SB1481 - 562R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-181, Arizona Revised Statutes, is amended to read:

START_STATUTE15-181. Charter schools; purpose; scope; open meetings; public records; posting; exceptions; definition

A. Charter schools may be established pursuant to this article to provide a learning environment that will improve pupil achievement. Charter schools provide additional academic choices for parents and pupils. Charter schools may consist of new schools or all or any portion of an existing school. Charter schools are public schools that serve as alternatives to traditional public schools, and charter schools are not subject to the requirements of article XI, section 1, Constitution of Arizona, or title 41, chapter 56.

B. Charter schools shall comply with all provisions of this article in order to receive state funding as prescribed in section 15-185.

C. Except as provided in subsection D of this section, charter schools, charter school governing bodies, charter school sponsors, charter holders, charter school operators, corporate boards of directors of charter school operators and management organizations that contract with charter schools shall comply with both of the following:

1. The open meeting requirements prescribed in title 38, chapter 3, article 3.1. Notices of public meetings, agendas and minutes must be prominently posted on the website of the charter school and the website of the state board for charter schools.

2. The public records requirements prescribed in title 39, chapter 1. Public records must be prominently posted on the website of the charter school and the website of the state board for charter schools.

D. Charter holder governing boards, corporate boards of directors of charter school operators and management organizations may meet in executive session for any of the following purposes:

1. Firing personnel, if twenty-four hours' written notice is provided to the affected employee.

2. Discussing or considering records that are exempt by law from public inspection.

3. Discussing or receiving legal advice.

4. Discussing or consulting with a lawyer to consider pending or contemplated litigation, settlement discussions or negotiated contracts.

5. Discussing and instructing representatives regarding labor negotiations.

6. Discussing international, interstate and tribal negotiations.

7. Discussing the purchase, sale or lease of real property.

E. For the purposes of this section, "charter holder governing board" means the limited liability company or corporation that is registered with the corporation commission by the charter holder. END_STATUTE

Sec. 2. Section 15-183, Arizona Revised Statutes, is amended to read:

START_STATUTE15-183. Charter schools; application; requirements; immunity; exemptions; renewal of application; reprisal; fee; funds; annual reports; definitions

A. An applicant seeking to establish a charter school shall apply in writing to a proposed sponsor as prescribed in subsection C of this section. The application, application process and application time frames shall be posted on the sponsor's website and shall include the following, as specified in the application adopted by the sponsor:

1. A detailed educational plan.

2. A detailed business plan.

3. A detailed operational plan.

4. Any other materials required by the sponsor.

B. The sponsor of a charter school may contract with a public body, private person or private organization for the purpose of establishing a charter school pursuant to this article. Beginning January 1, 2025, the sponsor of a charter school may not contract with a for-profit organization to establish a charter school pursuant to this article.

C. The sponsor of a charter school may be either the state board of education, the state board for charter schools, a university under the jurisdiction of the Arizona board of regents, a community college district or a group of community college districts, subject to the following requirements:

1. An applicant may not apply for sponsorship to any person or entity other than those prescribed in this subsection.

2. The applicant may apply to the state board of education or the state board for charter schools. Notwithstanding any other law, neither the state board for charter schools nor the state board of education shall grant a charter to a school district governing board for a new charter school or for the conversion of an existing district public school to a charter school. The state board of education or the state board for charter schools may approve the application if the application meets the requirements of this article and may approve the charter if the proposed sponsor determines, within its sole discretion, that the applicant is sufficiently qualified to operate a charter school and that the applicant is applying to operate as a separate charter holder by considering factors such as whether:

(a) The schools have separate governing bodies, governing body membership, staff, facilities and student population.

(b) Daily operations are carried out by different administrators.

(d) The applicant's charter management organization has multiple charter holders serving varied grade configurations on one physical site or nearby sites serving one community.

(e) The applicant is reconstituting an existing school site population at the same or new site.

(f) The applicant is reconstituting an existing grade configuration from a prior charter holder with at least one grade remaining on the original site with the other grade or grades moving to a new site. The state board of education or the state board for charter schools may approve any charter schools transferring charters. If the state board of education or the state board for charter schools rejects the preliminary application, the state board of education or the state board for charter schools shall notify the applicant in writing of the reasons for the rejection and of suggestions for improving the application. An applicant may submit a revised application for reconsideration by the state board of education or the state board for charter schools. The applicant may request, and the state board of education or the state board for charter schools may provide, technical assistance to improve the application.

3. The applicant may submit the application to a university under the jurisdiction of the Arizona board of regents, a community college district or a group of community college districts. A university, a community college district or a group of community college districts shall not grant a charter to a school district governing board for a new charter school or for the conversion of an existing district public school to a charter school. A university, a community college district or a group of community college districts may approve the application if it meets the requirements of this article and if the proposed sponsor determines, in its sole discretion, that the applicant is sufficiently qualified to operate a charter school.

4. Each applicant seeking to establish a charter school shall submit a full set of fingerprints to the approving agency for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. If an applicant will have direct contact with students, the applicant shall possess a valid fingerprint clearance card that is issued pursuant to title 41, chapter 12, article 3.1. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The criminal records check shall be completed before the issuance of a charter.

5. All persons engaged in instructional work directly as a classroom, laboratory or other teacher or indirectly as a supervisory teacher, speech therapist or principal and all charter representatives, charter school governing body members and officers, directors, members and partners of the charter holder shall have a valid fingerprint clearance card that is issued pursuant to title 41, chapter 12, article 3.1, unless the person is a volunteer or guest speaker who is accompanied in the classroom by a person with a valid fingerprint clearance card. A charter school shall not employ in any position that requires a valid fingerprint clearance card a person against whom the state board of education has taken disciplinary action as prescribed in section 15-505 or whose certificate has been suspended, surrendered or revoked, unless the person's certificate has been subsequently reinstated by the state board of education. All other personnel shall be fingerprint checked pursuant to section 15-512, or the charter school may require those personnel to obtain a fingerprint clearance card issued pursuant to title 41, chapter 12, article 3.1. Before employment, the charter school shall make documented, good faith efforts to contact previous employers of a person to obtain information and recommendations that may be relevant to the person's fitness for employment as prescribed in section 15-512, subsection F, including checking the educator information system that is maintained by the department of education pursuant to section 15-505. The charter school shall notify the department of public safety if the charter school or sponsor receives credible evidence that a person who possesses a valid fingerprint clearance card is arrested for or is charged with an offense listed in section 41-1758.03, subsection B. A person who is employed at a charter school that has met the requirements of this paragraph is not required to meet any additional requirements that are established by the department of education or that may be established by rule by the state board of education. The state board of education may not adopt rules that exceed the requirements for persons who are qualified to teach in charter schools prescribed in title I of the every student succeeds act (P.L. 114-95) or the individuals with disabilities education improvement act of 2004 (P.L. 108-446). Charter schools may hire personnel who have not yet received a fingerprint clearance card if proof is provided of the submission of an application to the department of public safety for a fingerprint clearance card and if the charter school that is seeking to hire the applicant does all of the following:

(a) Documents in the applicant's file the necessity for hiring and placing the applicant before the applicant receives a fingerprint clearance card.

