83R9096 CAS-D
 
  By: Davis S.B. No. 1301
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to granting and revoking licenses for open-enrollment
  charter schools and to exempting certain open-enrollment charter
  schools from assignment of a performance rating.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 5.001(6), Education Code, is amended to
  read as follows:
               (6)  "Open-enrollment charter school" means a school
  that has been granted a license [charter] under Subchapter D,
  Chapter 12.
         SECTION 2.  Section 7.028(a), Education Code, is amended to
  read as follows:
         (a)  Except as provided by Section 29.001(5), 29.010(a),
  39.056, or 39.057, the agency may monitor compliance with
  requirements applicable to a process or program provided by a
  school district, campus, program, or school granted a charter or
  license [charters] under Chapter 12, including the process
  described by Subchapter F, Chapter 11, or a program described by
  Subchapter B, C, D, E, F, H, or I, Chapter 29, Subchapter A, Chapter
  37, or Section 38.003, and the use of funds provided for such a
  program under Subchapter C, Chapter 42, only as necessary to
  ensure:
               (1)  compliance with federal law and regulations;
               (2)  financial accountability, including compliance
  with grant requirements; and
               (3)  data integrity for purposes of:
                     (A)  the Public Education Information Management
  System (PEIMS); and
                     (B)  accountability under Chapter 39.
         SECTION 3.  Section 7.102(c)(9), Education Code, is amended
  to read as follows:
               (9)  The board may grant an open-enrollment license
  [charter or approve a charter revision] as provided by Subchapter
  D, Chapter 12.
         SECTION 4.  The heading to Chapter 12, Education Code, is
  amended to read as follows:
  CHAPTER 12.  CHARTERS AND LICENSES
         SECTION 5.  Section 12.001(b), Education Code, is amended to
  read as follows:
         (b)  This chapter shall be applied in a manner that ensures
  the fiscal and academic accountability of persons holding charters
  or licenses granted [issued] under this chapter. This chapter may
  not be applied in a manner that unduly regulates the instructional
  methods or pedagogical innovations of charter schools.
         SECTION 6.  Sections 12.101(a), (b), and (d), Education
  Code, are amended to read as follows:
         (a)  In accordance with this subchapter, the State Board of
  Education may grant a license [charter] on the application of an
  eligible entity for an open-enrollment charter school to operate in
  a facility of a commercial or nonprofit entity, an eligible entity,
  or a school district, including a home-rule school district. In
  this subsection, "eligible entity" means:
               (1)  an institution of higher education as defined
  under Section 61.003;
               (2)  a private or independent institution of higher
  education as defined under Section 61.003;
               (3)  an organization that is exempt from taxation under
  Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section
  501(c)(3)); or
               (4)  a governmental entity.
         (b)  The State Board of Education may grant a license
  [charter] for an open-enrollment charter school only to an
  applicant that meets any financial, governing, and operational
  standards adopted by the commissioner under this subchapter. The
  State Board of Education may not grant a total of more than 215
  licenses [charters] for an open-enrollment charter school.
         (d)  An educator employed by a school district before the
  effective date of a license [charter] for an open-enrollment
  charter school operated at a school district facility may not be
  transferred to or employed by the open-enrollment charter school
  over the educator's objection.
         SECTION 7.  Section 12.1012, Education Code, is amended by
  amending Subdivisions (2), (3), and (4) and adding Subdivision
  (3-a) to read as follows:
               (2)  "Governing body of a license [charter] holder"
  means the board of directors, board of trustees, or other governing
  body of a license [charter] holder.
               (3)  "Governing body of an open-enrollment charter
  school" means the board of directors, board of trustees, or other
  governing body of an open-enrollment charter school. The term
  includes the governing body of a license [charter] holder if that
  body acts as the governing body of the open-enrollment charter
  school.
               (3-a)  "License holder" means the entity to which a
  license is granted under this subchapter.
               (4)  "Management company" means a person, other than a
  license [charter] holder, who provides management services for an
  open-enrollment charter school.
         SECTION 8.  Section 12.102, Education Code, is amended to
  read as follows:
         Sec. 12.102.  AUTHORITY UNDER LICENSE [CHARTER]. An
  open-enrollment charter school:
               (1)  shall provide instruction to students at one or
  more elementary or secondary grade levels as provided by the
  license [charter];
               (2)  is governed under the governing structure
  described by the license [charter];
               (3)  retains authority to operate under the license
  [charter] contingent on satisfactory student performance as
  provided by the charter in accordance with Section 12.111; and
               (4)  does not have authority to impose taxes.
         SECTION 9.  Section 12.1051(a), Education Code, is amended
  to read as follows:
         (a)  With respect to the operation of an open-enrollment
  charter school, the governing body of a license [charter] holder
  and the governing body of an open-enrollment charter school are
  considered to be governmental bodies for purposes of Chapters 551
  and 552, Government Code.
         SECTION 10.  Sections 12.1052(b), (c), and (e), Education
  Code, are amended to read as follows:
         (b)  Records of an open-enrollment charter school and
  records of a license [charter] holder that relate to an
  open-enrollment charter school are government records for all
  purposes under state law.
