[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10 Reported in House (RH)]

                                                 Union Calendar No. 312
113th CONGRESS
  2d Session
                                 H. R. 10

                          [Report No. 113-423]

To amend the charter school program under the Elementary and Secondary 
                         Education Act of 1965.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 1, 2014

Mr. Kline (for himself and Mr. George Miller of California) introduced 
 the following bill; which was referred to the Committee on Education 
                           and the Workforce

                             April 29, 2014

 Additional sponsors: Mr. Hinojosa, Mr. Hunter, Mr. Messer, Mr. Peters 
    of California, Mr. Polis, Mr. Roe of Tennessee, Mr. Rokita, Mr. 
Bucshon, Mr. DesJarlais, Mr. Walberg, Mr. Duffy, Mr. Petri, Mr. Womack, 
    Mr. Webster of Florida, Mrs. Brooks of Indiana, Mr. Byrne, Mr. 
Farenthold, Mr. Guthrie, Mr. Heck of Nevada, Mr. Hudson, and Mr. Wilson 
                           of South Carolina

                             April 29, 2014

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                                1, 2014]


_______________________________________________________________________

                                 A BILL


 
To amend the charter school program under the Elementary and Secondary 
                         Education Act of 1965.


 


    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Success and Opportunity through 
Quality Charter Schools Act''.

SEC. 2. REFERENCES.

    Except as otherwise specifically provided, whenever in this Act a 
section or other provision is amended or repealed, such amendment or 
repeal shall be considered to be made to that section or other 
provision of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.).

SEC. 3. SUBPART HEADING; PURPOSE.

    (a) Subpart Heading.--The heading for subpart 1 of part B of title 
V (20 U.S.C. 7221 et seq.) is amended to read as follows: ``Charter 
School Program''.
    (b) Purpose.--Section 5201 (20 U.S.C. 7221) is amended to read as 
follows:

``SEC. 5201. PURPOSE.

    ``It is the purpose of this subpart to--
            ``(1) improve the United States education system and 
        education opportunities for all Americans by supporting 
        innovation in public education in public school settings that 
        prepare students to compete and contribute to the global 
        economy;
            ``(2) provide financial assistance for the planning, 
        program design, and initial implementation of charter schools;
            ``(3) expand the number of high-quality charter schools 
        available to students across the Nation;
            ``(4) evaluate the impact of such schools on student 
        achievement, families, and communities, and share best 
        practices between charter schools and other public schools;
            ``(5) encourage States to provide support to charter 
        schools for facilities financing in an amount more nearly 
        commensurate to the amount the States have typically provided 
        for traditional public schools;
            ``(6) improve student services to increase opportunities 
        for students with disabilities, limited English proficient 
        students, and other traditionally underserved students to 
        attend charter schools and meet challenging State academic 
        achievement standards;
            ``(7) support efforts to strengthen the charter school 
        authorizing process to improve performance management, 
        including transparency, oversight, monitoring, and evaluation 
        of such schools; and
            ``(8) support quality accountability and transparency in 
        the operational performance of all authorized public chartering 
        agencies, which include State educational agencies, local 
        educational agencies, and other authorizing entities.''.

SEC. 4. PROGRAM AUTHORIZED.

    Section 5202 (20 U.S.C. 7221a) is amended to read as follows:

``SEC. 5202. PROGRAM AUTHORIZED.

    ``(a) In General.--This subpart authorizes the Secretary to carry 
out a charter school program that supports charter schools that serve 
elementary school and secondary school students by--
            ``(1) supporting the startup of charter schools, and the 
        replication and expansion of high-quality charter schools;
            ``(2) assisting charter schools in accessing credit to 
        acquire and renovate facilities for school use; and
            ``(3) carrying out national activities to support--
                    ``(A) charter school development;
                    ``(B) the dissemination of best practices of 
                charter schools for all schools;
                    ``(C) the evaluation of the impact of the program 
                on schools participating in the program; and
                    ``(D) stronger charter school authorizing.
    ``(b) Funding Allotment.--From the amount made available under 
section 5211 for a fiscal year, the Secretary shall--
            ``(1) reserve 12.5 percent to support charter school 
        facilities assistance under section 5204;
            ``(2) reserve not more than 10 percent to carry out 
        national activities under section 5205; and
            ``(3) use the remaining amount after the Secretary reserves 
        funds under paragraphs (1) and (2) to carry out section 5203.
    ``(c) Prior Grants and Subgrants.--The recipient of a grant or 
subgrant under this subpart or subpart 2, as such subpart was in effect 
on the day before the date of enactment of the Success and Opportunity 
through Quality Charter Schools Act, shall continue to receive funds in 
accordance with the terms and conditions of such grant or subgrant.''.

SEC. 5. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

    Section 5203 (20 U.S.C. 7221b) is amended to read as follows:

