charter schools; meeting; reporting; audits

SB1694 - 572R - I Ver

REFERENCE TITLE:
charter schools; meeting; reporting; audits

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1694

Introduced by

Senators
Diaz: Fernandez, Gonzales, Hatathlie, Kuby, Miranda, Ortiz, Sears

AN
ACT

amending sections 15-154.02, 15-181
and 15-183, Arizona Revised Statutes; amending title 15, chapter 1,
article 8, Arizona Revised Statutes, by adding section 15-183.02;
amending sections 15-184, 15-189.02 and 15-189.03, Arizona Revised
Statutes; amending title 15, chapter 1, article 8, Arizona Revised Statutes, by
adding section 15-189.08; amending sections 15-213, 15-914.02, 41-1279.03
and 41-1279.04, Arizona Revised Statutes; relating to charter schools.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 15-154.02, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-154.02.

Emergency response plans; school safety assessments; approved
providers; triennial safety assessments

A. Each school district and charter school that
receives monies pursuant to section 15-154 for an approved school safety
program shall do both of the following:

1. Develop an emergency response plan pursuant to
section 15-341, subsection A, paragraph 31 or section 15-183, subsection
E, paragraph
10

11
to satisfy the requirements prescribed in this paragraph.

2. Every five years, contract with a school safety
assessment provider from the list compiled pursuant to subsection B of this
section to conduct a school safety assessment, including an assessment of the
physical security of each school site and a review of the emergency response
plan for each school site.

B. The department of education shall compile a list
of approved school safety assessment providers and shall make the list
available to school districts and charter schools that participate in the
school safety program established by section 15-154.

C. Every three years, the department of education
shall select a random sample of school districts and charter schools that are
participating in the school safety program established by section 15-154
and shall conduct a safety assessment of the selected school districts and
charter schools. The department shall provide a copy of the safety
assessment results to the respective school district's governing board or
charter school's governing body and the administrators of each school site that
was assessed.
END_STATUTE

Sec. 2. Section 15-181, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-181.

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

START_STATUTE
15-183.

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

to establish
a charter
school pursuant to this article.�
Beginning January 1, 2027, 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
or
the state board of education
shall
may 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. 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.

(c) The applicant intends to have an affiliation
agreement
for the purpose of providing
to
provide
enrollment preferences.

(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

to obtain
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
and who

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

is
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.

(c) Notify the department of public safety 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 that is 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.

10.

11.
Ensure
that the charter school, in conjunction with local law enforcement agencies and
emergency response agencies,
develop

develops
an emergency response plan for each school in accordance with
minimum standards developed jointly by the department of education and the
division of emergency management within the department of emergency and
military affairs.� Any emergency response plan developed pursuant to this
paragraph must address how the school and emergency responders will communicate
with and provide assistance to students with disabilities.

12. 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.

(c) Meet the financial 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.

(c) Meet the financial 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.

(c) Meet the financial 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.

(c) Suspension, demotion or dismissal.

(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.

(c) Relocation of the program to a less favorable
site within the school or school district.

(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. Each charter representative, charter school
governing body member and officer, director, member and partner of a charter
holder, as allowed by the charter holder, may have:

1. Access to the charter school's students and
student records.

2. Unrestricted access to the charter school's
campuses.

3. Authority to make final decisions regarding
student learning in the charter school.

4. Authority to make final decisions regarding the
safety of the charter school's students and school campuses.

KK. 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.�

(
c
) Student
support services.

(
d
) Other
support services and operations.

(
e
) Special
education.

(
f
) Administration.

(
g
) Federal
projects.

(
h
) Facilities
expenses.

LL. 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.

MM. 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 KK of this section.

KK.

NN.
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.

1.

2.
"Charter
representative" means an individual who both:

(a) Has the authority to execute contracts on behalf
of the charter holder in accordance with the charter holder's articles of
incorporation, operating agreement or bylaws.

(b) Represents the charter holder before the state
board for charter schools in matters relating to accountability and compliance
with federal, state and local laws and with the terms and conditions of the
charter.

2.

3.
"Charter
school governing body member" means an individual who is a member of a
body organized to govern and manage a charter school.

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

3.

5.
"Officer,
director, member
or
and
partner of a
charter holder":

(a) Means an individual who has the authority to
manage the operations and functions of a charter school or to make decisions on
behalf of a charter holder.

(b) Includes:

(i) An individual who possesses an ownership
interest or voting rights, or both, in the charter school.

(ii) An individual who is identified in any of
sections 10-140, 10-801, 10-840, 10-3140, 10-3840,
29-301, 29-1001, 29-3102 and 29-4101.
END_STATUTE

Sec. 4. Title 15, chapter 1, article 8, Arizona
Revised Statutes, is amended by adding section 15-183.02, to read:

START_STATUTE
15-183.02.

Procurement policies; enforcement

A. On or before July 1, 2027, 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. 5. Section 15-184, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-184.

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.

(c) Members of the governing body of the school.

(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.

3. Are children of a member of the armed forces of
the United States who either is on active duty or was killed in the line of
duty.

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 may 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. 6. Section 15-189.02, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-189.02.

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

START_STATUTE
15-189.03.

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

to determine
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. 8.
Title 15,
chapter 1, article 8, Arizona Revised Statutes, is amended by adding section
15-189.0
8, to read:

START_STATUTE
15-189.08.

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 by 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 by collating data required
pursuant to this paragraph.

5. include Audit reports that are
numerically identical to what is provided in the 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. 9. Section 15-213, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-213.

Procurement practices of school districts; rules; 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
the
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

purchasing
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
that
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. 10. Section 15-914.02, Arizona Revised Statutes, is amended to read:

START_STATUTE
15-914.02.

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

START_STATUTE
41-1279.03.

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

START_STATUTE
41-1279.04.

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 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

representatives
.

B. The auditor general or the auditor general's
authorized representatives, in the performance of official duties, shall have
access to financial institutions' or financial enterprises' information,
accounts, books, records, statements, reports, communications, transactions or
any other information relating to 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. On
request of the auditor general or the auditor general's
authorized

representatives and in the form and at the time prescribed by the
auditor general, the financial institution or financial enterprise shall
provide all information requested by the auditor general or the auditor
general's authorized
representative

representatives
. An authorized representative of the
financial institution or financial enterprise shall certify all information
provided to the auditor general or auditor general's authorized representatives. Costs
or fees associated with producing the information requested by the auditor
general or auditor general's authorized representatives shall be paid by the
state agency, board, commission, department, institution, program, advisory council
or committee or political subdivision
of this state
. A
financial institution or financial enterprise is not liable to the state
agency, board, commission, department, institution, program, advisory council
or committee or political subdivision
of this state
for
providing to the auditor general or auditor general's authorized
representatives information requested pursuant to this subsection.

C. 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
representatives
,
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.

D. 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
may
not
violate the confidentiality of state tax laws.

E. 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.

F. Any officer or person who knowingly fails or
refuses to allow access and examination pursuant to this section or who
knowingly obstructs or misleads the auditor general in the execution of the
auditor general's

duties is guilty of a class 2
misdemeanor.

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

Sec. 13.
Short title

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