         (c)  Any requirement in Subtitle C, Title 6, Local Government
  Code, or Subchapter J, Chapter 441, Government Code, that applies
  to a school district, the board of trustees of a school district, or
  an officer or employee of a school district applies to an
  open-enrollment charter school, the governing body of a license
  [charter] holder, the governing body of an open-enrollment charter
  school, or an officer or employee of an open-enrollment charter
  school except that the records of an open-enrollment charter school
  that ceases to operate shall be transferred in the manner
  prescribed by Subsection (d).
         (e)  If the license [charter] holder of an open-enrollment
  charter school that ceases to operate or an officer or employee of
  such a school refuses to transfer school records in the manner
  specified by the commissioner under Subsection (d), the
  commissioner may ask the attorney general to petition a court for
  recovery of the records. If the court grants the petition, the
  court shall award attorney's fees and court costs to the state.
         SECTION 11.  Sections 12.1053(a) and (c), Education Code,
  are amended to read as follows:
         (a)  This section applies to an open-enrollment charter
  school unless the school's license [charter] otherwise describes
  procedures for purchasing and contracting and the procedures are
  approved by the State Board of Education.
         (c)  To the extent consistent with this section, a
  requirement in a law listed in this section that applies to a school
  district or the board of trustees of a school district applies to an
  open-enrollment charter school, the governing body of a license
  [charter] holder, or the governing body of an open-enrollment
  charter school.
         SECTION 12.  Section 12.1054, Education Code, is amended to
  read as follows:
         Sec. 12.1054.  APPLICABILITY OF LAWS RELATING TO CONFLICT OF
  INTEREST. (a) A member of the governing body of a license
  [charter] holder, a member of the governing body of an
  open-enrollment charter school, or an officer of an open-enrollment
  charter school is considered to be a local public official for
  purposes of Chapter 171, Local Government Code. For purposes of
  that chapter:
               (1)  a member of the governing body of a license
  [charter] holder or a member of the governing body or officer of an
  open-enrollment charter school is considered to have a substantial
  interest in a business entity if a person related to the member or
  officer in the third degree by consanguinity or affinity, as
  determined under Chapter 573, Government Code, has a substantial
  interest in the business entity under Section 171.002, Local
  Government Code;
               (2)  notwithstanding Subdivision (1) [any provision of
  Section 12.1054(1)], an employee of an open-enrollment charter
  school that has been assigned an [rated] acceptable performance
  rating [or higher] under Section 39.054 for at least two of the
  preceding three school years may serve as a member of the governing
  body of the license [charter] holder or [of the governing body of]
  the school if the employees do not constitute a quorum of the
  governing body or any committee of the governing body; however, all
  members shall comply with [the requirements of] Sections
  171.003-171.007, Local Government Code.
         (b)  To the extent consistent with this section, a
  requirement in a law listed in this section that applies to a school
  district or the board of trustees of a school district applies to an
  open-enrollment charter school, the governing body of a license
  [charter] holder, or the governing body of an open-enrollment
  charter school.
         (c)  An open-enrollment charter school rated as academically
  acceptable or higher under Subchapter D, Chapter 39, as that
  subchapter existed January 1, 2009, for the 2010-2011 school year
  is considered to have been assigned an acceptable performance
  rating for the 2010-2011 school year. This subsection expires
  September 1, 2015.
         SECTION 13.  Section 12.1055, Education Code, is amended by
  amending Subsection (b) and adding Subsection (c) to read as
  follows:
         (b)  Notwithstanding Subsection (a), if an open-enrollment
  charter school has been assigned an [is rated] acceptable
  performance rating [or higher] under Section 39.054 for at least
  two of the preceding three school years, [then] Chapter 573,
  Government Code, does not apply to that school; however, a member of
  the governing body of a license [charter] holder or a member of the
  governing body or officer of an open-enrollment charter school
  shall comply with [the requirements of] Sections 171.003-171.007,
  Local Government Code, with respect to a personnel matter
  concerning a person related to the member or officer within the
  degree specified by Section 573.002, Government Code, as if the
  personnel matter were a transaction with a business entity subject
  to those sections, and persons described [defined] under Sections
  573.021-573.025, Government Code, may [shall] not constitute a
  quorum of the governing body or any committee of the governing body.
         (c)  An open-enrollment charter school rated as academically
  acceptable or higher under Subchapter D, Chapter 39, as that
  subchapter existed January 1, 2009, for the 2010-2011 school year
  is considered to have been assigned an acceptable performance
  rating for the 2010-2011 school year. This subsection expires
  September 1, 2015.
         SECTION 14.  Section 12.1056, Education Code, is amended to
  read as follows:
         Sec. 12.1056.  IMMUNITY FROM LIABILITY. In matters related
  to operation of an open-enrollment charter school, an
  open-enrollment charter school is immune from liability to the same
  extent as a school district, and its employees and volunteers are
  immune from liability to the same extent as school district
  employees and volunteers. A member of the governing body of an
  open-enrollment charter school or of a license [charter] holder is
  immune from liability to the same extent as a school district
  trustee.
         SECTION 15.  Section 12.1057(a), Education Code, is amended
  to read as follows:
         (a)  An employee of an open-enrollment charter school
  operating under a license [charter] granted by the State Board of
  Education who qualifies for membership in the Teacher Retirement
  System of Texas shall be covered under the system to the same extent
  a qualified employee of a school district is covered.