``SEC. 5203. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

    ``(a) In General.--From the amount reserved under section 
5202(b)(3), the Secretary shall award grants to State entities having 
applications approved pursuant to subsection (f) to enable such 
entities to--
            ``(1) award subgrants to eligible applicants for opening 
        and preparing to operate--
                    ``(A) new charter schools;
                    ``(B) replicated, high-quality charter school 
                models; or
                    ``(C) expanded, high-quality charter schools; and
            ``(2) provide technical assistance to eligible applicants 
        and authorized public chartering agencies in carrying out the 
        activities described in paragraph (1) and work with authorized 
        public chartering agencies in the State to improve authorizing 
        quality.
    ``(b) State Uses of Funds.--
            ``(1) In general.--A State entity receiving a grant under 
        this section shall--
                    ``(A) use not less than 90 percent of the grant 
                funds to award subgrants to eligible applicants, in 
                accordance with the quality charter school program 
                described in the State entity's application approved 
                pursuant to subsection (f), for the purposes described 
                in subparagraphs (A) through (C) of subsection (a)(1);
                    ``(B) reserve not less than 7 percent of such funds 
                to carry out the activities described in subsection 
                (a)(2); and
                    ``(C) reserve not more than 3 percent of such funds 
                for administrative costs which may include technical 
                assistance.
            ``(2) Contracts and grants.--A State entity may use a grant 
        received under this section to carry out the activities 
        described in subparagraphs (A) and (B) of paragraph (1) 
        directly or through grants, contracts, or cooperative 
        agreements.
            ``(3) Rule of construction.--Nothing in this Act shall 
        prohibit the Secretary from awarding grants to States that use 
        a weighted lottery to give slightly better chances for 
        admission to all, or a subset of, educationally disadvantaged 
        students if--
                    ``(A) the use of weighted lotteries in favor of 
                such students is not prohibited by State law, and such 
                State law is consistent with laws described in section 
                5210(1)(G); and
                    ``(B) such weighted lotteries are not used for the 
                purpose of creating schools exclusively to serve a 
                particular subset of students.
    ``(c) Program Periods; Peer Review; Grant Number and Amount; 
Diversity of Projects; Waivers.--
            ``(1) Program periods.--
                    ``(A) Grants.--A grant awarded by the Secretary to 
                a State entity under this section shall be for a period 
                of not more than 5 years.
                    ``(B) Subgrants.--A subgrant awarded by a State 
                entity under this section shall be for a period of not 
                more than 5 years, of which an eligible applicant may 
                use not more than 18 months for planning and program 
                design.
            ``(2) Peer review.--The Secretary, and each State entity 
        receiving a grant under this section, shall use a peer review 
        process to review applications for assistance under this 
        section.
            ``(3) Grant awards.--The Secretary shall--
                    ``(A) for each fiscal year for which funds are 
                appropriated under section 5211--
                            ``(i) award not less than 3 grants under 
                        this section;
                            ``(ii) wholly fund each grant awarded under 
                        this section, without making continuation 
                        awards; and
                            ``(iii) fully obligate the funds 
                        appropriated for the purpose of awarding grants 
                        under this section in the fiscal year for which 
                        such grants are awarded; and
                    ``(B) midway through the grant period of each grant 
                awarded under this section to a State entity, review 
                the grant to determine whether the State entity will 
                meet the agreed upon uses of funds in the State 
                entity's application, and if not, reallot the grant 
                funds that will not be used for such agreed upon uses 
                of funds to other State entities during the succeeding 
                grant competition under this section.
            ``(4) Diversity of projects.--Each State entity receiving a 
        grant under this section shall award subgrants under this 
        section in a manner that, to the extent possible, ensures that 
        such subgrants--
                    ``(A) are distributed throughout different areas, 
                including urban, suburban, and rural areas; and
                    ``(B) will assist charter schools representing a 
                variety of educational approaches.
            ``(5) Waivers.--The Secretary may waive any statutory or 
        regulatory requirement over which the Secretary exercises 
        administrative authority except any such requirement relating 
        to the elements of a charter school described in section 
        5210(1), if--
                    ``(A) the waiver is requested in an approved 
                application under this section; and
                    ``(B) the Secretary determines that granting such a 
                waiver will promote the purpose of this subpart.
    ``(d) Limitations.--
            ``(1) Grants.--A State entity may not receive more than 1 
        grant under this section for a 5-year period.
            ``(2) Subgrants.--An eligible applicant may not receive 
        more than 1 subgrant under this section per individual charter 
        school for a 5-year period, unless the eligible applicant 
        demonstrates to the State entity not less than 3 years of 
        improved educational results in the areas described in 
        subparagraphs (A) and (D) of section 5210(8) for students 
        enrolled in such charter school.
    ``(e) Applications.--A State entity desiring to receive a grant 
under this section shall submit an application to the Secretary at such 
time and in such manner as the Secretary may require. The application 
shall include the following:
            ``(1) Description of program.--A description of the State 
        entity's objectives under this section and how the objectives 
        of the program will be carried out, including a description--
                    ``(A) of how the State entity--
                            ``(i) will support the opening of new 
                        charter schools, replicated, high-quality 
                        charter school models, or expanded, high-
                        quality charter schools, and a description of 
                        the proposed number of each type of charter 
                        school or model, if applicable, to be opened 
                        under the State entity's program;
                            ``(ii) will inform eligible charter 
                        schools, developers, and authorized public 
                        chartering agencies of the availability of 
                        funds under the program;
                            ``(iii) will work with eligible applicants 
                        to ensure that the eligible applicants access 
                        all Federal funds that they are eligible to 
                        receive, and help the charter schools supported 
                        by the applicants and the students attending 
                        the charter schools--
                                    ``(I) participate in the Federal 
                                programs in which the schools and 
                                students are eligible to participate;
                                    ``(II) receive the commensurate 
                                share of Federal funds the schools and 
                                students are eligible to receive under 
                                such programs; and
                                    ``(III) meet the needs of students 
                                served under such programs, including 
                                student with disabilities and English 
                                learners;
                            ``(iv) will have clear plans and procedures 
                        to assist students enrolled in a charter school 
                        that closes or loses its charter to attend 
                        other high-quality schools;
                            ``(v) in the case in which the State entity 
                        is not a State educational agency--
                                    ``(I) will work with the State 
                                educational agency and the charter 
                                schools in the State to maximize 
                                charter school participation in Federal 
                                and State programs for charter schools; 
                                and
                                    ``(II) will work with the State 
                                educational agency to adequately 
                                operate the State entity's program 
                                under this section, where applicable;
                            ``(vi) will ensure each eligible applicant 
                        that receives a subgrant under the State 
