Legal Issues and Compliance for Charter Holders in Texas Education
This content covers essential legal information for entities holding charters in the education sector in Texas. It addresses governance, applicable laws and regulations, eligibility criteria, and compliance requirements related to IRS 501(c)(3) exemption status. Key topics include organizational structures, open government laws, nonsecular requirements, and more. Emphasis is placed on adherence to Texas Business Organizations Code, IRS regulations, and Texas Open Meetings Act to ensure legal compliance and smooth operations.
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Generation 19 Applicant Conference Selected Legal Issues Karen L Johnson Assistant Counsel Office of Legal Services (512) 463-9720
Topics Governance Applicable Laws & Regulations Admission & Enrollment Issues Q & A
Governance Entities Eligible to Hold Charters Open Government Laws Nonsectarian Requirement Restrictions on Who May Serve
Eligible Entities Governmental Entity Institution of Higher Education Nonprofit corporation exempt from taxation under Internal Revenue Code Section 501(c)(3) Must have final IRS determination
Texas Business Organizations Code Charter holders that are Texas non-profit corporations must remember to comply with the requirement of the Business Organizations Code (BOC). Under the BOC, the number of directors of a corporation shall be not less than three (3). Questions regarding non-profit corporations should be directed to the Texas Secretary of State s Corporations Division. Tip: Check to make sure that you are in good standing with the Texas Secretary of State and the IRS
IRS 501(c)(3) Exemption Status An automatic revocation is effective on the original filing due date of the third annual return or notice. The law does not give IRS authority to undo an automatic revocation and there is no appeal process. An automatically revoked organization must apply to have its status reinstated, even if the organization was not originally required to file an application for exemption.
IRS 501(c)(3) Exemption Status cont d For more information: www.irs.gov/eo-Charities/Non-Profit page Frequently Asked Questions (FAQs) Automatic Revocation Fact Sheet Annual Form 990 Requirements for Tax-Exempt Organizations (PDF)
Texas Open Meetings Act Texas Gov t Code Chapter 551 TOMA requires that when a quorum of a governing body discusses public business, written notice of the time, place, and subject of the meeting be posted for at least 72 hours at a place convenient to the public at the central administrative office. The Act applies to both charter holder boards and charter school boards. Attorney General s Answers to FAQs: http://oag.state.tx.us/opinopen/og_faqs.shtml#oma 2012 Open Meetings Handbook is available at http://www.oag.state.tx.us/AG_Publications/pdfs/ope nmeeting_hb2012.pdf
Nonsectarian Nature Like other public schools, charter schools must be nonsectarian in all respects; Admission of students Hiring of employees Instruction
Why must charter schools be nonsectarian? The Establishment Clause in the U.S. Constitution states that: Congress shall make no law respecting an establishment of religion. Article I, 7 of the Texas Constitution states that: No money shall be appropriated or drawn from the Treasury for the benefit of a sect or religions society, theological or religious seminary, nor shall property belonging to the State be appropriated for any such purpose.
Restrictions on Who May Serve on Charter Holder s Board Nepotism Conflict of Interest Criminal History
Nepotism Restrictions General Rule: A public office cannot hire, select, appoint, confirm the appointment of, or vote for the hiring, selection, appointment or confirmation of an individual if the individual is related to the public official within the third degree of consanguinity (by blood) or affinity (by marriage). Two or more relatives within the third degree cannot serve together on the governing body. A board member s relative within the third degree cannot be employed by the charter holder or charter school 19 TAC 100.1015 & 100.1111-1116 apply NOTE- 100.1111 Applicability of Nepotism Provisions; Exception for Acceptable Performance- will be rewritten as there are NO exceptions to Nepotism any longer.
Relatives within the Third Degree A public official s or his/her spouse s: Spouse Child Parent Grandparent Great-grandparent Grandchild Great-grandchild Sibling Aunt/uncle Niece/Nephew
Request Applicants should not contact the agency regarding nepotism issues. Agency staff cannot provide an applicant with individualized advice regarding the applicant s governance structure. If an applicant is ultimately awarded a charter, agency staff will advise the applicant of any nepotism issues that must be resolved.
