c) in Section 2) and share lottery proceeds for charter school capital (Section 7).  The bill also allows charter schools to use State current expense funds for capital (LEAs do not have this authority) (115C-238.29H(a1) in Section 2).  This version does require that when a charter dissolves that any public funds used to purchase real property be returned to the governmental entity (State or county commissioner) after all liens on the property are satisfied.  Previous versions of the bill had stated that all debts must be satisfied first. 

 

            Problem:  The question remains as to whether the appropriation of public funds for capital to a non-profit agency is constitutional or not.  Would these provisions violate the public purpose doctrine and/or the emoluments clause of the North Carolina Constitution?

 

VIRTUAL CHARTER SCHOOLS:  The new version of the bill does not ban the approval of a virtual charter school.  In fact, for the first time this version expressly allows for virtual charters to be established if they meet certain conditions including have a physical facility in the state and the chief administrator of the school is located in the state  (115C-238.29B (20) in Section 2).

 

Problem: The only time NCSBA has intervened in a charter school application was to oppose two proposals for virtual charter schools.  While virtual education can be very beneficial, virtual charter schools can be particularly problematic.  First, it is very difficult to know if the student is really doing the work.  Second, it is near impossible for an LEA to plan for students leaving the LEA to attend the charter since instruction is delivered virtually and any student in NC could attend.  Lastly, other states who have established virtual charter schools have found that a large number of children that attend are former home school students

 

GOVERNANCE:  The bill still establishes a Public Charter Schools Commission to oversee charter schools.  The bill increases Gubernatorial appointments to the Commission by 2.  The bill decreases the vote threshold necessary for the State Board of Education to override a Commission decision from 3/4 to 2/3.  Two of the thirteen members are required to be associated with a charter school. 

 

            Problem:  This is the major bone of contention in the current draft of the bill.  There are serious questions as to whether the State Board of Education only having a “veto” over Public Charter School Commission decisions is constitutional or not.  Additionally, the makeup of the Commission also raises the question as to whether the hen is guarding the hen house.

 

DIVERSITY:  Changes were made to the bill to help ensure that charter schools would be more diverse and that economic barriers for children to attend charter schools would be lowered.  The bill requires new charter schools to develop a plan for food service for enrolling students residing in a household which has an income below 185% of the federal poverty level.  However, the bill only requires new charters to make efforts to develop transportation plans for low income students residing within 3 miles of the schools.

 

Several attempts had been made to change the current law that allows charters to limit admission to students, if set out in its charter, based upon intellectual ability, measures of achievements and aptitude, athletic ability, disability, race, creed, gender, national origin, religion and ancestry.  The changes, which have been UNSUCCESSFUL to date, would only allows charters, if set out in their mission, to limit admission based upon intellectual ability or measures of achievement and aptitude. 

 

CHARTER SCHOOL ACCOUNTABILITY:  The bill does now require the Commission to develop standards to measure the adequacy of charter school performance and identify schools that are not making adequate progress.  The criteria shall include that a charter that demonstrates no growth in student performance and has a performance composite score below 60% in any three year period to be inadequate.  The charter shall develop and have approved by the Commission a school improvement plan.  Failure to demonstrate improvement under the plan shall be cause for termination.

 

Additionally, the bill now contains six specific measurements that the Commission must use in reviewing each charter school (115C-238.29D(d) in Section 2). Current law that charter schools reviews are to be conducted at least every five years remains.

 

OTHER:  Other notable changes to the charter school law include: