HB1865

SECTION 1. The legislature finds that there have been reports that the state public charter school commission has placed certain conditions on per-pupil funding allocations that are inconsistent with chapter 302D, Hawaii Revised Statutes, and the legislative intent of that chapter.

The purpose of this Act is to ensure compliance with the letter and spirit of chapter 302D by:

(1) Repealing the exemption for charter schools from requirements on the administration and use of the federal funds allocated to the State for public education purposes;

(2) Clarifying that the disbursement of these funds shall not be conditioned on the agreement of a public charter school to amend an existing charter contract; and

(3) Amending the manner in which federal funds are disbursed to public charter schools.

SECTION 2. Section 302D-25, Hawaii Revised Statutes, is amended to read as follows:

"§302D-25 Applicability of state laws. (a) Charter schools shall be exempt from chapters 91 and 92 and all other state laws in conflict with this chapter, except those regarding:

(1) Collective bargaining under chapter 89; provided that:

(A) The exclusive representatives as defined in chapter 89 and the governing board of the charter school may enter into supplemental agreements that contain cost and noncost items to facilitate decentralized decision-making;

(B) The agreements shall be funded from the current allocation or other sources of revenue received by the charter school; provided that collective bargaining increases for employees shall be allocated by the department of budget and finance to the charter school's authorizer for distribution to the charter school; and

(2) Discriminatory practices under section 378-2; and

(3) Health and safety requirements.

(b) Charter schools, the commission, and authorizers shall be exempt from chapter 103D, but shall develop internal policies and procedures for the procurement of goods, services, and construction, consistent with the goals of public accountability and public procurement practices. Charter schools, the commission, and authorizers are encouraged to use the provisions of chapter 103D where possible; provided that the use of one or more provisions of chapter 103D shall not constitute a waiver of the exemption from chapter 103D and shall not subject the charter school, commission, or authorizer to any other provision of chapter 103D. Charter schools, the commission, and authorizers shall account for funds expended for the procurement of goods and services, and this accounting shall be available to the public.

(c) Charter schools and their employees, the commission and its employees, and governing boards and their members shall be subject to chapter 84.

(d) Any charter school, prior to the beginning of the school year, may enter into an annual contract with any department for centralized services to be provided by that department.

(e) Notwithstanding any law to the contrary, as public schools and entities of the State, a charter school, including its governing board, the commission, and any authorizer may not bring suit against any other entity or agency of the State.

[~~(f) Charter schools, the commission, and authorizers shall be exempt from section 302A-1401.~~

~~(g)~~] (f) For purposes of statutory delegation of authority to department heads by other state agencies, the executive director shall be deemed the department head of the commission and charter schools unless otherwise specifically provided."

SECTION 3. Section 302D-28, Hawaii Revised Statutes, is amended by amending subsections (d) through (f) to read as follows:

"(d) Charter schools shall be eligible for all federal financial support to the same extent as department schools. The department shall provide all authorizers with all state-level federal grant proposals submitted by the department that include charter schools as potential recipients and timely reports on state-level federal grants received for which charter schools may apply or are entitled to receive. Authorizers shall timely provide this information to the charter schools, as applicable. Federal funds received by the department for charter schools shall be transferred [~~to authorizers for distribution~~] directly to the charter schools [~~they authorize~~] in accordance with the federal requirements. If administrative services related to federal grants are provided to the charter school by the department, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that shall not exceed six per cent of the charter school's federal grants.

Any charter school shall be eligible to receive any supplemental federal grant or award for which any department school may submit a proposal, or any supplemental federal grants limited to charter schools; provided that if department administrative services, including funds management, budgetary, fiscal accounting, or other related services, are provided with respect to these supplemental grants, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that shall not exceed six per cent of the supplemental grant for which the services are used.

All additional funds generated by the governing boards, that are not from a supplemental grant, shall be held separate from allotted funds and may be expended at the discretion of the governing boards.

(e) [~~Authorizers~~] The department of budget and finance shall calculate a general fund per-pupil amount based upon the amount of general funds appropriated by the legislature and released by the governor and the projected enrollment amount used to calculate the general funds appropriated pursuant to subsection (a)[.] and disburse the funding directly to charter schools. Per-pupil funding disbursement shall not be withheld or conditioned on the agreement of a charter school to amend an existing charter contract, including without limitation amendments that may compromise student eligibility for the Free Appropriate Public Education Program under federal law.

Authorizers shall submit a report to the legislature no later than twenty days prior to the convening of each regular session that contains each charter school's current school year projection that is used to submit the budget request, the updated May 15 enrollment projection, the actual October 15 enrollment count, the authorizer's reviewed and verified enrollment count, and the November 15 enrollment count.

(f) To enable charter schools to access state funding prior to the start of each school year, foster their fiscal planning, enhance their accountability, and avoid over-allocating general funds to charter schools based on self-reported enrollment projections, [~~authorizers~~] the department of budget and finance shall:

(1) Provide sixty per cent of a charter school's per-pupil allocation based on the charter school's projected student enrollment no later than July 20 of each fiscal year; provided that the charter school shall have submitted to its authorizer a projected student enrollment no later than May 15 of each year;

(2) Provide an additional thirty per cent of a charter school's per-pupil allocation no later than December 1 of each year, based on the October 15 student enrollment, as reviewed and verified by the authorizer; provided that the school is in compliance with all financial reporting requirements; and

(3) Retain no more than the balance of the remaining ten per cent of a charter school's per-pupil allocation, as a contingency balance to ensure fiscal accountability and compliance, no later than June 30 of each year;

provided that [~~authorizers~~] the department of budget and finance, in consultation with the board, may make adjustments in allocations based on noncompliance with charter contracts and the board may make adjustments in allocations based on noncompliance with board policies made in the board's capacity as the state education agency, department directives made in the department's capacity as the state education agency, the board's administrative procedures, and board-approved accountability requirements."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2022.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1865
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII