Amended  IN  Assembly  May 02, 2023
Amended  IN  Assembly  March 30, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1604

Introduced by Assembly Member Bonta

February 17, 2023

An act to amend Sections 47605.6 and 47614.5 of, and to add Section Sections 47614.6 and 47614.7 to, the Education Code, relating to charter schools.


LEGISLATIVE COUNSEL'S DIGEST


AB 1604, as amended, Bonta. Charter schools: school facilities: Charter School Facility Grant Program. Program: conduit financing.
Existing law requires the California School Finance Authority to administer the Charter School Facility Grant Program, and provides that the grant program is intended to provide assistance with facilities rent and lease costs for pupils in charter schools. Existing law requires the authority to, among other things, determine eligibility, as specified, including a requirement that the charter schoolsite either gives a preference in admission to pupils who are currently enrolled in a public elementary school in which 55% or more of the pupil enrollment is eligible for free or reduced-price meals and to pupils who reside in the elementary school attendance area where the charter schoolsite is located or 55% or more of the pupil enrollment at the charter schoolsite is eligible for free or reduced-price meals.
This bill would specify that the above preference in admissions supersedes any other priority order for preference in admissions. clarify the above preference in admissions, including for when the charter school is a dual immersion program. The bill would also require the authority to update its regulations before opening the 2024–25 funding round to include specified requirements, including the process by which the authority will evaluate applicants for conflicts of interest, as specified, and to review a random sampling of an unspecified percentage of grant recipients for compliance with program requirements. specified. The bill would require charter schools to complete an annual survey conducted by the State Department of Education to be eligible for funding, and to include documentation confirming their status as nonprofit organizations in their applications.
This bill would require a charter school, charter management organization, subsidiary of a charter school, or the subsidiary of a charter management organization that operates or controls school to offer an educational facility, as defined, acquired, financed, constructed, or modernized on or after January 1, 2024, that has been substantially funded, as defined, with Charter School Facility Grant Program (program) funds to provide written notice to the Attorney General before entering into an agreement or transaction, as specified. The bill would require the Attorney General, within 90 days of the receipt of the written notice, to notify the educational facility owner in writing of the decision to consent to, give conditional consent to, or not consent to the agreement or transaction, and would authorize the Attorney General, in making that determination, to consider any factors the Attorney General deems relevant. The bill would require the Attorney General, before issuing any written decision, to conduct one or more public meetings, as specified. The bill would require the educational facility owner to promptly pay the Attorney General, upon request, for all actual, reasonable, and direct costs incurred in reviewing, evaluating, and making the determination required by these provisions, as specified. and held by a related-party entity, as defined, for sale or lease to certain entities in a specified order when choosing to sell or lease the educational facility. If none of the entities listed are interested in the educational facility, the bill would require the educational facility to then be sold or leased to another entity at fair market value, as specified. If a charter school educational facility substantially funded with program funds and held by a related-party entity is sold within 10 years of receiving program funds to any entity not listed and the proceeds are not used for capital outlay in the state, the bill would require program funds received by the charter school in the previous 10 years to be returned to the authority, as specified.
This bill would require a charter school participating in a conduit financing program to notify the conduit issuer in certain situations, including, among others, when the charter school occupying the financed facility is closing. The bill would require a charter school to annually notify the conduit issuer of the status of a facility with outstanding conduit bonds when the charter school has closed or vacated the building but the building has not been sold, as provided. To the extent these provisions would impose additional duties on charter schools, the bill would impose a state-mandated local program. The bill would require charter school conduit financing, entered into on or after January 1, 2024, to include an early repayment provision to allow repayment at any time.
The Charter Schools Act of 1992 provides for the establishment and operation of charter schools. Existing law requires a petition for the establishment of a charter school to contain comprehensive descriptions of various matters and procedures, including procedures to be used if the charter school closes, including a final audit of the charter school to determine the disposition of all assets and liabilities of the charter school, as specified.
If a charter school leases or rents its facility from a related party or subsidiary, as specified, or owns its facility, this bill would require the charter school to include a statement describing its plans for the use of the facility in its final audit.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 47605.6 of the Education Code is amended to read:

47605.6.
 (a) (1) In addition to the authority provided by Section 47605.5, a county board of education may also approve a petition for the operation of a charter school that operates at one or more sites within the geographic boundaries of the county and that provides instructional services that are not generally provided by a county office of education. A county board of education may approve a countywide charter only if it finds, in addition to the other requirements of this section, that the educational services to be provided by the charter school will offer services to a pupil population that will benefit from those services and that cannot be served as well by a charter school that operates in only one school district in the county. A petition for the establishment of a countywide charter school pursuant to this subdivision may be circulated throughout the county by any one or more persons seeking to establish the charter school. The petition may be submitted to the county board of education for review after either of the following conditions is met:
(A) The petition is signed by a number of parents or guardians of pupils residing within the county that is equivalent to at least one-half of the number of pupils that the charter school estimates will enroll in the school for its first year of operation and each of the school districts where the charter school petitioner proposes to operate a facility has received at least 30 days’ notice of the petitioner’s intent to operate a charter school pursuant to this section.
(B) The petition is signed by a number of teachers that is equivalent to at least one-half of the number of teachers that the charter school estimates will be employed at the school during its first year of operation and each of the school districts where the charter school petitioner proposes to operate a facility has received at least 30 days’ notice of the petitioner’s intent to operate a charter school pursuant to this section.
(2) An existing public school shall not be converted to a charter school in accordance with this section.
(3) After receiving approval of its petition, a charter school that proposes to establish operations at additional sites within the geographic boundaries of the county board of education shall notify the school districts where those sites will be located. The charter school shall also request a material revision of its charter by the county board of education that approved its charter and the county board of education shall consider whether to approve those additional locations at an open, public meeting, held no sooner than 30 days following notification of the school districts where the sites will be located. If approved, the location of the approved sites shall be a material revision of the charter school’s approved charter.
(4) A petition shall include a prominent statement indicating that a signature on the petition means that the parent or guardian is meaningfully interested in having their child or ward attend the charter school, or in the case of a teacher’s signature, means that the teacher is meaningfully interested in teaching at the charter school. The proposed charter shall be attached to the petition.
(b) No later than 60 days after receiving a petition, in accordance with subdivision (a), the county board of education shall hold a public hearing on the provisions of the charter, at which time the county board of education shall consider the level of support for the petition by teachers, parents or guardians, and the school districts where the charter school petitioner proposes to place school facilities. Following review of the petition and the public hearing, the county board of education shall either grant or deny the charter within 90 days of receipt of the petition. However, this date may be extended by an additional 30 days if both parties agree to the extension. A petition is deemed received by the county board of education for purposes of commencing the timelines described in this subdivision when the petitioner submits a petition, in accordance with subparagraph (A) or (B) of paragraph (1) of subdivision (a), to the county office of education. The county board of education shall publish all staff recommendations, including the recommended findings, regarding the petition at least 15 days before the public hearing at which the county board of education will either grant or deny the charter. At the public hearing at which the county board of education will either grant or deny the charter, petitioners shall have equivalent time and procedures to present evidence and testimony to respond to the staff recommendations and findings. A county board of education may impose any additional requirements beyond those required by this section that it considers necessary for the sound operation of a countywide charter school. A county board of education may grant a charter for the operation of a charter school under this part only if it is satisfied that granting the charter is consistent with sound educational practice and that the charter school has reasonable justification for why it could not be established by petition to a school district pursuant to Section 47605. The county board of education shall deny a petition for the establishment of a charter school if it finds one or more of the following:
(1) The charter school presents an unsound educational program for the pupils to be enrolled in the charter school.
(2) The petitioners are demonstrably unlikely to successfully implement the program set forth in the petition.
(3) The petition does not contain the number of signatures required by subdivision (a).
(4) The petition does not contain an affirmation of each of the conditions described in subdivision (e).
(5) The petition does not contain reasonably comprehensive descriptions of all of the following:
(A) (i) The educational program of the charter school, designed, among other things, to identify those pupils whom the charter school is attempting to educate, what it means to be an “educated person” in the 21st century, and how learning best occurs. The goals identified in that program shall include the objective of enabling pupils to become self-motivated, competent, and lifelong learners.
(ii) The annual goals for the charter school for all pupils and for each subgroup of pupils identified pursuant to Section 52052, to be achieved in the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served by the charter school, and specific annual actions to achieve those goals. A charter petition may identify additional school priorities, the goals for the school priorities, and the specific annual actions to achieve those goals.
(iii) If the proposed charter school will enroll high school pupils, the manner in which the charter school will inform parents regarding the transferability of courses to other public high schools. Courses offered by the charter school that are accredited by the Western Association of Schools and Colleges may be considered to be transferable to other public high schools.
(iv) If the proposed charter school will enroll high school pupils, information as to the manner in which the charter school will inform parents as to whether each individual course offered by the charter school meets college entrance requirements. Courses approved by the University of California or the California State University as satisfying their prerequisites for admission may be considered as meeting college entrance requirements for purposes of this clause.
(B) The measurable pupil outcomes identified for use by the charter school. “Pupil outcomes,” for purposes of this part, means the extent to which all pupils of the charter school demonstrate that they have attained the skills, knowledge, and aptitudes specified as goals in the charter school’s educational program. Pupil outcomes shall include outcomes that address increases in pupil academic achievement both schoolwide and for all pupil subgroups served by the charter school, as that term is defined in subdivision (a) of Section 52052. The pupil outcomes shall align with the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served by the charter school.
(C) The method by which pupil progress in meeting those pupil outcomes is to be measured. To the extent practicable, the method for measuring pupil outcomes for state priorities shall be consistent with the way information is reported on a school accountability report card.
(D) The location of each charter school facility that the petitioner proposes to operate.
(E) The governance structure of the charter school, including, but not limited to, the process to be followed by the charter school to ensure parental involvement.
