FILED SENATE
Apr 2, 2019
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 522
SESSION 2019 PRINCIPAL CLERK
S D
SENATE BILL DRS15251-MTf-98A
Short Title: Various Changes to Charter School Laws. (Public)
Sponsors: Senator Tillman (Primary Sponsor).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO MAKE VARIOUS CHANGES TO THE LAWS AFFECTING CHARTER
3 SCHOOLS.
4 The General Assembly of North Carolina enacts:
5
6 PART I. AUTHORIZE COUNTIES TO PROVIDE CAPITAL FUNDS TO CHARTER
7 SCHOOLS
8 SECTION 1.1. G.S. 115C-218.100(b) reads as rewritten:
9 "(b) Distribution of Assets. – Upon dissolution of a charter school, all net assets of the
10 charter school purchased with public funds shall be deemed the property of the local school
11 administrative unit in which the charter school is located.located, except capital-sourced assets.
12 For purposes of this subsection, capital-sourced assets include (i) capital funds provided to a
13 charter school by one or more counties pursuant to G.S. 115C-218.105(b1) and (ii) net assets
14 purchased or improved with such funds, up to the total amount of the funds provided.
15 Capital-sourced assets shall be deemed the property of the counties or counties providing the
16 funding and, if applicable, divided between the counties in proportion to the funds provided."
17 SECTION 1.2. G.S. 115C-218.105 is amended by adding the following new
18 subsections to read:
19 "(b1) Counties may provide funds to charter schools by direct appropriation as set forth in
20 G.S. 153A-458. These funds shall be used only for the following purposes:
21 (1) The acquisition of real property for school purposes, including, but not limited
22 to, school sites, playgrounds, and athletic fields.
23 (2) The acquisition, construction, reconstruction, enlargement, renovation, or
24 replacement of buildings and other structures, including, but not limited to,
25 buildings for classrooms and laboratories, physical and vocational educational
26 purposes, libraries, auditoriums, and gymnasiums.
27 (3) The acquisition or replacement of furniture and furnishings, instructional
28 apparatus, and similar items of furnishings and equipment.
29 (b2) If a charter school uses funds provided in subsection (b1) of this section to acquire or
30 improve property, the amount provided by the county must be evidenced by a promissory note
31 and secured by a deed of trust on the property acquired or improved by the funds. The county
32 may subordinate the deed of trust to other liens to facilitate the acquisition or improvement of
33 the property secured by the deed of trust. In the event that a charter school repays the county in
34 the amount of the capital funds provided, the county shall, for the property acquired or improved
35 by the funds, execute and file a deed of release or other documentation of satisfaction showing
36 the charter school repaid the county in the amount of the capital funds provided."
*DRS15251-MTf-98A*
 General Assembly Of North Carolina Session 2019
1 SECTION 1.3. G.S. 153A-149(c) reads as rewritten:
2 "(c) Each county may levy property taxes for one or more of the purposes listed in this
3 subsection up to a combined rate of one dollar and fifty cents ($1.50) on the one hundred dollars
4 ($100.00) appraised value of property subject to taxation. Authorized purposes subject to the rate
5 limitation are:
6 …
7 (8a) Charter Schools. – To provide capital funds for charter schools as authorized
8 by G.S. 153A-458.
9 …."
10 SECTION 1.4. Chapter 153A of the General Statutes is amended by a new section
11 to read:
12 "§ 153A-458. Charter schools.
13 Each county is authorized to appropriate funds and lease real property to schools chartered
14 under Article 14A of Chapter 115C of the General Statutes. Counties may provide funds only for
15 the purposes set forth in G.S. 115C-218.105(b1)."
16 SECTION 1.5. This Part applies beginning with the 2019-2020 fiscal year.
17
18 PART II. MAKE CHARTER SCHOOLS ELIGIBLE FOR GRANTS FROM THE
19 NEED-BASED PUBLIC SCHOOL CAPITAL FUND
20 SECTION 2.1. Section 5.3 of S.L. 2017-57, as amended by Section 1.1 of S.L.
21 2017-187, Section 1.2 of S.L. 2017-197, Section 1.1 of S.L. 2017-212, Section 5.3 of S.L. 2018-5,
22 and Section 3A.1 of S.L. 2018-80, read as rewritten:
23 "SECTION 5.3.(a) The appropriations made from the Education Lottery Fund for the
24 2017-2019 fiscal biennium are as follows:
25 …
26 "SECTION 5.3.(d) It is the intent of the General Assembly to increase the amount of North
27 Carolina Education Lottery net lottery revenue collected that is dedicated to assist local
28 governments in meeting local school capital needs from sixteen and nine-tenths percent (16.9%)
29 of net lottery revenue collected in the 2016-2017 fiscal year to forty percent (40%) of net lottery
30 revenue collected no later than the 2028-2029 fiscal year. To that end, there is created the
31 Needs-Based Public School Capital Fund as an interest-bearing, nonreverting special fund in the
32 Department of Public Instruction. The State Treasurer shall be the custodian of the Needs-Based
33 Public School Capital Fund and shall invest its assets in accordance with the provisions of
34 G.S. 147-69.2 and G.S. 147-69.3. The Needs-Based Public School Capital Fund shall be used to
35 award grants to counties designated as a development tier one area or a development tier two
36 area, as defined by G.S. 143B-437.08, to assist with their critical public school building capital
37 needs. Notwithstanding G.S. 115C-218.105(b), a qualified county may use a grant awarded under
38 this section for building capital needs for an approved charter school, including the acquisition
39 or improvement of a property by the charter school. For the purposes of this section, a qualified
40 county is a county designated as a development tier one area.
41 The Superintendent of Public Instruction shall award grants to counties in accordance with
42 the following priorities:
43 (1) Counties designated as development tier one areas.
44 (2) Counties with greater need and less ability to generate sales tax and property
45 tax revenue.
46 (3) Counties with a high debt-to-tax revenue ratio.
47 (4) The extent to which a project will address critical deficiencies in adequately
48 serving the current and future student population.
49 "SECTION 5.3.(e) Grant funds awarded under this section shall be subject to a matching
50 requirement from the recipient county as follows:
Page 2 DRS15251-MTf-98A
 General Assembly Of North Carolina Session 2019
1 (1) For a county designated as a development tier one area, the grant shall not
2 exceed three dollars ($3.00) in grant funds for every one dollar ($1.00)
3 provided by the county. Grant funds awarded to a county designated as a
4 development tier one area shall not exceed fifteen million dollars
5 ($15,000,000).
6 (2) For a county designated as a development tier two area, the grant shall not
7 exceed one dollar ($1.00) for every one dollar ($1.00) in grant funds provided
8 by the county. Grant funds awarded to a county designated as a tier two area
9 shall not exceed ten million dollars ($10,000,000).
10 (3) For a qualified county using grant funds for a charter school, the grant shall
11 not exceed one dollar ($1.00) for every one dollar ($1.00) in grant funds
12 provided by the county. Grant funds awarded to the county for this purpose
13 shall not exceed three million dollars ($3,000,000).
14 Grant Except as otherwise provided for a qualified county using grant funds for a charter
15 school, grant funds shall be used for the construction of new school buildings only. Grant funds
16 only and shall not be used for real property acquisition. Grant funds shall be disbursed in a series
17 of payments based on the progress of the project. To obtain a payment, the grantee shall submit
18 a request for payment along with documentation of the expenditures for which the payment is
19 requested and evidence that the matching requirement contained in subsection (b) of this section
20 has been met. Grant funds shall not be awarded to any county that has received an aggregate
21 amount exceeding eight million seven hundred fifty thousand dollars ($8,750,000) in funds from
22 the Public School Building Capital Fund from the 2012-2013 fiscal year to the 2016-2017 fiscal
23 year. No county may receive grant funds under this section more than once every five years. No
24 portion of grant funds may be used to acquire a Leadership in Energy and Environmental Design
25 (LEED) certification. For fiscal year 2018-2019, for the purposes of this section, a county shall
26 be considered to be designated as a development tier one area if (i) it was so designated by the
27 Department of Commerce in 2017 or 2018 and (ii) the county filed a grant application under this
28 section in 2017.
29 "SECTION 5.3.(e1) A county receiving grant funds pursuant to this section shall enter into
30 an agreement with the Department of Public Instruction detailing the use of grant funds. The
31 agreement shall contain at least all of the following:
32 (1) A requirement that the grantee seek planning assistance and plan review from
33 the School Planning Section of the Department of Public Instruction.
34 (2) A progress payment provision governing disbursements to the county for the
35 duration of the school construction project based upon the construction
36 progress and documentation satisfactory to the Department that the matching
37 requirement in subsection (e) of this section has been met.
38 (3) A provision requiring periodic reports to the Department of Public Instruction
39 on the use of disbursed grant funds and the progress of the school construction
40 project.
41 (4) A requirement that matching funds paid by the county pursuant to this section
42 must be derived from non-State and nonfederal funds.