(b) Ensures that the department of public safety completes a statewide criminal records check on the applicant. A statewide criminal records check shall be completed by the department of public safety every one hundred twenty days until the date that the fingerprint check is completed or the fingerprint clearance card is issued or denied.

(c) Obtains references from the applicant's current employer and the two most recent previous employers except for applicants who have been employed for at least five years by the applicant's most recent employer.

(d) Provides general supervision of the applicant until the date that the fingerprint card is obtained.

(e) Completes a search of criminal records in all local jurisdictions outside of this state in which the applicant has lived in the previous five years.

(f) Verifies the fingerprint status of the applicant with the department of public safety.

6. A charter school that complies with the fingerprinting requirements of this section shall be deemed to have complied with section 15-512 and is entitled to the same rights and protections provided to school districts by section 15-512.

7. If a charter school operator is not already subject to a public meeting or hearing by the municipality in which the charter school is located, the operator of a charter school shall conduct a public meeting at least thirty days before the charter school operator opens a site or sites for the charter school. The charter school operator shall post notices of the public meeting in at least three different locations that are within three hundred feet of the proposed charter school site.

8. A person who is employed by a charter school or who is an applicant for employment with a charter school, who is arrested for or charged with a nonappealable offense listed in section 41-1758.03, subsection B and who does not immediately report the arrest or charge to the person's supervisor or potential employer is guilty of unprofessional conduct and the person shall be immediately dismissed from employment with the charter school or immediately excluded from potential employment with the charter school.

9. A person who is employed by a charter school and who is convicted of any nonappealable offense listed in section 41-1758.03, subsection B or is convicted of any nonappealable offense that amounts to unprofessional conduct under section 15-550 shall immediately do all of the following:

(a) Surrender any certificates issued by the department of education.

(b) Notify the person's employer or potential employer of the conviction.

(d) Surrender the person's fingerprint clearance card.

D. An entity that is authorized to sponsor charter schools pursuant to this article has no legal authority over or responsibility for a charter school sponsored by a different entity. This subsection does not apply to the state board of education's duty to exercise general supervision over the public school system pursuant to section 15-203, subsection A, paragraph 1.

E. The charter of a charter school shall do all of the following:

1. Ensure compliance with federal, state and local rules, regulations and statutes relating to health, safety, civil rights and insurance. The department of education shall publish a list of relevant rules, regulations and statutes to notify charter schools of their responsibilities under this paragraph.

2. Ensure that it is nonsectarian in its programs, admission policies and employment practices and all other operations.

3. Ensure that it provides a comprehensive program of instruction for at least a kindergarten program or any grade between grades one and twelve, except that a school may offer this curriculum with an emphasis on a specific learning philosophy or style or certain subject areas such as mathematics, science, fine arts, performance arts or foreign language.

4. Ensure that it designs a method to measure pupil progress toward the pupil outcomes adopted by the state board of education pursuant to section 15-741.01, including participation in the statewide assessment and the nationally standardized norm-referenced achievement test as designated by the state board and the completion and distribution of an annual report card as prescribed in chapter 7, article 3 of this title.

5. Ensure that, except as provided in this article and in its charter, it is exempt from all statutes and rules relating to schools, governing boards and school districts.

6. Ensure that, except as provided in this article, it is subject to the same financial and electronic data submission requirements as a school district, including the uniform system of financial records as prescribed in chapter 2, article 4 of this title, procurement rules as prescribed in section 15-213 and audit requirements. The auditor general shall conduct a comprehensive review and revision of the uniform system of financial records to ensure that the provisions of the uniform system of financial records that relate to charter schools are in accordance with commonly accepted accounting principles used by private business. A school's charter may include exceptions to the requirements of this paragraph that are necessary as determined by the university, the community college district, the group of community college districts, the state board of education or the state board for charter schools. Each charter school and charter management organization that enters into a management services contract with the charter school shall ensure that an annual independent audit of financial statements is conducted and that the results of that audit, including individual salaries paid by the charter school to the charter management organization, and any management letter issued in connection with that audit are made available to the public. The department of education or the office of the auditor general may shall conduct financial, program or compliance audits.

7. Ensure compliance with all federal and state laws relating to the education of children with disabilities in the same manner as a school district.

8. Ensure that it provides for a charter holder governing board composed of at least three members. Not more than two immediate family members may serve simultaneously on the charter holder governing board, and immediate family members may not constitute a majority of those board members, except that:

(a) Persons related as immediate family members who currently reside within the same household or who resided within the same household at any time within the preceding four years may not serve simultaneously on the same charter holder governing board.

(b) For a charter school with a student count of at least two hundred fifty that is located in a county with a population of more than five hundred thousand persons, not more than two persons related by affinity, by consanguinity or by law to the third degree may serve simultaneously on the same charter holder governing board.

8. 9. Ensure that it provides for a governing body for the charter school that is responsible for the operational and policy decisions of the charter school. There shall be at least three governing body members. Not more than two immediate family members may serve simultaneously on the governing body of the same charter school, and immediate family members may not be a majority of the governing body members of the same charter school. Notwithstanding section 1-216, if there is a vacancy or vacancies on the governing body, a majority of the remaining members of the governing body constitute a quorum for the transaction of business, unless that quorum is prohibited by the charter school's operating agreement. Individuals related as immediate family members who currently reside within the same household or who resided within the same household any time within the preceding four years may not serve simultaneously on the same charter school governing body, except that for a charter school with a student count of at least two hundred fifty that is located in a county with a population of more than five hundred thousand persons, not more than two persons related by affinity, by consanguinity or by law to the third degree may serve simultaneously on the same charter school governing body. For the purposes of this paragraph, "operational" includes all applicable requirements for supervision that are prescribed for school district governing boards pursuant to section 15-341.

9. 10. Ensure that it provides a minimum of one hundred eighty instructional days before June 30 of each fiscal year unless it is operating on an alternative calendar approved by its sponsor. The superintendent of public instruction shall adjust the apportionment schedule accordingly to accommodate a charter school utilizing an alternative calendar.

11. Ensure that the charter school governing body and the charter holder governing board comply with the open meeting requirements prescribed in title 38, chapter 3, article 3.1.

F. A charter school shall collect and maintain information about each teacher's educational and teaching background and experience in a particular academic content subject area. A charter school shall either post the information on the charter school's website or make the information available for inspection on request of parents and guardians of pupils enrolled at the charter school. This subsection does not require any charter school to release personally identifiable information in relation to any teacher, including the teacher's address, salary, social security number or telephone number.

G. The charter of a charter school may be amended at the request of the governing body of the charter school and on the approval of the sponsor.

H. Charter schools may contract, sue and be sued.

I. The charter is effective for fifteen years from the first day of the fiscal year as specified in the charter, subject to the following:

1. At least eighteen months before the charter expires, the sponsor shall notify the charter school that the charter school may apply for renewal and shall make the renewal application available to the charter school. A charter school that elects to apply for renewal shall file a complete renewal application at least fifteen months before the charter expires. A sponsor shall give written notice of its intent not to renew the charter school's request for renewal to the charter school at least twelve months before the expiration of the charter. The sponsor shall make data used in making renewal decisions available to the school and the public and shall provide a public report summarizing the evidence basis for each decision. The sponsor may deny the request for renewal if, in its judgment, the charter holder has failed to do any of the following:

(a) Meet or make sufficient progress toward the academic performance expectations set forth in the performance framework.

