HBA-MPM H.B. 2195 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2195 By: Kitchen Public Education 3/18/2001 Introduced BACKGROUND AND PURPOSE Charter schools are public schools that receive state tax dollars, state textbooks, and other benefits of governmental status. In 1995, the State Board of Education (board) established an application process for an open-enrollment charter school and set criteria for selecting successful applicants for the 1996-1997 biennium. In its findings to the 77th Legislature, the House Subcommittee on Charter Schools noted that of the "first generation" charter schools whose applications were granted, one failed to open, but not before the school had received more than $240,000 in state funds. Additionally, of the number of charter schools in operation, a number of other schools owed the state a large portion of the funds that had been advanced and spent throughout the year. In 1997, the Texas Legislature authorized 100 more open-enrollment charter schools. The subsequent biennium saw several of the new generation of charter schools fail. In some cases, the sudden closing of the schools resulted in displaced students having to repeat a grade. These closures evidence the need for stronger financial and operational accountability requirements. House Bill 2195 requires an open-enrollment charter school in its application to the board to show understanding and experience regarding financial matters and provide for an organized plan of shut-down. The bill also requires TEA to conduct an on-site compliance and readiness review before the school begins to enroll students. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2195 amends the Education Code to require the State Board of Education (board) to consider additional criteria relating to the financial and operational accountability of an open-enrollment charter school (school) prior to approving or denying the school's application for a charter. The bill provides that the additional criteria the board adopts must include a requirement for the school to prepare and submit to the Texas Education Agency (TEA) documentation from applicants that demonstrates that: _school management staff have an understanding of and experience in accounting and the provision of financial accountability reports; _all school board members and management staff have attended some minimum training regarding areas from basic school laws and funding aspects to public accountability; _the school possesses current and future ability to meet payrolls and other contractual obligations; _the school has a reasonable plan for an organized shut down of operations if the school ceases operation, including specified notification requirements; and _the school management has a reasonable implementation plan demonstrating preparedness of school operations before the date it plans to begin operations. The bill requires TEA to respond to the plan no later than the 10th day after the school organization submits the plan if the plan does not meet preparedness guidelines. H.B. 2195 sets forth status report requirements for each school organization approved by the board for operation and requires TEA to conduct a compliance and readiness review of each approved school organization. The bill authorizes TEA to delay enrollment of students in a school if the compliance and readiness review reveals that the school organization is not prepared to meet contractual obligations and requires TEA to notify a school organization of a decision to delay enrollment. EFFECTIVE DATE September 1, 2001.