Conflict of Interest Restriction General Rule: Member of a charter holder board cannot receive compensation or remuneration from the charter holder or the charter school (i.e., an individual cannot serve on the board and be an employee). 19 TAC 100.1131
Exception If each charter school operated by a charter holder has received a satisfactory rating, as defined by 19 TAC 1100.1022(b)(2)(B), for at least two of the preceding three school years, then charter school employees may serve on the governing body or the charter holder. However, the governing body or any committee may not be comprised of a quorum (majority) of charter school employees. 19 TAC 100.1131
Request Applicants should not contact the agency regarding conflict of interest issues. Agency staff cannot provide an applicant with individualized advice regarding the applicant s governance structure. If an applicant is ultimately awarded a charter, agency staff will advise the applicant of any conflict of interest issues that must be resolved.
Substantial Interests in Management Company A person cannot serve on the governing body of a charter holder or charter school or as an officer or employee if the person has a substantial interest in a management company that has a contract for management services with the charter holder or charter school. 19 TAC 100.1153
Criminal History Restriction A person cannot serve as a board member, employee, or officer if the person has been convicted of: a misdemeanor involving moral turpitude a felony any offense listed in TEC 37.007(a) (i.e., offenses for which an ISD student must be expelled) any offense listed in the Code of Criminal Procedure art. 62.01(5)(i.e., primarily sex crimes) 19 TAC 100.1151 NOTE; Statute TEC12.120 has been amended to allow persons to be employed if the person could be employed by a school district. TEC 12.1202 has been added which requires majority of members of governing body of charter holder or charter school to be qualified voters.
Note: The application coversheet requires the CEO of the sponsoring entity to certify that no one has been convicted of a misdemeanor involving moral turpitude or any felony. The affidavit form also contains a question regarding criminal history. Questions regarding whether a misdemeanor offense is a crime of moral turpitude must be directed to the charter holder s private attorney, not TEA. Criminal history checks must be conducted before the person begins service and every year thereafter. The checks must be obtained from the Texas Dept. of Public Safety (DPS).
Roles and Responsibilities of Governing Bodies Certain powers and duties must be exercised by the governing body of the charter holder itself and not delegated to any other body or individual. 19 TAC 100.1033(c)(6)(C)
Non-delegable Duties final authority to hear or decide certain grievances; final authority to adopt or amend the budget; final authority to direct the disposition or safekeeping of public records; final authority to adopt policies governing charter school operations; final authority to approve audit reports under TEC 44.008(d); initial or final authority to select, employ, direct, evaluate, renew, non-renew, terminate, or set compensation for the CEO. 19 TAC 100.1033(c)(6)(C).
Governance Issues in the RFA Statement regarding bankruptcy history Include an affidavit for each board member and make sure information is correct. Requirement that a secondary board be established if a majority of board members are not local. Don t answer questions regarding school board if you only have one board.
Applicable Laws and Regulations Texas Education Code Chapter 12 19 Texas Administrative Code Chapter 100
Requirements Applicable to ISDs and Charter Schools Bilingual Education & ESL Special Education PEIMS Graduation Requirements TEKS STARR Open Health & Safety TEC Ch. 38 Government Laws Pre-K
Areas of Difference between ISDs and Charter Schools Teacher Certification Requirements Student/ Teacher Ratio & Class Size Ch. 21 School Calendar Admissions Ch. 37
Admissions and Enrollment Issues
28 Terminology Admission Process when student is initially seeking to be admitted to school. The admissions application must only request basic information (e.g., name, age, address, parent information). The School may request information regarding an applicant s documented history of past discipline problems as permitted by TEC 12.111(a)(6). Enrollment Process when the student has been offered admission and is registering. At this stage, information regarding past academic achievement, medical history, etc. may be requested.
Admissions Process Admission Policy Who may be admitted? All students residing within the designated geographic area who meet lawful criteria must be eligible for admission. A geographic boundary is established by Texas statute: TEC 12.111 Content each charter granted under this subchapter must: (a)(14) describe the geographic area served by the program TEC 12.1101 Required Notice 1) Board of Trustees of each ISD from where the open-enrollment charter school or campus is likely to draw students 2) Each member of the Legislature that represents the area
Admissions Process continued Federal law requires a homeless student to be admitted immediately even if student cannot produce records normally required. Still student must be an eligible student and school must have space available with no wait list.