(b) Meet the operational performance expectations set forth in the performance framework or any improvement plans.

(d) Complete the obligations of the contract.

(e) Comply with this article or any provision of law from which the charter school is not exempt.

2. A charter operator may apply for early renewal. At least nine months before the charter school's intended renewal consideration, the operator of the charter school shall submit a letter of intent to the sponsor to apply for early renewal. The sponsor shall review fiscal audits and academic performance data for the charter school that are annually collected by the sponsor, review the current contract between the sponsor and the charter school and provide the qualifying charter school with a renewal application. On submission of a complete application, the sponsor shall give written notice of its consideration of the renewal application. The sponsor may deny the request for early renewal if, in the sponsor's judgment, the charter holder has failed to do any of the following:

(a) Meet or make sufficient progress toward the academic performance expectations set forth in the performance framework.

(b) Meet the operational performance expectations set forth in the performance framework or any improvement plans.

(d) Complete the obligations of the contract.

(e) Comply with this article or any provision of law from which the charter school is not exempt.

3. A sponsor shall review a charter at five-year intervals using a performance framework adopted by the sponsor and may revoke a charter at any time if the charter school breaches one or more provisions of its charter or if the sponsor determines that the charter holder has failed to do any of the following:

(a) Meet or make sufficient progress toward the academic performance expectations set forth in the performance framework.

(b) Meet the operational performance expectations set forth in the performance framework or any improvement plans.

(d) Comply with this article or any provision of law from which the charter school is not exempt.

4. In determining whether to renew or revoke a charter holder, the sponsor must consider making sufficient progress toward the academic performance expectations set forth in the sponsor's performance framework as one of the most important factors.

5. Before the sponsor adopts a determination of intent to revoke a charter, the charter holder shall have at least thirty days to address the problems, as necessary or applicable, associated with the reason or reasons for the determination of intent to revoke. The sponsor is not required to provide the charter holder with thirty days to correct the problems associated with the reason or reasons for adopting a determination of intent to revoke if the reason or reasons cannot be remedied, including a failure to submit required financial audits pursuant to subsection E, paragraph 6 of this section and section 15-914, or for a matter of health or safety, or both. Before the sponsor adopts a determination of intent to revoke a charter, the sponsor shall give written notice to the charter holder that includes the reason or reasons for the sponsor's consideration to revoke the charter. Notice may be provided by electronic means or by United States mail and is effective on the date of email or, if sent by United States mail, the earlier of the date of receipt by the charter holder or within five days after the notice is mailed. The determination of whether to proceed to revocation shall be made at a public meeting called for that purpose.

J. The charter may be renewed for successive periods of twenty years.

K. A charter school that is sponsored by the state board of education, the state board for charter schools, a university, a community college district or a group of community college districts may not be located on the property of a school district unless the district governing board grants this authority.

L. A governing board or a school district employee who has control over personnel actions shall not take unlawful reprisal against another employee of the school district because the employee is directly or indirectly involved in an application to establish a charter school. A governing board or a school district employee shall not take unlawful reprisal against an educational program of the school or the school district because an application to establish a charter school proposes to convert all or a portion of the educational program to a charter school. For the purposes of this subsection, "unlawful reprisal" means an action that is taken by a governing board or a school district employee as a direct result of a lawful application to establish a charter school and that is adverse to another employee or an education program and:

1. With respect to a school district employee, results in one or more of the following:

(a) Disciplinary or corrective action.

(b) Detail, transfer or reassignment.

(d) An unfavorable performance evaluation.

(e) A reduction in pay, benefits or awards.

(f) Elimination of the employee's position without a reduction in force by reason of lack of monies or work.

(g) Other significant changes in duties or responsibilities that are inconsistent with the employee's salary or employment classification.

2. With respect to an educational program, results in one or more of the following:

(a) Suspension or termination of the program.

(b) Transfer or reassignment of the program to a less favorable department.

(d) Significant reduction or termination of funding for the program.

M. Charter schools shall secure insurance for liability and property loss. The governing body of a charter school that is sponsored by the state board of education or the state board for charter schools may enter into an intergovernmental agreement or otherwise contract to participate in an insurance program offered by a risk retention pool established pursuant to section 11-952.01 or 41-621.01 or the charter school may secure its own insurance coverage. The pool may charge the requesting charter school reasonable fees for any services it performs in connection with the insurance program.

N. Charter schools do not have the authority to acquire property by eminent domain.

O. A sponsor, including members, officers and employees of the sponsor, is immune from personal liability for all acts done and actions taken in good faith within the scope of its authority.

P. Charter school sponsors and this state are not liable for the debts or financial obligations of a charter school or persons who operate charter schools.

Q. The sponsor of a charter school shall establish procedures to conduct administrative hearings on determination by the sponsor that grounds exist to revoke a charter. Procedures for administrative hearings shall be similar to procedures prescribed for adjudicative proceedings in title 41, chapter 6, article 10. Except as provided in section 41-1092.08, subsection H, final decisions of the state board of education and the state board for charter schools from hearings conducted pursuant to this subsection are subject to judicial review pursuant to title 12, chapter 7, article 6.

R. The sponsoring entity of a charter school shall have oversight and administrative responsibility for the charter schools that it sponsors. In implementing its oversight and administrative responsibilities, the sponsor shall ground its actions in evidence of the charter holder's performance in accordance with the performance framework adopted by the sponsor. The performance framework shall be publicly available, shall be placed on the sponsoring entity's website and shall include:

1. The academic performance expectations of the charter school and the measurement of sufficient progress toward the academic performance expectations.

2. The operational expectations of the charter school, including adherence to all applicable laws and obligations of the charter contract.

3. The financial expectations of the charter school.

4. Intervention and improvement policies.

S. Charter schools may pledge, assign or encumber their assets to be used as collateral for loans or extensions of credit.

T. All property accumulated by a charter school shall remain the property of the charter school.

T. If a charter school closes, any asset of that charter school that was acquired in whole or in part with public monies shall be returned to this state. This subsection does not apply if the proceeds from the sale of a closed charter school are used to fund the capital costs for a new campus of that charter school.

U. Charter schools may not locate a school on property that is less than one-fourth mile from agricultural land regulated pursuant to section 3-365, except that the owner of the agricultural land may agree to comply with the buffer zone requirements of section 3-365. If the owner agrees in writing to comply with the buffer zone requirements and records the agreement in the office of the county recorder as a restrictive covenant running with the title to the land, the charter school may locate a school within the affected buffer zone. The agreement may include any stipulations regarding the charter school, including conditions for future expansion of the school and changes in the operational status of the school that will result in a breach of the agreement.

V. A transfer of a charter to another sponsor, a transfer of a charter school site to another sponsor or a transfer of a charter school site to a different charter shall be completed before the beginning of the fiscal year that the transfer is scheduled to become effective. An entity that sponsors charter schools may accept a transferring school after the beginning of the fiscal year if the transfer is approved by the superintendent of public instruction. The superintendent of public instruction shall have the discretion to consider each transfer during the fiscal year on a case-by-case basis. A charter holder seeking to transfer sponsors shall comply with the current charter terms regarding assignment of the charter. A charter holder transferring sponsors shall notify the current sponsor that the transfer has been approved by the new sponsor.

