What's happening
This bill amends New York charter school laws to increase transparency, set stricter enrollment and reporting requirements, limit executive compensation, and impose new rules on management contracts and student discipline.
Why it matters
Enrollment Equity and Accountability. The bill requires charter schools to enroll and maintain student populations that mirror the demographics of their local public schools, including specific minimums for English Language Learners, students with disabilities, low-income students, and those in temporary housing. Charter schools that do not meet these targets face funding penalties, loss of facility subsidies, and possible charter revocation—significantly raising the stakes for compliance.
Financial Oversight and Executive Pay. Strict limits are set on charter executive compensation, capping salaries and requiring any exceptions to be justified and approved through a detailed waiver process. Charter schools and their affiliates must report executive compensation and all large contributions, and disclose relationships with management companies. Surpluses exceeding 7% of expenditures must be returned to school districts, aiming to prevent excessive reserves or profit-taking.
Transparency in Operations and Contracts. Charter schools must make detailed financial, enrollment, and disciplinary data publicly available, including management contracts and audited financial statements. Contracts with management organizations—both for-profit and non-profit—must ensure government auditors have access to records, and all facility construction contracts must follow public bidding and labor laws, closing loopholes that previously allowed less scrutiny.
Student Rights and Discipline. The bill standardizes student discipline procedures in charter schools to match those in traditional public schools, mandating due process protections and annual public reporting of all disciplinary actions by race, disability, and language status. It also requires prompt and detailed notification to districts when students leave charter schools, supporting transparency and preventing push-outs of high-need students.
These changes are poised to fundamentally alter charter school operations in New York, making them more publicly accountable, fiscally transparent, and equitably accessible to diverse student populations.
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Who cares
Headline styles
Tighten Charter School Rules
Plain English, a few words. Used as the page title.
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History
- Referred to education
- Referred to rules
Full text
20 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6578
2017-2018 Regular Sessions
IN SENATE
June 5, 2017
Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the education law and the state finance law, in relation to charter schools
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 2851 of the education law, as amended by chapter 101 of the laws of 2010, is amended to read as follows:
1. An application to establish a charter school may be submitted by teachers, parents, school administrators, community residents or any combination thereof. Such application may be filed in conjunction with a college, university, museum, educational institution, not-for-profit corporation exempt from taxation under paragraph 3 of subsection (c) of section 501 of the internal revenue code or for-profit business or corporate entity authorized to do business in New York state. Provided however, for-profit business or corporate entities shall not be eligible to submit an application to establish a charter school pursuant to subdivision nine-a of section twenty-eight hundred fifty-two of this article, or operate or manage a charter school for a charter issued pursuant to subdivision nine-a of section twenty-eight hundred fifty-two of this article. For charter schools established in conjunction with a for-profit or not-for-profit business or corporate entity, the charter shall specify the extent of the entity's participation in the management and operation of the school.
§ 2. Paragraph (h) of subdivision 2 of section 2851 of the education law, as added by chapter 4 of the laws of 1998, is amended to read as follows:
(h) The rules and procedures by which students may be disciplined[, including but not limited to expulsion or suspension from the school, which shall be consistent with the requirements of due process and with
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11858-01-7
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federal laws and regulations governing the placement of students with disabilities] shall be in accordance with the provisions of subdivisions two-a, three and three-a of section thirty-two hundred fourteen of this chapter. The charters of all charter schools that were issued on or before July first, two thousand seventeen shall be deemed amended to require compliance with the procedures set forth in subdivisions two-a, three and three-a of section thirty-two hundred fourteen of this chapter.
§ 3. Paragraph (e) of subdivision 4 of section 2851 of the education law, as added by chapter 101 of the laws of 2010, is amended to read as follows:
(e) The means by which the charter school will meet or exceed the enrollment [and retention targets as prescribed by the board of regents or the board of trustees of the state university of New York, as applicable, of students with disabilities, English language learners, and students who are eligible applicants for the free and reduced price lunch program which shall be considered by the charter entity prior to approving such charter school's application for renewal. When developing such targets, the board of regents and the board of trustees of the state university of New York shall ensure (1) that such enrollment targets are comparable to the enrollment figures of such categories of students attending the public schools within the school district, or in a city school district in a city having a population of one million or more inhabitants, the community school district, in which the charter school is located; and (2) that such retention targets are comparable to the rate of retention of such categories of students attending the public schools within the school district, or in a city school district in a city having a population of one million or more inhabitants, the community school district, in which the proposed charter school would be located] requirements of subparagraph (ii) of paragraph (b) of subdivision two of section two thousand eight hundred fifty-four of this article.
§ 4. Subdivision 2 of section 2852 of the education law, as amended by section 2 of part D-2 of chapter 57 of the laws of 2007, is amended to read as follows:
2. An application for a charter school shall not be approved unless the charter entity finds in writing that:
(a) the charter school described in the application meets the requirements set out in this article and all other applicable laws, rules and regulations;
(b) the applicant can demonstrate the ability to operate the school in an educationally and fiscally sound manner;
(c) granting the application is likely to improve student learning and achievement and materially further the purposes set out in subdivision two of section twenty-eight hundred fifty of this article; and
(d) in a school district where the total enrollment of resident students attending charter schools in the base year is greater than five percent of the total public school enrollment of the school district in the base year (i) granting the application would have a significant educational benefit to the students expected to attend the proposed charter school [or] and (ii) the school district in which the charter school will be located consents to such application.
In reviewing applications, the charter entity is encouraged to give preference to applications that demonstrate the capability to provide comprehensive learning experiences to students identified by the applicants as at risk of academic failure. Upon making a determination of
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whether an application for a charter school shall be approved, the charter entity shall provide detailed written findings related to each of the requirements in this subdivision, which shall be made available to the charter school applicant, board of regents and the school district in which the proposed charter school would be located.
§ 5. Subdivision 5 of section 2852 of the education law, as amended by chapter 101 of the laws of 2010, is amended to read as follows:
5. (a) Upon approval of an application by a charter entity, the applicant and charter entity shall enter into a proposed agreement allowing the applicants to organize and operate a charter school. Such written agreement, known as the charter, shall include [(a)] (i) the information required by subdivision two of section twenty-eight hundred fifty-one of this article, as modified or supplemented during the approval process, [(b)] (ii) in the case of charters to be issued pursuant to subdivision nine-a of this section, information required by such subdivision, [(c)] (iii) a provision prohibiting the charter school from entering into, renewing or extending any agreement with a for-profit or not-for-profit corporate or other business entity for the administration, management or operation of the charter school unless the agreement requires such entity to provide state and local officers having the power to audit the charter school pursuant to this article with access to the entity's records relating to the costs of, and fees for, providing such services to the school, (iv) any other terms or conditions required by applicable laws, rules and regulations, and [(d)] any other terms or conditions, not inconsistent with law, agreed upon by the applicant and the charter entity. In addition, the charter shall include the specific commitments of the charter entity relating to its obligations to oversee and supervise the charter school. Within five days after entering into a proposed charter, the charter entity other than the board of regents shall submit to the board of regents a copy of the charter, the application and supporting documentation for final approval and issuance by the board of regents in accordance with subdivisions five-a and five-b of this section.
(b) No charter school having a charter that was issued and approved on or before the effective date of this paragraph shall enter into, renew or extend the duration of any agreement with a for-profit or not-forprofit corporate or other business entity for the administration, management or operation of the charter school unless the agreement requires such entity to provide state and local officers having the power to audit the charter school pursuant to this article with access to the entity's records relating to the costs of, and fees for, providing such services to the school. Any agreement entered into, renewed or extended in violation of this section shall be null, void and wholly unenforceable, and a violation of this section shall be grounds for revocation or termination of a charter pursuant to section twenty-eight hundred fifty-five of this article.
§ 6. Subparagraph (i) of paragraph (b) of subdivision 9-a of section 2852 of the education law, as amended by section 2 of subpart A of part B of chapter 20 of the laws of 2015, is amended to read as follows:
(i) that the proposed charter school would meet or exceed the enrollment [and retention targets, as prescribed by the board of regents or the board of trustees of the state university of New York, as applicable, of students with disabilities, English language learners, and students who are eligible applicants for the free and reduced price lunch program. When developing such targets, the board of regents and the board of trustees of the state university of New York, shall ensure
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(1) that such enrollment targets are comparable to the enrollment figures of such categories of students attending the public schools within the school district, or in a city school district in a city having a population of one million or more inhabitants, the community school district, in which the proposed charter school would be located; and (2) that such retention targets are comparable to the rate of retention of such categories of students attending the public schools within the school district, or in a city school district in a city having a population of one million or more inhabitants, the community school district, in which the proposed charter school would be located] requirements of subparagraph (ii) of paragraph (b) of subdivision two of section two thousand eight hundred fifty-four of this article; and
§ 7. Section 2853 of the education law is amended by adding a new subdivision 2-b to read as follows:
2-b. In any case where a charter school enters into, renews or extends any agreement with a for-profit or not-for-profit business or corporate entity for the administration, management or operation of a charter school, the charter school is required to have a formal contract with such entity. Any such contract shall be reviewed and approved by the charter entity.
§ 8. Paragraph (a) of subdivision 3 of section 2853 of the education law, as amended by chapter 101 of the laws of 2010, is amended to read as follows:
(a) A charter school may be located in part of an existing public school building, in space provided on a private work site, in a public building or in any other suitable location. Provided, however, before a charter school may be located in part of an existing public school building, the charter entity shall provide notice to the parents or guardians of the students then enrolled in the existing school building and shall hold a public hearing for purposes of discussing the location of the charter school. All contracts entered into by such charter school, or any education corporation organized to operate a charter school, or any other public entity, including the state, a public benefit corporation, municipal corporation, or any private entity acting on behalf of any of these entities, involving the construction, reconstruction, demolition, excavation, rehabilitation, repair, renovation, or alteration of any charter school facility shall be subject to the requirements of section one hundred three of the general municipal law and articles eight and nine of the labor law. A charter school may own, lease or rent its space.
§ 9. The opening paragraph and subparagraph 1 of paragraph (e) of subdivision 3 of section 2853 of the education law, as added by section 5 of part BB of chapter 56 of the laws of 2014, are amended to read as follows:
[In] Except as provided in subparagraph seven of this paragraph, a city school district in a city having a population of one million or more inhabitants, charter schools that first commence instruction or that require additional space due to an expansion of grade level, pursuant to this article, approved by their charter entity for the two thousand fourteen--two thousand fifteen school year or thereafter and request co-location in a public school building and demonstrates to the city school district that the charter school does not have the financial capacity to procure adequate facilities shall be provided access to facilities pursuant to this paragraph for such charter schools that first commence instruction or that require additional space due to an
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expansion of grade level, pursuant to this article, approved by their charter entity for those grades newly provided.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law and the state finance law, in relation to charter schools
Summary of provisions
This bill would provide enhanced transparency and accountability of charter schools in regards to enrollment targets, discipline policies, management and operation of the charter school, charter reserve funds, charter facilities rental aid payments, information disseminated to parents regarding probationary status, and residency dispute issues.
Specifically, the bill would require charters established in conjunction with non-profits to specify the extent of the entity's participation in the management and operation of the school. The bill requires charters to disclose annually information related to the compensation of individuals serving as a charter executive, loans or gifts received over one thousand dollars, and financial statements related to assets of the charter, and, if applicable, any of its affiliated corporate/business entities, valued over one million dollars. It prohibits charters from compensating any individual who is also an employee of a charter affiliate and limits the compensation of charter executives to $199,000 annually, with limited exceptions. The bill prohibits charters from entering into agreements with corporate/business entities to operate the school unless the entity agrees to provide access to various records for auditing purposes. The bill requires charters to have a formal contract with any corporate/business entity that must be approved by the charter entity. It also requires charters that request co-location to demonstrate that the charter does not have the financial capacity to procure adequate facilities. Charters with assets that have are valued at over one million dollars would be ineligible to be offered co-located or private space at the expense of NYC.
Read the full memo (914 words)
The bill limits the time a charter may be offered private space at no cost to three years. The bill also limits charter facilities rental aid payments to six years, and provides that in the last three years, a reduced payment be provided to the charter.
The bill strengthens provisions relating to the enrollment of ELLs, students with disabilities, and free lunch recipients by requiring charters to retain an equal or greater enrollment of such students compared to the district's enrollment. The bill also requires that enrollment targets be continually met and considered a very significant factor for charter renewal. The bill would also require charter entities to provide detailed, written findings related to all requirements the charter must meet when making a determination to approve a charter.
The bill would apply statewide disciplinary laws to charter schools, requires charters to develop a code of conduct, and requires charters to submit an annual report of disciplinary measures imposed on students.
The bill applies Articles 8 and 9 of the Labor Law relating to prevailing wage and public works to charter schools.
The bill would require charters to provide parents information annually detailing the process to file a complaint against the charter. The bill also requires charter school to notify parents if the charter is placed in probationary status.
This bill would withhold funding from charters that fail to enroll the minimum number of students, and continued failure to adhere to
reporting requirements and enrollment targets would be grounds for revocation or termination of the charter..
The bill establishes clearer guidelines for disenroliment and residency determinations for charter schools and addresses intercept issues when a residency dispute exists.
The bill would provide that the effective date be immediate.
Justification
As of the 2016-17 school year, New York State has 267 operating charter schools serving approximately 92,000 students. Charter schools are largely free from state and local regulations, and operate under different rules and laws than traditional public schools. Charters are also unique in that they are allowed to conduct their own fundraising efforts for private funding in addition to receiving State aid. There is a lack of transparency in how charters raise and spend their funds, especially in regards to the charter's top managers and management companies. Further, charters do not have to disclose information regarding to the compensation of individuals serving as charter executives, or financial statements related to assets of the charter. Charters that request co-location are not required to disclose whether the charter has the financial capacity to procure adequate facilities on their own.
Charter audits demonstrate why charter management must be held to stricter standards of accountability and transparency-not only on how they spend taxpayer's money, but also regarding the student populations they enroll. In 2015-16, traditional public schools outside NYC enrolled 12.6% of ELL students, while charter schools only served 4.2%. Traditional public schools served 17.4% of students with disabilities, while charters only served 9%.
Charter schools are not subject to many of the same requirements as public school districts, and may retain millions of dollars in unrestricted reserve funds. Recent audits have shown that charter schools held $395 million in cash and $451 million in unrestricted net assets at the close of 2015. Unrestricted net assets, which can be used to fund programs or pay rent, grew by $93.5 million from 2013 to 2015. School districts face many restrictions that charter school do not, such as a 2% tax cap that limits local revenue. Charters have no limit on the amount of private funding they may fundraise.
Charter schools need to be held to the same high standards the state's traditional public schools are held to. This bill would provide overall greater transparency and accountability of charter schools.
Prior legislative history
New bill.
Fiscal implications
Undetermined.
Effective date
Immediately.
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