         SECTION 16.  Section 12.106(a), Education Code, as effective
  until September 1, 2017, is amended to read as follows:
         (a)  A license [charter] holder is entitled to receive for
  the open-enrollment charter school funding under Chapter 42 equal
  to the greater of:
               (1)  the percentage specified by Section 42.2516(i)
  multiplied by the amount of funding per student in weighted average
  daily attendance, excluding enrichment funding under Sections
  42.302(a-1)(2) and (3), as they existed on January 1, 2009, that
  would have been received for the school during the 2009-2010 school
  year under Chapter 42 as it existed on January 1, 2009, and an
  additional amount of the percentage specified by Section 42.2516(i)
  multiplied by $120 for each student in weighted average daily
  attendance; or
               (2)  the amount of funding per student in weighted
  average daily attendance, excluding enrichment funding under
  Section 42.302(a), to which the license [charter] holder would be
  entitled for the school under Chapter 42 if the school were a school
  district without a tier one local share for purposes of Section
  42.253 and without any local revenue for purposes of Section
  42.2516.
         SECTION 17.  Section 12.106(a), Education Code, as effective
  September 1, 2017, is amended to read as follows:
         (a)  A license [charter] holder is entitled to receive for
  the open-enrollment charter school funding under Chapter 42 equal
  to the amount of funding per student in weighted average daily
  attendance, excluding enrichment funding under Section 42.302(a),
  to which the license [charter] holder would be entitled for the
  school under Chapter 42 if the school were a school district without
  a tier one local share for purposes of Section 42.253.
         SECTION 18.  Section 12.106(a-2), Education Code, is amended
  to read as follows:
         (a-2)  In addition to the funding provided by Subsection (a),
  a license [charter] holder is entitled to receive for the
  open-enrollment charter school enrichment funding under Section
  42.302 based on the state average tax effort.
         SECTION 19.  Sections 12.1061, 12.107, and 12.1071,
  Education Code, are amended to read as follows:
         Sec. 12.1061.  RECOVERY OF CERTAIN FUNDS. The commissioner
  may not garnish or otherwise recover funds paid to an
  open-enrollment charter school under Section 12.106 if:
               (1)  the basis of the garnishment or recovery is that:
                     (A)  the number of students enrolled in the school
  during a school year exceeded the student enrollment described by
  the school's license [charter] during that period; and
                     (B)  the school received funding under Section
  12.106 based on the school's actual student enrollment;
               (2)  the school:
                     (A)  submits to the commissioner a timely request
  to revise the maximum student enrollment described by the school's
  license [charter] and the commissioner does not notify the school
  in writing of an objection to the proposed revision before the 90th
  day after the date on which the commissioner received the request,
  provided that the number of students enrolled at the school does not
  exceed the enrollment described by the school's request; or
                     (B)  exceeds the maximum student enrollment
  described by the school's license [charter] only because a court
  mandated that a specific child enroll in that school; and
               (3)  the school used all funds received under Section
  12.106 to provide education services to students.
         Sec. 12.107.  STATUS AND USE OF FUNDS. (a) Funds received
  under Section 12.106 after September 1, 2001, by a license
  [charter] holder:
               (1)  are considered to be public funds for all purposes
  under state law;
               (2)  are held in trust by the license [charter] holder
  for the benefit of the students of the open-enrollment charter
  school;
               (3)  may be used only for a purpose for which a school
  may use local funds under Section 45.105(c); and
               (4)  pending their use, must be deposited into a bank,
  as defined by Section 45.201, with which the license [charter]
  holder has entered into a depository contract.
         (b)  A license [charter] holder shall deliver to the agency a
  copy of the depository contract between the license [charter]
  holder and any bank into which state funds are deposited.
         Sec. 12.1071.  EFFECT OF ACCEPTING STATE FUNDING. (a) A
  license [charter] holder who accepts state funds under Section
  12.106 after the effective date of a provision of this subchapter
  agrees to be subject to that provision, regardless of the date on
  which the license [charter] holder's license [charter] was granted.
         (b)  A license [charter] holder who accepts state funds under
  Section 12.106 after September 1, 2001, agrees to accept all
  liability under this subchapter for any funds accepted under that
  section before September 1, 2001. This subsection does not create
  liability for charter holder conduct occurring before September 1,
  2001.
         SECTION 20.  Sections 12.110(a), (b), and (c), Education
  Code, are amended to read as follows:
         (a)  The State Board of Education shall adopt:
               (1)  an application form and a procedure that must be
  used to apply for a license [charter] for an open-enrollment
  charter school; and
               (2)  criteria to use in selecting a program for which to
  grant a license [charter].
         (b)  The application form must provide for including the
  information required under Section 12.111 to be contained in a
  license [charter].
         (c)  As part of the application procedure, the board may
  require a petition supporting a license [charter] for a school
  signed by a specified number of parents or guardians of school-age
  children residing in the area in which a school is proposed or may
  hold a public hearing to determine parental support for the school.
         SECTION 21.  Sections 12.1101, 12.111, 12.112, 12.113, and
  12.114, Education Code, are amended to read as follows:
         Sec. 12.1101.  NOTIFICATION OF LICENSE [CHARTER]
  APPLICATION. The commissioner by rule shall adopt a procedure for
  providing notice to the following persons on receipt by the State
  Board of Education of an application for a license [charter] for an
  open-enrollment charter school under Section 12.110:
               (1)  the board of trustees of each school district from
  which the proposed open-enrollment charter school is likely to draw
  students, as determined by the commissioner; and
               (2)  each member of the legislature that represents the
  geographic area to be served by the proposed school, as determined
  by the commissioner.