Admissions Process continued Administrative Rule: 19 TAC 100.1207 Student Admission a) application deadline for admission to a charter school, a charter holder shall: 1) establish a reasonable deadline 2) use a lottery if oversubscribed b) Lottery Exemption may do so as consistent with definition of public charter school under NCLB PL 107-110 c) Newspaper publication 1)State the date of application deadline 2) published in newspaper of general circulation not later than 7th day before application deadline
Admissions Process continued (f.) Maximum Enrollment; Transfers. Students who reside outside the geographic boundaries stated in the open-enrollment charter shall not be admitted to the charter school until all eligible applicants who reside within the boundaries and have submitted a timely application have been enrolled. Then, if the open-enrollment charter so provides, the charter holder may admit transfer students to the charter school in accordance with the terms of the open-enrollment charter. Important to note: A charter may not accept students who reside outside its geographic boundary. However, a charter may have primary geographic boundary and secondary or transfer geographic boundary if the open-enrollment charter so provides.
Admissions Process continued Beware: Very few charters have such transfer boundaries. It can be very costly to charter holder if you accept students from outside your approved geographic boundaries. See 19 TAC 100.1041(d) Eligibility for state funding (1) If a charter holder, before or without approval for expansion under 100.1033(d)of this title, expands its geographic boundaries, then the charter holder is not eligible to receive state funds for the activities of the unapproved expansion of its charter school operations. The charter may owe the state of Texas a repayment for over allocated funds for those students who live in unapproved geographic boundaries while attending the charter.
Admission Policy Inclusions required: 19 TAC 100.1207(d) governing body of the charter holder must adopt a student admissions and enrollment policy that: 1) prohibits discrimination on basis of sex, national origin, ethnicity, religion, disability, academic ability, or athletic ability, or the district the student would otherwise attend or 2) specific other non-discriminatory enrollment criteria, i.e. history of criminal offense, juvenile at adjudicated or discipline problem under TEC Chapter 37, Subchapter A
Admission Policy continued Exclusions allowed: TEC 12.111(a)(6)(A) exclusion of student for disciplinary reasons under Chapter 37, Subchapter A TEC 12.111(a)(6)(B) policy that requires demonstration of artistic ability for school specializing in performing arts
36 Performing Arts TEC 12.1171 & 12.111 Charter may include an emphasis in performing arts music, theater and dance which may include: 1) core academic curriculum integrated with performing arts 2) wider array of performing arts courses then are typically offered at public schools 3) frequent opportunities for students to demonstrate artistic talent 4) cooperative programs with other organizations or individual in the performing arts community 5) other innovative methods for offering performing arts learning opportunities
37 Performing Arts continued To the extent consistent with definition of public charter school with NCLB, governing body may adopt an admission policy that required a student to demonstrate an interest or ability in the performing arts or to audition for admission to the school.
38 Lottery Federal law and Non-Regulatory Guidance require charter schools receiving federal funds to use a lottery when a school is oversubscribed. 20 USC 7221(i)(1) charter school means a public school that- (H) is a school to which parents choose to send their children and admits children on basis of lottery, if more students apply for admission than that can be accommodated. Texas Law TEC 12.117 offers 2 options: Lottery or First come, first serve fill the positions in the order in which the applications were received before the application deadline.
39 Lottery Exemptions Exemptions allowed under lottery: a) Students who are enrolled in a public school at the time it is converted into a public charter school; b) Students who are eligible to attend, and are living in the attendance area of, a public school at the time it is converted into a public charter school; c) Siblings of students already admitted to or attending the same charter school; d) Children of a charter school s founders, teachers, and staff (so long as the total number of students allowed under this exemption constitutes only a small percentage of the school s total enrollment); and e) Children of employee in a work-site charter school, (so long as the total number of students allowed under this exemption constitutes only a small percentage of the student s total enrollment).
40 Lottery Questions 1) May a charter have a priority among classes of exemptions? No. Must have one lottery for all exemptions if you have more exemptions than spaces available. Need to note that there is a limitation on children of teachers/staff/founders as they can only comprise a small percentage of total student population. Texas defines small percentage as 5%. Example: ABC Charter has an enrollment of 100 students. Children of teachers/staff/founders can be no more than 5 students. 2) May a charter give priority placement to siblings, if it does not hold a lottery? No, because exemptions are valid only for a lottery. No lottery, no priority.
