OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 561 Bill Analysis
135th General Assembly
Click here for H.B. 561’s Fiscal Note
Version: As Introduced
Primary Sponsors: Reps. Brennan and Sims
Effective Date:
Holly Gilman, Attorney
SUMMARY
Conversion to nonprofit community school operators
Provides that, on or after July 1, 2026, a community school with a for profit operator no
longer qualifies as a public school.
Specifies that only a nonprofit organization or governing board of an educational service
center (ESC) may enter into or renew a contract to be the operator of a community
school after the bill’s effective date.
Requires a for profit entity to convert to a nonprofit organization in order to enter into
or renew a contract to operate community schools.
Permits a for profit individual or organization to continue to provide services under a
contract entered into prior to the bill’s effective date until July 1, 2026.
DETAILED ANALYSIS
Requirement for nonprofit operators
The bill provides that, on or after July 1, 2026, or the date on which the contract for
operation of the school is subject to renewal, a community school with a for profit operator no
longer qualifies as a public school.1 Accordingly, it operates as a pubic community school after
that date, if it has an operator at all, the school must contract with one that is a nonprofit
entity.
1 R.C. 3314.01(B)(2).
June 14, 2024
Office of Research and Drafting LSC Legislative Budget Office
Definition of operator
The bill revises the definition of an operator to limit all new operators to only nonprofit
entities. Specifically, under the bill, an “operator” is a nonprofit organization or governing board
of an educational service center (ESC) that either:
1. Manages the daily operations of a community school pursuant to a contract between
the operator or management company and the school’s governing authority; or
2. Provides programmatic oversight and support to a community school under a contract
with the school’s governing authority and that retains the right to terminate its
affiliation with the school if the school fails to meet the operator’s or management
company’s quality standards.
Under current law any “individual or organization” may act as an operator. This
provision is removed by the bill. The effect of the bill is to prohibit for profit entities from
entering into new, or renewing, contracts with community schools on and after the bill’s
effective date.2
For profit operators with contracts entered into or renewed before the bill’s effective
date may continue to operate as such until the expiration of the operator contract. 3 However,
when the contract becomes subject to renewal the operator must become a nonprofit entity.4
Conversion to a nonprofit operator
The bill provides a method for an operator, which is currently a for profit entity, to
continue its relationship with a community school while that school retains its status as a
community school. That is for the operator to become a nonprofit entity by July 1, 2026, or by
the date on which the contract for operation of the school is subject to renewal.
On or before January 1, 2025, such an entity must notify the governing authority of each
community school with which the operator has a contract regarding its decision to convert to a
nonprofit entity in compliance with the bill’s new definition of operator.5
Community school selection of ESC as operator
The bill also specifically permits the governing board of an ESC to act as an operator of a
community school.6
In the event that a for profit entity does not comply with the requirement to convert to
a nonprofit entity, the school’s governing authority must (1) identify an ESC to act as the new
2 R.C. 3314.02(A)(8).
3 R.C. 3314.0111.
4 R.C. 3314.01 and 3314.032.
5 R.C. 3314.0111 (first paragraph).
6 R.C. 3314.0111(A) and 3314.02(A)(8).
P a g e |2 H.B. 561
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
operator of the community school not later than July 1, 2025, and notify the school’s sponsor of
that decision and (2) provide notice to the parents of current and prospective students.
A governing authority that fails to do so must close by the end of the last school year
specified in the current operator contract.
Background
Community schools (often called ʺcharter schoolsʺ) are public schools that operate
independently from any school district under a contract with a sponsoring entity. A conversion
community school, created by converting an existing school, may be located in and sponsored
by any school district or educational service center in the state. On the other hand, a “start‐up”
community school may be located only in a “challenged school district.” A challenged school
district is any of the following: (1) a ʺBig‐Eightʺ district (Akron, Canton, Cincinnati, Cleveland,
Columbus, Dayton, Toledo, or Youngstown), (2) a poorly performing district as determined by
its performance index score, value-added progress dimension, or overall ratings on the state
report card, or (3) a district in the original community school pilot project area (Lucas County).
Many, but not all, community school governing authorities contract with private or
public entities to run the day-to-day operations of their schools. A school’s contract with the
“operator” is separate from the school’s contract with its sponsor.
The sponsor of a start‐up community school may be any of the following:
1. The school district in which the school is located;
2. A school district located in the same county as the district in which the school is located
has a major portion of its territory;
3. A joint vocational school district serving the same county as the district in which the
school is located has a major portion of its territory;
4. An educational service center;
5. The board of trustees of a state university (or designee) under specified conditions;
6. A federally tax‐exempt entity under specified conditions;
7. The Department of Education’s Office of Ohio School Sponsorship for a limited number
of community schools; or
8. The mayor of Columbus for new community schools in the Columbus City School District
under specified conditions. (However, it does not appear that those conditions have
been triggered and cannot be triggered now without further legislation.)
HISTORY
Action Date
Introduced 05-15-24
ANHB0561IN-135/ks
P a g e |3 H.B. 561
As Introduced
Statutes affected: As Introduced: 3314.01, 3314.02, 3314.032, 3314.05