         Sec. 12.111.  CONTENT. (a) Each license [charter] granted
  under this subchapter must:
               (1)  describe the educational program to be offered,
  which must include the required curriculum as provided by Section
  28.002;
               (2)  specify the period for which the charter or any
  charter renewal is valid;
               (3)  provide that continuation or renewal of the
  license [charter] is contingent on acceptable student performance
  on assessment instruments adopted under Subchapter B, Chapter 39,
  and on compliance with any accountability provision specified by
  the license [charter], by a deadline or at intervals specified by
  the license [charter];
               (4)  establish the level of student performance that is
  considered acceptable for purposes of Subdivision (3);
               (5)  specify any basis, in addition to a basis
  specified by this subchapter, on which the license [charter] may be
  placed on probation or revoked or on which renewal of the license 
  [charter] may be denied;
               (6)  prohibit discrimination in admission policy on the
  basis of sex, national origin, ethnicity, religion, disability,
  academic, artistic, or athletic ability, or the district the child
  would otherwise attend in accordance with this code, although the
  license [charter] may:
                     (A)  provide for the exclusion of a student who
  has a documented history of a criminal offense, a juvenile court
  adjudication, or discipline problems under Subchapter A, Chapter
  37; and
                     (B)  provide for an admission policy that requires
  a student to demonstrate artistic ability if the school specializes
  in performing arts;
               (7)  specify the grade levels to be offered;
               (8)  describe the governing structure of the program,
  including:
                     (A)  the officer positions designated;
                     (B)  the manner in which officers are selected and
  removed from office;
                     (C)  the manner in which members of the governing
  body of the school are selected and removed from office;
                     (D)  the manner in which vacancies on that
  governing body are filled;
                     (E)  the term for which members of that governing
  body serve; and
                     (F)  whether the terms are to be staggered;
               (9)  specify the powers or duties of the governing body
  of the school that the governing body may delegate to an officer;
               (10)  specify the manner in which the school will
  distribute to parents information related to the qualifications of
  each professional employee of the program, including any
  professional or educational degree held by each employee, a
  statement of any certification under Subchapter B, Chapter 21, held
  by each employee, and any relevant experience of each employee;
               (11)  describe the process by which the person
  providing the program will adopt an annual budget;
               (12)  describe the manner in which an annual audit of
  the financial and programmatic operations of the program is to be
  conducted, including the manner in which the person providing the
  program will provide information necessary for the school district
  in which the program is located to participate, as required by this
  code or by State Board of Education rule, in the Public Education
  Information Management System (PEIMS);
               (13)  describe the facilities to be used;
               (14)  describe the geographical area served by the
  program; and
               (15)  specify any type of enrollment criteria to be
  used.
         (b)  A license [charter] holder of an open-enrollment
  charter school shall consider including in the school's license
  [charter] a requirement that the school develop and administer
  personal graduation plans under Section 28.0212.
         Sec. 12.112.  FORM. A license [charter] for an
  open-enrollment charter school shall be in the form of a written
  contract signed by the chair of the State Board of Education and the
  chief operating officer of the school.
         Sec. 12.113.  LICENSE [CHARTER] GRANTED; CONTINUATION OF
  CHARTERS. (a) Each license [charter] the State Board of Education
  grants for an open-enrollment charter school must:
               (1)  satisfy this subchapter; and
               (2)  include the information that is required under
  Section 12.111 consistent with the information provided in the
  application and any modification the board requires.
         (b)  The grant of a charter under this subchapter does not
  create an entitlement to a renewal of a charter on the same terms as
  it was originally issued. A charter granted under this subchapter
  before September 1, 2013, may not be renewed. At the time the
  charter is eligible to be renewed under the terms of the charter,
  the charter may be renewed only as a license under this subchapter
  and relevant rules adopted under this subchapter. Except as
  otherwise provided by this section, during the period before a
  charter may be renewed as a license as provided by this subsection,
  this subchapter applies to the charter holder as though the charter
  holder were a license holder, to the governing body of the charter
  holder as though that governing body were the governing body of a
  license holder, and to the charter as though the charter were a
  license granted under this subchapter.  The terms "charter holder"
  and "governing body of a charter holder" have the meanings assigned
  to those terms under Section 12.1012, as that section existed
  August 31, 2013, and that section is continued in effect for that
  purpose. The commissioner shall adopt rules as necessary to
  provide for the renewal of a charter as a license as provided by
  this subsection.  This subsection expires September 1, 2025.
         Sec. 12.114.  REVISION. (a) A revision of a license
  [charter] of an open-enrollment charter school may be made only
  with the approval of the commissioner.
         (b)  Not more than once each year, an open-enrollment charter
  school may request approval to revise the maximum student
  enrollment described by the school's license [charter].
