CHARTER SCHOOL OVERSIGHT S.B. 946 (S-2) & 947 (S-3):
SUMMARY AS PASSED BY THE SENATE
Senate Bill 946 (Substitute S-2 as passed by the Senate)
Senate Bill 947 (Substitute S-3 as passed by the Senate)
Sponsor: Senator Darrin Camilleri (S.B. 946)
Senator Dayna Polehanki (S.B. 947)
Committee: Education
Date Completed: 12-30-24
CONTENT
Senate Bill 946 (S-2) would amend the Revised School Code to require an
authorizing body to perform specific oversight for each public school academy
(PSA), urban high school academy, or school of excellence that it authorized.
Senate Bill 947 (S-3) would amend the Revised School Code to do the following:
-- Require the board of directors of a PSA, urban high school academy, school of
excellence, or strict discipline academy to ensure that the terms of a lease or
purchase agreement for real property were equal to or below prevailing market
conditions, as determined by an appraisal.
-- Require a PSA, urban high school academy, school of excellence, or strict
discipline academy's authorizing body to review the terms of a lease or purchase
agreement and notify the Superintendent of Public Instruction or State Board of
Education if these requirements were not being followed.
Senate Bill 947 is tie-barred to Senate Bill 946.
Senate Bill 946 (S-2)
The Code allows an authorizing body to contract with an interested person or entity for the
creation of a PSA, school of excellence, strict discipline academy, or urban high school
academy. As these schools are created by charter contracts, they are referred to as charter
schools. (For more information, see BACKGROUND).
Generally, the board of a school district, the board of an intermediate school district, the
board of a community college, the board of a public university in the State, or two or more of
these bodies working jointly under an agreement may serve as an authorizing body for a PSA,
school of excellence, or strict discipline academy. An urban high school academy may only be
authorized by the board of a State public university.
Currently, if an authorizing body issues a contract for a PSA, urban high school academy, or
school of excellence, the authorizing body must fulfill certain requirements, such as ensuring
that the contract complies with applicable requirements, establishing the board of directors
of the charter school, and overseeing the charter school's operations, among other
responsibilities. The bill would further require an authorizing body to do the following:
-- Ensure that a representative of the authorizing body attended at least half the meetings
of the board of directors of a PSA, urban high school academy, or school of excellence it
authorized.
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-- At least twice a year, prepare a report detailing the authorizing body's efforts to provide
oversight of a PSA, urban high school academy, or school of excellence.
-- At least twice a year, present the report at a meeting of the board of directors of a PSA,
urban high school academy, or school of excellence each year.
-- Ensure that bylaws adopted by the board of directors of a PSA, urban high school academy,
or school of excellence included a requirement that any act of the board of directors be
approved by a majority of the members serving on the board.
-- Oversee all contracts entered by a PSA, urban high school academy, or school of
excellence that amounted to over $100,000 to ensure that the terms and conditions of
the contract were not in conflict with the contract issued by the authorizing body.
-- Ensure that the board of directors of a PSA, urban high school academy, or school of
excellence held meetings in at least 10 months of the calendar year.
Senate Bill 947 (S-3)
Under the Code, a PSA, urban high school academy, school of excellence, or strict discipline
academy may take action to carry out the purposes for which it was incorporated, such as by
leasing or purchasing property.
Beginning one year after the bill's effective date, if a PSA, urban high school academy, school
of excellence, or strict discipline academy leased or purchased real property, the bill would
require the board of directors of the charter school to approve the terms of the lease or
purchase agreement for real property and ensure that the terms of the lease or purchase
agreement for real property were equal to or below prevailing market conditions that existed
at the time of the lease or purchase transaction, as determined by an appraisal conducted by
a licensed independent real estate appraiser.
Additionally, the bill would prohibit the board of directors of a PSA, urban high school
academy, school of excellence, or strict discipline academy from entering into a lease or
purchase agreement for real property unless the agreement was reviewed by the charter
school's authorizing body. The authorizing body would have to notify the Superintendent of
Public Instruction and the State Board of Education if it had reason to suspect that the lease
or purchase agreement did not comply with the provisions above.
Current law grants PSAs, urban high school academies, schools of excellence, and strict
discipline academies the ability to enter into binding legal agreements with persons or entities
as necessary for the operation, management, financing, and maintenance of the charter
school. The bill would specify that, subject to Senate Bill 943 (S-2), a charter school only
would have this ability if the agreement complied with Sections 7 and 18 of the State School
Aid Act.
(Section 7 provides that the costs for school operating purposes include all expenditures
necessary to carry out the powers and the financial obligations of the district or intermediate
district under the Revised School Code.
Senate Bill 943 (S-2) would amend Section 18 to require a school district or intermediate
school district to make available on its public website financial statements provided by an
educational management organization, detailed accountings provided by the authorizing body
of a charter school concerning expenditures, and notices of noncompliance with applicable
education standards, guidelines, or rules. Section 18 also provides for the disclosure of other
information).
MCL 380.507 et al. (S.B. 946); 380.504a et al. (S.B. 947)
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PREVIOUS LEGISLATION
(This section does not provide a comprehensive account of previous legislative efforts on this subject matter.)
Senate Bill 946 is similar to Senate Bill 680 of the 2017-2018 Legislative Session and Senate
Bill 933 of the 2021-2022 Legislative Session. Senate Bill 947 is a reintroduction of Senate
Bill 681 of the 2017-2018 Legislative Session and Senate Bill 934 of the 2021-2022 Legislative
Session.
BACKGROUND
The Code requires the Superintendent of Public Instruction to approve a school of excellence
if the proposed school is modelled on a high-performing school or program. An authorizing
body may operate a school of excellence as a cyber school if the school s education
management organization demonstrates experience in delivering a quality education program
that improves pupil academic achievement, among other requirements. The Code allows for
the creation of up to 15 cyber schools of excellence. Additionally, a PSA that demonstrates
superior academic performance may be converted to a school of excellence. Strict discipline
academies are established to serve suspended, expelled, or incarcerated young people.
BRIEF RATIONALE
Public school academies, schools of excellence, urban high school academies, and strict
discipline academies are referred to as charter schools because they are created by charter
contracts approved by an authorizing body. While traditional public schools are run by
superintendents, many charter schools are operated by private for-profit companies called
educational management organizations; however, charter schools receive State
appropriations. Private companies are not subject to Freedom of Information Act requests
and other disclosure requirements, and some argue that this results in a lack of transparency
surrounding charter school finances that allows educational management organizations to
unduly profit from public funds, such as by charging charter schools excessive rents.
Accordingly, some have suggested that charter schools be prohibited from engaging in certain
real estate transactions and subjected to increased oversight.
Legislative Analyst: Abby Schneider
FISCAL IMPACT
Senate Bill 946 (S-2) would have no fiscal impact on the State and would have a negative
fiscal impact on local governmental entities that are charter school authorizers. Authorizers
would see increased costs to ensure that representatives could attend the required meetings
for each PSA it authorized. There also would be administrative costs to prepare and present
the reports required under the bill. If the authorizer needed to hire additional staff to comply
with the requirements, it would see increased costs. The amount of increased costs would be
proportional to the number of PSAs authorized by a given charter school authorizer.
Senate Bill 947 (S-3) would have no fiscal impact on the State and would have an
indeterminate fiscal impact on affected PSAs. While the provisions of the bill likely would have
some effect on the cost to lease or purchase real property for a given PSA, there is no way to
determine whether the provisions would increase the costs, decrease the costs, or have no
effect.
Fiscal Analyst: Ryan Bergan
SAS\S2324\s946sb
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
statement of legislative intent.
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Statutes affected:
Substitute (S-1): 380.507
Substitute (S-2): 380.507
Senate Introduced Bill: 380.507
As Passed by the Senate: 380.507