(F) The qualifications to be met by individuals to be employed by the charter school.
(G) The procedures that the charter school will follow to ensure the health and safety of pupils and staff. These procedures shall require all of the following:
(i) That each employee of the charter school furnish the charter school with a criminal record summary as described in Section 44237.
(ii) The development of a school safety plan, which shall include the safety topics listed in subparagraphs (A) to (J), inclusive, of paragraph (2) of subdivision (a) of Section 32282.
(iii) That the school safety plan be reviewed and updated by March 1 of every year by the charter school.
(H) The means by which the charter school will achieve a balance of racial and ethnic pupils, special education pupils, and English learner pupils, including redesignated fluent English proficient pupils as defined by the evaluation rubrics in Section 52064.5, that is reflective of the general population residing within the territorial jurisdiction of the county board of education to which the charter petition is submitted. Upon renewal, for a charter school not deemed to be a local educational agency for purposes of special education pursuant to Section 47641, the chartering authority may consider the effect of school placements made by the chartering authority in providing a free and appropriate public education as required by the federal Individuals with Disabilities Education Act (Public Law 101-476), on the balance of pupils with disabilities at the charter school.
(I) The manner in which annual, independent financial audits shall be conducted, in accordance with regulations established by the state board, and the manner in which audit exceptions and deficiencies shall be resolved.
(J) The procedures by which pupils can be suspended or expelled from the charter school for disciplinary reasons or otherwise involuntarily removed from the charter school for any reason. These procedures, at a minimum, shall include an explanation of how the charter school will comply with federal and state constitutional procedural and substantive due process requirements that is consistent with all of the following:
(i) For suspensions of fewer than 10 days, provide oral or written notice of the charges against the pupil and, if the pupil denies the charges, an explanation of the evidence that supports the charges and an opportunity for the pupil to present the pupil’s side of the story.
(ii) For suspensions of 10 days or more and all other expulsions for disciplinary reasons, both of the following:
(I) Provide timely, written notice of the charges against the pupil and an explanation of the pupil’s basic rights.
(II) Provide a hearing adjudicated by a neutral officer within a reasonable number of days at which the pupil has a fair opportunity to present testimony, evidence, and witnesses and confront and cross-examine adverse witnesses, and at which the pupil has the right to bring legal counsel or an advocate.
(iii) Contain a clear statement that no pupil shall be involuntarily removed by the charter school for any reason unless the parent or guardian of the pupil has been provided written notice of intent to remove the pupil no less than five schooldays before the effective date of the action. The written notice shall be in the native language of the pupil or the pupil’s parent or guardian, or, if the pupil is a homeless child or youth, or a foster child or youth, in the native language of the homeless or foster child’s educational rights holder. In the case of a foster child or youth, the written notice shall also be provided to the foster child’s attorney and county social worker. If the pupil is a an Indian child, as defined in Section 224.1 of the Welfare and Institutions Code, the written notice shall also be provided to the Indian child’s tribal social worker and, if applicable, county social worker. The written notice shall inform the pupil, the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, and county social worker, or the Indian child’s tribal social worker and, if applicable, county social worker of the right to initiate the procedures specified in clause (ii) before the effective date of the action. If the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, or county social worker, or the Indian child’s tribal social worker or, if applicable, county social worker initiates the procedures specified in clause (ii), the pupil shall remain enrolled and shall not be removed until the charter school issues a final decision. For purposes of this clause, “involuntarily removed” includes disenrolled, dismissed, transferred, or terminated, but does not include suspensions specified in clauses (i) and (ii).
(iv) A foster child’s educational rights holder, attorney, and county social worker and an Indian child’s tribal social worker and, if applicable, county social worker shall have the same rights a parent or guardian of a child has to receive a suspension notice, expulsion notice, manifestation determination notice, involuntary transfer notice, and other documents and related information.
(K) The manner by which staff members of the charter school will be covered by the State Teachers’ Retirement System, the Public Employees’ Retirement System, or federal social security.
(L) The procedures to be followed by the charter school and the county board of education to resolve disputes relating to provisions of the charter.
(M) Admission policy and procedures, consistent with subdivision (e).
(N) The public school attendance alternatives for pupils residing within the county who choose not to attend the charter school.
(O) The rights of an employee of the county office of education, upon leaving the employment of the county office of education, to be employed by the charter school, and any rights of return to the county office of education that an employee may have upon leaving the employment of the charter school.
(P) The procedures to be used if the charter school closes. The procedures shall ensure a final audit of the charter school to determine the disposition of all assets and liabilities of the charter school, including plans for disposing of any net assets and for the maintenance and transfer of public records. If the charter school leases or rents its facility from a related party or subsidiary, as identified in its audited financial statements according to generally accepted accounting principles in the United States, or owns its facility, the charter school shall include a statement describing its plans for the use of the facility in its final audit.
(6) A declaration of whether or not the charter school shall be deemed the exclusive public school employer of the employees of the charter school for purposes of the Educational Employment Relations Act (Chapter 10.7 (commencing with Section 3540) of Division 4 of Title 1 of the Government Code).
(7) Any other basis that the county board of education finds justifies the denial of the petition.
(c) A county board of education that approves a petition for the operation of a countywide charter may, as a condition of charter approval, enter into an agreement with a third party, at the expense of the charter school, to oversee, monitor, and report to the county board of education on the operations of the charter school. The county board of education may prescribe the aspects of the charter school’s operations to be monitored by the third party and may prescribe appropriate requirements regarding the reporting of information concerning the operations of the charter school to the county board of education.
(d) (1) Charter schools shall meet all statewide standards and conduct the pupil assessments required pursuant to Section 60605 and any other statewide standards authorized in statute or pupil assessments applicable to pupils in noncharter public schools.
(2) Charter schools shall on a regular basis consult with their parents and teachers regarding the charter school’s educational programs.
(e) (1) In addition to any other requirement imposed under this part, a charter school shall be nonsectarian in its programs, admission policies, employment practices, and all other operations, shall not charge tuition, and shall not discriminate against any pupil on the basis of ethnicity, national origin, gender, gender identity, gender expression, or disability. Except as provided in paragraph (2), admission to a charter school shall not be determined according to the place of residence of the pupil, or of the pupil’s parent or guardian, within this state.
(2) (A) A charter school shall admit all pupils who wish to attend the charter school.