                        entity's program to open and prepare to operate 
                        a new charter school, a replicated, high-
                        quality charter school model, or an expanded, 
                        high-quality charter school--
                                    ``(I) will ensure such school or 
                                model meets the requirements under 
                                section 5210(1); and
                                    ``(II) is prepared to continue to 
                                operate such school or model, in a 
                                manner consistent with the eligible 
                                applicant's application, after the 
                                subgrant funds have expired;
                            ``(vii) will support charter schools in 
                        local educational agencies with large numbers 
                        of schools identified by the State for 
                        improvement;
                            ``(viii) will work with charter schools to 
                        promote inclusion of all students and support 
                        all students once they are enrolled to promote 
                        retention;
                            ``(ix) will work with charter schools on 
                        recruitment practices, including efforts to 
                        engage groups that may otherwise have limited 
                        opportunities to participate in charter 
                        schools, and to ensure such schools do not have 
                        in effect policies or procedures that may 
                        create barriers to enrollment of students, 
                        including educationally disadvantaged students, 
                        and are in compliance with all Federal and 
                        State laws on enrollment practices;
                            ``(x) will share best and promising 
                        practices between charter schools and other 
                        public schools, including, where appropriate, 
                        instruction and professional development in 
                        core academic subjects, and science, 
                        technology, engineering, and math education, 
                        including computer science;
                            ``(xi) will ensure the charter schools 
                        receiving funds under the State entity's 
                        program meet the educational needs of their 
                        students, including students with disabilities 
                        and English learners;
                            ``(xii) will support efforts to increase 
                        quality initiatives, including meeting the 
                        quality authorizing elements described in 
                        paragraph (2)(E);
                            ``(xiii) in the case of a State entity not 
                        described in clause (xiv), will provide 
                        oversight of authorizing activity, including 
                        how the State will approve, actively monitor, 
                        and re-approve or revoke the authority of an 
                        authorized public chartering agency based on 
                        the performance of the charter schools 
                        authorized by such agency in the areas of 
                        student achievement, student safety, financial 
                        management, and compliance with all applicable 
                        statutes and regulations; and
                            ``(xiv) in the case of a State entity 
                        defined in subsection (i)(4), will work with 
                        the State to provide assistance to and 
                        oversight of authorized public chartering 
                        agencies for authorizing activity described in 
                        clause (xiii);
                    ``(B) of the extent to which the State entity--
                            ``(i) is able to meet and carry out the 
                        priorities listed in subsection (f)(2); and
                            ``(ii) is working to develop or strengthen 
                        a cohesive statewide system to support the 
                        opening of new charter schools, replicated, 
                        high-quality charter school models, or 
                        expanded, high-quality charter schools;
                    ``(C) of how the State entity will carry out the 
                subgrant competition, including--
                            ``(i) a description of the application each 
                        eligible applicant desiring to receive a 
                        subgrant will submit, including--
                                    ``(I) a description of the roles 
                                and responsibilities of eligible 
                                applicants, partner organizations, and 
                                management organizations, including the 
                                administrative and contractual roles 
                                and responsibilities;
                                    ``(II) a description of the quality 
                                controls agreed to between the eligible 
                                applicant and the authorized public 
                                chartering agency involved, such as a 
                                contract or performance agreement, how 
                                a school's performance in the State's 
                                academic accountability system will be 
                                a primary factor for renewal or 
                                revocation of the school's charter, and 
                                how the State entity and the authorized 
                                public chartering agency involved will 
                                reserve the right to revoke or not 
                                renew a school's charter based on 
                                financial, structural, or operational 
                                factors involving the management of the 
                                school;
                                    ``(III) a description of how the 
                                eligible applicant will solicit and 
                                consider input from parents and other 
                                members of the community on the 
                                implementation and operation of each 
                                charter school receiving funds under 
                                the State entity's program; and
                                    ``(IV) a description of the planned 
                                activities and expenditures for the 
                                subgrant funds for purposes of opening 
                                and preparing to operate a new charter 
                                school, a replicated, high-quality 
                                charter school model, or an expanded, 
                                high-quality charter school, and how 
                                the school or model will maintain 
                                financial sustainability after the end 
                                of the subgrant period; and
                            ``(ii) a description of how the State 
                        entity will review applications;
                    ``(D) in the case of an entity that partners with 
                an outside organization to carry out the State entity's 
                quality charter school program, in whole or in part, of 
                the roles and responsibilities of this partner;
                    ``(E) of how the State entity will help the charter 
                schools receiving funds under the State entity's 
                program consider the transportation needs of the 
                schools' students; and
                    ``(F) of how the State entity will support diverse 
                charter school models, including models that serve 
                rural communities.
            ``(2) Assurances.--Assurances, including a description of 
        how the assurances will be met, that--
                    ``(A) each charter school receiving funds under the 
                State entity's program will have a high degree of 
                autonomy over budget and operations;
                    ``(B) the State entity will support charter schools 
                in meeting the educational needs of their students as 
                described in paragraph (1)(A)(x);
                    ``(C) the State entity will ensure that the 
                authorized public chartering agency of any charter 
                school that receives funds under the State entity's 
                program--
                            ``(i) adequately monitors each charter 
                        school in recruiting, enrolling, and meeting 
                        the needs of all students, including students 
                        with disabilities and English learners; and
                            ``(ii) ensures that each charter school 
                        solicits and considers input from parents and 
                        other members of the community on the 
                        implementation and operation of the school;
                    ``(D) the State entity will provide adequate 
                technical assistance to eligible applicants to--
                            ``(i) meet the objectives described in 
                        clauses (vii) and (viii) of paragraph (1)(A) 
                        and paragraph (2)(B); and
                            ``(ii) recruit, enroll, and retain 
                        traditionally underserved students, including 
                        students with disabilities and English 
                        learners, at rates similar to traditional 
                        public schools;
                    ``(E) the State entity will promote quality 
                authorizing, such as through providing technical 
                assistance and supporting all authorized public 
                chartering agencies in the State to improve the 
                oversight of their charter schools, including by--
                            ``(i) assessing annual performance data of 
                        the schools, including, as appropriate, 
                        graduation rates and student academic growth;
                            ``(ii) reviewing the schools' independent, 
                        annual audits of financial statements conducted 
                        in accordance with generally accepted 
                        accounting principles, and ensuring any such 
                        audits are publically reported; and
                            ``(iii) holding charter schools accountable 
                        to the academic, financial, and operational 
                        quality controls agreed to between the charter 
                        school and the authorized public chartering 
                        agency involved, such as through renewal, non-
                        renewal, or revocation of the school's charter;
                    ``(F) the State entity will work to ensure that 
                charter schools are included with the traditional 
                public schools in decision-making about the public 
                school system in the State; and
                    ``(G) the State entity will ensure that each 
                charter school in the State make publicly available, 
                consistent with the dissemination requirements of the 
                annual State report card, information to help parents 
                make informed decisions about the education options 
                available to their children, including information on 
                the educational program, student support services, and 
                annual performance and enrollment data for the groups 
                of students described in section 1111(b)(2)(C)(v)(II).
            ``(3) Requests for waivers.--A request and justification 
        for waivers of any Federal statutory or regulatory provisions 
        that the State entity believes are necessary for the successful 
        operation of the charter schools that will receive funds under 
        the State entity's program under this section, and a 
        description of any State or local rules, generally applicable 
        to public schools, that will be waived, or otherwise not apply 
        to such schools or, in the case of a State entity defined in 
        subsection (i)(4), a description of how the State entity will 
        work with the State to request necessary waivers where 
        applicable.
    ``(f) Selection Criteria; Priority.--
            ``(1) Selection criteria.--The Secretary shall award grants 
        to State entities under this section on the basis of the 
        quality of the applications submitted under subsection (e), 
        after taking into consideration--
                    ``(A) the degree of flexibility afforded by the 
                State's public charter school law and how the State 
                entity will work to maximize the flexibility provided 
                to charter schools under the law;
                    ``(B) the ambitiousness of the State entity's 
                objectives for the quality charter school program 
                carried out under this section;
                    ``(C) the quality of the strategy for assessing 
                achievement of those objectives;
                    ``(D) the likelihood that the eligible applicants 
                receiving subgrants under the program will meet those 
                objectives and improve educational results for 
                students;
                    ``(E) the State entity's plan to--
                            ``(i) adequately monitor the eligible 
                        applicants receiving subgrants under the State 
                        entity's program;
                            ``(ii) work with the authorized public 
                        chartering agencies involved to avoid 
                        duplication of work for the charter schools and 
                        authorized public chartering agencies; and
                            ``(iii) provide adequate technical 
                        assistance and support for--
                                    ``(I) the charter schools receiving 
                                funds under the State entity's program; 
                                and
                                    ``(II) quality authorizing efforts 
                                in the State; and
                    ``(F) the State entity's plan to solicit and 
                consider input from parents and other members of the 
                community on the implementation and operation of the 
                charter schools in the State.
            ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to State entities to the extent 
        that they meet the following criteria:
                    ``(A) In the case of a State entity located in a 
                State that allows an entity other than a local 
                educational agency to be an authorized public 
                chartering agency, the State has a quality authorized 
                public chartering agency that is an entity other than a 
                local educational agency.
                    ``(B) The State entity is located in a State that 
                does not impose any limitation on the number or 
                percentage of charter schools that may exist or the 
                number or percentage of students that may attend 
                charter schools in the State.
                    ``(C) The State entity is located in a State that 
                ensures equitable financing, as compared to traditional 
                public schools, for charter schools and students in a 
                prompt manner.
                    ``(D) The State entity is located in a State that 
                uses charter schools and best practices from charter 
                schools to help improve struggling schools and local 
                educational agencies.
                    ``(E) The State entity partners with an 
                organization that has a demonstrated record of success 
                in developing management organizations to support the 
                development of charter schools in the State.
                    ``(F) The State entity supports charter schools 
                that support at-risk students through activities such 
                as dropout prevention or dropout recovery.
                    ``(G) The State entity authorizes all charter 
                schools in the State to serve as school food 
                authorities.
                    ``(H) The State entity has taken steps to ensure 
                that all authorizing public chartering agencies 
                implement best practices for charter school 
                authorizing.
    ``(g) Local Uses of Funds.--An eligible applicant receiving a 
subgrant under this section shall use such funds to carry out 
activities related to opening and preparing to operate a new charter 
school, a replicated, high-quality charter school model, or an 
expanded, high-quality charter school, such as--
            ``(1) preparing teachers and school leaders, including 
        through professional development;
            ``(2) acquiring equipment, educational materials, and 
        supplies; and
            ``(3) necessary renovations and minor facilities repairs 
        (excluding construction).
    ``(h) Reporting Requirements.--Each State entity receiving a grant 
under this section shall submit to the Secretary, at the end of the 
third year of the 5-year grant period and at the end of such grant 
period, a report on--
            ``(1) the number of students served by each subgrant 
        awarded under this section and, if applicable, how many new 
        students were served during each year of the subgrant period;
            ``(2) the progress the State entity made toward meeting the 
        priorities described in subsection (f)(2), as applicable;
            ``(3) how the State entity met the objectives of the 
        quality charter school program described in the State entity's 
        application under subsection (e);
            ``(4) how the State entity complied with, and ensured that 
        eligible applicants complied with, the assurances described in 
        the State entity's application;
            ``(5) how the State entity worked with authorized public 
        chartering agencies, including how the agencies worked with the 
        management company or leadership of the schools that received 
        subgrants under this section; and
            ``(6) the number of subgrants awarded under this section to 
        carry out each of the following:
                    ``(A) The opening of new charter schools.
                    ``(B) The opening of replicated, high-quality 
                charter school models.
                    ``(C) The opening of expanded, high-quality charter 
                schools.
    ``(i) State Entity Defined.--For purposes of this section, the term 
`State entity' means--
            ``(1) a State educational agency;
            ``(2) a State charter school board;
            ``(3) a Governor of a State; or
            ``(4) a charter school support organization.''.