         SECTION 22.  Section 12.115, Education Code, is amended to
  read as follows:
         Sec. 12.115.  BASIS FOR MODIFICATION, PLACEMENT ON
  PROBATION, REVOCATION, OR DENIAL OF RENEWAL. (a) The commissioner
  may modify, place on probation, revoke, or deny renewal of the
  license [charter] of an open-enrollment charter school if the
  commissioner determines that the license [charter] holder:
               (1)  committed a material violation of the license
  [charter], including failure to satisfy accountability provisions
  prescribed by the license [charter];
               (2)  failed to satisfy generally accepted accounting
  standards of fiscal management;
               (3)  failed to protect the health, safety, or welfare
  of the students enrolled at the school; or
               (4)  failed to comply with this subchapter or another
  applicable law or rule.
         (b)  Except as provided by Section 12.116(a-1), the [The]
  action the commissioner takes under Subsection (a) shall be based
  on the best interest of the open-enrollment charter school's
  students, the severity of the violation, and any previous violation
  the school has committed.
         SECTION 23.  Section 12.116, Education Code, is amended by
  amending Subsections (a) and (b) and adding Subsection (a-1) to
  read as follows:
         (a)  The commissioner shall adopt a procedure to be used for
  modifying, placing on probation, revoking, or denying renewal of
  the license [charter] of an open-enrollment charter school.
         (a-1)  The procedure adopted under Subsection (a) must
  provide for the commissioner to give written notice to a license
  holder of a determination by the commissioner that Section
  12.115(a)(1), (2), or (3) applies to the license holder. The notice
  must specifically list each failure or violation by the license
  holder to which Section 12.115(a)(1), (2), or (3) applies, as
  determined by the commissioner. If, not later than the 270th day
  after the date of the receipt of notice by the license holder and
  after a hearing under Subsection (b), the commissioner determines
  that each violation or failure listed by the notice has not been
  corrected, the commissioner shall revoke the license holder's
  license.
         (b)  The procedure adopted under Subsection (a) must provide
  an opportunity for a hearing to the license [charter] holder and to
  parents and guardians of students in the school. A hearing under
  this subsection must be held at the facility at which the program is
  operated.
         SECTION 24.  Section 12.1161, Education Code, is amended to
  read as follows:
         Sec. 12.1161.  EFFECT OF REVOCATION, DENIAL OF RENEWAL, OR
  SURRENDER OF LICENSE [CHARTER].  (a)  Except as provided by
  Subsection (b), if the commissioner revokes or denies the renewal
  of a license [charter] of an open-enrollment charter school, or if
  an open-enrollment charter school surrenders its license
  [charter], the school may not:
               (1)  continue to operate under this subchapter; or
               (2)  receive state funds under this subchapter.
         (b)  An open-enrollment charter school may continue to
  operate and receive state funds under this subchapter for the
  remainder of a school year if the commissioner denies renewal of the
  school's license [charter] before the completion of that school
  year.
         SECTION 25.  Sections 12.1162(a) and (d), Education Code,
  are amended to read as follows:
         (a)  The commissioner shall take any of the actions described
  by Subsection (b) or by Section 39.102(a), to the extent the
  commissioner determines necessary, if an open-enrollment charter
  school, as determined by a report issued under Section 39.058(b):
               (1)  commits a material violation of the school's
  license [charter];
               (2)  fails to satisfy generally accepted accounting
  standards of fiscal management; or
               (3)  fails to comply with this subchapter or another
  applicable rule or law.
         (d)  Not later than the third business day after the date the
  commissioner acts under Subsection (b), the commissioner shall
  provide the license [charter] holder an opportunity for a hearing.
         SECTION 26.  Sections 12.1163(a) and (c), Education Code,
  are amended to read as follows:
         (a)  To the extent consistent with this section, the
  commissioner may audit the records of:
               (1)  an open-enrollment charter school;
               (2)  a license [charter] holder; and
               (3)  a management company.
         (c)  Unless the commissioner has specific cause to conduct an
  additional audit, the commissioner may not conduct more than one
  on-site audit under this section [Section 12.1163] during any
  fiscal year, including any financial and administrative records.
  For purposes of this subsection, an audit of a license [charter]
  holder or management company associated with an open-enrollment
  charter school is not considered an audit of the school.
         SECTION 27.  Section 12.1164(a), Education Code, is amended
  to read as follows:
         (a)  The commissioner must notify the Teacher Retirement
  System of Texas in writing of the revocation, denial of renewal, or
  surrender of a license [charter] under this subchapter not later
  than the 10th business day after the date of the event.
         SECTION 28.  Section 12.117(c), Education Code, is amended
  to read as follows:
         (c)  An open-enrollment charter school authorized by a
  license [charter] granted under this subchapter to a municipality:
               (1)  is considered a work-site open-enrollment charter
  school for purposes of federal regulations regarding admissions
  policies that apply to open-enrollment charter schools receiving
  federal funding; and
               (2)  notwithstanding Subsection (a), may admit
  children of employees of the municipality to the school before
  conducting a lottery to fill remaining available positions,
  provided that the number of children admitted under this
  subdivision constitutes only a small percentage, as may be further
  specified by federal regulation, of the school's total enrollment.
         SECTION 29.  Section 12.118(b), Education Code, is amended
  to read as follows:
         (b)  An evaluation under this section must include
  consideration of the following items before implementing the
  license [charter] and after implementing the license [charter]:
               (1)  students' scores on assessment instruments
  administered under Subchapter B, Chapter 39;
               (2)  student attendance;
               (3)  students' grades;
               (4)  incidents involving student discipline;
               (5)  socioeconomic data on students' families;
               (6)  parents' satisfaction with their children's
  schools; and
               (7)  students' satisfaction with their schools.
         SECTION 30.  Section 12.119(a), Education Code, is amended
  to read as follows:
         (a)  A license [charter] holder shall file with the State
  Board of Education a copy of its articles of incorporation and
  bylaws, or comparable documents if the license [charter] holder
  does not have articles of incorporation or bylaws, within the
  period and in the manner prescribed by the board.
         SECTION 31.  The heading to Section 12.120, Education Code,
  is amended to read as follows:
         Sec. 12.120.  RESTRICTIONS ON SERVING AS MEMBER OF GOVERNING
  BODY OF LICENSE [CHARTER] HOLDER OR OPEN-ENROLLMENT CHARTER SCHOOL
  OR AS OFFICER OR EMPLOYEE.
         SECTION 32.  Section 12.120(a), Education Code, is amended
  to read as follows:
         (a)  A person may not serve as a member of the governing body
  of a license [charter] holder, as a member of the governing body of
  an open-enrollment charter school, or as an officer or employee of
  an open-enrollment charter school if the person:
               (1)  has been convicted of a felony or a misdemeanor
  involving moral turpitude;
               (2)  has been convicted of an offense listed in Section
  37.007(a);
               (3)  has been convicted of an offense listed in Article
  62.001(5), Code of Criminal Procedure; or
               (4)  has a substantial interest in a management
  company.
         SECTION 33.  Section 12.124, Education Code, is amended to
  read as follows:
         Sec. 12.124.  LOANS FROM MANAGEMENT COMPANY PROHIBITED. (a)
  The license [charter] holder or the governing body of an
  open-enrollment charter school may not accept a loan from a
  management company that has a contract to provide management
  services to:
               (1)  that charter school; or
               (2)  another charter school that operates under a
  license [charter] granted to the license [charter] holder.
         (b)  A license [charter] holder or the governing body of an
  open-enrollment charter school that accepts a loan from a
  management company may not enter into a contract with that
  management company to provide management services to the school.
         SECTION 34.  Section 12.127(c), Education Code, is amended
  to read as follows:
         (c)  This section is cumulative of all other remedies and
  does not affect:
               (1)  the liability of a management company to the
  license [charter] holder; or
               (2)  the liability of a license [charter] holder, a
  member of the governing body of a license [charter] holder, or a
  member of the governing body of an open-enrollment charter school
  to the state.
         SECTION 35.  Sections 12.128(a), (b), and (e), Education
  Code, are amended to read as follows:
         (a)  Property purchased or leased with funds received by a
  license [charter] holder under Section 12.106 after September 1,
  2001:
               (1)  is considered to be public property for all
  purposes under state law;
               (2)  is held in trust by the license [charter] holder
  for the benefit of the students of the open-enrollment charter
  school; and
               (3)  may be used only for a purpose for which a school
  district may use school district property.
         (b)  If at least 50 percent of the funds used by a license
  [charter] holder to purchase real property are funds received under
  Section 12.106 before September 1, 2001, the property is considered
  to be public property to the extent it was purchased with those
  funds.
         (e)  This section does not affect a security interest in or
  lien on property established by a creditor in compliance with law if
  the security interest or lien arose in connection with the sale or
  lease of the property to the license [charter] holder.
         SECTION 36.  Section 12.132, Education Code, is amended to
  read as follows:
         Sec. 12.132.  USE OF MUNICIPAL FUNDS FOR CHARTER SCHOOL LAND
  OR FACILITIES. A municipality to which a license [charter] is
  granted under this subchapter may borrow funds, issue obligations,
  or otherwise spend its funds to acquire land or acquire, construct,
  expand, or renovate school buildings or facilities and related
  improvements for its open-enrollment charter school within the city
  limits of the municipality in the same manner the municipality is
  authorized to borrow funds, issue obligations, or otherwise spend
  its funds in connection with any other public works project.
         SECTION 37.  Section 12.133, Education Code, is amended to
  read as follows:
         Sec. 12.133.  WAGE INCREASE FOR CERTAIN PROFESSIONAL STAFF.
  (a) This section applies to a license [charter] holder that on
  January 1, 2006, operated an open-enrollment charter school.
         (b)  Each school year, using state funds received by the
  license [charter] holder for that purpose under Subsection (d), a
  license [charter] holder that participated in the program under
  Chapter 1579, Insurance Code, for the 2005-2006 school year shall
  provide employees of the license [charter] holder, other than
  administrators, compensation in the form of annual salaries,
  incentives, or other compensation determined appropriate by the
  license [charter] holder that results in an average compensation
  increase for classroom teachers, full-time librarians, full-time
  counselors, and full-time school nurses who are employed by the
  license [charter] holder and who would be entitled to a minimum
  salary under Section 21.402 if employed by a school district, in an
  amount at least equal to $2,500.
         (b-1)  Using state funds received by the license [charter]
  holder for that purpose under Subsection (d-1), a license [charter]
  holder that participated in the program under Chapter 1579,
  Insurance Code, for the 2005-2006 school year shall provide
  employees of the license [charter] holder, other than
  administrators, compensation in the form of annual salaries,
  incentives, or other compensation determined appropriate by the
  license [charter] holder that results in average compensation
  increases as follows:
               (1)  for full-time employees other than employees who
  would be entitled to a minimum salary under Section 21.402 if
  employed by a school district, an average increase at least equal to
  $500; and
               (2)  for part-time employees, an average increase at
  least equal to $250.