(B) If the number of pupils who wish to attend the charter school exceeds the charter school’s capacity, attendance, except for existing pupils of the charter school, shall be determined by a public random drawing. Preference shall be extended to pupils currently attending the charter school and pupils who reside in the county except as provided for in Section 47614.5. Preferences, including, but not limited to, siblings of pupils admitted or attending the charter school and children of the charter school’s teachers, staff, and founders identified in the initial charter, may also be permitted by the chartering authority on an individual charter school basis. Priority order for any preference shall be determined in the charter petition in accordance with all of the following:
(i) Each type of preference shall be approved by the chartering authority at a public hearing.
(ii) Preferences shall be consistent with federal law, the California Constitution, and Section 200.
(iii) Preferences shall not result in limiting enrollment access for pupils with disabilities, academically low-achieving pupils, English learners, neglected or delinquent pupils, homeless pupils, or pupils who are economically disadvantaged, as determined by eligibility for any free or reduced-price meal program, foster youth, or pupils based on nationality, race, ethnicity, or sexual orientation.
(iv) In accordance with Section 49011, preferences shall not require mandatory parental volunteer hours as a criterion for admission or continued enrollment.
(C) In the event of a drawing, the county board of education shall make reasonable efforts to accommodate the growth of the charter school and in no event shall take any action to impede the charter school from expanding enrollment to meet pupil demand.
(3) If a pupil is expelled or leaves the charter school without graduating or completing the school year for any reason, the charter school shall notify the superintendent of the school district of the pupil’s last known address within 30 days and shall, upon request, provide that school district with a copy of the cumulative record of the pupil, including report cards or a transcript of grades, and health information. If the pupil is subsequently expelled or leaves the school district without graduating or completing the school year for any reason, the school district shall provide this information to the charter school within 30 days if the charter school demonstrates that the pupil had been enrolled in the charter school. This paragraph applies only to pupils subject to compulsory full-time education pursuant to Section 48200.
(4) (A) A charter school shall not discourage a pupil from enrolling or seeking to enroll in the charter school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2).
(B) A charter school shall not request a pupil’s records or require a parent, guardian, or pupil to submit the pupil’s records to the charter school before enrollment.
(C) A charter school shall not encourage a pupil currently attending the charter school to disenroll from the charter school or transfer to another school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2). This subparagraph shall not apply to actions taken by a charter school pursuant to the procedures described in subparagraph (J) of paragraph (5) of subdivision (b).
(D) The department shall develop a notice of the requirements of this paragraph. This notice shall be posted on a charter school’s internet website. A charter school shall provide a parent or guardian, or a pupil if the pupil is 18 years of age or older, a copy of this notice at all of the following times:
(i) When a parent, guardian, or pupil inquires about enrollment.
(ii) Before conducting an enrollment lottery.
(iii) Before disenrollment of a pupil.
(E) (i) A person who suspects that a charter school has violated this paragraph may file a complaint with the chartering authority.
(ii) The department shall develop a template to be used for filing complaints pursuant to clause (i).
(5) Notwithstanding any other law, a charter school in operation as of July 1, 2019, that operates in partnership with the California National Guard may dismiss a pupil from the charter school for failing to maintain the minimum standards of conduct required by the Military Department.
(f) The county board of education shall not require an employee of the county or a school district to be employed in a charter school.
(g) The county board of education shall not require a pupil enrolled in a county program to attend a charter school.
(h) The county board of education shall require that the petitioner or petitioners provide information regarding the proposed operation and potential effects of the charter school, including, but not limited to, the facilities to be used by the charter school, the manner in which administrative services of the charter school are to be provided, and potential civil liability effects, if any, upon the charter school, any school district where the charter school may operate, and upon the county board of education. The petitioner or petitioners shall also be required to provide financial statements that include a proposed first-year operational budget, including startup costs, and cashflow and financial projections for the first three years of operation. If the charter school is to be operated by, or as, a nonprofit public benefit corporation, the petitioner shall provide the names and relevant qualifications of all persons whom the petitioner nominates to serve on the governing body of the charter school.
(i) In reviewing petitions for the establishment of charter schools within the county, the county board of education shall give preference to petitions that demonstrate the capability to provide comprehensive learning experiences to pupils identified by the petitioner or petitioners as academically low achieving pursuant to the standards established by the department under Section 54032, as that section read before July 19, 2006.
(j) Upon the approval of the petition by the county board of education, the petitioner or petitioners shall provide written notice of that approval, including a copy of the petition, to the school districts within the county, the Superintendent, and the state board.
(k) If a county board of education denies a petition, the petitioner shall not elect to submit the petition for the establishment of the charter school to the state board.
(l) (1) Teachers in charter schools shall be required to hold the Commission on Teacher Credentialing certificate, permit, or other document required for the teacher’s certificated assignment. These documents shall be maintained on file at the charter school and shall be subject to periodic inspection by the chartering authority. A governing body of a direct-funded charter school may use local assignment options authorized in statute and regulations for the purpose of legally assigning certificated teachers, in accordance with all of the requirements of the applicable statutes or regulations in the same manner as a governing board of a school district. A charter school shall have authority to request an emergency permit or a waiver from the Commission on Teacher Credentialing for individuals in the same manner as a school district.
(2) The Commission on Teacher Credentialing shall include in the bulletins it issues pursuant to subdivision (k) of Section 44237 to provide notification to local educational agencies of any adverse actions taken against the holders of any commission documents, notice of any adverse actions taken against teachers employed by charter schools. The Commission on Teacher Credentialing shall make this bulletin available to all chartering authorities and charter schools in the same manner in which it is made available to local educational agencies.
(m) A charter school shall transmit a copy of its annual, independent, independent financial audit report for the preceding fiscal year, as described in subparagraph (I) of paragraph (5) of subdivision (b), to the county office of education, the Controller, and the department by December 15 of each year. This subdivision does not apply if the audit of the charter school is encompassed in the audit of the chartering authority pursuant to Section 41020.
(n) A charter school may encourage parental involvement but shall notify the parents and guardians of applicant pupils and currently enrolled pupils that parental involvement is not a requirement for acceptance to, or continued enrollment at, the charter school.
(o) The requirements of this section shall not be waived by the state board pursuant to Section 33050 or any other law.