SEC. 6. FACILITIES FINANCING ASSISTANCE.

    Section 5204 (20 U.S.C. 7221c) is amended to read as follows:

``SEC. 5204. FACILITIES FINANCING ASSISTANCE.

    ``(a) Grants to Eligible Entities.--
            ``(1) In general.--From the amount reserved under section 
        5202(b)(1), the Secretary shall not use less than 50 percent to 
        award grants to eligible entities that have the highest-quality 
        applications approved under subsection (d), after considering 
        the diversity of such applications, to demonstrate innovative 
        methods of assisting charter schools to address the cost of 
        acquiring, constructing, and renovating facilities by enhancing 
        the availability of loans or bond financing.
            ``(2) Eligible entity defined.--For purposes of this 
        section, the term `eligible entity' means--
                    ``(A) a public entity, such as a State or local 
                governmental entity;
                    ``(B) a private nonprofit entity; or
                    ``(C) a consortium of entities described in 
                subparagraphs (A) and (B).
    ``(b) Grantee Selection.--The Secretary shall evaluate each 
application submitted under subsection (d), and shall determine whether 
the application is sufficient to merit approval.
    ``(c) Grant Characteristics.--Grants under subsection (a) shall be 
of a sufficient size, scope, and quality so as to ensure an effective 
demonstration of an innovative means of enhancing credit for the 
financing of charter school acquisition, construction, or renovation.
    ``(d) Applications.--
            ``(1) In general.--To receive a grant under subsection (a), 
        an eligible entity shall submit to the Secretary an application 
        in such form as the Secretary may reasonably require.
            ``(2) Contents.--An application submitted under paragraph 
        (1) shall contain--
                    ``(A) a statement identifying the activities 
                proposed to be undertaken with funds received under 
                subsection (a), including how the eligible entity will 
                determine which charter schools will receive 
                assistance, and how much and what types of assistance 
                charter schools will receive;
                    ``(B) a description of the involvement of charter 
                schools in the application's development and the design 
                of the proposed activities;
                    ``(C) a description of the eligible entity's 
                expertise in capital market financing;
                    ``(D) a description of how the proposed activities 
                will leverage the maximum amount of private-sector 
                financing capital relative to the amount of public 
                funding used and otherwise enhance credit available to 
                charter schools, including how the eligible entity will 
                offer a combination of rates and terms more favorable 
                than the rates and terms that a charter school could 
                receive without assistance from the eligible entity 
                under this section;
                    ``(E) a description of how the eligible entity 
                possesses sufficient expertise in education to evaluate 
                the likelihood of success of a charter school program 
                for which facilities financing is sought; and
                    ``(F) in the case of an application submitted by a 
                State governmental entity, a description of the actions 
                that the entity has taken, or will take, to ensure that 
                charter schools within the State receive the funding 
                the charter schools need to have adequate facilities.
    ``(e) Charter School Objectives.--An eligible entity receiving a 
grant under this section shall use the funds deposited in the reserve 
account established under subsection (f) to assist one or more charter 
schools to access private sector capital to accomplish one or more of 
the following objectives:
            ``(1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held by a 
        third party for the benefit of a charter school) in improved or 
        unimproved real property that is necessary to commence or 
        continue the operation of a charter school.
            ``(2) The construction of new facilities, or the 
        renovation, repair, or alteration of existing facilities, 
        necessary to commence or continue the operation of a charter 
        school.
            ``(3) The predevelopment costs required to assess sites for 
        purposes of paragraph (1) or (2) and which are necessary to 
        commence or continue the operation of a charter school.
    ``(f) Reserve Account.--
            ``(1) Use of funds.--To assist charter schools to 
        accomplish the objectives described in subsection (e), an 
        eligible entity receiving a grant under subsection (a) shall, 
        in accordance with State and local law, directly or indirectly, 
        alone or in collaboration with others, deposit the funds 
        received under subsection (a) (other than funds used for 
        administrative costs in accordance with subsection (g)) in a 
        reserve account established and maintained by the eligible 
        entity for this purpose. Amounts deposited in such account 
        shall be used by the eligible entity for one or more of the 
        following purposes:
                    ``(A) Guaranteeing, insuring, and reinsuring bonds, 
                notes, evidences of debt, loans, and interests therein, 
                the proceeds of which are used for an objective 
                described in subsection (e).
                    ``(B) Guaranteeing and insuring leases of personal 
                and real property for an objective described in 
                subsection (e).
                    ``(C) Facilitating financing by identifying 
                potential lending sources, encouraging private lending, 
                and other similar activities that directly promote 
                lending to, or for the benefit of, charter schools.
                    ``(D) Facilitating the issuance of bonds by charter 
                schools, or by other public entities for the benefit of 
                charter schools, by providing technical, 
                administrative, and other appropriate assistance 
                (including the recruitment of bond counsel, 
                underwriters, and potential investors and the 
                consolidation of multiple charter school projects 
                within a single bond issue).
            ``(2) Investment.--Funds received under this section and 
        deposited in the reserve account established under paragraph 
        (1) shall be invested in obligations issued or guaranteed by 
        the United States or a State, or in other similarly low-risk 
        securities.
            ``(3) Reinvestment of earnings.--Any earnings on funds 
        received under subsection (a) shall be deposited in the reserve 
        account established under paragraph (1) and used in accordance 
        with such paragraph.
    ``(g) Limitation on Administrative Costs.--An eligible entity may 
use not more than 2.5 percent of the funds received under subsection 
(a) for the administrative costs of carrying out its responsibilities 
under this section (excluding subsection (k)).
    ``(h) Audits and Reports.--
            ``(1) Financial record maintenance and audit.--The 
        financial records of each eligible entity receiving a grant 
        under subsection (a) shall be maintained in accordance with 
        generally accepted accounting principles and shall be subject 
        to an annual audit by an independent public accountant.
            ``(2) Reports.--
                    ``(A) Grantee annual reports.--Each eligible entity 
                receiving a grant under subsection (a) annually shall 
                submit to the Secretary a report of its operations and 
                activities under this section.
                    ``(B) Contents.--Each annual report submitted under 
                subparagraph (A) shall include--
                            ``(i) a copy of the most recent financial 
                        statements, and any accompanying opinion on 
                        such statements, prepared by the independent 
                        public accountant reviewing the financial 
                        records of the eligible entity;
                            ``(ii) a copy of any report made on an 
                        audit of the financial records of the eligible 
                        entity that was conducted under paragraph (1) 
                        during the reporting period;
                            ``(iii) an evaluation by the eligible 
                        entity of the effectiveness of its use of the 
                        Federal funds provided under subsection (a) in 
                        leveraging private funds;