         (c)  Each school year, using state funds received by the
  license [charter] holder for that purpose under Subsection (e), a
  license [charter] holder that did not participate in the program
  under Chapter 1579, Insurance Code, for the 2005-2006 school year
  shall provide employees of the license [charter] holder, other than
  administrators, compensation in the form of annual salaries,
  incentives, or other compensation determined appropriate by the
  license [charter] holder that results in an average compensation
  increase for classroom teachers, full-time librarians, full-time
  counselors, and full-time school nurses who are employed by the
  license [charter] holder and who would be entitled to a minimum
  salary under Section 21.402 if employed by a school district, in an
  amount at least equal to $2,000.
         (d)  Each school year, in addition to any amounts to which a
  license [charter] holder is entitled under this chapter, a license
  [charter] holder that participated in the program under Chapter
  1579, Insurance Code, for the 2005-2006 school year is entitled to
  state aid in an amount, as determined by the commissioner, equal to
  the product of $2,500 multiplied by the number of classroom
  teachers, full-time librarians, full-time counselors, and
  full-time school nurses employed by the license [charter] holder at
  an open-enrollment charter school.
         (d-1)  In addition to any amounts to which a license
  [charter] holder is entitled under this chapter, a license
  [charter] holder that participated in the program under Chapter
  1579, Insurance Code, for the 2005-2006 school year is entitled to
  state aid in an amount, as determined by the commissioner, equal to
  the sum of:
               (1)  the product of $500 multiplied by the number of
  full-time employees other than employees who would be entitled to a
  minimum salary under Section 21.402 if employed by a school
  district; and
               (2)  the product of $250 multiplied by the number of
  part-time employees.
         (e)  Each school year, in addition to any amounts to which a
  license [charter] holder is entitled under this chapter, a license
  [charter] holder that did not participate in the program under
  Chapter 1579, Insurance Code, for the 2005-2006 school year is
  entitled to state aid in an amount, as determined by the
  commissioner, equal to the product of $2,000 multiplied by the
  number of classroom teachers, full-time librarians, full-time
  counselors, and full-time school nurses employed by the license
  [charter] holder at an open-enrollment charter school.
         (f)  A payment under this section is in addition to wages the
  license [charter] holder would otherwise pay the employee during
  the school year.
         SECTION 38.  Section 12.135(a), Education Code, is amended
  to read as follows:
         (a)  On the application of the license [charter] holder, the
  commissioner may grant designation as a charter district to an
  open-enrollment charter school that meets financial standards
  adopted by the commissioner.  The financial standards must require
  an open-enrollment charter school to have an investment grade
  credit rating as specified by Section 45.0541.
         SECTION 39.  Subchapter D, Chapter 12, Education Code, is
  amended by adding Section 12.136 to read as follows:
         Sec. 12.136.  ADOPTION OF RULES FOR TRANSITION TO LICENSING.
  The commissioner may adopt rules as necessary to provide for the
  transition from granting charters to granting licenses under this
  subchapter. This section expires January 1, 2015.
         SECTION 40.  Section 12.156, Education Code, is amended to
  read as follows:
         Sec. 12.156.  APPLICABILITY OF CERTAIN PROVISIONS. (a)
  Except as otherwise provided by this subchapter, Subchapter D
  applies to a college or university charter school or junior college
  charter school as though the college or university charter school
  or junior college charter school, as applicable, were granted a
  license [charter] under that subchapter.
         (b)  A charter granted under this subchapter is not
  considered for purposes of the limit on the number of licenses
  [open-enrollment charter schools] imposed by Section 12.101(b).
         SECTION 41.  Section 38.152, Education Code, is amended to
  read as follows:
         Sec. 38.152.  APPLICABILITY.  This subchapter applies to an
  interscholastic athletic activity, including practice and
  competition, sponsored or sanctioned by:
               (1)  a school district, including a home-rule school
  district, or a public school, including any school for which a
  charter or license has been granted under Chapter 12; or
               (2)  the University Interscholastic League.
         SECTION 42.  Section 39.104(a), Education Code, is amended
  to read as follows:
         (a)  Except to the extent of a conflict with Section
  12.116(a-1), interventions [Interventions] and sanctions
  authorized under this chapter for a school district or campus apply
  in the same manner to an open-enrollment charter school.
         SECTION 43.  Subchapter C, Chapter 39, Education Code, is
  amended by adding Section 39.0541 to read as follows:
         Sec. 39.0541.  EXEMPTION FROM ASSIGNMENT OF PERFORMANCE
  RATING FOR ALTERNATIVE EDUCATION OPEN-ENROLLMENT CHARTER SCHOOL.  
  (a)  Notwithstanding any other provision of this subchapter, based
  on standards adopted by commissioner rule, the commissioner may
  grant an exemption from the assignment of a performance rating
  under Section 39.054 to an open-enrollment charter school that is
  an alternative education campus serving only or primarily students
  who:
               (1)  have dropped out of school;
               (2)  are students at risk of dropping out of school, as
  defined by Section 29.081; or
               (3)  are part of a special population, including
  students eligible for a school district special education program
  under Section 29.003.
         (b)  To be granted an exemption under Subsection (a), an
  open-enrollment charter school must apply for the exemption in the
  time and manner required by commissioner rule.
         (c)  An exemption under Subsection (a) expires at the end of
  the school year for which it is granted.
         SECTION 44.  Section 45.301(1), Education Code, is amended
  to read as follows:
               (1)  "License [Charter] holder" has the meaning
  assigned by Section 12.1012.
         SECTION 45.  Section 45.302(a), Education Code, is amended
  to read as follows:
         (a)  The commissioner by rule may establish an
  open-enrollment charter school facilities credit enhancement
  program to assist license [charter] holders in obtaining financing
  for the purchase, repair, or renovation of real property, including
  improvements to real property, for facilities of open-enrollment
  charter schools.
         SECTION 46.  Section 45.303, Education Code, is amended to
  read as follows:
         Sec. 45.303.  LIMITATION ON PARTICIPATION; MINIMUM
  REQUIREMENTS FOR DEBT SERVICE RESERVE. In adopting rules under
  Section 45.302, the commissioner may:
               (1)  limit participation in the program to license
  [charter] holders who hold licenses [charters] for open-enrollment
  charter schools that meet standards established by the
  commissioner, including standards for financial stability,
  compliance with applicable state and federal program requirements,
  and student academic performance; and
               (2)  impose minimum requirements for a debt service
  reserve to secure repayment of obligations for which credit
  enhancement is provided under this subchapter.
         SECTION 47.  Sections 45.306(a), (b), (c), and (e),
  Education Code, are amended to read as follows:
         (a)  If a license [charter] holder on behalf of which the
  state makes a payment under the program does not immediately repay
  the Foundation School Program the amount of the payment, the
  commissioner shall withhold any funds due from the state to the
  license [charter] holder as necessary to recover the total amount
  of state and private funds paid on behalf of the license [charter]
  holder under the program.
         (b)  If a license [charter] holder is for any reason,
  including revocation or surrender of a license [charter] or
  bankruptcy, unable to repay any amount due under this subchapter,
  any loss of funds shall be shared equally between the Foundation
  School Program and the person providing the private funds obligated
  for credit enhancement under this subchapter.
         (c)  A license [charter] holder for which credit enhancement
  is provided under this subchapter to purchase, repair, or renovate
  real property for open-enrollment charter school facilities must
  agree to execute a lien on that real property in a form prescribed
  by the commissioner and approved by the attorney general to secure
  repayment of all amounts due to the state from the license [charter]
  holder, including reimbursement of any private funds paid on behalf
  of an open-enrollment charter school under this subchapter.
         (e)  The commissioner shall notify a license [charter]
  holder of any amount determined to be due to the state, including
  federal funds. If the full amount due to the state has not been
  repaid or recovered by the commissioner from other funds due to the
  license [charter] holder within the current and subsequent school
  year, the commissioner may request the attorney general to file an
  action to foreclose on a lien under this section. Funds recovered
  from foreclosure of a lien under this section shall be credited
  first to any security interest or lien with priority over the lien
  under this section, then to the license [charter] holder's
  obligation under this section, and then to any other program to
  which the funds are due.
         SECTION 48.  Section 53.02(10), Education Code, is amended
  to read as follows:
               (10)  "Authorized charter school" means an
  open-enrollment charter school that holds a license [charter]
  granted under Subchapter D, Chapter 12, and includes an
  open-enrollment charter school designated as a charter district as
  provided by Section 12.135.
         SECTION 49.  Section 221.0071(a), Human Resources Code, is
  amended to read as follows:
         (a)  Notwithstanding any other law and in addition to the
  number of licenses [charters] allowed under Subchapter D, Chapter
  12, Education Code, the State Board of Education may grant a charter
  on the application of a detention, correctional, or residential
  facility established only for juvenile offenders under Section
  51.12, 51.125, or 51.126, Family Code.
         SECTION 50.  Section 221.056(d), Human Resources Code, is
  amended to read as follows:
         (d)  Notwithstanding any other law and in addition to the
  number of licenses [charters] allowed under Subchapter D, Chapter
  12, Education Code, the State Board of Education shall grant a
  charter on the application of a residential treatment facility
  established under this section for a school chartered for the
  purposes of this section.
         SECTION 51.  Sections 375.308(b) and (c), Local Government
  Code, are amended to read as follows:
         (b)  An authority may not:
               (1)  issue bonds or notes without the prior approval of
  the governing body of the municipality that created the authority;
               (2)  seek a license [charter] for or operate, within
  the boundaries of the authority, an open-enrollment charter school
  authorized by Subchapter D, Chapter 12, Education Code; or
               (3)  levy ad valorem property taxes.
         (c)  A municipality may not seek a license [charter] for or
  operate an open-enrollment charter school authorized by Subchapter
  D, Chapter 12, Education Code, within the boundaries of the
  authority.
         SECTION 52.  Section 12.1012(1), Education Code, is
  repealed.
         SECTION 53.  The amendment of Subchapter D, Chapter 12,
  Education Code, by this Act and amendments to other provisions of
  law by this Act to conform to the amendment of Subchapter D, Chapter
  12, Education Code, by this Act do not affect the status of a
  charter, including any legal rights, duties, and obligations based
  on a charter, granted under Subchapter D, Chapter 12, Education
  Code, before September 1, 2013.
         SECTION 54.  This Act takes effect September 1, 2013.