SEC. 2.

 Section 47614.5 of the Education Code is amended to read:

47614.5.
 (a) The Charter School Facility Grant Program is hereby established, and shall be administered by the California School Finance Authority. The grant program is intended to provide assistance with facilities rent and lease costs for pupils in charter schools.
(b) (1) Commencing with the 2017–18 fiscal year, and subject to available funding in the annual Budget Act, eligible charter schools shall receive an amount equivalent to one of the following, whichever is less:
(A) Seventy-five percent of annual facilities rent and lease costs for the charter school.
(B) For the 2017–18 fiscal year, an amount equal to one thousand one hundred seventeen dollars ($1,117) per unit of average daily attendance, as certified at the second principal apportionment. Commencing with the 2018–19 fiscal year, the amount of funding provided per unit of average daily attendance in the preceding fiscal year, as adjusted by the percentage change in the annual average value of the Implicit Price Deflator for State and Local Government Purchases of Goods and Services for the United States, as published by the United States Department of Commerce for the 12-month period ending in the third quarter of the prior fiscal year. This percentage change shall be determined using the latest data available as of May 10 of the preceding fiscal year compared with the annual average value of the same deflator for the 12-month period ending in the third quarter of the second preceding fiscal year, using the latest data available as of May 10 of the preceding fiscal year, as reported by the Department of Finance.
(2) In any fiscal year, if the funds appropriated for purposes of this section by the annual Budget Act are insufficient to fully fund the approved amounts, the California School Finance Authority shall apportion the available funds on a pro rata basis.
(c) For purposes of this section, the California School Finance Authority shall do all of the following:
(1) Inform charter schools of the grant program.
(2) Upon application by a charter school, determine eligibility, based on the geographic location of the charter schoolsite, pupil eligibility for free or reduced-price meals, and a preference in admissions, as appropriate. Eligibility for funding shall not be limited to the grade level or levels served by the school whose attendance area is used to determine eligibility. A charter schoolsite is eligible for funding pursuant to this section if the charter schoolsite meets either of the following conditions:
(A) (i) The charter schoolsite is physically located in the attendance area of a public elementary school in which 55 percent or more of the pupil enrollment is eligible for free or reduced-price meals and the charter schoolsite gives a preference in admissions to pupils who are currently enrolled in that public elementary school and to pupils who reside in the elementary school attendance area where the charter schoolsite is located. The preference in admissions under this subparagraph shall supersede any priority order for preference in admissions established pursuant to Section 47605.
(ii) A charter school using this authority shall give preference in admissions to pupils who are currently enrolled in that public elementary school and to pupils who reside in the elementary school attendance area where the charter schoolsite is located after preferences for existing pupils and siblings of existing pupils. If the charter school is a dual immersion program, the charter school may give preference in admissions to pupils who speak specific languages among the preference in admissions to pupils who are currently enrolled in that public elementary school and to pupils who reside in the elementary school attendance area where the charter schoolsite is located. If the number of pupils admitted from that group does not meet the necessary threshold for a dual immersion program, the charter school may give a preference for admission to pupils who speak a specific language who are not currently enrolled in that public elementary school and to pupils who do not reside in the elementary school attendance area where the charter schoolsite is located above the preference in admission to pupils who are currently enrolled in that public elementary school and to pupils who reside in the elementary school attendance area where the charter schoolsite is located.
(B) Fifty-five percent or more of the pupil enrollment at the charter schoolsite is eligible for free or reduced-price meals.
(3) Inform charter schools of their grant eligibility.
(4) Make apportionments to a charter school for eligible expenditures according to the following schedule:
(A) An initial apportionment by October 31 of each fiscal year, provided the charter school has submitted a timely application for funding, as determined by the California School Finance Authority. The initial apportionment shall be 50 percent of the charter school’s estimated annual entitlement as determined by this section.
(B) A second apportionment by March 1 of each fiscal year. This apportionment shall be 75 percent of the charter school’s estimated annual entitlement, as adjusted for any revisions in cost, enrollment, and other data relevant to computing the charter school’s annual entitlement, less any funding already apportioned to the charter school.
(C) A third apportionment within 30 days of the end of each fiscal year or 30 days after receiving the data and documentation needed to compute the charter school’s total annual entitlement, whichever is later. This apportionment shall be the charter school’s total annual entitlement less any funding already apportioned to the charter school.
(D) Notwithstanding subparagraph (A), the initial apportionment in the 2013–14 fiscal year shall be made by October 15, 2013, or 105 days after enactment of the Budget Act of 2013, whichever is later.
(d) (1) The California School Finance Authority shall update its regulations before opening the 2024–25 funding round to include all of the following:

(5)(A)Evaluate

(A) The process by which the California School Finance Authority will evaluate applicants for conflicts of interest in accordance with Section 1090 of the Government Code, the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code), or any other conflict-of-interest laws that may be applicable to the applicant’s participation in the program.
(B) The process by which the California School Finance Authority shall update its regulations before opening the 2024–25 funding round to will evaluate conflicts of interest between all related parties. These regulations shall not be adopted using the California School Finance Authority’s emergency rulemaking authority.

(6)(A)Review

(C) The process by which the California School Finance Authority will review a random sampling of at least ____ 10 percent of grant recipients per year for compliance with program requirements, including proper disclosure and certifications of conflicts of interest.

(B)

(D) The process by which the California School Finance Authority may deny future funding to recipients if it determines that the applicant failed to provide complete and accurate information or provided misleading information on their application for grant funding.
(2) These regulations shall not be adopted using the California School Finance Authority’s emergency rulemaking authority.

(d)

(e) For purposes of this section:
(1) The California School Finance Authority shall use prior year data on pupil eligibility for free or reduced-price meals to determine eligibility pursuant to paragraph (2) of subdivision (c). A new charter school that was not operational in the prior year shall be eligible in the current year if it meets the free or reduced-price meal eligibility requirements specified in paragraph (2) of subdivision (c) based on current year data. Prior year rent or lease costs provided by charter schools shall be used to determine eligibility for the grant program until actual rent or lease costs become known or until June 30 of each fiscal year.
(2) If prior year rent or lease costs are unavailable, and the current year lease and rent costs are not immediately available, the California School Finance Authority shall use rent or lease cost estimates provided by the charter school.
(3) (A) The California School Finance Authority shall verify costs associated with facility rents or leases, as evidenced by an executed rental or lease agreement.
(B) The verified facility agreement shall be subject to either of the following conditions:
(i) Reimbursable facility rent or lease costs do not exceed the prior year’s costs on file with the authority as of the 2016–17 fiscal year, subject to a cost-of-living adjustment consistent with subparagraph (B) of paragraph (1) of subdivision (b).
(ii) The rent or lease costs of new facility agreements are at or below market rate based on an independent appraisal paid for by the charter school.
(4) The California School Finance Authority shall verify that the grant amount awarded to each charter school is consistent with eligibility requirements as specified in this section and in regulations adopted by the authority. If it is determined by the California School Finance Authority that a charter school did not receive the proper grant award amount, either the charter school shall transfer funds back to the authority as necessary within 60 days of being notified by the authority, or the authority shall provide an additional apportionment as necessary to the charter school within 60 days of notifying the charter school, subject to the availability of funds.

(e)

(f) Funds appropriated for purposes of this section shall not be apportioned for any of the following:
(1) Units of average daily attendance generated through nonclassroom-based instruction as defined by paragraph (2) of subdivision (e) of Section 47612.5 or that does not comply with conditions or limitations set forth in regulations adopted by the state board pursuant to this section.
(2) Charter schools occupying existing school district or county office of education facilities, except that charter schools shall be eligible for the portions of their facilities that are not existing school district or county office of education facilities.
(3) Charter schools receiving reasonably equivalent facilities from their chartering authorities pursuant to Section 47614, except that charter schools shall be eligible for the portions of their facilities that are not reasonably equivalent facilities received from their chartering authorities.

(f)

(g) Funds appropriated for purposes of this section shall first be used for costs associated with facilities rents and leases, consistent with the definitions used in the California School Accounting Manual or regulations adopted by the California School Finance Authority. These funds also may be used for costs, including, but not limited to, costs associated with remodeling buildings, deferred maintenance, initially installing or extending service systems and other built-in equipment, and improving sites.

(g)

(h) If an existing charter school located in an elementary attendance area in which less than 50 percent of pupil enrollment is eligible for free or reduced-price meals relocates to an attendance area identified in paragraph (2) of subdivision (c), admissions preference shall be given to pupils who reside in the elementary school attendance area into which the charter school is relocating.

(h)

(i) The California School Finance Authority annually shall report to the department and the Director of Finance, and post information on its internet website, regarding the use of funds that have been made available during the fiscal year to each charter school pursuant to the grant program.

(i)

(j) The California School Finance Authority shall annually allocate the facilities grants to eligible charter schools according to the schedule in paragraph (4) of subdivision (c) for the current school year rent and lease costs.

(j)

(k) It is the intent of the Legislature that the funding level for the Charter School Facility Grant Program for the 2012–13 fiscal year be considered the base level of funding for subsequent fiscal years.

(k)

(l) The Controller shall include instructions appropriate to the enforcement of this section in the audit guide required by subdivision (a) of Section 14502.1.

(l )

(m) The California School Finance Authority, effective with the 2013–14 fiscal year, shall be considered the senior creditor for purposes of satisfying audit findings pursuant to the audit instructions to be developed pursuant to subdivision (k).

(m)

(n) The California School Finance Authority may adopt regulations to implement this section. Any regulations adopted pursuant to this section may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of the Title 2 of the Government Code). The adoption of these regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare.

(n)

(o) Notwithstanding any other law, a charter school shall be subject, with regard to this section, to audit conducted pursuant to Section 41020.

(o)

(p) A charter school that rents or leases its facility from a related party and receives funds from the grant program shall consent to, and comply with, the provisions of Section 47614.6.

(p)

(q) (1) To be eligible for funding pursuant to this section a charter school shall complete the Charter School Annual Information Update survey conducted by the department.
(2) The department shall provide a list of charter schools that completed the survey to the California School Finance Authority for verification purposes.

(q)

(r) In its application for grant funding, a charter school shall include documentation confirming its status as a nonprofit organization.

(r)

(s) For purposes of this section, “related parties” shall include, but is not limited to, nonprofit corporate entities, nonprofit charter management organizations, benefit corporations, an entity managing a charter school, as defined in Section 47604.1, and the wholly owned subsidiaries of those entities, including entities that were formed for the purpose of managing or providing support to the charter school.

SEC. 3.Section 47614.6 is added to the Education Code, to read:
47614.6.

(a)This section shall apply to the sale or lease of an educational facility substantially funded with Charter School Facility Grant Program funds and held by any of the following related-party entities:

(1)A charter school.

(2)A charter management organization.

