A BILL TO BE ENTITLED
AN ACT to implement the recommendations of the blue ribbon commission on charter schools.
Whereas, in June 2007, the State Board of Education convened a Blue Ribbon Commission on Charter Schools; and
Whereas, the charge of the Commission was to (i) evaluate the current status of charter schools including current and past legislation, current Board policies that affect charter school functioning; (ii) determine where the charter school sector needs to improve and develop goals for the future; (iii) identify how current legislation can enable achievement of these goals or if legislation needs to be adjusted to allow the State's charter school program to improve; and (iv) assess current Board policies to determine if they need to be adjusted or if new ones are necessary; and
Whereas, the Commission recommended that the State Board of Education seek the changes in the charter school law which are set out in this act; and
Whereas, Section 1 of this act amends the law to increase the charter school cap by six schools per year and to exclude from counting toward the cap high performing charter schools and the first charter school in a county that currently does not have one; and
Whereas, Section 2 of this act amends the law to strengthen the charter authorization process by continuing to evaluate it and thereby identifying the characteristics of charter school boards or academic programs that are predictive of later success of the charter school; and
Whereas, Section 3 of this act amends the law to direct the State Board of Education to develop a more diagnostic process of oversight to enable timely response to poor‑performing schools ; and
Whereas, Section 4 of this act eliminates a contradiction in the student selection process and permits charter schools to allow preferences for siblings in the student selection process; and
Whereas, Section 5 of this act permits charter schools to receive and expend lottery funds; Now, therefore,
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 115C‑238.29D reads as rewritten:
"§ 115C‑238.29D.  Final approval of applications for charter schools.
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(b)	 Except as otherwise provided in subsection (b1) of this section, the maximum number of charter schools operating in the State each school year shall consist of:
(1)	Six more than operated in the State during the prior school year plus:
(2)	The number of the increase, if any, of high performing charter schools over the prior school year.
The State Board shall give priority to applications that are most likely to further State education policies and to strengthen the educational program offered in the local school administrative units in which they are located.
(b1)	Notwithstanding the maximum set out in subsection (b) of this section, the State Board of Education may authorize:
(1)	A charter school in any county that does not currently have a charter school; and
(2)	An additional charter school operated by the board of a high performing charter school.
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SECTION 2.  G.S. 115C‑238.29C is amended by adding a new subsection to read:
"(a1)	The chartering entity shall continuously evaluate its process for reviewing applications in an effort to identify the characteristics of charter school founding members, boards, and academic programs that are predictive of later success of charter schools."
SECTION 3.  G.S. 115C‑238.29G reads as rewritten:
"§ 115C‑238.29G.  Causes for nonrenewal or termination; disputes.
(a)	The State Board of Education, or a chartering entity subject to the approval of the State Board of Education, may terminate or not renew a charter upon any of the following grounds:
(1)	Failure to meet the requirements for student performance contained in the charter;
(1a)	Failure to meet the standards for academic growth and academic performance developed by the State Board of Education in accordance with subsection (a1) of this section.
(2)	Failure to meet generally accepted standards of fiscal management;
(3)	Violations of law;
(4)	Material violation of any of the conditions, standards, or procedures set forth in the charter;
(5)	Two‑thirds of the faculty and instructional support personnel at the school request that the charter be terminated or not renewed; or
(6)	Other good cause identified.
(a1)	The State Board of Education shall develop a diagnostic process of oversight to enable a timely response to poor‑performing schools. Under this process developed by the State Board, a school that demonstrates low growth in student performance and low student performance shall be reviewed and the results of the review shall determine subsequent action relative to the school. By the end of the second year of operation, the minimum standard for academic growth for a charter school shall be a year's growth in student performance in a school year. 
If the State Board of Education finds that a charter school has failed to meet its projected levels of improvement in student performance or had low levels of student performance for two consecutive years, the State Board shall terminate or fail to renew that charter at the end of the school year in which that finding is made.
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SECTION 4.  G.S. 115C‑238.29F(g)(5) and (6) read as rewritten:
"§ 115C‑238.29F.  General requirements.
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(g)	Admission Requirements. –
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(5)	A charter school shall not discriminate against any student on the basis of ethnicity, national origin, gender, or disability. Except as otherwise provided by law or the mission of the school as set out in the charter, the school shall not limit admission to students on the basis of intellectual ability, measures of achievement or aptitude, athletic ability, disability, race, creed, gender, national origin, religion, or ancestry. The charter school may give enrollment priority to siblings of currently enrolled students who were admitted to the charter school in a previous year, to siblings of students admitted to the charter school for the upcoming year, and to children of the school's principal, teachers, and teacher assistants. In addition, and only for its first year of operation, the charter school may give enrollment priority to children of the initial members of the charter school's board of directors, so long as (i) these children are limited to no more than ten percent (10%) of the school's total enrollment or to 20 students, whichever is less, and (ii) the charter school is not a former public or private school. Within one year after the charter school begins operation, the population of the school shall reasonably reflect, to the extent practicable given the applicant pool, the racial and ethnic composition of the general population residing within the local school administrative unit in which the school is located or the racial and ethnic composition of the special population that the school seeks to serve residing within the local school administrative unit in which the school is located. The school shall be subject to any court‑ordered desegregation plan in effect for the local school administrative unit.
(6)	During each period of enrollment, the charter school shall enroll an eligible student who submits a timely application, unless the number of applications exceeds the capacity of a program, class, grade level, or building. In this case, students shall be accepted by lot. To assist a school in meeting the requirements of subdivision (5) of this subsection regarding the racial and ethnic composition of the school, the school may stratify the lottery by race and ethnicity.
Once enrolled, students are not required to reapply in subsequent enrollment periods."
SECTION 5.(a)  G.S. 115C‑546.2(d) reads as rewritten:
"(d)	Monies transferred into the Fund in accordance with Chapter 18C of the General Statutes shall be allocated for capital projects for school construction projects as follows:
(1)	A sum equal to sixty‑five percent (65%) of those monies transferred in accordance with G.S. 18C‑164 shall be allocated on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education. The State Board of Education shall include the average daily membership of each charter school located within a local school administrative unit in its computation of the average daily membership for that local school administrative unit.
(2)	A sum equal to thirty‑five percent (35%) of those monies transferred in accordance with G.S. 18C‑164 shall be allocated to those local school administrative units located in whole or part in counties in which the effective county tax rate as a percentage of the State average effective tax rate is greater than one hundred percent (100%), with the following definitions applying to this subdivision:
a.	"Effective county tax rate" means the actual county rate for the previous fiscal year, including any countywide supplemental taxes levied for the benefit of public schools, multiplied by a three‑year weighted average of the most recent annual sales assessment ratio studies.
b.	"State average effective tax rate" means the average effective county tax rates for all counties.
c.	"Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105‑289(h).
(3)	No county shall have to provide matching funds required under subsection (c) of this section.
(4)	A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects incurred on or after January 1, 2003.
(5)	A county may not use monies in this Fund to pay for school technology needs.
(6)	Of the funds that a local school administrative unit receives under this subsection, a pro rata share shall be distributed to charter schools based on the ratio that the charter school students in that school administrative unit bear to the total average daily membership of the local school administrative unit. These funds are not subject to a matching requirement and may be used for capital expenses, operating expenses, or both. Expenditure of these funds is subject to the provisions of G.S. 115C‑238.29H."
SECTION 5.(b)  G.S. 115C‑238.29H(a1) reads as rewritten:
"(a1)	State funds may be used to enter into operational and financing leases for real property or mobile classroom units for use as school facilities for charter schools and may be used for payments on loans made to charter schools for facilities or equipment. However, State funds shall not be used to obtain any other interest in real property or mobile classroom units. No indebtedness of any kind incurred or created by the charter school shall constitute an indebtedness of the State or its political subdivisions, and no indebtedness of the charter school shall involve or be secured by the faith, credit, taxing power, or any funds of the State or its political subdivisions. Every contract or lease into which a charter school enters shall include the previous sentence. The school also may own land and buildings it obtains through non‑State sources."
SECTION 6.  This act becomes effective July 1, 2009.