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Questions on State Legislation/Policy

May 30, 2002

Date: 1/24/02


Thanks to those of you who took the time to respond to the questions I circulated from Joe Nathan last week. Below are the replies sent by many of you -- authorizers and colleagues at the Arizona State Board of Education, Colorado Dept. of Education, Colorado League of Charter Schools, Denver Public Schools, St. Vrain Valley School District (CO), The Florida Department of Education, The Learning Exchange (Missouri), New York City Board of Education, the Wisconsin Charter School Resource Center, the American Academy of Liberal Education, and Hogan &
Hartson (Washington, DC).

Some responded to both questions, while others addressed just one. I've recopied Joe's original questions below, followed by all the responses,
unedited. Also attached are two documents -- intended to accompany their messages below -- from Jim Griffin (Colorado League of Charter Schools) and Kathleen Boyle Dalen (The Learning Exchange), which they wish to share widely. The two documents respond to Joe's question regarding the responsibilities of authorizers/sponsors. (Read their messages for full context.)

Questions relating to authorizer responsibilities are, of course, of critical interest to NACSA, and our "Building Excellence in Charter School
Authorizing" Project is developing an array of resources - including a set of practical principles - to help authorizers execute their responsibilities well. Thanks again to those of you who have volunteered to advise this project. We will be posting the first set of new resources to our website soon, and the principles will be released this summer after we've conducted
case studies and incorporated broad feedback on the draft.


#1 What happens to property of charter schools that are closed? We appear to have no firm rules about this. We've had a few charter schools that closed. Does any state have what you feel is a fair, wise legislative or state-wide policy on this issue?

#2 What does your state law stipulate as the responsibilities of sponsors? If you could write legislative language to describe the sponsors' responsibility, what would you write? Clearly sponsors are supposed to develop a process by which applications are reviewed, review those applications and award charters, provide some oversight to charter schools the entity sponsors, and make decisions about whether those charters should have their contracts renewed.

There are dangers of over-regulation of sponsors- but there also may be dangers of under-regulation (ie some sponsors appear to feel they have little responsibility to review what's happening in the school, and that it's enough if parents want their kids to attend the charter).

So - what ideally, would you like to see in legislation regarding sponsors?

RESPONSES: (This is long; keep scrolling!)


From Arizona...We have really no policy regarding property of charter schools. Our legislation just states that all property belongs to the
charter school.

In the past, when we are made aware that a charter school is closing (we haven't had that many) but the operators will advertise furniture, file cabinets, etc. with the Charter Schools Association and/or ask their sponsor if they know of anybody who might wish to purchase the property.

This is very "iffy" at best, but it's all we have. Some charter schools donate computers, etc, to other school that may be deserving (the definition of deserving is left to anyone's descretion).

I would like to see legislation tightened a bit regarding "the quality" of the teachers hired in our charter schools. Currently, there are no
guidelines about who a charter school can hire as a teacher and in some cases, the schools hire unqualified individuals, with no teaching
experience, no degree, no expertise to teach elementary students. These lower grades are the foundation of future education and really must have qualified people teaching.


On question 1: there's no state law on the topic, but state law does require a contract between the district and the charter school which governs their relationship. Just about every contract I am aware of (including ours) contains language that stipulates that, in the event the charter school goes out of business, all of its assets revert to the district.

Question 2 is much too complicated for a response, but I thought you'd be interested in knowing that the practice is generally that property reverts.

Having said that, there are some concerns around the creation of 501(c)(3) foundations which serve as conduits for revenue bond financing for some
charter schools. In those cases, there is some question as to whether the district or bondholders ought to have first claim on assets. That question may get addressed in the current legislative session.


Brief thoughts on the issues:

1. We have requested that all of our charter schools be 501c3 corporations that are solely dedicated to running a charter school. All other businesses or related activities of an organization are done by another corporation.
We are then putting clauses in the charter school agreements that the property reverts back to the district if the charter school closes.

2. My approach would be to focus the district's role on ensuring that policies and procedures that have not otherwise been waived are followed.
Therefore, if concerns are raised by parents or others, and they are not policy related (or related to safety/security), the concerns are referred back to the school. The district should focus only on implementation of the contract and the elements in it, and on student achievement issues related to accountability.

In response to #1: In Colorado this is typically handled through a charter contract. Charter schools are organized legally in different ways and so to ask them all to conform to one model would be very difficult. It is common
for a charter school's assets obtained through non-public funds (e.g. grants or gifts) to belong to the corporation and for that stipulation to be in the charter contract. However, public fund assets revert to the sponsoring school district.

In response to #2: To my knowledge, the Colorado Charter Schools Act is silent on dissolution. I think that's wise since it's an issue between the
school district and charter school. Again, each charter school organizes differently. I'd encourage better technical assistance for authorizers rather than legal mandates. I'd propose language such as "Each sponsoring school district shall address dissolution in the charter contract." Maybe the school districts that have used a "hands-off" approach to their charters need better TA on how to provide guidance, or better monitoring, without micromanaging their charters.

There was also some interesting conversations I've had during some grant training I was doing for the USDOE in Arizona on charter start-up monies and the goods/services purchased. The assumption is if a district is the chartering authorizer, all assets revert to the district. However, it's unclear as to what happens in the case of a charter school being their own LEA.


I have two things. As to ownership of property, almost all our contracts include a clause largely as follows: "upon dissolution all assets of the charter school shall revert to the school district, except where otherwise provided for under terms of grant or donation;" though as more charter schools are increasing their real estate assets (with state money), we are arguing more for simple reversion to an appropriate public entity - i.e. the state.

As to the responsibilities of chartering authorities, I have attached a draft document I began one day - most of what's on there is
self-explanatory, there is also the beginnings of one key point thatI haven't entirely developed. That the state should require certain minimums of local chartering authorities - i.e. my analogy is to someone adopting children or becoming a foster parent. . .they should have to first and foremost demonstrate a committment to chartering - because as we know, it's not a good environment if it's forced upon them. Anyway, just a few thoughts, some perhaps lucid. Hope it helps.


Question1: Since we haven't closed any charter schools with private property holdings, we don't have any precedents on this issue. The two
conversions reverted to public school status, and property was not an issue. State (and possibly federal?) laws/rules apply to the distribution/liquidation of property and assets for non-profit organizations. I believe non-profits are required to distribute assets
to other non-profits. Why wouldn't whatever non-profit rules that exist equally apply to charter schools?


#1: Since we've not had any non-instrumentalities close yet, I would look
to what happens when non-profits in our state that hold significant government contracts close. What does the law say in those instances?
For example, three non-profits in Milwaukee run welfare to work programming on behalf of the state. I'm guessing that if the law
doesn't say anything, the contract between the state and the agency says something. I know that's the case for Milwaukee Public Schools
contracts with CBOs (contact the Office of Small Community Schools for a copy of their contract--MPS's general line is (414) 475-8393.)

In the case of our instrumentalities, I'm assuming that the property reverts "back" to the school district since, in essence, the charter was
always part of the school district. Possible exceptions might include the handful of charters around the state that have strong
community-based support and therefore a separate board/organization etc. But for the most part, the property belongs to the school district

#2: Our state law only states that the authorizer must give the state-mandated tests and make sure staff meet state licensing requirements.

As for what I think the law should say, I'd like to try the old "self-regulation" for a while longer. I'd like to see how the laws in
Wisconsin work (we have quite a lab in my opinion with the two significantly different laws) before trying to craft legislation or regulations.


On point #1, I happen to be looking at Hawaii's dissolution provision for a client but I wouldn't call it "fair" or "wise" from a charter school
perspective: "If, at any time, the . . . charter school dissolves or is denied continuation, the State of Hawaii shall have first right, at no cost to the State, to all the assets and facilities of the . . . charter school."


I have not given a great deal of thought to the role that charter school accreditation could or should play with regard to # 2, below:
responsibilities of sponsors. Of course I concur with the concern expressed about over-regulation and under-regulation. A formal, external measure of accountability would appear, though, to have some place. The role of accreditation can cut two ways. First, in compliance-based models, which tend to accumulate multiple hurdles and more and more minutiae over time, you can raise sponsors' confidence level to a degree. In the second model, performance- or excellence-based, which as you know is our ambition, you can
markedly increase the sponsors' confidence, but the bar will be quite high and not all charter schools will necessarily measure up.


Our legislation in Missouri does not provide much clarity and guidance around the roles and responsibilities of charter sponsors and the sponsors in our state (largely public institutions of higher education) have their
own, diverse, interpretations of their sponsorship roles and responsibilities. On a continuum of involvement, Missouri has some
sponsors that are actively engaged with oversight responsibilities and even offer a great deal of technical assistance, while others offer no
technical assistance and are much more "hands off" in their relationship with the schools they sponsor. In Missouri, there is no funding to
underwrite the services and/or oversight and monitoring provided by the sponsors which may impact the future of the movement in Missouri.

Summary of the Responsibilities, Obligations, and Authority of a Charter School Sponsor in Missouri as Defined by Missouri Statute
* statute defines eligible sponsors (school board, public four year college...)
* no sponsor shall receive any fee for consideration of a charter
* the charter constitutes a contract b/t a sponsor and a charter school
* a sponsor is not liable for acts of omission of a school it sponsors, including acts of omissions relating to the charter submitted,
the school's operation or performance
* no university or college shall grant a charter to a corporation if an employee of the university or college is a member of the corporations board of directors
* a charter may be approved when the sponsor determines statutory requirements are met and determines the applicant sufficiently qualified
to operate a charter school
* approval shall be made within sixty days of the applicant's filing
* if a sponsor approves a charter, it shall be submitted to the state board of education
* if a charter is denied, the sponsor shall notify the applicant in writing the reasons for denial
* sponsors shall give priority to applicants proposing a school oriented to high-risk students or dropouts; at least one-third of the schools sponsored shall be schools that recruit dropout and high risk students
* sponsors must approve amendments to charters
* sponsors must review a charter school's performance, management, and operations once every two years
* sponsors may revoke a charter if a school commits a serious breach of the provisions of its charter or fails to meet academic performance
standards set forth in its charter; fails to meet generally accepted standards of fiscal managment; and/or violates the law
* sponsors may place a school on probation to allow implementation of a remedial plan
* sponsors must notify the school's board 60 days before revoking a charter and state grounds for revocation
* sponsors shall establish procedures to conduct administrative hearings upon determination to revoke a charter
* termination shall be effective only at the end of a school year unless continued operation presents clear and immediate threat to the
health and safety of children

Based on the fact that these statutory requirements have been described by many as lacking clarity and specificity, The Learning Exchange Charter School Partnership convened all Missouri sponsors to develop Principles of
Good Practice for Missouri Charter School Sponsor Accountability. These Principles of Good Practice were created in collaboration with all active sponsors and offer clarity around responsibilities related to the application review process, public disclosure of information, and other critical areas. The intent behind the Principles was to agree to guiding principles that clarify the roles and responsibilities of sponsors while allowing for flexibility and continued diversity in sponsorship. In addition, these Principles have been used with the Missouri legislature to create leverage for sponsor oversight and accountability funding. I am attaching the Principles of Good Practice for your reference.

Please contact me if I can provide additional information, this is a topic that we have given significant attention to. ([email protected],


Florida is currently undergoing a transformation in Education. The DOE is becoming a governor's agency and will no longer have a constitutional officer, or elected commissioner. Instead, a Secretary of Education has been appointed by the Governor and a new state board of education.

Along the same lines, the Secretary has appointed an AD HOC COMMITTEE on Charter Schools. The group has been working for the past several months on charter issues, particularly accountability and funding. They are about to make a final recommendation to the Secretary, which will become the state's legislative proposal. Our legislative session begins next week.

The "package" will be the Accountability Act of 2002, for charter schools.

To answer you questions,

1. Current Florida law states that when a charter is not renewed or is terminated, the school is dissolved and any unencumbered public funds from the school revert to the district school board, which is the sponsor. In addition, all district school board property, improvements and furniture (furnishings) and or equipment purchased with public funds revert to the school board as well.

Our legislature takes the position that it is appropriate and fair for public fund purchases to be reverted or returned when a school is closed.

And since as an industry we work hard to promote the fact that charters are public schools, abiding by the same rules is part of that.

2. Florida outlines many responsibilities of the sponsor, which for now is just a school district. The causes for renewal or termination are outlined in the law, as well as notification provisions regarding actions taken by the district.

From the industry's perspective, we would like to see more assistance given to schools and to district staff about what is a "good school" and what is their role in monitoring...we have some problems with district STAFF attempting to reload or add rules, that are not part of the statute.

The state board is looking closely at districts and whether they are following the law, or just reloading requirements. They want districts to be fair.

In other words, we don't want charters to be held to a HIGHER standard than the traditional schools. Yet, some districts throw up big obstacles in an attempt to stifle charter growth, or even charter applications from the beginning.

One of the major issues being worked on in our strategic plan for charters, as a state, is a guidebook for districts. Not best practices as in school operation, but a guide for district administrators and district boards to use in monitoring charters...without room for them to make things up. The plan includes training authorized by the state board and the department of education's choice office. This is training for the sponsors (district staff, district school board members and superintendent and school board attorneys), not charters.

The overall focus of Florida's government leaders in terms of education is STUDENT CENTERED decisions. This is true for charters as well. Their rule of thumb is "Are children learning?" And if so, then the funding should follow the child, whether it be in one school or another, all parent choice.

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