(3)(A)A nonprofit corporation, including a nonprofit limited liability corporation, that is a subsidiary of a charter school or charter management organization.

(B)Subsidiaries and nonprofit corporations may be identified in a charter school’s audited financial statements according to generally accepted accounting principles recognized in the United States.

(b)(1)A charter school, charter management organization, subsidiary of a charter school, or subsidiary of a charter management organization that operates or controls an educational facility described in subdivision (a), regardless of whether it is currently operating or if its charter has been revoked or nonrenewed, shall provide written notice to, and obtain the written consent of, the Attorney General before entering into any agreement or transaction to do either of the following:

(A)Sell, transfer, lease, exchange, option, convey, or otherwise dispose of the educational facility.

(B)Transfer control, responsibility, or governance of the educational facility.

(2)The substitution of a new corporate member or members that transfers the control of, responsibility for, or governance of the educational facility shall be deemed a transfer for the purposes of this section. The substitution of one or more members of the governing body, or any arrangement, written or oral, that would transfer voting control of the members of the governing body, shall also be deemed a transfer for purposes of this section. This paragraph shall not apply to typical governing body governance changes that occur due to governing body member term limits, turnover, or decisions by individual members of the governing body.

(c)The notice to the Attorney General provided for in this section shall include the information the Attorney General determines is required. The notice, including any other information provided to the Attorney General under this section, and that is in the public file, shall be made available by the Attorney General to the public in written form, as soon as is practicable after it is received by the Attorney General. The Attorney General may require the educational facility owner to provide certain components of the notice in the top three languages spoken among the community served by the school district in which the educational facility is located.

(d)Within 90 days of the receipt of the written notice provided pursuant to subdivision (b), the Attorney General shall notify the educational facility owner in writing of the decision to consent to, give conditional consent to, or not consent to the agreement or transaction. The Attorney General may extend this period for one additional 45-day period if any of the following conditions is satisfied.

(1)The extension is necessary to obtain information pursuant to subdivision (h).

(2)The proposed agreement or transaction is substantially modified after the first public meeting conducted by the Attorney General in accordance with subdivision (e).

(e)Before issuing a written decision pursuant to subdivision (d), the Attorney General shall conduct one or more public meetings, one of which shall be in the county in which the educational facility is located, to hear comments from interested parties. At least 14 days before conducting the public meeting, the Attorney General shall provide written notice of the time and place of the meeting through publication in one or more newspapers of general circulation in the affected community, to the local school district in which the educational facility is located, and to the county board of education of the county in which the facility is located. The notice shall be provided in English and in the primary languages spoken among community members. If a substantive change in the proposed agreement or transaction is submitted to the Attorney General after the initial public meeting, the Attorney General may conduct an additional public meeting to hear comments from interested parties with respect to that change.

(f)The Attorney General shall have discretion to consent to, give conditional consent to, or not consent to any agreement or transaction described in subdivision (b). In making the determination, the Attorney General shall consider any factors that the Attorney General deems relevant, including, but not limited to, whether any of the following apply:

(1)The terms and conditions of the agreement or transaction are fair and reasonable to the educational facility owner.

(2)The agreement or transaction will result in inurement to any private person or entity.

(3)Any agreement or transaction that is subject to this section is at fair market value.

(4)The market value has been manipulated by the actions of the parties in a manner that causes the value of the assets to decrease.

(5)The proposed use of the proceeds from the agreement or transaction is consistent with the charitable trust on which the assets are held by the educational facility owner or any related-party entity, and whether the proceeds will not be spent on operations, expansion, or other business practices outside the state.

(6)The agreement or transaction involves or constitutes any breach of trust.

(7)The Attorney General has been provided with sufficient information and data by the educational facility owner to adequately evaluate the agreement or transaction or the effects on the public.

(8)The agreement or transaction may create a significant effect on the availability or accessibility of nonsectarian public educational facilities, services, or opportunities in the affected community.

(9)The proposed agreement or transaction is in the public interest.

(g)The Attorney General may adopt regulations implementing this section.

(h)(1)Within the time periods designated in subdivision (d), and relating to those factors specified in subdivision (f), the Attorney General may do both of the following:

(A)Contract with, consult, and receive advice from any state agency, county board of education, or school district on those terms and conditions that the Attorney General deems appropriate.

(B)Contract with experts or consultants to assist in reviewing the proposed agreement or transaction.

(2)Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code.

(3)The Attorney General shall be entitled to reimbursement from the educational facility owner for all actual, reasonable, direct costs incurred in reviewing, evaluating, and making the determination referred to in this section, including administrative costs. The educational facility owner shall promptly pay the Attorney General, upon request, for all of those costs.

(i)(1)In order to effectively monitor ongoing compliance with the terms and conditions of any sale or transfer of assets subject to this section, including, but not limited to, the ongoing use of the charitable assets in a manner consistent with the trust pursuant to which they are held, the Attorney General may, in their sole discretion, contract with experts and consultants to assist in this regard.

(2)Contract costs shall not exceed an amount that is reasonable and necessary to monitor ongoing compliance. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code.

(3)The Attorney General shall be entitled to reimbursement from either the selling or the acquiring entity, depending upon which one the burden of compliance falls, for all actual, reasonable, and direct costs incurred in monitoring ongoing compliance with the terms and conditions of the sale or transfer of assets, including contract and administrative costs. The Attorney General may bill either the selling or the acquiring entity and the entity billed by the Attorney General shall promptly pay for all of those costs.