W. Notwithstanding subsection V of this section, a charter holder on an improvement plan must notify parents or guardians of registered students of the intent to transfer the charter and the timing of the proposed transfer. On the approved transfer, the new sponsor shall enforce the improvement plan but may modify the plan based on performance.

X. Notwithstanding subsection Y of this section, the state board for charter schools shall charge a processing fee to any charter school that amends its contract to participate in Arizona online instruction pursuant to section 15-808. The charter Arizona online instruction processing fund is established consisting of fees collected and administered by the state board for charter schools. The state board for charter schools shall use monies in the fund only for processing contract amendments for charter schools participating in Arizona online instruction. Monies in the fund are continuously appropriated.

Y. The sponsoring entity may not charge any fees to a charter school that it sponsors unless the sponsor has provided services to the charter school and the fees represent the full value of those services provided by the sponsor. On request, the value of the services provided by the sponsor to the charter school shall be demonstrated to the department of education.

Z. Charter schools may enter into an intergovernmental agreement with a presiding judge of the juvenile court to implement a law-related education program as defined in section 15-154. The presiding judge of the juvenile court may assign juvenile probation officers to participate in a law-related education program in any charter school in the county. The cost of juvenile probation officers who participate in the program implemented pursuant to this subsection shall be funded by the charter school.

AA. The sponsor of a charter school shall modify previously approved curriculum requirements for a charter school that wishes to participate in the board examination system prescribed in chapter 7, article 6 of this title.

BB. If a charter school decides not to participate in the board examination system prescribed in chapter 7, article 6 of this title, pupils enrolled at that charter school may earn a Grand Canyon diploma by obtaining a passing score on the same board examinations.

CC. Notwithstanding subsection Y of this section, a sponsor of charter schools may charge a new charter application processing fee to any applicant. The application fee shall fully cover the cost of application review and any needed technical assistance. Authorizers may approve policies that allow a portion of the fee to be returned to the applicant whose charter is approved.

DD. A charter school may choose to provide a preschool program for children with disabilities pursuant to section 15-771.

EE. Pursuant to the prescribed graduation requirements adopted by the state board of education, the governing body of a charter school operating a high school may approve a rigorous computer science course that would fulfill a mathematics course required for graduation from high school. The governing body may approve a rigorous computer science course only if the rigorous computer science course includes significant mathematics content and the governing body determines the high school where the rigorous computer science course is offered has sufficient capacity, infrastructure and qualified staff, including competent teachers of computer science.

FF. A charter school may allow the use of school property, including school buildings, grounds, buses and equipment, by any person, group or organization for any lawful purpose, including a recreational, educational, political, economic, artistic, moral, scientific, social, religious or other civic or governmental purpose. The charter school may charge a reasonable fee for the use of the school property.

GG. A charter school and its employees, including the governing body, or chief administrative officer, are immune from civil liability with respect to all decisions made and actions taken to allow the use of school property, unless the charter school or its employees are guilty of gross negligence or intentional misconduct. This subsection does not limit any other immunity provisions that are prescribed by law.

HH. Sponsors authorized pursuant to this section shall submit an annual report to the auditor general on or before October 1. The report shall include:

1. The current number of charters authorized and the number of schools operated by authorized charter holders.

2. The academic, operational and financial performance of the sponsor's charter portfolio as measured by the sponsor's adopted performance framework.

3. For the prior year, the number of new charters approved, the number of charter schools closed and the reason for the closure.

4. The sponsor's application, amendment, renewal and revocation processes, charter contract template and current performance framework as required by this section.

II. The auditor general shall prescribe the format for the annual report required by subsection HH of this section and may require that the annual report be submitted electronically. The auditor general shall review the submitted annual reports to ensure that the reports include the required items in subsection HH of this section and shall make the annual reports available on request. If the auditor general finds significant noncompliance or if a sponsor fails to submit the annual report required by subsection HH of this section, on or before December 31 of each year the auditor general shall report to the governor, the president of the senate, the speaker of the house of representatives and the chairs of the senate and house education committees or their successor committees, and the legislature shall consider revoking the sponsor's authority to sponsor charter schools.

JJ. The sponsor of a charter school shall annually compile information pertaining to the governance and operations of each charter school it sponsors. A nonprofit charter holder that is responsible for annually filing a form 990 with the internal revenue service may meet the relevant data requirements prescribed in paragraphs 3 through 12 of this subsection by submitting the charter holder's form 990 to the charter school's sponsor. A charter school sponsor shall post to its public website the following information for each charter school it sponsors:

1. The names of voting members of the charter school governing body.

2. The number of independent voting members of the charter school governing body. For the purposes of this paragraph, "independent voting members" means members who are not employed by the charter school or who do not have immediate family members or business relationships with the charter school.

3. The names of voting members of the charter holder governing board.

4. The number of independent voting members of the charter holder governing board.

5. The total annual state revenues received.

6. The total annual revenues from other sources, including grants, donations and investment income.

7. The total annual expenses.

8. The total annual revenues minus total annual expenses.

9. The total assets and liabilities.

10. The authorization of any related party transaction and the individuals or entities that are party to the transaction, services or goods provided and the total transaction cost.

11. Whether the charter school or charter holder sold, exchanged, disposed of or transferred more than twenty-five percent of the charter school's assets in the previous fiscal year.

12. The confirmation of an adopted conflict of interest policy and A copy of the adopted policy.

13. If the charter school or charter holder contracts with a charter management organization, a written statement that does all of the following:

(a) Identifies the charter management organization and the name of the person or entity that has ownership of the charter management organization.

(b) Describes the services provided to the charter school or charter holder.

(c) Provides the amount of monies the charter school or charter holder spends for the charter management organization's services.

(d) includes an itemized list of services the charter management organization offers to the charter school or charter holder, including the cost for each service.

14. Spending data that the charter school sponsor compiles from annual financial reports for each charter holder in each of the following categories:

(a) Teacher salaries.

(b) Classroom instruction.

(d) Other support services and operations.

(e) Special education.

(f) Administration.

(g) Federal projects.

(h) Facilities expenses.

KK. If a charter school contracts with a charter management organization, not more than ten percent of the charter school's total expenditures may be spent on administrative expenses.

LL. The website of each charter school shall include a link to the information required to be posted on the charter school sponsor's website pursuant to subsection JJ of this section.

MM. For the purposes of this section:

1. "Charter management organization":

(a) Means an organization that contracts with a charter school or charter holder to provide academic services and administrative services to one or more charter schools.

(b) Includes an organization commonly referred to as an educational management organization or an educational service provider.

2. "Immediate family" has the same meaning prescribed in section 15-421. END_STATUTE

Sec. 3. Title 15, chapter 1, article 8, Arizona Revised Statutes, is amended by adding section 15-183.02, to read:

START_STATUTE15-183.02. Procurement policies; enforcement

A. On or before July 1, 2025, each charter school in this state shall comply with the procurement policies prescribed in section 15-213. Each charter school in this state shall also adopt procurement policies that include all of the following:

1. A prohibition on purchasing any good or service from any of the following persons, unless a majority of the disinterested members of the charter school governing body authorize the purchase after fully disclosing the substantial interest and include this information and a description of the justification for why the purchase is in the best interest of the school in the minutes of the meeting at which the governing body approves the purchase:

(a) Any member of the charter holder governing board or charter school governing body.

(b) An immediate family member of any member of the charter holder governing board or charter school governing body.

(c) Any other entity in which any member of the charter holder governing board or charter school GOVERNING body or an immediate family member of a member of the charter holder governing board or charter school governing body may have a substantial interest in the procurement.

2. A requirement that, for any purchase made on behalf of the charter school by the charter school or charter holder that the charter school OR CHARTER HOLDER reasonably anticipates will exceed $50,000, the charter school maintain records demonstrating that the purchase is in the best interest of the charter school when considering the totality of the circumstances. A charter school may demonstrate that the purchase is in the best interest of the charter school through research of like products or services or by receiving multiple quotes. A charter school shall maintain records of the purchase for review during the charter school's annual audit. A project or purchase may not be divided or sequenced into separate projects or purchases to intentionally avoid the limits prescribed in this paragraph.

3. A requirement that any purchase made on behalf of the charter school by the charter school or charter holder that exceeds $50,000 is subject to public bidding requirements unless the purchase is exempt from public bidding requirements pursuant to section 15-189.02.

4. A requirement that a compliance review of a charter school's or charter holder's procurement policies and activities be included in the charter school's annual audit.

B. Federal procurement requirements apply to a charter school's receipt of certain federal monies.

C. A charter school employee who has control over personnel actions may not take reprisal against a charter school employee for that employee's disclosure of information relating to a violation of this section.

D. If the sponsor of a charter school determines that a violation of this section is or likely may be occurring, the sponsor may request that the attorney general enforce this section after providing the charter school with a reasonable opportunity to respond to any allegations raised and to discontinue and correct any improper actions. The attorney general may seek relief for any violation of this section through an appropriate criminal or civil action in superior court. The attorney general may use the audit authority of the auditor general pursuant to 15-183, subsection E, paragraph 6 to enforce this section. END_STATUTE

Sec. 4. Section 15-184, Arizona Revised Statutes, is amended to read:

START_STATUTE15-184. Charter schools; admissions requirements; parental classroom visits

A. A charter school shall enroll all eligible pupils who submit a timely application, unless the number of applications exceeds the capacity of a program, class, grade level or building.

B. A charter school shall give enrollment preference to pupils who are returning to the charter school in the second or any subsequent year of its operation and to siblings of pupils who are already enrolled in the charter school.

C. A charter school may give enrollment preference to children who are in foster care or meet the definition of unaccompanied youth prescribed in the McKinney-Vento homeless assistance act (42 United States Code section 11434a).

D. A charter school may give enrollment preference to and reserve capacity for pupils who either:

1. Are children, grandchildren or legal wards of any of the following:

(a) Employees of the school.

(b) Employees of the charter holder.

(d) Directors, officers, partners or board members of the charter holder.

2. Attended another charter school or are the siblings of that pupil if the charter school previously attended by the pupil has the identical charter holder, board and governing board membership as the enrolling charter school or is managed by the same educational management organization, charter management organization or educational service provider as determined by the charter authorizer.

E. If remaining capacity is insufficient to enroll all pupils who submit a timely application, the charter school shall select pupils through an equitable selection process such as a lottery except that preference shall be given to siblings of a pupil who is selected through an equitable selection process such as a lottery.

F. Except as provided in subsections A through D of this section, a charter school shall not limit admission based on ethnicity, national origin, gender, income level, disabling condition, proficiency in the English language or athletic ability.

G. A charter school shall not limit admission based on the ability of a pupil or the pupil's parent or guardian to provide a financial contribution to the charter school or based on any agreement to volunteer at or for the charter school.

G. H. A charter school may limit admission to pupils within a given age group or grade level.

H. I. A charter school may provide instruction to pupils of a single gender with the approval of the sponsor of the charter school. An existing charter school may amend its charter to provide instruction to pupils of a single gender and, if approved by the sponsor of the charter school, may provide instruction to pupils of a single gender at the beginning of the next school year.

I. J. A charter school may refuse to admit any pupil who has been expelled from another educational institution or who is in the process of being expelled from another educational institution.

J. K. A charter school governing body must develop and adopt in a public meeting policies to allow for visits, tours and observations of all classrooms by parents of enrolled pupils and parents who wish to enroll their children in the charter school unless a visit, tour or observation threatens the health and safety of pupils and staff. These policies and procedures must be easily accessible from the home page on each school's website. END_STATUTE

Sec. 5. Section 15-189.02, Arizona Revised Statutes, is amended to read:

START_STATUTE15-189.02. Charter schools; exemption; public bidding requirements

A. Except as otherwise provided in section 15-213, a charter school's procurement is exempt from public bidding requirements if the aggregate dollar amount of the procurement does not exceed the maximum amount of the exemption authorized by title 41, chapter 23 or pursuant to rules adopted by the director of the department of administration.

B. Notwithstanding subsection A, the state board for charter schools may authorize an exemption from public bidding requirements that exceeds the maximum exemption prescribed in subsection A of this section for any charter school sponsored by the state board for charter schools. END_STATUTE

Sec. 6. Section 15-189.03, Arizona Revised Statutes, is amended to read:

START_STATUTE15-189.03. Academic credits; transfer; withdrawal; notification

A. If a pupil who was previously enrolled in a charter school or school district enrolls in a charter school in this state, the charter school shall accept credits earned by the pupil in courses or instructional programs at the charter school or school district. A charter school governing board body may adopt a policy concerning the application of transfer credits for the purpose of determining whether a credit earned by a pupil who was previously enrolled in a school district or charter school will be assigned as an elective or core credit.

B. A pupil who transfers from a charter school or school district shall be provided with a list that indicates which credits have been accepted as an elective credit credits and which credits have been accepted as a core credit credits by the charter school. Within ten school days after receiving the list, a the pupil may request to take an examination in each particular course in which core credit has been denied. The charter school shall accept the credit as a core credit for each particular course in which the pupil takes an examination and receives a passing score on a test that is designed and evaluated by a teacher in the charter school who teaches the subject matter on which the examination is based.

C. If a pupil withdraws or transfers from a charter school during the school year, the charter school shall report the withdrawal or transfer to the department of education within two weeks after the withdrawal or transfer. The department shall adjust the average daily membership of the charter school to account for that pupil's withdrawal or transfer at the next scheduled distribution of state aid to that charter school. END_STATUTE

Sec. 7. Title 15, chapter 1, article 8, Arizona Revised Statutes, is amended by adding section 15-189.08, to read:

START_STATUTE15-189.08. Charter school audits; list of acceptable auditors; form of audit; reports

An audit of a charter school that is conducted pursuant to this title must:

1. follow a standard format that requires detailed and supporting information on assets and liabilities, revenues and expenditures and related party expenses.

2. be conducted by an auditor who meets all of the following:

(a) Is located in this state.

(b) has demonstrated expertise in the laws of this state.

(c) Is on a list of acceptable auditors established and maintained by the state board for charter schools that uses data extracted from audits to determine which auditors are currently providing acceptable levels of information. The state board for charter schools shall update this list annually.

3. be completed individually for each charter entity. a Consolidated Audit may be prepared collating data required pursuant to this paragraph.

4. Be completed INDIVIDUALLY for each charter school separate from any larger entity that includes that charter school. a Consolidated Audit may be prepared collating data required pursuant to this paragraph.

