| (a) No applicant will be considered that has, within
the preceding ten years, had a charter under Texas law or similar
charter under the laws of another state surrendered under a settlement
agreement, revoked, denied renewal, or returned or that is considered
to be a corporate affiliate of, or substantially related to, an entity
that, within the preceding ten years, had a charter under Texas law
or similar charter under the laws of another state surrendered under
a settlement agreement, revoked, denied renewal, or returned. The
commissioner of education may not grant more than one charter for
an open-enrollment charter school to any charter holder.
(b) Notwithstanding any other provisions in this chapter,
the following provisions apply to open-enrollment charter applicants
and successful charter awardees authorized by the commissioner under
requests for applications adopted after November 1, 2012.
(1) Financial standards. An applicant for an open-enrollment
charter, a public senior college or university charter, or a public
junior college charter shall meet each of the following financial
standards to demonstrate the financial viability of the charter, as
determined by the commissioner or the commissioner's designee, prior
to being considered for award of a charter and must understand that
any failure to maintain ongoing compliance with these requirements,
if awarded a charter, will be considered a material violation of the
charter contract and may be grounds for revocation.
(A) Any existing entity applying for the charter must
be in good standing with the Internal Revenue Service (IRS), the Texas
Secretary of State, and the Texas Comptroller of Public Accounts.
An existing entity must also be in good standing with all regulatory
agencies in its home state.
(B) Each entity must provide evidence of financial
competency and sustainability by providing evidence of an appropriate
business plan that includes each of the following:
(i) a succinct long-term vision for the proposed school;
(ii) three to five core values or beliefs, with succinct
explanations, for the operation of the proposed school;
(iii) a brief analysis of the target location(s) for
the proposed school with a succinct explanation of the reasons for
choosing the location(s);
(iv) a brief analysis of the competition in the area(s)
for the same students and the methods that the proposed school will
use to recruit and retain students;
(v) a brief narrative of the growth plan for the first
five years of operation of the proposed school that matches all projections
included in the budget and considers the potential expansion of competition
in the area for the same student population;
(vi) a list of risk factors, with brief explanations,
that could jeopardize the viability of the proposed school;
(vii) a list of success factors, with brief explanations,
that the proposed school founders have analyzed and determined will
outweigh the risks;
(viii) an unqualified opinion as provided in the most
recent audited financial statements of the applicant if the entity
has been in existence at least a year;
(ix) a five-year budget projection of revenue and expenditures
for the proposed charter using the template that will be provided
in the request for applications (RFA);
(x) a narrative response, based on the revenue and
expenditures provided in the template that will be provided in the
RFA, detailing the ways in which the budget projections were derived,
including any assumptions used; and
(xi) support documentation for budget projections as
detailed in the budget template that will be provided with the RFA.
(C) Loans and lines of credit are liabilities that
must be repaid and will be considered as available funding. Loans
or lines of credit may be characterized as assets and as cash on hand.
The applicant must identify in the template provided in the RFA available
funding for start-up costs, as documented by current assets listed
in the balance sheet and/or pledges for donations that do not require
repayment, meeting or exceeding the following amounts:
(i) the total amount of funds available;
(ii) the amount per student proposed to be served in
the first year of operation; and
(iii) the number of days of operation funded by the
amount in this subparagraph, defined by the total annual budget divided
by the number of approved instructional days.
(D) To ensure financial viability, the entity must
commit to serving a minimum of 100 students at all times.
(E) The entity applying for the charter must have liabilities
that are less than 80% of its assets.
(F) The aggregate of projected budgeted expenses must
be less than the aggregate of projected total revenues by the end
of the first year of operation provided that:
(i) projected revenues are documented and use the amount
per student designated in the RFA when calculating Foundation School
Program (FSP) funding that will begin during the first year of operation,
or the applicant provides compelling evidence as to the reasons that
its FSP will be higher than the rate designated in the RFA; and
(ii) all reasonable start-up and first-year expenditures
are included in the budgets or an explanation for not needing to include
them is included in the budget narratives.
(G) No more than 27% of the budget may be allocated
for administrative costs for charters with an anticipated first-year
enrollment of 500 or fewer students, or no more than 16% of the budget
may be allocated for administrative costs for charters with an anticipated
first-year enrollment of more than 500 students. Administrative costs
are those costs identified as such in Texas Education Agency (TEA)
financial publications for charter schools.
(2) Governing standards. An applicant for an open-enrollment
charter, a public senior college or university charter, or a public
junior college charter shall meet each of the following governing
standards to demonstrate sound establishment and oversight of the
charter's educational mission, as determined by the commissioner or
the commissioner's designee, prior to being considered for award of
a charter and must understand that any failure to maintain ongoing
compliance with these requirements, if awarded a charter, will be
considered a material violation of the charter contract and may be
grounds for revocation, except as provided by Texas Education Code
(TEC), §12.1054(a)(2).
(A) To qualify as an eligible entity in accordance
with TEC, §12.101(a)(3), as an organization that is exempt under
26 United States Code (USC), §501(c)(3), the applicant must have
its own 501(c)(3) exemption in its own name, as evidenced by a 501(c)(3)
letter of determination issued by the IRS. Thus, an applicant cannot
attain status as an eligible entity that is exempt under 26 USC, §501(c)(3),
as a disregarded entity, a supporting organization, or a member of
a group exemption of a currently recognized 501(c)(3) tax-exempt organization.
A religious organization, sectarian school, or religious institution
that applies must have an established separate non-sectarian entity
that is exempt under 26 USC, §501(c)(3), to be considered an
eligible entity. Entities that have applied for 501(c)(3) status,
but have yet to receive the exemption from the IRS, must provide the
letter of determination of the 501(c)(3) status issued by the IRS
prior to consideration for interview. Failure to secure 501(c)(3)
status deems an entity ineligible.
(B) The articles of incorporation, the Certificate
of Filing, the Certificate of Formation, and the bylaws of the applicant
must vest the management of the corporate affairs in the board of
directors. The management of the corporate affairs shall not be vested
in any member or members nor shall the corporate charter or bylaws
confer on or reserve to any other entity the ability to overrule,
remove, replace, or name the members of the board of the charter holder
during the duration of the charter's existence. However, if the applicant
or its affiliate is a high performing entity, then it may vest management
in a member provided that the entity may change the members of the
governing body of the charter holder prior to the expiration of a
member's term only with commissioner's written approval. An academic
performance rating that is below acceptable in another state, as determined
by the commissioner, does not satisfy this section. Any other change
in the aforementioned governance documents pursuant to the management
of the corporate affairs of the nonprofit entity may only occur with
the approval of the commissioner in accordance with §100.1033(b)
of this title (relating to Charter Amendment) or in accordance with
any other power granted to the commissioner in state law or rule.
(C) If the sponsoring entity is a 501(c)(3) nonprofit
corporation, its bylaws must clearly state that the charter holder
and charter school will comply with the Texas Open Meetings Act and
will appropriately respond to Texas Public Information Act requests.
Cont'd... |