                            ``(iv) a listing and description of the 
                        charter schools served during the reporting 
                        period, including the amount of funds used by 
                        each school, the type of project facilitated by 
                        the grant, and the type of assistance provided 
                        to the charter schools;
                            ``(v) a description of the activities 
                        carried out by the eligible entity to assist 
                        charter schools in meeting the objectives set 
                        forth in subsection (e); and
                            ``(vi) a description of the characteristics 
                        of lenders and other financial institutions 
                        participating in the activities undertaken by 
                        the eligible entity under this section 
                        (excluding subsection (k)) during the reporting 
                        period.
                    ``(C) Secretarial report.--The Secretary shall 
                review the reports submitted under subparagraph (A) and 
                shall provide a comprehensive annual report to Congress 
                on the activities conducted under this section 
                (excluding subsection (k)).
    ``(i) No Full Faith and Credit for Grantee Obligation.--No 
financial obligation of an eligible entity entered into pursuant to 
this section (such as an obligation under a guarantee, bond, note, 
evidence of debt, or loan) shall be an obligation of, or guaranteed in 
any respect by, the United States. The full faith and credit of the 
United States is not pledged to the payment of funds which may be 
required to be paid under any obligation made by an eligible entity 
pursuant to any provision of this section.
    ``(j) Recovery of Funds.--
            ``(1) In general.--The Secretary, in accordance with 
        chapter 37 of title 31, United States Code, shall collect--
                    ``(A) all of the funds in a reserve account 
                established by an eligible entity under subsection 
                (f)(1) if the Secretary determines, not earlier than 2 
                years after the date on which the eligible entity first 
                received funds under this section (excluding subsection 
                (k)), that the eligible entity has failed to make 
                substantial progress in carrying out the purposes 
                described in subsection (f)(1); or
                    ``(B) all or a portion of the funds in a reserve 
                account established by an eligible entity under 
                subsection (f)(1) if the Secretary determines that the 
                eligible entity has permanently ceased to use all or a 
                portion of the funds in such account to accomplish any 
                purpose described in subsection (f)(1).
            ``(2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to collect 
        from any eligible entity any funds that are being properly used 
        to achieve one or more of the purposes described in subsection 
        (f)(1).
            ``(3)  Procedures.--The provisions of sections 451, 452, 
        and 458 of the General Education Provisions Act 20 U.S.C. 124, 
        1234a, 1234g shall apply to the recovery of funds under 
        paragraph (1).
            ``(4) Construction.--This subsection shall not be construed 
        to impair or affect the authority of the Secretary to recover 
        funds under part D of the General Education Provisions Act (20 
        U.S.C. 1234 et seq.).
    ``(k) Per-pupil Facilities Aid Program.--
            ``(1) Definition of per-pupil facilities aid program.--In 
        this subsection, the term `per-pupil facilities aid program' 
        means a program in which a State makes payments, on a per-pupil 
        basis, to charter schools to provide the schools with 
        financing--
                    ``(A) that is dedicated solely for funding charter 
                school facilities; or
                    ``(B) a portion of which is dedicated for funding 
                charter school facilities.
            ``(2) Grants.--
                    ``(A) In general.--From the amount under section 
                5202(b)(1) remaining after the Secretary makes grants 
                under subsection (a), the Secretary shall make grants, 
                on a competitive basis, to States to pay for the 
                Federal share of the cost of establishing or enhancing, 
                and administering per-pupil facilities aid programs.
                    ``(B) Period.--The Secretary shall award grants 
                under this subsection for periods of not more than 5 
                years.
                    ``(C) Federal share.--The Federal share of the cost 
                described in subparagraph (A) for a per-pupil 
                facilities aid program shall be not more than--
                            ``(i) 90 percent of the cost, for the first 
                        fiscal year for which the program receives 
                        assistance under this subsection;
                            ``(ii) 80 percent in the second such year;
                            ``(iii) 60 percent in the third such year;
                            ``(iv) 40 percent in the fourth such year; 
                        and
                            ``(v) 20 percent in the fifth such year.
                    ``(D) State share.--A State receiving a grant under 
                this subsection may partner with 1 or more 
                organizations to provide up to 50 percent of the State 
                share of the cost of establishing or enhancing, and 
                administering the per-pupil facilities aid program.
                    ``(E) Multiple grants.--A State may receive more 
                than 1 grant under this subsection, so long as the 
                amount of such funds provided to charter schools 
                increases with each successive grant.
            ``(3) Use of funds.--
                    ``(A) In general.--A State that receives a grant 
                under this subsection shall use the funds made 
                available through the grant to establish or enhance, 
                and administer, a per-pupil facilities aid program for 
                charter schools in the State of the applicant.
                    ``(B) Evaluations; technical assistance; 
                dissemination.--From the amount made available to a 
                State through a grant under this subsection for a 
                fiscal year, the State may reserve not more than 5 
                percent to carry out evaluations, to provide technical 
                assistance, and to disseminate information.
                    ``(C) Supplement, not supplant.--Funds made 
                available under this subsection shall be used to 
                supplement, and not supplant, State and local public 
                funds expended to provide per pupil facilities aid 
                programs, operations financing programs, or other 
                programs, for charter schools.
            ``(4) Requirements.--
                    ``(A) Voluntary participation.--No State may be 
                required to participate in a program carried out under 
                this subsection.
                    ``(B) State law.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), to be eligible to receive a grant 
                        under this subsection, a State shall establish 
                        or enhance, and administer, a per-pupil 
                        facilities aid program for charter schools in 
                        the State, that--
                                    ``(I) is specified in State law; 
                                and
                                    ``(II) provides annual financing, 
                                on a per-pupil basis, for charter 
                                school facilities.
                            ``(ii) Special rule.--Notwithstanding 
                        clause (i), a State that is required under 
                        State law to provide its charter schools with 
                        access to adequate facility space, but which 
                        does not have a per-pupil facilities aid 
                        program for charter schools specified in State 
                        law, may be eligible to receive a grant under 
                        this subsection if the State agrees to use the 
                        funds to develop a per-pupil facilities aid 
                        program consistent with the requirements of 
                        this subsection.
            ``(5) Applications.--To be eligible to receive a grant 
        under this subsection, a State shall submit an application to 
        the Secretary at such time, in such manner, and containing such 
        information as the Secretary may require.''.