5. include Audit reports that are numerically identical to what is provided in internal revenue service form 990 and associated annual financial reports. The audit report must explain any inconsistency and include specific plans on how the subject of the audit intends to remedy the inconsistency in the future.

6. IDENTIfy the source of any profit distribution that exceeds net profits for that year. END_STATUTE

Sec. 8. Section 15-213, Arizona Revised Statutes, is amended to read:

START_STATUTE15-213. Procurement practices of school districts; violations; classification; definitions

A. The state board of education shall adopt rules prescribing procurement practices for all school districts in this state as follows:

1. The state board shall submit to the auditor general proposed rules consistent with the procurement practices prescribed in title 41, chapter 23, modifying the provisions for public notice of invitation for bids, requests for proposals and requests for qualifications to allow a governing board to give public notice of the invitation for bids, requests for proposals and requests for qualifications by publication in the official newspaper of the county as prescribed in section 11-255, modifying the provisions relating to disposal of materials to comply with section 15-342, paragraph 18, providing for governing board delegation of procurement authority and modifying as necessary other provisions that the state board determines are not appropriate for school districts. The rules shall include provisions specifying that school districts are not required to engage in competitive bidding in order to make the decision to participate in programs pursuant to section 15-382 and that a program authorized by section 15-382 is not required to engage in competitive bidding for the services necessary to administer the program or for purchase of insurance or reinsurance. The rules shall include provisions specifying that school districts are not required to engage in competitive bidding in order to place a pupil in a private school that provides special education services if such a placement is prescribed in the pupil's individualized education program and the private school has been approved by the department of education division of special education pursuant to section 15-765, subsection D. This placement is not subject to rules adopted by the state board of education before November 24, 2009 pursuant to this section. The rules for procurement of construction projects shall include provisions specifying that surety bonds furnished as bid security and performance and payment bonds shall be executed and furnished as required by title 34, chapter 2 or 6, as applicable. The rules shall specify the total cost of a procurement that is subject to invitations for bids, requests for proposals and requests for clarification, using the aggregate dollar amount limits for procurements prescribed in section 41-2535. The rules must follow the prompt payment requirements prescribed in sections 41-2576 and 41-2577 except for external funding that has not yet been received.

2. The state board of education shall adopt rules for procurements involving construction not exceeding $150,000, which shall be known as the simplified school construction procurement program. At a minimum, the rules for a simplified construction procurement program shall require that:

(a) Each county school superintendent maintain a list of persons who desire to receive solicitations to bid on construction projects to which additions shall be allowed throughout the year.

(b) The list of persons be available for public inspection.

(c) A performance bond and a payment bond as required by this section be provided for contracts for construction by contractors.

(d) All bids for construction be opened at a public opening and that the bids shall remain confidential until the public opening.

(e) All persons desiring to submit bids be treated equitably and that the information related to each project be available to all eligible persons.

(f) Competition for construction projects under the simplified school construction procurement program be encouraged to the maximum extent possible. At a minimum, a school district shall submit information on each project to all persons listed with the county school superintendent by any school district within that county.

(g) A provision, covenant, clause or understanding in, collateral to or affecting a construction contract that makes the contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state is against this state's public policy and is void and unenforceable.

3. The state board of education shall adopt rules for the procurement of goods and information services by school districts and charter schools using electronic, online bidding. The rules adopted by the state board shall include the use of reverse auctions and shall be consistent with the procurement practices prescribed in title 41, chapter 23, article 13, modifying as necessary those provisions and the rules adopted pursuant to that article that the state board determines are not appropriate for school districts and charter schools. Until the rules are adopted, school districts and charter schools may procure goods and information services pursuant to title 41, chapter 23, article 13 using the rules adopted by the department of administration in implementing that article.

4. The state board shall adopt rules for the procurement by school districts of any materials, services, goods, construction or construction services that ensure maximum practicable competition as prescribed in section 41-2565 and shall require that a person:

(a) That contracts for or purchases any materials, services, goods, construction or construction services in a manner contrary to the rules adopted by the state board pursuant to this section is personally liable for the recovery of all public monies paid plus twenty percent of that amount and legal interest from the date of payment and all costs and damages arising out of the violation as prescribed in section 41-2616.

(b) That intentionally or knowingly contracts for or purchases any materials, services, goods, construction or construction services pursuant to a scheme or artifice to avoid the rules adopted by the state board pursuant to this section is guilty of a class 4 felony as prescribed in section 41-2616.

(c) That prepares procurement specifications may not receive any direct or indirect benefit from using those specifications.

(d) That serves on a selection committee for a procurement may not be a contractor or subcontractor under a contract awarded under the procurement or provide any specified professional services, construction, construction services, materials or other services under the contract. A person that serves on a selection committee for a procurement and that fails to disclose contact with a representative of a competing vendor or fails to provide required accurate information is subject to a civil penalty as prescribed in section 41-2616.

5. The state board shall adopt rules requiring school districts to obtain and maintain a record of proof that a construction or construction services provider that has been awarded a contract with the school district, or school purchasing cooperative, has a valid license to practice in this state.

6. The auditor general shall review the proposed rules to determine whether the rules are consistent with the procurement practices prescribed in title 41, chapter 23 and any modifications are required to adapt the procedures for school districts.

7. If the auditor general approves the proposed rules, the auditor general shall notify the state board in writing and the state board shall adopt such rules.

8. If the auditor general objects to the proposed rules, the auditor general shall notify the state board of the objections in writing and the state board, in adopting the rules, shall conform the proposed rules to meet the objections of the auditor general or revise the proposed rules to which an objection has been made and submit the revisions to the auditor general for approval.

B. After the bids submitted in response to an invitation for bids are opened and the award is made or after the proposals or qualifications are submitted in response to a request for proposals or a request for qualifications and the award is made, the governing board shall make available for public inspection all information, all bids, proposals and qualifications submitted and all findings and other information considered in determining whose bid conforms to the invitation for bids and will be the most advantageous with respect to price, conformity to the specifications and other factors or whose proposal or qualifications are to be selected for the award, including the rationale for awarding a contract for any specified professional services, construction, construction services or materials to an entity selected from a qualified select bidders list or through a school purchasing cooperative. The invitation for bids, request for proposals or request for qualifications shall include a notice that all information and bids, proposals and qualifications submitted will be made available for public inspection. The rules adopted by the state board shall prohibit the use in connection with procurement of specifications in any way proprietary to one supplier unless the specification includes all of the following:

1. A statement of the reasons no other specification is practicable.

2. A description of the essential characteristics of the specified product.

3. A statement specifically allowing an acceptable alternative product to be supplied.

C. A project or purchase may not be divided or sequenced into separate projects or purchases in order to avoid the limits prescribed by the state board under subsection A of this section.

D. A contract for the procurement of construction or construction services shall include a provision that provides for negotiations between the school district and the contractor for the recovery of damages related to expenses incurred by the contractor for a delay for which the school district is responsible, that is unreasonable under the circumstances and that was not within the contemplation of the parties to the contract. This subsection does not void any provision in the contract that requires notice of delays, provides for arbitration or any other procedure for settlement or provides for liquidated damages.