41 Lottery Questions continued 3) Can children of teachers/staff be considered exempt from lottery, if they do not reside within the school s geographic boundary? No, to be exempt from the lottery, the student first has to be an eligible applicant and eligibility, by Texas statue, means a resident within the geographic boundary of the charter. However, it may be the primary or secondary (if applicable) boundary. 4) What does term children of teachers/staff/founders include in this exemption? It includes the following: natural children, legally adopted children, step children living under same roof.
42 Elements in Admissions Policy A set application period (beginning and ending dates). The nondiscrimination statement in TEC 12.111(a)(6). If charter excludes students with documented histories of discipline problems under TEC 12.111(a)(6), the admissions policy in the charter application must state so. Explain how the application process and lottery process will work, including whether any students are excluded from the lottery.
43 Enrollment Process Enrollment Records Schools may not prohibit students from enrolling pending receipt of records from the prior school. 19 TAC 74.26(a)(1). You cannot require transcripts, report cards, ARD documents prior to enrolling child. The failure of a prior school or the person enrolling the student to provide identification or records does not constitute grounds for refusing to admit the student. However, if identifying records are not furnished within 30 days, TEC 25.002(c) requires the school to notify law enforcement and request a determination of whether the student has been reported as missing. Remember McKinney Vento Act homeless student may enroll without records.
44 Related Issues Promotional Materials & Websites must be consistent with the admissions policy in the charter application and renewal application. Applicant Interviews/Meetings cannot be required as a condition for admission or enrollment. Charter may encourage these but parents must be able to mail application to school, drop it off, or apply online. Cannot require face to face interviews. Assessments/Essays cannot require pre-enrollment.
45 Related Issues continued Parent or Student Contracts cannot require pre-enrollment or require as a condition of enrollment; cannot require parents to volunteer or to donate money in lieu of volunteering or work to pay off fees. School Uniforms TEC 11.162 doesn t expressly apply; but, charter schools should ensure that policies are reasonable and consider disadvantaged students and students with bona file religious or philosophical objections. Withdrawals Withdrawals must be entirely voluntary. Discipline problems should be addressed following the school s discipline policy.
Tuition & Fees An open enrollment charter school may not charge tuition (except for certain pre-K classes). There cannot be a blanket fee charged to parents. Cannot require payment of fee before parent can turn in application. The governing body of an open-enrollment charter school may require a student to pay any fee that the board of trustees of a school district may charge under TEC 11.158(a). TEC 12.108 But a child should be able to attend the open enrollment charter school and receive all the required curriculum and graduate without paying any fee.
Tuition & Fees continued Charter schools should not require parents to donate money in lieu of volunteering their time. The only authorization to withhold records is TEC 31.104(d), which allows withholding an official transcript because of failure to pay for a lost textbook.
Students (a) Student performance. Notwithstanding any provision in an open- enrollment charter, acceptable student performance under Texas Education Code, 12.111(3), shall at a minimum require student performance meeting the standards for an "Acceptable" rating as determined by the commissioner of education under the relevant Accountability Manual, or under the alternative education accountability rating procedures, if applicable. (b) Reporting child abuse or neglect. A charter holder shall adopt and disseminate to all charter school staff and volunteers a policy governing child abuse reports required by Texas Family Code, Chapter 261. The policy shall require that employees, volunteers, or agents of the charter holder and the charter school report child abuse or neglect directly to an appropriate entity listed in Texas Family Code, Chapter 261. adopt a school year for the charter school, with fixed beginning and ending dates. TAC 100.1211
Students continued (c) Notice of expulsion or withdrawal. A charter holder shall notify the school district in which the student resides within three business days of any action expelling or withdrawing a student from the charter school. (d) Data reporting. A charter holder shall report timely and accurate information required by the commissioner to the Texas Education Agency, except as expressly waived by the commissioner. (e) Scholastic year. A charter holder shall adopt a school year for the charter school, with fixed beginning and ending dates. TAC 100.1211