SEC. 7. NATIONAL ACTIVITIES.

    Section 5205 (20 U.S.C. 7221d) is amended to read as follows:

``SEC. 5205. NATIONAL ACTIVITIES.

    ``(a) In General.--From the amount reserved under section 
5202(b)(2), the Secretary shall--
            ``(1) use not less than 75 percent of such funds to award 
        grants in accordance with subsection (b); and
            ``(2) use not more than 25 percent of such funds to--
                    ``(A) provide technical assistance to State 
                entities in awarding subgrants under section 5203, and 
                eligible entities and States receiving grants under 
                section 5204;
                    ``(B) disseminate best practices; and
                    ``(C) evaluate the impact of the charter school 
                program, including the impact on student achievement, 
                carried out under this subpart.
    ``(b)  Grants.--
            ``(1) In general.--The Secretary shall make grants, on a 
        competitive basis, to eligible applicants for the purpose of 
        carrying out the activities described in section 5202(a)(1), 
        subparagraphs (A) through (C) of section 5203(a)(1), and 
        section 5203(g).
            ``(2) Terms and conditions.--Except as otherwise provided 
        in this subsection, grants awarded under this subsection shall 
        have the same terms and conditions as grants awarded to State 
        entities under section 5203.
            ``(3) Charter management organizations.--The Secretary 
        shall--
                    ``(A) use not less than 75 percent of the funds 
                described in subsection (a)(1) to make grants, on a 
                competitive basis, to eligible applicants described in 
                paragraph (4)(C); and
                    ``(B) notwithstanding paragraphs (1)(A) and (2) of 
                section 5203(f)--
                            ``(i) award grants to eligible applicants 
                        on the basis of the quality of the applications 
                        submitted under this subsection; and
                            ``(ii) in awarding grants to eligible 
                        applicants described in paragraph (4)(C), give 
                        priority to each such eligible applicant that--
                                    ``(I) demonstrates a high 
                                proportion of high-quality charter 
                                schools within the network of the 
                                eligible applicant;
                                    ``(II) demonstrates success in 
                                serving students who are educationally 
                                disadvantaged;
                                    ``(III) does not have a significant 
                                proportion of charter schools that have 
                                been closed, had their charter revoked 
                                for compliance issues, or had their 
                                affiliation with such eligible 
                                applicant revoked;
                                    ``(IV) has sufficient procedures in 
                                effect to ensure timely closure of low-
                                performing or financially-mismanaged 
                                charter schools and clear plans and 
                                procedures in effect for the students 
                                in such schools to attend other high-
                                quality schools; and
                                    ``(V) demonstrates success in 
                                working with schools identified for 
                                improvement by the State.
            ``(4) Eligible applicant defined.--For purposes of this 
        subsection, the term `eligible applicant' means an eligible 
        applicant (as defined in section 5210) that--
                    ``(A) desires to open a charter school in--
                            ``(i) a State that did not apply for a 
                        grant under section 5203; or
                            ``(ii) a State that did not receive a grant 
                        under section 5203; or
                    ``(B) is a charter management organization.
    ``(c) Contracts and Grants.--The Secretary may carry out any of the 
activities described in this section directly or through grants, 
contracts, or cooperative agreements.''.

SEC. 8. RECORDS TRANSFER.

    Section 5208 (20 U.S.C. 7221g) is amended--
            (1) by inserting ``as quickly as possible and'' before ``to 
        the extent practicable''; and
            (2) by striking ``section 602'' and inserting ``section 
        602(14)''.

SEC. 9. DEFINITIONS.