(j)The Attorney General may enforce conditions imposed on the Attorney General’s consent to an agreement or transaction pursuant to subdivision (d) to the fullest extent provided by law. In addition to any legal remedies the Attorney General may have, the Attorney General shall be entitled to specific performance, injunctive relief, and other equitable remedies a court deems appropriate for breach of any of the conditions and shall be entitled to recover its attorney’s fees and costs incurred in remedying each violation.

(k)For purposes of this section, the following definitions apply:

(1)“Educational facility” means a facility that is qualified to receive rent and lease reimbursements pursuant to Section 47614.5.

(2)“Fair market value” means the most likely price that the assets being sold would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and the seller each acting prudently, knowledgeably, and in their own best interest, and a reasonable time being allowed for exposure in the open market.

(3)(A)“Substantially funded” means that the educational facility has received 50 percent or more of its independently assessed value at the time of its proposed sale or lease in public grant funds from the Charter School Facility Grant Program.

(B)The California School Finance Authority shall supply information to the educational facility owner, the chartering authority, and the Attorney General on the total amount of funds received by a charter school for a given facility through the Charter School Facility Grant Program in all program years.

SEC. 3.

 Section 47614.6 is added to the Education Code, to read:

47614.6.
 (a) This section shall apply to the sale or lease of an educational facility substantially funded with Charter School Facility Grant Program funds and held by any of the following related-party entities:
(1) A charter school.
(2) An entity managing a charter school.
(3) (A) A nonprofit corporation, including a nonprofit limited liability corporation, that is a subsidiary of an entity managing a charter school.
(B) Subsidiaries and nonprofit corporations may be identified in a charter school’s audited financial statements according to generally accepted accounting principles recognized in the United States.
(b) A charter school shall first offer an educational facility acquired, financed, constructed, or modernized on or after January 1, 2024, that is substantially funded with Charter School Facility Grant Program funds and held by a related-party entity, for sale or lease consistent with the following:
(1) First, the property shall be offered for sale or lease to any interested charter school, school district, county office of education, or agency that will use the property exclusively for the delivery of subsidized child care and development services or early education, for a period of not less than five years from the date the property is made available.
(2) Second, the property shall be offered to any interested public district, public authority, public agency, public corporation, or any other political subdivision of the state, and to the federal government.
(c) (1) The charter school shall offer the educational facility for sale to the entities described in subdivision (b) at the charter school’s cost of acquisition, adjusted by a factor equivalent to the percentage increase or decrease in the cost of living from the date of purchase to the year in which the offer of sale is made, plus the cost of any school facilities construction undertaken on the property by the charter school since its acquisition, adjusted by a factor equivalent to the increase or decrease in the statewide cost index for class B construction, as annually determined by the State Allocation Board pursuant to Section 17072.10, from the year the improvement is completed to the year in which the sale is made.
(2) In the event a statewide cost index for class B construction is not available, the charter school shall use a factor equal to the average statewide cost index for class B construction for the preceding 10 calendar years.
(3) In no event shall the price be less than 25 percent of the fair market value of the property described in this section, or less than the amount necessary to retire the share of conduit revenue bonds, including prepayment penalties or any other loans.
(4) The percentage of annual increase or decrease in the cost of living shall be the amount shown for January 1 of the applicable year by the then current Bureau of Labor Statistics Consumers Price Index for the area in which the educational facility is located.
(d) If no entity listed in subdivision (b) is interested in the sale or lease of the charter school educational facility, the educational facility shall be sold or leased for the fair market value to an entity not listed in subdivision (b).
(e) If a charter school educational facility, that is substantially funded by Charter School Facility Grant Program funds and held by a related-party entity described in subdivision (a), is sold within 10 years of receiving Charter School Facility Grant Program funds and the property is not sold to one of the entities listed in subdivision (b), and the proceeds from the sale are not used for capital outlay in the state, the Charter School Facility Grant Program funds received in the previous 10 years shall be returned to the California School Finance Authority, after first retiring any outstanding bonds and other outstanding financial obligations. If a portion of the real property is sold, a proportionate amount of funds received from the Charter School Facility Grant Program funds shall be returned to the California School Finance Authority based on the percentage of the real property sold.
(f) The California School Finance Authority shall supply information to the educational facility owner, the charter school, and the chartering authority on the total amount of funds received by a charter school for a given facility through the Charter School Facility Grant Program in all program years.
(g) For purposes of this section, the following definitions apply:
(1) “Educational facility” means a facility that is qualified to receive rent and lease reimbursements pursuant to Section 47614.5.
(2) “Entity managing a charter school” has the same meaning as defined in Section 47604.1.
(3) “Substantially funded” means that the educational facility has received 51 percent or more of its most recent independently assessed value, as determined by the county assessor at the time of its proposed sale, in public grant funds from the Charter School Facility Grant Program.

SEC. 4.

 Section 47614.7 is added to the Education Code, to read:

47614.7.
 (a) A charter school participating in a conduit financing program shall notify the conduit issuer, in a manner prescribed by the conduit issuer, in all of the following situations:
(1) When the charter school occupying the financed facility is closing.
(2) When the charter school intends to sell or vacate a facility with outstanding conduit bonds.
(3) When the facility is sold.
(b) A charter school shall annually notify the conduit issuer of the status of a facility with outstanding conduit bonds when the charter school has closed or vacated the building but the building has not been sold, including, but not limited to, whether the property is continuing to be used as a school.
(c) (1) Charter school conduit financing shall include an early repayment provision to allow repayment at any time.
(2) This subdivision shall apply only to conduit financing entered into on or after January 1, 2024.
(d) For purposes of this section, “conduit financing” has the same meaning as defined in Section 5870 of the Government Code.

SEC. 5.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.