E. The auditor general may conduct discretionary reviews, investigations and audits of the financial and operational procurement activities of school districts, nonexempt charter schools and school purchasing cooperatives. The auditor general has final review and approval authority over all school district, nonexempt charter school and school purchasing cooperative audit contracts and any audit reports issued in accordance with this section. If the attorney general has reasonable cause to believe an employee of a school district or school purchasing cooperative, or an employee of an entity that has been awarded a contract by a school district or school purchasing cooperative, has engaged in, is engaging in or is about to engage in any practice or transaction that violates the rules adopted by the state board of education pursuant to this section, the attorney general may:

1. Require that person to file on forms prescribed by the attorney general a statement or report in writing and under oath as to all the facts and circumstances concerning a violation of the rules adopted by the state board pursuant to this section by that person and any other data and information deemed necessary by the attorney general.

2. Examine under oath any person in connection with a violation of the rules adopted by the state board pursuant to this section.

F. In addition to the requirements of sections 15-914 and 15-914.01, school districts, nonexempt charter schools and school purchasing cooperatives, in connection with any audit conducted by a certified public accountant, shall contract for a systematic review of purchasing practices using methodology consistent with sampling guidelines established by the auditor general. The auditor general shall consider cost when establishing guidelines pursuant to this subsection and to the extent possible shall attempt to minimize the cost of the review. The purpose of the review is to determine whether the school district, nonexempt charter school or school purchasing cooperative is in compliance with the procurement laws and applicable procurement rules of this state. A copy of the review shall be submitted on completion to the auditor general. The auditor general may conduct discretionary reviews of school districts, nonexempt charter schools and school purchasing cooperatives that are not required to contract for independent audits.

G. A school district school employee who has control over personnel actions may not take reprisal against a school district school employee for that employee's disclosure of information that is a matter of public concern, including a violation of this section, to a public body pursuant to title 38, chapter 3, article 9.

H. The attorney general or county attorney has jurisdiction to enforce this section. The attorney general or county attorney may seek relief for any violation of this section through an appropriate civil or criminal action in superior court, including an action to enjoin a threatened or pending violation of this section and including an action to enforce compliance with any request for documents made by the auditor general pursuant to this section.

I. The department of education shall enact policies and procedures for the acceptance and disposition of complaints from the public regarding school procurement practices and shall forward all school procurement complaints to the attorney general. Notwithstanding rules adopted by the state board, school districts shall not be required to prepare or submit an annual report on the benefits associated with the use of construction-manager-at-risk, design-build, qualified select bidders list and job-order-contracting methods.

J. The state board of education shall adopt, and the auditor general shall review, rules authorizing school districts to procure construction services by construction-manager-at-risk, design-build, qualified select bidders list and job-order-contracting methods of project delivery. The rules shall not require school districts to obtain bid security for the construction-manager-at-risk method of project delivery.

K. A school district or charter school may evaluate United States general services administration contracts for materials and services. The governing board or governing body may authorize purchases under a current contract for materials or services without complying with the requirements of the procurement rules adopted by the state board of education if the governing board or governing body determines in writing that all of the following apply:

1. The price for materials or services is equal to or less than the contractor's current federal supply contract price with the general services administration.

2. The contractor has indicated in writing that the contractor is willing to extend the current federal supply contract pricing, terms and conditions to the school district or charter school.

3. The purchase order adequately identifies the federal supply contract on which the order is based.

4. The purchase contract is cost effective and is in the best interests of the school district or charter school.

L. Unless otherwise provided by law, multiterm contracts for materials or services and contracts for job-order-contracting construction services may be entered into if the duration of the contract and the conditions of renewal or extension, if any, are included in the invitation for bids or the request for proposals and if monies are available for the first fiscal period at the time the contract is executed. The duration of contracts for materials or services and contracts for job-order-contracting construction services are is limited to not more than five years unless the governing board determines in writing before the procurement solicitation is issued that a contract of longer duration would be advantageous to the school district. Payment and performance obligations for succeeding fiscal periods are subject to the availability and appropriation of monies.

M. Notwithstanding the rules adopted by the state board of education, the maximum dollar amount of an individual job order for job-order-contracting construction services is $1,000,000 or a higher or lower amount prescribed by the governing board in a policy adopted in a public meeting held pursuant to title 38, chapter 3, article 3.1. Requirements shall not be artificially divided or fragmented in order to constitute a job order that satisfies the requirements of this subsection.

N. A person who supervises or participates in contracts, purchases, payments, claims or other financial transactions, or a person who supervises or participates in the planning, recommending, selecting or contracting for materials, services, goods, construction, or construction services of a school district or school purchasing cooperative, is guilty of a class 6 felony if the person solicits, accepts or agrees to accept any personal gift or benefit with a value of $300 or more from a person or vendor that has secured or has taken steps to secure a contract, purchase, payment, claim or financial transaction with the school district or school purchasing cooperative. Soliciting, accepting or agreeing to accept any personal gift or benefit with a value of less than $300 is a class 1 misdemeanor. A gift or benefit does not include an item of nominal value such as a greeting card, t-shirt, mug or pen.

O. Any person or vendor that has secured or has taken steps to secure a contract, purchase, payment, claim or financial transaction with a school district or school purchasing cooperative that offers, confers or agrees to confer any personal gift or benefit with a value of $300 or more on a person who supervises or participates in contracts, purchases, payments, claims or other financial transactions, or on a person who supervises or participates in planning, recommending, selecting or contracting for materials, services, goods, construction or construction services of a school district or school purchasing cooperative, is guilty of a class 6 felony. Offering, conferring or agreeing to confer any personal gift or benefit with a value of less than $300 is a class 1 misdemeanor. A gift or benefit does not include an item of nominal value such as a greeting card, t-shirt, mug or pen.

P. Any person or vendor that is convicted under subsection O of this section may be suspended for up to six months or barred for up to three years by the director of the department of administration from doing business with school districts and school purchasing cooperatives. The director of the department of administration shall adopt rules, including administrative procedures, to suspend or bar any person from consideration for award of contracts pursuant to this section.

Q. For the purposes of this section:

1. "Gift or benefit":

(a) Means a payment, distribution, expenditure, advance, deposit or donation of monies, any intangible personal property or any kind of tangible personal or real property. Gift or benefit

(b) Does not include either:

(a) (i) Food or beverage.

(b) (ii) Expenses or sponsorships relating to a special event or function to which individuals listed in subsection N of this section are invited.

2. "Nonexempt charter school" means a charter school that is not exempted from procurement laws pursuant to section 15-183, subsection E, paragraph 6.

3. 2. "School purchasing cooperative" means an entity that is engaged in cooperative purchasing as defined in section 41-2631.

4. 3. "Total cost" means the cost of all materials and services, including the cost of labor performed by employees of the school district, for all construction as provided in subsection A of this section. END_STATUTE

Sec. 9. Section 15-914.02, Arizona Revised Statutes, is amended to read:

START_STATUTE15-914.02. School districts; charter schools; audit

A school district or charter school that is subject to audit pursuant to section 41-1279.03 shall comply with the reporting, follow-up and hearing participation requirements of that section. END_STATUTE

Sec. 10. Section 41-1279.03, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.03. Powers and duties

A. The auditor general shall:

1. Prepare an audit plan for approval by the committee and report to the committee the results of each audit and investigation and other reviews conducted by the auditor general.

2. Conduct or cause to be conducted annual financial and compliance audits of financial transactions and accounts kept by or for all state agencies subject to the federal single audit requirements. The audits shall be conducted in accordance with generally accepted governmental auditing standards and accordingly shall include tests of the accounting records and other auditing procedures as may be considered necessary in the circumstances. The audits shall include the issuance of suitable reports as required by the federal single audit requirements so that the legislature, the federal government and others will be informed as to the adequacy of financial statements of this state in compliance with generally accepted accounting principles and to determine whether this state has complied with laws and regulations that may have a material effect on the financial statements and on major federal assistance programs.

3. Perform procedural reviews for all state agencies at times determined by the auditor general. These reviews may include evaluation of administrative and accounting internal controls and reports on these reviews.

4. Perform special research requests, special audits and related assignments as designated by the committee and conduct performance audits, special audits, special research requests and investigations of any state agency, whether created by the constitution or otherwise, as may be requested by the committee.

5. Annually on or before the fourth Monday of December, prepare a written report to the governor and to the committee that contains a summary of activities for the previous fiscal year.

6. In the fifth year and in each fifth year thereafter in which a transportation excise tax is in effect in a county as provided in section 42-6106 or 42-6107, conduct a performance audit that:

(a) Reviews past expenditures and future planned expenditures of the transportation excise revenues and determines the impact of the expenditures in solving transportation problems within the county and, for a transportation excise tax in effect in a county as provided in section 42-6107, determines whether the expenditures of the transportation excise revenues comply with section 28-6392, subsection B.

(b) Reviews projects completed to date and projects to be completed during the remaining years in which a transportation excise tax is in effect. Within six months after each review period, the auditor general shall present a report to the speaker of the house of representatives and the president of the senate detailing findings and making recommendations.

(c) Reviews, determines, reports and makes recommendations to the speaker of the house of representatives and the president of the senate whether the distribution of Arizona highway user revenues complies with title 28, chapter 18, article 2.

7. If requested by the committee, conduct performance audits of counties and incorporated cities and towns receiving Arizona highway user revenue fund monies pursuant to title 28, chapter 18, article 2 to determine whether the monies are being spent as provided in section 28-6533, subsection B.

8. Perform special audits designated pursuant to law if the auditor general determines that there are adequate monies appropriated for the auditor general to complete the audit. If the auditor general determines the appropriated monies are inadequate, the auditor general shall notify the joint legislative audit committee. Based on information provided by the auditor general, for any legislative measure that requires the auditor general to perform a special audit, the joint legislative budget committee staff shall notify all the members of the legislature as soon as practicable of the cost to conduct the special audit.

9. Establish a schoolwide audit team in the office of the auditor general to conduct performance audits and monitor school districts and charter schools to determine the percentage of every dollar spent in the classroom by the school district or charter school. Each school district and charter school shall prominently post on its website home page a copy of its profile pages that displays the percentage of every dollar spent in the classroom by that school district or charter school from the most recent status report issued by the auditor general pursuant to this paragraph. The auditor general shall determine, through random selection, the school districts and charter schools to be audited each year, subject to review by the joint legislative audit committee. A school district or charter school that is subject to an audit pursuant to this paragraph shall notify the auditor general in writing whether the school district or charter school agrees or disagrees with the findings of the audit and whether the school district or charter school will implement the recommendations, implement modifications to the recommendations or refuse to implement the recommendations. The school district or charter school shall submit to the auditor general a written status report on the implementation of the audit recommendations at the request of the auditor general, within the two-year period following the issuance of an audit conducted pursuant to this paragraph. The auditor general shall review the school district's or charter school's progress toward implementing the recommendations of the audit and provide status reports of the reviews to the joint legislative audit committee during this two-year period. The auditor general may review a school district's or charter school's progress beyond this two-year period for recommendations that have not yet been implemented by the school district or charter school. The school district or charter school shall participate in any hearing scheduled during this review period by the joint legislative audit committee or by any other legislative committee designated by the joint legislative audit committee.

10. Annually review per diem compensation and reimbursement of expenses for employees of this state and members of a state board, commission, council or advisory committee by judgmentally selecting samples and evaluating the propriety of per diem compensation and expense reimbursements.

B. The auditor general may:

1. Subject to approval by the committee, adopt rules necessary to administer the duties of the office.

2. Hire consultants to conduct the studies required by subsection A, paragraphs 6 and 7 of this section.

C. If approved by the committee, the auditor general may charge a reasonable fee for the cost of performing audits or providing accounting services for auditing federal funds, special audits or special services requested by political subdivisions of this state. Monies collected pursuant to this subsection shall be deposited in the audit services revolving fund.

D. The department of transportation, the county treasurer, the county transportation excise tax recipients, and the board of supervisors of a county that has approved a county transportation excise tax as provided in section 42-6106 or 42-6107 and the governing bodies of counties, cities and towns receiving Arizona highway user revenue fund monies shall cooperate with and provide necessary information to the auditor general or the auditor general's consultant.

E. The department of transportation or the county transportation excise tax recipients shall reimburse the auditor general as follows, and the auditor general shall deposit the reimbursed monies in the audit services revolving fund:

1. For the cost of conducting the studies or hiring a consultant to conduct the studies required by subsection A, paragraph 6, subdivisions (a) and (b) of this section, from monies collected pursuant to a county transportation excise tax levied pursuant to section 42-6106 or 42-6107.

2. For the cost of conducting the studies or hiring a consultant pursuant to subsection A, paragraph 6, subdivision (c) and paragraph 7 of this section, from the Arizona highway user revenue fund. END_STATUTE

Sec. 11. Section 41-1279.04, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.04. Authority to examine records; violation; classification; attorney general supervision

A. The auditor general or the auditor general's authorized representatives, in the performance of performing their official duties, shall have access to employees and the authority to examine any and all books, accounts, reports, vouchers, correspondence files and other records, bank accounts, criminal history record information as defined in section 41-1701 and in accordance with section 41-1750, monies and other property of any state agency, board, commission, department, institution, program, advisory council or committee or political subdivision of this state, whether created by the constitution or otherwise, or such documents and property of a contractor relating to a contract with this state pursuant to section 35-214. Any such agency or political subdivision, having that has such records under the officer's or employee's control, shall allow access to and examination of the records on the request of the auditor general or the auditor general's authorized representative.

B. For the purpose of complying with section 41-1279.03, subsection A, paragraphs 4 and 9, the auditor general or the auditor general's authorized representative, in the performance of performing their official duties, may attend executive sessions of the governing body of any state agency, or school district or charter school in this state.

C. For the purpose of auditing the department of revenue, the auditor general and the auditor general's authorized representatives have access to state tax returns, except that a report of the auditor general shall not violate the confidentiality of state tax laws.

D. For the purpose of complying with subsection A of this section, all officers of any state agency, board, commission, department, institution, program, advisory council or committee or political subdivision of this state shall provide reasonable space for auditor general staff and make records available, in the form and at the time prescribed.

E. Any officer or person who knowingly fails or refuses to allow access and examination pursuant to this section or knowingly obstructs or misleads the auditor general in the execution of the auditor general's duties is guilty of a class 2 misdemeanor.

F. The attorney general shall supervise the prosecution of all offenders under this section. END_STATUTE

Sec. 12. Short title

This act may be cited as the "Charter School Transparency and Accountability Act".