43 (5) For a qualified county using grant funds for a charter school, the agreement
44 shall also contain provisions regarding all of the following:
45 a. A property being acquired or improved by grant funds shall be owned
46 by the nonprofit organization which holds the charter. The amount
47 provided by the county in grant funds shall be evidenced by a
48 promissory note and secured by a deed of trust on the property
49 acquired or improved by the funds. The county may subordinate the
50 deed of trust to other liens to facilitate the acquisition or improvement
51 of the property secured by the deed of trust. In the event that a charter
DRS15251-MTf-98A Page 3
 General Assembly Of North Carolina Session 2019
1 school repays the county in the amount of the grant funds provided,
2 the county shall, for the property acquired or improved by the funds,
3 execute and file a deed of release or other documentation of
4 satisfaction showing the charter school repaid the county in the amount
5 of the grant funds provided.
6 b. The property may not be conveyed to another entity or person without
7 the approval of the State Board of Education.
8 c. An acknowledgment that upon the dissolution, termination, or
9 nonrenewal of the charter school, all capital-sourced assets shall be
10 deemed the property of the county pursuant to G.S. 115C-218.100(b).
11 …."
12 SECTION 2.2. This Part is effective July 1, 2019, and applies to applications for
13 grant funds submitted on or after that date.
14
15 PART III. SUPERINTENDENT OF PUBLIC INSTRUCTION MAY APPROVE
16 CHARTER SCHOOL FACILITY BONDS
17 SECTION 3. Article 14A of Chapter 115C of the General Statutes is amended by
18 adding a new section to read:
19 "§ 115C-218.37. Public approval for private activity bonds.
20 (a) For purposes of this section, the following definitions shall apply:
21 (1) Charter school facility. – Real property, personal property, or both that is used
22 or intended for use in connection with the operation of a charter school.
23 (2) Applicable elected representative. – An elected official of a governmental unit
24 having jurisdiction over the area in which a charter school facility is located,
25 as defined in the Internal Revenue Code.
26 (b) The Superintendent of Public Instruction is hereby designated as an applicable elected
27 representative who may approve the issuance of one or more private activity bonds to finance or
28 refinance a charter school facility, after a public hearing following reasonable public notice, in
29 accordance with Section 147 of the Internal Revenue Code and applicable State and federal laws
30 and regulations. Procedures for the public hearing shall be determined by the Superintendent of
31 Public Instruction, and the public hearing shall be conducted by the Superintendent or his or her
32 designee."
33
34 PART IV. CLARIFY CHARTER SCHOOL RENEWAL STANDARDS
35 SECTION 4.1. G.S. 115C-218.6 reads as rewritten:
36 "§ 115C-218.6. Review and renewal of charters.
37 (a) The State Board of Education shall review the operations of each charter school at
38 least once prior to the expiration of its charter to ensure that the school is meeting the expected
39 academic, financial, and governance standards.
40 (b) The State Board of Education shall renew a charter upon the request of the chartering
41 entity for subsequent periods of 10 years, unless one of the following applies:
42 (1) The charter school has not provided financially sound audits for the
43 immediately preceding three years.
44 (2) The charter school's student academic outcomes for the immediately
45 preceding three years have not been comparable to the academic outcomes of
46 students in the local school administrative unit in which the charter school is
47 located.The percent of students who scored at or above proficient for all
48 end-of-grade and end-of-course tests taken in the previous school year, as
49 required by G.S. 115C-174.11(c)(1), is at least five percentage points lower in
50 the charter school than in the local school administrative unit where the charter
51 school is located.
Page 4 DRS15251-MTf-98A
 General Assembly Of North Carolina Session 2019
1 (3) The charter school is not, at the time of the request for renewal of the charter,
2 substantially in compliance with State law, federal law, the school's own
3 bylaws, or the provisions set forth in its charter granted by the State Board of
4 Education.
5 If one of the conditions set forth in subdivisions (1) through (3) of this subsection applies,
6 then the State Board may renew the charter for a period of less than 10 years or not renew the
7 charter."
8 SECTION 4.2. This Part applies to applications for the renewal of the charter of a
9 charter school submitted on or after the effective date of this act.
10
11 PART V. APPLICATION BACKGROUND CHECK STANDARDS
12 SECTION 5.(a) G.S. 115C-218.1 reads as rewritten:
13 "§ 115C-218.1. Eligible applicants; contents of applications; submission of applications for
14 approval.
15 (a) Any nonprofit corporation seeking to establish a charter school may apply to establish
16 a charter school. If the applicant seeks to convert a public school to a charter school, the
17 application shall include a statement signed by a majority of the teachers and instructional support
18 personnel currently employed at the school indicating that they favor the conversion and evidence
19 that a significant number of parents of children enrolled in the school favor conversion.
20 (b) The application shall contain at