    Section 5210 (20 U.S.C. 7221i) is amended--
            (1) by amending paragraph (1) to read as follows:
            ``(1) Charter school.--The term `charter school' means a 
        public school that--
                    ``(A) in accordance with a specific State statute 
                authorizing the granting of charters to schools, is 
                exempt from significant State or local rules that 
                inhibit the flexible operation and management of public 
                schools, but not from any rules relating to the other 
                requirements of this paragraph;
                    ``(B) is created by a developer as a public school, 
                or is adapted by a developer from an existing public 
                school, and is operated under public supervision and 
                direction;
                    ``(C) operates in pursuit of a specific set of 
                educational objectives determined by the school's 
                developer and agreed to by the authorized public 
                chartering agency;
                    ``(D) provides a program of elementary or secondary 
                education, or both;
                    ``(E) is nonsectarian in its programs, admissions 
                policies, employment practices, and all other 
                operations, and is not affiliated with a sectarian 
                school or religious institution;
                    ``(F) does not charge tuition;
                    ``(G) complies with the Age Discrimination Act of 
                1975, title VI of the Civil Rights Act of 1964, title 
                IX of the Education Amendments of 1972, section 504 of 
                the Rehabilitation Act of 1973, part B of the 
                Individuals with Disabilities Education Act, the 
                Americans with Disabilities Act of 1990 (42 U.S.C. 
                12101 et seq.), and section 444 of the General 
                Education Provisions Act (20 U.S.C. 1232(g)) (commonly 
                known as the `Family Education Rights and Privacy Act 
                of 1974');
                    ``(H) is a school to which parents choose to send 
                their children, and admits students on the basis of a 
                lottery if more students apply for admission than can 
                be accommodated, except that in cases in which students 
                who are enrolled in a charter school affiliated (such 
                as by sharing a network) with another charter school, 
                those students may be automatically enrolled in the 
                next grade level at such other charter school, so long 
                as a lottery is used to fill seats created through 
                regular attrition in student enrollment;
                    ``(I) agrees to comply with the same Federal and 
                State audit requirements as do other elementary schools 
                and secondary schools in the State, unless such State 
                audit requirements are waived by the State;
                    ``(J) meets all applicable Federal, State, and 
                local health and safety requirements;
                    ``(K) operates in accordance with State law;
                    ``(L) has a written performance contract with the 
                authorized public chartering agency in the State that 
                includes a description of how student performance will 
                be measured in charter schools pursuant to State 
                assessments that are required of other schools and 
                pursuant to any other assessments mutually agreeable to 
                the authorized public chartering agency and the charter 
                school; and
                    ``(M) may serve prekindergarten or postsecondary 
                students.'';
            (2) by redesignating paragraphs (2) through (4) as 
        paragraphs (4) through (6), respectively;
            (3) by inserting after paragraph (1), the following:
            ``(2) Charter management organization.--The term `charter 
        management organization' means a not-for-profit organization 
        that manages a network of charter schools linked by centralized 
        support, operations, and oversight.
            ``(3) Charter school support organization.--The term 
        `charter school support organization' means a nonprofit, 
        nongovernmental entity that is not an authorized public 
        chartering agency, which provides on a statewide basis--
                    ``(A) assistance to developers during the planning, 
                program design, and initial implementation of a charter 
                school; and
                    ``(B) technical assistance to charter schools to 
                operate such schools.'';
            (4) in paragraph (5)(B), as so redesignated, by striking 
        ``under section 5203(d)(3)''; and
            (5) by adding at the end the following:
            ``(7) Expanded, high-quality charter school.--The term 
        `expanded, high-quality charter school' means a high-quality 
        charter school that has either significantly increased its 
        enrollment or added one or more grades to its school.
            ``(8) High-quality charter school.--The term `high-quality 
        charter school' means a charter school that--
                    ``(A) shows evidence of strong academic results, 
                which may include strong academic growth as determined 
                by a State;
                    ``(B) has no significant issues in the areas of 
                student safety, operational and financial management, 
                or statutory or regulatory compliance;
                    ``(C) has demonstrated success in significantly 
                increasing student academic achievement, including 
                graduation rates where applicable, consistent with the 
                requirements under title I, for all students served by 
                the charter school; and
                    ``(D) has demonstrated success in increasing 
                student academic achievement, including graduation 
                rates where applicable, for the groups of students 
                described in section 1111(b)(2)(C)(v)(II), except that 
                such demonstration is not required in a case in which 
                the number of students in a group is insufficient to 
                yield statistically reliable information or the results 
                would reveal personally identifiable information about 
                an individual student.
            ``(9) Replicated, high-quality charter school model.--The 
        term `replicated, high-quality charter school model' means a 
        high-quality charter school that has opened a new campus under 
        an existing charter or an additional charter if required by 
        State law.''.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    Section 5211 (20 U.S.C. 7221j) is amended to read as follows:

``SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this subpart 
$300,000,000 for fiscal year 2015 and each of the 5 succeeding fiscal 
years.''.

SEC. 11. CONFORMING AMENDMENTS.

    (a) Repeal.--Subpart 2 of part B of title V (20 U.S.C. 7223 et 
seq.) is repealed.
    (b) Table of Contents.--The table of contents in section 2 is 
amended--
            (1) by striking the item relating to subpart 1 of part B of 
        title V and inserting the following:

                 ``Subpart 1--Charter School Program'';

            (2) by striking the item relating to section 5203 and 
        inserting the following:

``Sec. 5203. Grants to support high-quality charter schools.'';
            (3) by striking the item relating to section 5204 and 
        inserting the following:

``Sec. 5204. Facilities financing assistance.''; and
            (4) by striking the items relating to subpart 2 of part B 
        of title V.
                                                 Union Calendar No. 312

113th CONGRESS

  2d Session

                                H. R. 10

                          [Report No. 113-423]

_______________________________________________________________________

                                 A BILL

To amend the charter school program under the Elementary and Secondary 
                         Education Act of 1965.

_______________________________________________________________________

                             April 29, 2014

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed