[House Report 105-321]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-321
_______________________________________________________________________


 
                 CHARTER SCHOOLS AMENDMENTS ACT OF 1997

                                _______
                                

  October 14, 1997.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

_______________________________________________________________________


   Mr. Goodling, from the Committee on Education and the Workforce, 
                        submitted the following

                              R E P O R T

                             Together with

               ADDITIONAL, MINORITY, AND DISSENTING VIEWS

                        [To accompany H.R. 2616]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 2616) to amend titles VI and X of the 
Elementary and Secondary Education Act of 1965 to improve and 
expand charter schools, having considered the same, reports 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Charter Schools Amendments Act of 
1997''.

SEC 2. INNOVATIVE CHARTER SCHOOLS.

  Title VI of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7301 et seq.) is amended--
          (1) in section 6201(a)--
                  (A) in paragraph (1)(C), by striking ``and'' after 
                the semicolon;
                  (B) by redesignating paragraph (2) as paragraph (3); 
                and
                  (C) by inserting after paragraph (1) the following:
          ``(2) support for planning, designing, and initial 
        implementation of charter schools as described in part C of 
        title X; and''; and
          (2) in section 6301(b)--
                  (A) in paragraph (7), by striking ``and'' after the 
                semicolon;
                  (B) by redesignating paragraph (8) as paragraph (9); 
                and
                  (C) by inserting after paragraph (7) the following:
          ``(8) planning, designing, and initial implementation of 
        charter schools as described in part C of title X; and''.

SEC. 3. CHARTER SCHOOLS.

  Part C of title X of the Elementary and Secondary Education Act of 
1965 is amended to read as follows:

                    ``PART C--PUBLIC CHARTER SCHOOLS

``SEC. 10301. FINDINGS AND PURPOSE.

  ``(a) Findings.--The Congress finds that--
          ``(1) enhancement of parent and student choices among public 
        schools can assist in promoting comprehensive educational 
        reform and give more students the opportunity to learn to 
        challenging State content standards and challenging State 
        student performance standards, if sufficiently diverse and 
        high-quality choices, and genuine opportunities to take 
        advantage of such choices, are available to all students;
          ``(2) useful examples of such choices can come from States 
        and communities that experiment with methods of offering 
        teachers and other educators, parents, and other members of the 
        public the opportunity to design and implement new public 
        schools and to transform existing public schools;
          ``(3) charter schools are a mechanism for testing a variety 
        of educational approaches and should, therefore, be exempted 
        from restrictive rules and regulations if the leadership of 
        such schools commits to attaining specific and ambitious 
        educational results for educationally disadvantaged students 
        consistent with challenging State content standards and 
        challenging State student performance standards for all 
        students;
          ``(4) charter schools, as such schools have been implemented 
        in a few States, can embody the necessary mixture of enhanced 
        choice, exemption from restrictive regulations, and a focus on 
        learning gains;
          ``(5) charter schools, including charter schools that are 
        schools-within-schools, can help reduce school size, which can 
        have a significant effect on student achievement;
          ``(6) the Federal Government should test, evaluate, and 
        disseminate information on a variety of charter school models 
        in order to help demonstrate the benefits of this promising 
        educational reform; and
          ``(7) there is a strong documented need for cash-flow 
        assistance to charter schools that are starting up, because 
        State and local operating revenue streams are not immediately 
        available.
  ``(b) Purposes.--The purposes of this part are--
          ``(1) to provide financial assistance for the planning, 
        design, initial implementation of charter schools;
          ``(2) to facilitate the ability of States and localities to 
        increase the number of charter schools in the Nation to not 
        less than 3,000 by the year 2000; and
          ``(3) to evaluate the effects of charter schools, including 
        the effects on students, student achievement, staff, and 
        parents.

``SEC. 10302. PROGRAM AUTHORIZED.

  ``(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to section 
10303 to enable such agencies to conduct a charter school grant program 
in accordance with this part.
  ``(b) Special Rule.--If a State educational agency elects not to 
participate in the program authorized by this part or does not have an 
application approved under section 10303, the Secretary may award a 
grant to an eligible applicant that serves such State and has an 
application approved pursuant to section 10303.
  ``(c) Program Periods.--
          ``(1) Grants to states.--
                  ``(A) Basic grants.--Grants awarded to State 
                educational agencies under this part for planning, 
                design, or initial implementation of charter schools, 
                shall be awarded for a period of not more than 5 years.
                  ``(B) Extension.--Any eligible applicant that has 
                received a grant or subgrant under this part prior to 
                October 1, 1997, shall be eligible to receive an 
                additional grant for a period not to exceed 2 years in 
                accordance with this section.
          ``(2) Grants to eligible applicants.--
                  ``(A) Basic grants.--Grants awarded by the Secretary 
                to eligible applicants or subgrants awarded by State 
                educational agencies to eligible applicants under this 
                part shall be awarded for planning, design, or initial 
                implementation of charter schools, for a period not to 
                exceed more than 5 years, of which the eligible 
                applicant may use--
                          ``(i) not more than 30 months for planning 
                        and program design; and
                          ``(ii) not more than 4 years for the initial 
                        implementation of a charter school.
                  ``(B) Extension.--Any eligible applicant that has 
                received a grant or subgrant under this part prior to 
                October 1, 1997, shall be eligible to receive an 
                additional grant for a period not to exceed 2 years in 
                accordance with this section.
  ``(d) Limitation.--Except as otherwise provided under subsection (c), 
the Secretary shall not award more than one grant and State educational 
agencies shall not award more than one subgrant under this part to 
support a particular charter school.
  ``(e) Priority and Requirements.--
          ``(1) Priority.--
                  ``(A) Fiscal years 1998, 1999, and 2000.--In awarding 
                grants under this part for any of the fiscal years 
                1998, 1999, and 2000 from funds appropriated under 
                section 10310 that are in excess of $51,000,000 for the 
                fiscal year, the Secretary shall give priority to State 
                educational agencies in accordance with subparagraph 
                (C).
                  ``(B) Succeeding fiscal years.--In awarding grants 
                under this part for fiscal year 2001 or any succeeding 
                fiscal year from any funds appropriated under section 
                10310, the Secretary shall consider the number of 
                charter schools in each State and shall give priority 
                to State educational agencies in accordance with 
                subparagraph (C).
                  ``(C) Priority order.--In awarding grants under 
                subparagraphs (A) and (B), the Secretary shall, in the 
                order listed, give priority to a State that--
                          ``(i) meets all requirements of paragraph 
                        (2);
                          ``(ii) meets 2 requirements of paragraph (2); 
                        and
                          ``(iii) meets 1 requirement of paragraph (2).
          ``(2) Requirements.--The requirements referred to in 
        paragraph (1)(C) are as follows:
                  ``(A) The State law regarding charter schools ensures 
                that each charter school has a high degree of autonomy 
                over its budgets and expenditures.
                  ``(B) The State law regarding charter schools 
                provides that not less than 1 chartering authority in 
                the State allows for an increase in the number of 
                charter schools from 1 year to the next year; and
                  ``(C) The State law regarding charter schools 
                provides for periodic review and evaluation by the 
                authorized public chartering agency of each charter 
                school to determine whether the school is meeting or 
                exceeding the academic performance requirements and 
                goals for charter schools as set forth under State law 
                or the school's charter.

``SEC. 10303. APPLICATIONS.

  ``(a) Applications From State Agencies.--Each State educational 
agency desiring a grant from the Secretary under this part shall submit 
to the Secretary an application at such time, in such manner, and 
containing or accompanied by such information as the Secretary may 
require.
  ``(b) Contents of a State Educational Agency Application.--Each 
application submitted pursuant to subsection (a) shall--
          ``(1) describe the objectives of the State educational 
        agency's charter school grant program and a description of how 
        such objectives will be fulfilled, including steps taken by the 
        State educational agency to inform teachers, parents, and 
        communities of the State educational agency's charter school 
        grant program;
          ``(2) describe how the State educational agency will inform 
        each charter school of available Federal programs and funds 
        that each such school is eligible to receive and ensure that 
        each such school receives its appropriate share of Federal 
        education funds allocated by formula; and
          ``(3) contain assurances that the State educational agency 
        will require each eligible applicant desiring to receive a 
        subgrant to submit an application to the State educational 
        agency containing--
                  ``(A) a description of the educational program to be 
                implemented by the proposed charter school, including--
                          ``(i) how the program will enable all 
                        students to meet challenging State student 
                        performance standards;
                          ``(ii) the grade levels or ages of children 
                        to be served; and
                          ``(iii) the curriculum and instructional 
                        practices to be used;
                  ``(B) a description of how the charter school will be 
                managed;
                  ``(C) a description of--
                          ``(i) the objectives of the charter school; 
                        and
                          ``(ii) the methods by which the charter 
                        school will determine its progress toward 
                        achieving those objectives;
                  ``(D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                  ``(E) a description of how parents and other members 
                of the community will be involved in the design and 
                implementation of the charter school;
                  ``(F) a description of how the authorized public 
                chartering agency will provide for continued operation 
                of the school once the Federal grant has expired, if 
                such agency determines that the school has met the 
                objectives described in subparagraph (C)(i);
                  ``(G) a request and justification for waivers of any 
                Federal statutory or regulatory provisions that the 
                applicant believes are necessary for the successful 
                operation of the charter school, and a description of 
                any State or local rules, generally applicable to 
                public schools, that will be waived for, or otherwise 
                not apply to, the school;
                  ``(H) a description of how the subgrant funds or 
                grant funds, as appropriate, will be used, including a 
                description of how such funds will be used in 
                conjunction with other Federal programs administered by 
                the Secretary;
                  ``(I) a description of how students in the community 
                will be--
                          ``(i) informed about the charter school; and
                          ``(ii) given an equal opportunity to attend 
                        the charter school;
                  ``(J) an assurance that the eligible applicant will 
                annually provide the Secretary and the State 
                educational agency such information as may be required 
                to determine if the charter school is making 
                satisfactory progress toward achieving the objectives 
                described in subparagraph (C)(i);
                  ``(K) an assurance that the applicant will cooperate 
                with the Secretary and the State educational agency in 
                evaluating the program assisted under this part;
                  ``(L) such other information and assurances as the 
                Secretary and the State educational agency may require; 
                and
          ``(4) describe how the State educational agency will 
        disseminate best or promising practices of charter schools in 
        such State to each local educational agency in the State.
  ``(c) Contents of Eligible Applicant Application.--Each eligible 
applicant desiring a grant pursuant to section 10302 shall submit an 
application to the State educational agency or Secretary, respectively, 
at such time, in such manner, and accompanied by such information as 
the State educational agency or Secretary, respectively, may reasonably 
require.
  ``(d) Contents of Application.--Each application submitted pursuant 
to subsection (c) shall contain--
          ``(1) the information and assurances described in 
        subparagraphs (A) through (L) of subsection (b)(3), except that 
        for purposes of this subsection subparagraphs (J), (K), and (L) 
        of such subsection shall be applied by striking `and the State 
        educational agency' each place such term appears; and
          ``(2) assurances that the State educational agency--
                  ``(A) will grant, or will obtain, waivers of State 
                statutory or regulatory requirements; and
                  ``(B) will assist each subgrantee in the State in 
                receiving a waiver under section 10304(e).

``SEC. 10304. ADMINISTRATION.

  ``(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies under this 
part on the basis of the quality of the applications submitted under 
section 10303(b), after taking into consideration such factors as--
          ``(1) the contribution that the charter schools grant program 
        will make to assisting educationally disadvantaged and other 
        students to achieving State content standards and State student 
        performance standards and, in general, a State's education 
        improvement plan;
          ``(2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's charter 
        schools law;
          ``(3) the ambitiousness of the objectives for the State 
        charter school grant program;
          ``(4) the quality of the strategy for assessing achievement 
        of those objectives;
          ``(5) the likelihood that the charter school grant program 
        will meet those objectives and improve educational results for 
        students; and
          ``(6) the number of charter schools created under this part 
        in the State.
  ``(b) Selection Criteria for Eligible Applicants.--The Secretary 
shall award grants to eligible applicants under this part on the basis 
of the quality of the applications submitted under section 10303(c), 
after taking into consideration such factors as--
          ``(1) the quality of the proposed curriculum and 
        instructional practices;
          ``(2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local educational 
        agency to the charter school;
          ``(3) the extent of community support for the application;
          ``(4) the ambitiousness of the objectives for the charter 
        school;
          ``(5) the quality of the strategy for assessing achievement 
        of those objectives; and
          ``(6) the likelihood that the charter school will meet those 
        objectives and improve educational results for students.
  ``(c) Peer Review.--The Secretary, and each State educational agency 
receiving a grant under this part, shall use a peer review process to 
review applications for assistance under this part.
  ``(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this part, shall award 
subgrants under this part in a manner that, to the extent possible, 
ensures that such grants and subgrants--
          ``(1) are distributed throughout different areas of the 
        Nation and each State, including urban and rural areas; and
          ``(2) will assist charter schools representing a variety of 
        educational approaches, such as approaches designed to reduce 
        school size.
  ``(e) 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 10309(1), if--
          ``(1) the waiver is requested in an approved application 
        under this part; and
          ``(2) the Secretary determines that granting such a waiver 
        will promote the purpose of this part.
  ``(f) Use of Funds.--
          ``(1) State educational agencies.--Each State educational 
        agency receiving a grant under this part shall use such grant 
        funds to award subgrants to one or more eligible applicants in 
        the State to enable such applicant to plan and implement a 
        charter school in accordance with this part.
          ``(2) Eligible applicants.--Each eligible applicant receiving 
        funds from the Secretary or a State educational agency shall 
        use such funds to plan and implement a charter school in 
        accordance with this part.
          ``(3) Allowable activities for basic grants.--An eligible 
        applicant receiving a basic grant or subgrant under section 
        10302(c)(2) may use the grant or subgrant funds only for--
                  ``(A) post-award planning and design of the 
                educational program, which may include--
                          ``(i) refinement of the desired educational 
                        results and of the methods for measuring 
                        progress toward achieving those results; and
                          ``(ii) professional development of teachers 
                        and other staff who will work in the charter 
                        school; and
                  ``(B) initial implementation of the charter school, 
                which may include--
                          ``(i) informing the community about the 
                        school;
                          ``(ii) acquiring necessary equipment and 
                        educational materials and supplies;
                          ``(iii) acquiring or developing curriculum 
                        materials; and
                          ``(iv) other initial operational costs that 
                        cannot be met from State or local sources.
          ``(4) Administrative expenses.--Each State educational agency 
        receiving a grant pursuant to this part may reserve not more 
        than 5 percent of such grant funds for administrative expenses 
        associated with the charter school grant program assisted under 
        this part.

``SEC. 10305. NATIONAL ACTIVITIES.

  ``The Secretary shall reserve for each fiscal year the lesser of 5 
percent of the amount appropriated to carry out this part for the 
fiscal year or $5,000,000, to carry out, giving highest priority to 
carrying paragraph (2), the following:
          ``(1) To provide charter schools, either directly or through 
        the State educational agency, with information regarding 
        available education funds that such school is eligible to 
        receive, and assistance in applying for Federal education funds 
        which are allocated by formula, including filing deadlines and 
        submission of applications; and
          ``(2) To provide, through 1 or more contracts using a 
        competitive bidding process--
                  ``(A) charter schools with assistance in accessing 
                private capital;
                  ``(B) pilot projects in a variety of States to better 
                understand and improve access to private capital by 
                charter schools; and
                  ``(C) collection on a nationwide basis, of 
                information regarding successful programs that access 
                private capital for charter schools and disseminate any 
                such relevant information and model descriptions to all 
                charter schools.
          ``(3) To provide for the completion of the 4-year national 
        study (which began in 1995) of charter schools and any related 
        evaluations or studies.
          ``(4)(A) To provide information to applicants for assistance 
        under this part;
          ``(B) assistance to applicants for assistance under this part 
        with the preparation of applications under section 10303;
          ``(C) assistance in the planning and startup of charter 
        schools;
          ``(D) ongoing training and technical assistance to existing 
        charter schools; and
          ``(E) for the dissemination of best practices in charter 
        schools to other public schools.

``SEC. 10306. PART A, TITLE I ALLOCATION DURING FIRST YEAR AND FOR 
                    SUCCESSIVE ENROLLMENT EXPANSIONS.

  ``For purposes of the allocation to schools by the States or their 
agencies of funds under part A of title I, or of any other Federal 
educational assistance funds, the Secretary and each State educational 
agency shall take such measures not later than 6 months after the date 
of the enactment of this part as are necessary to ensure that every 
charter school receives the Federal funding for which it is eligible in 
the calendar year in which it first opens, notwithstanding the fact 
that the identity and characteristics of the students enrolling in that 
school are not fully and completely determined until that school 
actually opens. These measures shall similarly ensure that every 
charter school expanding its enrollment in any subsequent year of 
operation receives the Federal funding for which it is eligible during 
the calendar year of such expansion.

``SEC. 10307. RECORDS TRANSFER.

  ``State and local educational agencies, to the extent practicable, 
shall ensure that a student's records and if applicable a student's 
individualized education program as defined in section 602(11) of the 
Individuals with Disabilities Education Act (20 U.S.C. 1401(11)), are 
transferred to the charter school upon transfer of a student to a 
charter school in accordance with applicable State law.

``SEC. 10308. PAPERWORK REDUCTION.

  ``To the extent practicable, the Secretary and each authorized public 
chartering agency, shall ensure that implementation of this part 
results in a minimum of paperwork for any eligible applicant or charter 
school.

``SEC. 10309. DEFINITIONS.

  ``As used in this part:
          ``(1) The term `charter school' means a public school that--
                  ``(A) in accordance with a specific State charter 
                school statute, is exempted 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, and part B of the 
                Individuals with Disabilities Education Act;
                  ``(H) is a school to which parents choose to send 
                their children, and that admits students on the basis 
                of a lottery, if more students apply for admission than 
                can be accommodated;
                  ``(I) agrees to comply with the same Federal and 
                State audit requirements as do other elementary and 
                secondary schools in the State, unless such 
                requirements are specifically waived for the purpose of 
                this program;
                  ``(J) meets all applicable Federal, State, and local 
                health and safety requirements;
                  ``(K) operates in accordance with State law; and
                  ``(L) has a written performance contract with the 
                authorized public chartering agency in the State.
          ``(2) The term `developer' means an individual or group of 
        individuals (including a public or private nonprofit 
        organization), which may include teachers, administrators and 
        other school staff, parents, or other members of the local 
        community in which a charter school project will be carried 
        out.
          ``(3) The term `eligible applicant' means an authorized 
        public chartering agency participating in a partnership with a 
        developer to establish a charter school in accordance with this 
        part.
          ``(4) The term `authorized public chartering agency' means a 
        State educational agency, local educational agency, or other 
        public entity that has the authority pursuant to State law and 
        approved by the Secretary to authorize or approve a charter 
        school.

``SEC. 10310. AUTHORIZATION OF APPROPRIATIONS.

  ``For the purpose of carrying out this part, there are authorized to 
be appropriated $100,000,000 for fiscal year 1998 and such sums as may 
be necessary for each of the four succeeding fiscal years.''.

                                Purpose

    The purpose of the Charter Schools Amendments Act of 1997, 
which strengthens the existing statute, Title X, Part C, of the 
Elementary and Secondary Education Act of 1965, is threefold: 
first, to provide financial assistance for the planning, 
design, and initial implementation of new charter schools, in 
essence to provide critical start-up funds to charters; second, 
to augment the efforts of States and localities to increase the 
number of charter schools to 3000 by the year 2000; and third, 
to evaluate the effects of charter schools on students, parents 
and teachers.

                  Background and Need for Legislation

    Charter schools are public schools, established under State 
law, which are granted varying degrees of autonomy from State 
and local rules and regulations. They are public schools that 
are free from the red-tape that governs traditional public 
schools. However, like traditional schools, charter schools are 
non-sectarian schools that do not charge tuition and must 
adhere to Federal education and civil rights statutes. And, 
since charter schools are public schools, they are completely 
under the authority of the public domain.
    In exchange for their autonomy, charter schools are held 
accountable for meeting the terms of their charters, including 
achievement of academic outcomes of the students they serve, as 
stipulated in the charters. There is wide variation among the 
States in the terms and conditions under which charter schools 
can be established and operated, but in virtually every State, 
the students' academic performance is a universal condition for 
measuring each charter school's success and determining whether 
to extend the charter.
    Typically, charter schools are granted a charter by 
authorized chartering entities such as a State charter board, a 
State board of education, a public university in some States, 
or a local board of education. Additionally, in some States, 
there may be multiple entities that grant charters.
    Depending upon the particular State law, these schools may 
be newly-created or established from existing public or private 
schools and may be established by non-profit or for-profit 
private or public organizations, teachers, parents or other 
private citizens. Unlike traditional public schools, students 
are not mandatorily assigned to these schools, rather they 
choose to attend these schools. If a charter school receives 
money under the Federal statute, it must admit the students by 
lottery in situations where there are more students who apply 
to attend, than are positions available.
    Since 1991, when Minnesota adopted the Nation's first 
charter school bill, support for charter schools has 
flourished. Over half of the States in the Union, and the 
District of Columbia and Puerto Rico have passed charter school 
legislation. According to Bruno Manno, a senior fellow at the 
Hudson Institute who co-authored two national studies of the 
charter school movement in the United States, ``* * * about 700 
charter schools will be operating in at least 20 States for 
this fall (the 1997-1998 school year) serving over 170,000 
children--more than the entire student population of Rhode 
Island.'' Clearly, in 1997, charter schools are no longer a 
mere experiment in education reform, but represent a popular 
and reliable alternative for parents and teachers to the 
traditional public school system.
    In 1994, Congress passed legislation establishing charter 
schools as Part C of Title X of the Elementary and Secondary 
Education Act, Public Law 103-382, and established a Federal 
funding stream to assist charter schools with start-up costs. 
Start-up costs are defined as the costs of the planning, design 
and initial implementation of the charter school. Allowable 
uses of funds under this definition include professional 
development, informing the community about the school, 
acquiring necessary equipment and educational materials and 
supplies, and developing curriculum and other costs incurred in 
the first few years of a charter school's existence not 
otherwise covered by State and local dollars. The Act 
authorized $15 million for fiscal year 1995 and such sums in 
the out years.
    As a result of the increased popularity of the charter 
schools' movement, the President in his budget request for the 
fiscal year 1998 called for $100 million for charter schools. 
This figure marks a 96% increase in Federal funding for the 
Federal charter schools program over 1997 and a 1,533% increase 
over the initial appropriation of $6 million in fiscal year 
1995. The Committee supports the President's request.
    Given the rapid increase in funding, changes are needed to 
the National Charter Schools Act to build upon what we have 
learned over the past three years about how the Federal 
government can best support the charter school movement.

                            Committee Action

    The Committee on Education and the Workforce held five 
hearings during the first session of the 105th Congress 
regarding charter schools. The Subcommittee on Oversight and 
Investigations conducted field hearings in California and 
Arizona, while the Subcommittee on Early Childhood, Youth and 
Families held three hearings in Washington, DC to continue the 
discussion on charter schools.
    On January 30, 1997, the Subcommittee on Oversight and 
Investigations held a hearing ``Education at a Crossroads'' at 
the Vaughn Learning Center in San Fernando, California. The 
second panel focused on charter schools. Witnesses included: 
Dr. Yvonne Chan, Executive Director of the Vaughn Learning 
Center; Mr. Joe Lucente, Principal of Fenton Elementary School; 
Mr. Jonathan Williams, Co-Director of The Accelerated School; 
Mrs. Jeannine English, Executive Director of the Little Hoover 
Commission; and Mr. Eric Premack, Director of the Charter 
Schools Project, Institute for Education Reform.
    On January 31, 1997, the Subcommittee on Oversight and 
Investigations held a ``Crossroads'' field hearing at the 
Phoenix City Council Chambers in Phoenix, Arizona. The first 
panel consisted of Lisa Graham Keegan, State Superintendent of 
Public Instruction, ArizonaDepartment of Education; Dr. Raymond 
Jackson, President and Chief Executive Officer of the ATOP Academy; Dr. 
Karen Butterfield, Executive Director of Flagstaff Arts and Leadership 
Academy; Dr. Patrick Grippe, Assistant Superintendent of Douglas 
County, Colorado; Jeffry Flake, Executive Director of the Goldwater 
Institute; and B. Kay Lybeck, President of the Arizona Teachers 
Association. The second panel consisted of C. Diane Bishop, Education 
Policy Advisor to Governor Fife Symington of Arizona; Candie Tapia, a 
student at Arizona Call-A-Teen Center of Excellence; Mary Ballard, 
parent of Candie Tapia; Marianne Jennings, parent and Professor of 
Legal and Ethical Studies of the College of Business, Arizona State 
University; and Dr. Lois Gerber, Chairperson of the National 
Independent Private Schools Association.
    On April 9, 1997, the Subcommittee on Early Childhood, 
Youth and Families held a its first hearing in Washington, DC 
on charter schools. This hearing focused on a broad overview of 
the charter school movement as well as State law perspectives 
and issues. This hearing continued the Committee's review of 
charter schools that began with the field hearings in 
California and Arizona. The witness for the first panel was the 
Honorable Gerald Tirozzi, Assistant Secretary of Elementary and 
Secondary Education at the Department of Education. The second 
panel consisted of Dr. Louann Bierlein, Education Policy 
Advisor for Governor Mike Foster Baton Rouge, Louisiana; Dr. 
Joe Nathan, Director of the Center for School Change, Humphrey 
Institute at the University of Minnesota, Minneapolis, 
Minnesota; and Dr. Amy Stuart Wells, Associate Professor for 
Educational Policy at the UCLA Graduate School of Education, 
Los Angeles, California. The third panel consisted of the 
Honorable Phillip Hamilton, State Delegate in the Virginia 
House of Delegates, Newport News, Virginia; Mr. Scott Hamilton, 
Associate Commissioner for Charter Schools at the Massachusetts 
Department of Education, Boston, Massachusetts; Mr. Bill 
Windler, Senior Consultant for School Improvement 
Accountability and Accreditation at the Colorado Department of 
Education, Denver, Colorado; and Mr. Tim Sindelar, Attorney for 
the Disability Law Center, Incorporated, Boston, Massachusetts.
    On June 26, 1997, the Subcommittee on Early Childhood, 
Youth and Families held its second hearing in Washington, D.C. 
on charter schools. The purpose of this hearing was to focus on 
a ``micro-view'' of charter schools. The Honorable Gerald 
Tirozzi, Assistant Secretary of Elementary and Secondary 
Education at the Department of Education testified on the first 
panel. The second panel included Ms. T. Beller, parent and 
cofounder of the River School in Napa, California and Ms. Linda 
Horan, a parent from Charlestown, Massachusetts. The third 
panel received testimony from Mr. Bob DeBoer, Director of New 
Visions School in Minneapolis, Minnesota; Mr. John Pellitier, 
Member of the Board of Directors at the Lawrence Family 
Development Charter School in Lawrence, Massachusetts; Ms. 
Mamie Thorns, Interim Director of the Charter School Office at 
Central Michigan University, Mount Pleasant, Michigan; and Dr. 
Raymond Jackson, President of the ATOP Academy in Phoenix, 
Arizona.
    On September 16, 1997, the Subcommittee on Early Childhood, 
Youth and Families held it's third and final hearing on charter 
schools in Washington, DC. Ms. Cornelia Blanchette, Associate 
Director for Education and Employment Issues at the General 
Accounting Office testified on the first panel. The second 
panel consisted of Mr. Robert Chase, President of the National 
Education Association; Mr. Richard Thompson, President of the 
Charter Schools Development Corporation; Ms. Jeanne Allen, 
President of the Center for Education Reform; Dr. Yvonne Chan, 
Principal of the Vaughn Next Century Learning Center in San 
Fernando, California; and Ms. Sharon Johnson-Lewis, Director of 
Research for Great City Schools.

                           Legislative Action

    On October 6, 1997, Mr. Riggs, Chairman of the Subcommittee 
on Early Childhood, Youth and Families, introduced H.R. 2616, 
the Charter Schools Amendments Act of 1997. During Full 
Committee markup on October 9, 1997, an amendment in the nature 
of a substitute was offered by Mr. Riggs and adopted by a voice 
vote. Amendments offered by Mr. Roemer to reinstate a purpose 
from current law and an amendment by Mr. Scott to require the 
SEA to disseminate best practices of charter schools to LEAs 
were also adopted and H.R. 2616, as amended, was ordered 
reported out of Full Committee by a vote of 24 to 8.

                              Bill Summary

    In reporting H.R. 2616, the Charter Schools Amendments Act 
of 1997, the Committee improves existing statute through the 
following provisions:
          Increasing the authorization level from $15 million 
        to $100 million.
          Directing new money to those States that have charter 
        schools laws that provide for a high degree of fiscal 
        autonomy, that allow for increases in the number of 
        charter schools, and that provide for strong academic 
        accountability.
          Reducing the amount reserved for National Activities 
        from 10% to 5% in order to drive 95% of the Federal 
        charter schools' money to the State and local level.
          Extending the life of Federal start-up grants from 
        three to five years in an effort to give charter 
        schools more time to become financially stable.
          Ensuring that charter schools can compete on an equal 
        footing for Federal categorical aid by directing both 
        the SEA and the Secretary to provide information and 
        technical assistance to charter schools on applying for 
        and receiving federal categorical education grants.
          Addressing the lack of adequate financial resources 
        available to charter schools, by directing the 
        Secretary to assist charter schools in accessing 
        private capital.
          Spreading the news of effective education practices 
        by directing both the Secretary and the SEAs to 
        disseminate the best practices of charters schools to 
        other public schools.

                            Committee Views

    The amount of flexibility in organizational, personnel, 
governance and curriculum matters granted to charter schools 
differs from State to State. However, most charter schools 
afford parents and teachers the opportunity and flexibility to 
try innovative approaches in providing a high quality, 
stimulating primary and/or secondary education in exchange for 
beingheld accountable for academic results and the proper 
management of funds. These are the two key characteristics that set 
charter schools apart from traditional public schools.
    Although charter schools differ greatly from State to 
State, and from community to community, the First Year Report 
by the Department of Education four year's study on charter 
schools published in 1997, shows that ``most charter schools 
are relatively small, but they serve the great racial and 
economic diversity of students that make up public education.''
    Specifically, the First Year Report found that the 60% of 
charter schools served fewer than 200 students, compared to 
only about 16% of traditional schools that serve a similarly 
sized study body. With regard to a charter school's student 
body, the Report found that most charter schools have a racial 
composition similar to Statewide averages or in some cases 
served a higher proportion of minority students. Furthermore, 
the Report found that nationwide charter schools enroll roughly 
the same proportion of low-income students as other public 
schools.
    The findings of the First Year report dispel the myth that 
charter schools serve only the highest performing students. The 
testimony provided at the five hearings reflected the findings 
of the First Year Report and other studies--that many charter 
schools are dedicated to providing a quality education for at-
risk students. The Committee heard from several charter school 
operators who founded their school based on a specific 
pedagogical vision on how to best educate at-risk youth or 
other students whose particular needs aren't being addressed by 
their school system. Charter schools successes are based on the 
fact that they afford teachers and administrators the necessary 
flexibility to meet the needs of at-risk youth or other 
disenfranchised students who require the special attention and 
dedication that charter schools provide.
    Finally, in addition to charter schools' contribution to 
serving hard to reach youth, the Committee believes that the 
strengths of charter schools lie in increased student 
performance, parental satisfaction and involvement, and teacher 
satisfaction. The Committee is encouraged by the repeated 
stories of charter schools' successes in these areas. 
Consequently, it is the opinion of the Committee that charter 
schools now represent an integral component of education 
reform.
    After careful consideration of this issue, including a 
comprehensive set of hearings, the Committee developed H.R. 
2616, the Charter Schools Act of 1997, to improve upon the 
existing statute.

                         priority of new money

    The intent of H.R. 2616 is to drive new money, any amount 
appropriated over fiscal year 1997 funding ($51 million), to 
the States with the strongest charter school laws. H.R. 2616 
establishes a three tiered priority system on which the 
Secretary is to base the allocation of any new money. Priority 
in funding is given to those States that have a State charter 
school law that meets the following criteria:
          Requires that each charter school within the State 
        has a high degree of autonomy over their budget and 
        expenditures.
          Provides for an increase in the number of charter 
        schools from one year to the next. Only one of the 
        chartering authorities in the State has to allow for 
        the increase in the number of schools they charter from 
        year to year in order to comply with this particular 
        requirement.
          Requires periodic review to determine whether each 
        charter school is meeting or exceeding academic 
        performance requirements and goals stipulated in the 
        school's charter.
    Under H.R. 2616, priority for the new money would be given 
first to those States with laws that meet all three criteria; 
second to those that meet at least two of the criteria; and 
third to States that meet at least one of the criteria. The 
Committee intends that the bulk of the new money would be 
allocated to those States that meet at least two of the 
requirements, with the highest consideration given to those 
States that meet all three.
    With regard to the first criteria, the Committee expects 
the Secretary to measure the high degree of autonomy based on 
whether a State permits charter schools to have complete 
control over the school's funds, including salaries and 
procurement of services and supplies, generated by the school 
student count. The Committee originally intended for the money 
to be prioritized to those States that treat their charter 
schools as a separate LEA, anticipating that those charter 
schools which are treated as separate LEAs have greater 
autonomy and are more likely to receive their fair share of 
Title I and IDEA funds. The Committee encourages States to 
treat charter schools as separate LEAs for the purposes of the 
allocation of Federal education grants, provided that such an 
action does not unduly cause additional regulations and 
requirements to be placed on charter schools. The Committee 
intends to continue to review whether those charter schools 
that are treated as separate LEAs receive a more favorable 
allocation of State and Federal dollars than those charter 
schools that are considered part of an LEA.
    The second criteria is designed to reward those States that 
allow for an increase in the number of charter schools and is 
consistent with the purpose of the Act to have 3000 charter 
schools in operation by the year 2000. The intent of this 
criteria is to encourage States not to stifle the growth of 
charter schools by placing a low cap on the number of charter 
schools that can operate in a particular State.
    With regard to the third criteria, the Committee recognizes 
that all States that have an enabling charter school statute 
have a system of review and evaluation in place. By their very 
nature charter schools' continued existence is rooted in the 
idea of accountability for student performance and fiscal 
management. However, current law does not include any 
accountability or performance language, two factors that must 
be the cornerstone of any successful charter school program. 
Prioritizing money based on States that have a strong 
accountability component in their State charter school statute, 
reflects the Committee's strong emphasis on evaluation and 
tying student performance to accountability.

                Extending Grant from Three to Five Years

    The Committee believes that the greatest barrier facing 
charter schools is a lack of start-up funds. In fact, in the 
Department's First Year Report, insufficient start-up funds was 
the most commonly cited barrier facing charter schools. Nearly 
60 percent of all charter schools, both those newly created and 
those in operation for a year or two, cited a lack of start-up 
and operational funds as a problem. Given the vast array of 
obstacles in founding a charter school coupled with the fact 
that many charter schools receive less money than traditional 
public schools for a host of technical and political reasons, 
the Committee believes that it often takes at least three, if 
not five years, for charter schools to establish themselves 
financially. Consequently, the Committee is compelled to extend 
the maximum cycle of the Federal grant from three to five years 
in an effort to allow a more reasonable period for charter 
schools to become financially stable.
    Furthermore, the Committee heard from several charter 
school operators whose schools were flourishing in the areas of 
student achievement and parental and teacher satisfaction, but 
were still struggling financially. The Committee believes that 
extending the grant period from three to five years will permit 
meritorious schools (schools that exceed their academic 
performance requirements) to serve more children in their 
initial years of operation.

       Fair Share of Federal Categorical Aid for Charter Schools

    The Committee has included bill language which ensures that 
charter schools are treated fairly and equitably with respect 
to the distribution of Federal education program assistance 
(i.e., Title I of the Elementary and Secondary Education Act, 
the Individuals With Disabilities Education Act, and other 
programs). Section 10303(b)(2) requires each State Educational 
Agency applicant to describe, in its application to the 
Secretary, how it will inform each charter school of available 
Federal education programs and funds that each school is 
eligible to receive and ensure that each school receives its 
appropriate share of Federal education funds allocated by 
formula. In addition, the Secretary is required, pursuant to 
section 10305(1), to provide charter schools with information 
about Federal education programs for which charter schools 
might be eligible, and to assist them with filing deadlines and 
the submission of applications.
    During the course of the year, several witnesses testified 
that charter schools are not receiving, in some cases, their 
fair share of Federal, formula-based education aid. In 
testimony before the Subcommittee on Oversight and 
Investigations' field hearing in San Fernando, California on 
January 30, 1997, Dr. Yvonne Chan, Director of the Vaughn Next 
Century Learning Center charter school, stated ``Though our 
District receives various Federal grants, e.g., Eisenhower, 
Safe and Drug-[f]ree Schools, [and] Migrant Education, we 
[Vaughn Next Century Learning Center charter school] are not 
eligible for any of these funds as the District determines 
which schools can participate.''
    Similarly, with respect to special education, Dr. Chan is 
required to negotiate with her local school district for her 
charter school's allocations. Yet, despite these barriers, Dr. 
Chan and the Vaughn Next Century Learning Center have made 
great progress in providing for students with disabilities. For 
example, each year, the school redirects $180,000 from its 
general fund to help support students with disabilities. In 
addition, upon becoming a charter school in 1993, the Vaughn 
Next Century Learning Center purchased two bungalows and 
brought many severely disabled students back to the school who 
had previously left. Beginning in 1994, the school dedicated 
two rooms in its new building as a ``Special Education Support 
Center,'' staffed with three bilingual resource specialists, 
two special education assistants, and a one-to-one special 
education aide. All students with exceptional needs are 
included in the regular classroom as much as possible and 
participate in all activities and learning events. Finally, as 
Dr. Chan recommended at the January 30, 1997 hearing, ``The 
role of the Federal government is to encourage all the States 
to adopt strong [C]harter [S]chool laws, make sure that 
[C]harter [S]chools receive all Federal funds that their 
students are eligible for, eliminate burdensome paperwork 
requirements, provide incentives or start up funds, allow 
[C]harter [S]chools to compete for Federal grants without 
piggybacking on their [D]istricts, clearly define 
accountability measures, provide technical support and 
disseminate lesson[s] learned.''
    At the same hearing Mr. Joe Lucente, the Executive Director 
of the Fenton Avenue Charter School in Lake View Terrace, 
California, testified that Federal education programs account 
for about 12% of his school's total revenue with most of the 
funding generated from Title I and the National School Lunch 
and Breakfast programs. In describing some of the inequities 
charter schools face in receiving Federal education aid, 
Lucente testified,

          These Federal funds greatly facilitate the attainment 
        of our charter goals. Currently, these funds flow to 
        the State, to the county, to the district and, finally, 
        to the charter school. This system needs to be 
        streamlined so Federal funds can flow directly to 
        charter schools. This would put the funding in the 
        hands of educators more expeditiously and insure that 
        all Federal funding generated by our students and 
        programs reach the school site.

    Also, Ms. Cornelia Blanchette of the General Accounting 
Office (GAO) testified on September 16, 1997 that the GAO's 
survey of charter schools has identified a variety of barriers 
that have made it difficult for charter school operators to 
apply for and receive Title I and Individuals With Disabilities 
Education Act (IDEA) funds. Ms. Blanchette stated,

          * * * [o]ur survey has revealed a variety of barriers 
        that have made it difficult for charter schools to 
        access Title I and IDEA funds. These factors include, 
        for example, a lack of enrollment and student 
        eligibility data to submit to States before funding 
        allocation decisions are made and the time required and 
        the costs involved in applying for such funds, given 
        the amount of funds available. In addition, some 
        charter schools have failed to meet statutory 
        eligibility requirements for receiving Federal funds. 
        Charter school operators most often cited training and 
        technical assistance as factors that facilitated their 
        accessing Title I and IDEA funds.
          In other cases, charter school officials must take 
        additional steps to establish their eligibility for 
        Title I funds over and above those faced by their 
        traditional public school counterparts. For example, in 
        one State, charter school officials must manually match 
        their student enrollment records against State and 
        local Aid to Families With Dependent Children records 
        to verify student eligibility. The business 
        administrator for a charter school with an enrollment 
        of about 1,000 students told us that it takes him and 
        another staff person approximately 2 full days to 
        complete this process. He said that while this 
        procedure is accomplished electronically for 
        traditional public schools, city officials told him 
        that he had no such option.

    Finally, Dr. Raymond Jackson, the President and Chief 
Executive Officer of the ATOP Academy, a charter school in 
Phoenix, Arizona, has experienced similar problems. Dr. Jackson 
testified on this matter at a Subcommittee on Oversight and 
Investigations hearing on January 31, 1997. He said, ``I do not 
think ATOP is getting its fair share of the [Federal] special 
education funds. Although the Title I funds are much more 
adequate, I think that Federal funding for charter schools 
should be increased because they don't get all of the tax 
dollars that should follow a student who leaves the traditional 
public schools.''
    Based upon the hearing record, there is strong evidence 
that more should be done by the Secretary and the State 
Educational Agencies to ensure that charter schools receive 
their fair or commensurate share of Federal, formula based 
categorical grant aid. Accordingly, the Committee has included 
language requiring the Secretary and State Educational Agencies 
to ensure that charter schools know about their eligibility for 
Federal categorical aid, and that such aid is promptly 
distributed to charter schools, in a fair, equitable, and 
appropriate manner in accordance with Federal law.

                          National Activities

    The Committee reduced the Secretary's set-aside for 
national activities from 10 percent to 5 percent in an effort 
to send more money directly to charter schools. In the original 
statute, the Secretary was permitted to reserve up to 10 
percent of the appropriation for National Activities. However, 
the Committee notes that the 10 percent set-aside was linked to 
a $15 million authorization. In light of the fact that H.R. 
2616 includes a $100 million authorization, the Committee 
believes it is prudent to reduce the percent the Secretary 
could reserve from the top of the Federal allocation and drive 
95 percent of the funds down to charter schools.
    It should be noted the Administration did not oppose 
reducing the amount reserved for National Activities and that 
testimony provided at the hearings supports reducing their 
percentage. Jeanne Allen, President of the Center for Education 
Reform, an organization which provides information and 
assistance to citizens and educators across the country 
interested in establishing and running charters schools, 
testified at the September 16, 1997 hearing that:

          * * * the Department of Education or any other entity 
        does not need 10 percent of the money allocated for 
        research and activities * * * in fact much of the money 
        could have been used on text books and teacher training 
        and things this year, had it not been allocated to the 
        Department and while they are doing some good things in 
        terms of the national study and various events, they 
        are having a hard time trying to figure out how to 
        spend all the charter school money allotted to them.

    In addition to reducing the set-aside, H.R. 2616 refocuses 
the purpose and intent of the National Activities. While 
evaluation remains an important component to the National 
Activity section, the Committee redirects the Department to 
focus on activities and projects that would directly benefit 
schools. In 1994, the charter schools movement was new, 
therefore the primary focus for the National Activities 
centered on evaluation and the collection and dissemination of 
information on successful charter schools, rather than on 
providing direct assistance to charter schools. Over the last 
few years, the number of charter schools has blossomed as have 
studies and evaluations of the charter school movement. As a 
result, we are now aware of the specific barriers that face 
charter schools.
    The National Activities section in H.R. 2616 is in response 
to the enormous body of evidence that points to a lack of 
start-up funds and private capital as well as the difficulty in 
accessing Title I and IDEA funds as the biggest obstacles 
facing charter schools operators. The Committee believes that 
in some cases these obstacles are so prohibitive that well-
intentioned parents and teachers wishing to start a charter 
school cannot due to a lack of adequate financial and technical 
resources. The new National Activities section addresses these 
concerns by requiring the Secretary to provide charter schools, 
either directly or through the SEA, with information on 
available education funds and assistance in applying for those 
funds. Furthermore, the Secretary is directed to issue a 
contract with an organization(s) to assist charter schools in 
obtaining private capital and to improve access to private 
capital by charter schools. Further, the Secretary is required 
to disseminate the best practices of charter schools to other 
public schools. The Committee expects that dissemination of 
best practices will lead to increased successes for all schools 
and will bring the best components of educational reform to the 
classrooms of traditional public schools. The Committee 
believes redirecting the purposes of the National Activities 
contributes to the goal of having 3000 charter schools in 
operation by the year 2000.

                         Private Capitalization

    The Committee has included language in the bill requiring 
the Department of Education to give priority, under National 
Activities, to help charter schools with what most charter 
school operators consider to be their number one problem--the 
lack of funding for capitalization.
    Why is this a problem? There are two primary reasons. 
First, of the 29 States with charter school laws, only one--
Minnesota--provides a per pupil allocation for both capital 
expenses and operating expenses. The remaining States provide 
charter schools with per pupil allocations only for operating 
expenses, and in many cases, the per pupil operating allocation 
may only be 70, 80, or 90 percent of the allocation for 
traditional public schools. Traditional public schools, on the 
other hand, typically receive a per pupil allocation for both 
capital and operating expenses. Second, the board of trustees 
of charter schools have no legal authority to approve school 
construction bonds. On the other hand, the local school board 
of traditionalpublic schools has authority to approve the 
issuance of school construction bonds, which are in turn used to 
finance the building of new schools.
    Despite these difficult circumstances, charter school 
operators, through sheer fortitude and creativity, have been 
able to obtain property to house their schools. In some cases, 
philanthropists and foundations have donated vacant commercial 
buildings for use by charter schools. In other cases, school 
districts have made available surplus school properties. And in 
yet other cases, charter school operators have been able to 
negotiate very favorable lease agreements. Nevertheless, many 
have faced great difficulties. This bill attempts to make the 
process easier.
    Two recent studies have noted in great detail the extent of 
the problem. In the Hudson Institute's ``Charter Schools In 
Action: What Have We Learned,'' it's authors, Chester Finn Jr., 
Bruno Manno, and Louanne Bierlein, wrote:

          The lack of capital funds--both at the start and 
        ongoing--magnifies this problem [problem of charter 
        schools not opening because of lack of adequate initial 
        funding]. It is one thing to secure money for smaller 
        items such as books and furniture; it is another to 
        obtain adequate funds to buy or rent a usable facility 
        and complete the upgrading that is so often necessary 
        to meet health, safety and disabled-access codes. Most 
        charter schools do not have any use of district funds 
        levied for capital construction, purchase, and 
        renovation, nor do they have the ability to issue their 
        own bonds * * * Most charter schools, therefore, must 
        use a portion of their operating funds (which in most 
        cases is already less) to secure, furnish, and maintain 
        facilities * * *
          Because of the dearth of capital funding, only 
        fourteen (40 percent) of the schools in our sample were 
        in facilities that we considered generally good, twelve 
        (34 percent) were in ``adequate'' ones, and nine (26 
        percent) were housed in facilities that seemed 
        inadequate to us. Consider, for example the West 
        Michigan Academy of Environment Science in Grand 
        Rapids. During 1995-96, this school of 350 students was 
        housed in an old coliseum. Part of its lease 
        requirement was that twice during the year the school 
        had to pack up everything (including books, furniture, 
        and even temporary walls) and move it out of the 
        building--to allow a dog show and a circus to move in! 
        Parents assisted with this burdensome task, which 
        turned out to have one upside: the school could 
        completely reconfigure itself when it set back up in a 
        few days. (Even with these facility-related 
        constraints, the waiting list for West Michigan Academy 
        exceeds 150). The school plans to acquire its own 
        facility, including garden and farm areas, once 
        adequate financing can be obtained.

    A second study, the Department of Education's ``A Study of 
Charter Schools: First-Year Report 1997,'' is in accord with 
the Hudson findings. The study found that a large percentage of 
newly created charter schools have been troubled by 
insufficient start-up funds and inadequate facilities. The 
report notes:

          * * * although some newly created schools are located 
        in district-owned space, many are located in non-
        traditional spaces. A few schools have taken innovative 
        or creative steps to resolve their facilities problems. 
        For example, one school leases space in multiple sites 
        in shopping malls scattered throughout the district, at 
        a steep discount relative to prevailing rents. Others 
        are located in leased commercial space or previously-
        closed private or parochial schools. Some are housed in 
        temporary structures.

    The Committee also recognizes that school construction, 
whether for public charter schools, or traditional public 
schools, is primarily a State and local responsibility. The 
Committee has accordingly required the Department of Education 
to assist States and counties in this matter by directing the 
Secretary to award contracts to qualified entities to assist 
charter schools in obtaining private capital; to conduct pilot 
projects in a variety of States to better understand and 
improve access to private capital; to collect information, on a 
nationwide basis, regarding successful programs that access 
private capital for charter schools; and to disseminate any 
such information to all charter schools.

                   The Definition of Charter Schools

    One of the most unique and defining qualities of a charter 
school is that parents choose to send their children to a 
charter school, unlike most traditional schools where 
attendance is usually predicated on the address of the student. 
Another key aspect of the charter school concept is that these 
schools will be held accountable for academic results. As a 
means to measure a charter school's success, the charter school 
has a written performance agreement with the chartering 
authority that outlines a school's particular goals. The 
Committee feels that both the element of choice and the 
existence of the performance contract are defining 
characteristics of a charter school and as a result should be 
incorporated in the definition of a charter school.
    In tightening the definition of charter schools, the 
Committee also reviewed the current interpretation of what 
qualifies as a charter school. It should be noted that although 
the statute is silent on private schools that convert to public 
charter schools, it is the current policy of the Department of 
Education as well as the express intent of the Committee that 
public charter schools that have been converted from private 
schools are, for the purposes of the Federal statute, 
considered charter schools and are not prohibited from 
receiving Federal education dollars. Private schools that 
convert to public charter schools may no longer charge tuition, 
are required to select their students by a lottery and must 
comply with all Federal education and civil rights laws. They 
are in every manner a public charter school.
    Private school conversion is permitted in five States and 
the District of Columbia and according to the Department of 
Education's First Year Report, about one-tenth of all charter 
schools were previously private schools.
    Furthermore, the Committee notes that there is nothing in 
the statute that prohibits charter schools from contracting 
with for-profit companies to manage the operations of a charter 
school.The Department currently does not prohibit charter 
schools who contract out specific services with for-profit 
organizations from receiving Federal dollars. The Committee believes 
that Federal assistance should continue to be made available to a 
charter school regardless of whether the chartered entity provides 
educational services by means of a contract with another person, 
entity, or organization, including a corporation.

   Prior Year Enrollment--Title I Eligibility for New Charter Schools

    During the course of hearings in 1997 and through the 
Department of Education's First Year Report and other private 
studies, the Committee has become aware that some new charter 
schools are not receiving funding from Title I of the 
Elementary and Secondary Education Act.
    In traditional public schools, during the spring preceding 
the start of the school year, schools provide to their school 
districts a count of their number of Title I eligible students. 
This number is then used by the school district and the 
Department of Education for purposes of determining the Title I 
allocations for the school year which starts in September. An 
announcement of the allocations for the coming school year is 
usually made in the late spring or early summer and school 
districts and schools are able to plan for the coming year 
based on those allocations.
    However, charter schools that are opening for the first 
time in the fall of a given year have no such Title I count 
during the preceding spring or summer because their potential 
student enrollment is often still being determined. As a 
result, they have no basis on which to obtain a Title I 
allocation by the time the school opens.
    As earlier mentioned, testimony at hearings has confirmed 
this problem. As recently as September 16, 1997, in written 
testimony before the Subcommittee on Early Childhood, Youth and 
Families, Ms. Cornelia Blanchette of the General Accounting 
Office said ``* * * our survey has identified a variety of 
barriers that made it difficult for charter school operators to 
apply for and receive title I and IDEA [Individuals With 
Disabilities Education Act] funds. For example, three officials 
told us that because they had no prior year's enrollment or 
student eligibility data, they were not eligible under State 
guidelines for Federal funds.'' Blanchette further noted that 
two of three respondents for whom lack of prior year's 
enrollment data was a problem were newly created schools while 
the third was converted from a formerly private institution.
    Mr. John Fiegel, the charter schools program director for 
the Department of Education testified at an April 9, 1997 
hearing that the Department is conducting a study on whether 
charter schools are receiving their fair share of Federal 
education funds. He stated:

          We are also conducting a short four to five month 
        study on Federal funds and charter schools, whether 
        charter schools are getting their fair share, what are 
        the issues revolving around Federal funds. We will be 
        completing a report on that within four to five months, 
        and we will send a letter and guidance, or the report, 
        to every charter school, and possibly to local 
        districts and States as well.

    To date, the Committee has not received the Department's 
findings and would urge the Department to promptly complete the 
study and disseminate the results. In addition, Assistant 
Secretary Tirozzi noted his concern about the emerging issue of 
charter schools accessing Federal education aid such as Title 
I, Safe and Drug Free Schools, and Eisenhower Professional 
Development funds.
    The Committee is also aware that the Hudson Institute's 
July 1997 report found that Title I funds were typically 
allotted on the basis of the previous year's population of 
Title I eligible children, ``leaving start-up charters 
completely stranded for their first year.''
    For all of these reasons, the Committee has included 
language requiring the Secretary of Education to take such 
measures as necessary to ensure that every charter school 
receives its full share of funding in the calendar year in 
which it first opens. The Secretary shall also ensure that 
every charter school expanding its enrollment in any subsequent 
year of operation receives its full share of funding during the 
calendar year of such expansion.

                           Special Education

    H.R. 2616 complements the new IDEA legislation by requiring 
SEAs and the Secretary of Education to provide technical 
assistance to charter schools who frequently struggle with the 
complex paperwork requirements associated with IDEA. In 
addition, the bill directs SEAs and LEAs to ensure that a 
student's Individual Education Plan (IEP) is transferred to the 
charter school, in accordance with State law. The Committee 
believes these two provisions will assist charter schools in 
drawing down more funds to serve special education students as 
well as providing charter schools with the necessary ``know-
how'' on how to best serve special education students.
    Furthermore, it is the consistent opinion of the Committee 
as reflected in both the IDEA legislation passed in June of 
1997 and in this bill, that charter schools must fully comply 
with the requirements and provisions of IDEA. The Committee 
recognizes that charter schools like all public schools in 
States that accept funding under Part B of the Individuals with 
Disabilities Education Act (IDEA), must provide a free 
appropriate public education (FAPE) to children with 
disabilities enrolled in their programs. It should also be 
noted that both Title X, Part C of the Elementary and Education 
Act which established federal funding for charter schools and 
this bill stipulate that charter schools must comply with Part 
of IDEA.
    The IDEA Amendments of 1997 signed into law, by the 
President on June 4, 1997, noted the rise of charter schools as 
an education alternative and included provisions to facilitate 
the delivery of FAPE to children with disabilities in charter 
schools. In the case of charter schools that are part of a LEA, 
IDEA now provides that LEAs must serve the education of 
children with disabilities in charter schools as it serves 
children with disabilities in other schools. IDEA also now 
ensures that LEAs must provide Federal funds to charter schools 
in the same manner that they provide them to other schools. In 
essence, LEAs must continue to serve children with disabilities 
enrolled in charter schools, as they would with traditional 
public schools.

                               Conclusion

    Charter schools have made great strides in just a few 
years. In 1991, Minnesota became the first State to authorize 
charter schools. We now have 29 States with charter laws, along 
with the District of Columbia and Puerto Rico, and more than 
500 charter schools currently in operation.
    The increase in the authorization level to $100 million is 
consistent with the Administration's budget request, and goes a 
long way toward meeting the needs of these fast-growing, 
innovative public schools. The increase will also help meet the 
Administration's goal of having 3,000 charter schools by the 
end of this century.
    Finally, the bill drives 95% of Federal charter funding to 
the State and local levels, ensures that charter schools 
compete on equal footing for Federal categorical grant aid, and 
grants priority in the distribution of new money to those 
States that have laws which provide for fiscal autonomy, 
increases in the number of charter schools, and periodic review 
and evaluation of academic accountability.

                      Section by Section Analysis

                         Section 1. Short Title

    This Act may be cited as the ``Charter Schools Amendments 
Act of 1997.''

                 Section 2. Innovative Charter Schools

    Amends Title VI of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7301 et seq.) to allow State and Local 
educational agencies to use their Title VI money both at the 
State level and local levels for charter schools. This would be 
an additional use of funds for Title VI.

                       Section 3. Charter Schools

    Amends part C of title X of the Elementary and Secondary 
Education Act of 1965 to read as follows:

                       ``PART C--CHARTER SCHOOLS

    ``Section 10301. Findings and Purpose.--Contains the 
findings and purposes of the Act.
    ``Section 10302. Program Authorized.--Contains the terms 
made by the Secretary to conduct charter school programs 
including program periods, limitation, priority and 
requirements.
    ``Section 10303. Applications.-- Contains application 
requirements for State educational agencies desiring Federal 
money for State charter school programs.
    ``Section 10304. Administration.--Defines selection 
criteria for the purpose of awarding grants to State 
educational agencies and eligible applicants; establishes a 
peer review requirement that each State educational agency 
shall use a peer review process to review applications and 
defines the uses of funds.
    ``Section 10305. National Activities.--Directs the 
Secretary to reserve up to 5% of the appropriation to be 
reserved for National Activities, specifically for: evaluation, 
technical assistance, and dissemination of best practices. This 
section also directs the Secretary tocontract, through a 
competitive bidding process, to an organization to assist charter 
schools in accessing private capital.
    ``Section 10306 Part A, Title I. Allocation During First 
Year and for Successive Enrollment Expansions.--Directs the 
Secretary and each State educational agency to ensure that each 
charter school receives its full share of federal funding, in 
particular Title I funding, in the calendar year in which it 
first opens and that each charter school expanding its 
enrollment in any subsequent year of operation receives its 
full share of funding during the calendar year of such 
expansion.
    ``Section 10307. Records Transfer.-- Directs State and 
local educational agencies to ensure that student records are 
transferred to the charter school.
    ``Section 10308. Paperwork Reduction.--Stipulates that the 
implementation of the Act shall result in a minimum of 
paperwork for eligible applicants and charter schools.
    ``Section 10309. Definitions.--Defines key terms in the Act 
including, Charter School, Developer, Eligible Applicant, and 
Authorized Public Chartering Agency.
    ``Section 10310. Authorization of Appropriations.--
Authorizes $100,000,000 to be appropriated for fiscal year 1998 
and such sums as may be necessary for each of the 4 succeeding 
fiscal years.''

                        Explanation of Amendment

    The Amendment in the Nature of a Substitute is explained in 
this report.

                  Oversight Findings of the Committee

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives and clause 2(b)(1) of 
rule X of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in the body of this report.

                    Government Reform and Oversight

    With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of H.R. 2616.

                           Committee Estimate

    Clause 7 of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs which would be incurred in carrying out 
H.R. 2616. However, clause 7(d) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act of 1974.

                        Constitutional Authority

    Title X, Part C of the Elementary and Secondary Schools Act 
of 1965 and the amendments made by H.R. 2616, are 
Constitutional under the spending clause of the constitution, 
Article I section 8, clause 1.

                Application of Law to Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. This bill provides funds to States for programs and 
services to eligible recipients; the bill does not prohibit 
legislative branch employees from otherwise being eligible for 
such services.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget & Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The Committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office and as such the Committee 
agrees that the bill does not contain any unfunded mandates. 
See infra.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 2(l)(3)(B) of 
rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of clause 2(l)(3)(C) of rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 2616 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 10, 1997.
Hon. William F. Goodling,
Chairman, Committee on Education and the Workforce, House of 
        Representatives, Washington, DC
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2616, the Charter 
Schools Amendments Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Justin Latus.
            Sincerely,
                                                      James L. Blum
                                     For June E. O'Neill, Director.
    Enclosure.

H.R. 2616--Charter Schools Amendments Act of 1997

    Summary: H.R. 2616 would reauthorize the charter school 
program through 2002. It would authorize $100 million for 
charter schools in fiscal year 1998 and such sums as may be 
necessary for fiscal years 1999-2002. The charter schools 
program received an appropriation of $51 million in 1997.
    H.R. 2616 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: H.R. 2616 would 
amend the charter schools program in Title VI of the Elementary 
and Secondary Education Act of 1965. Under current law, the 
charter schools program is authorized at such sums as necessary 
through 1999. The General Education Provisions Act provides an 
automatic one-year extension of authorizations for all programs 
in the Department of Education, extending current 
authorizations through 2000.
    Under H.R. 2616, both states and other applicants would be 
allowed to receive grants for a longer period of time than 
under current law, and those that received grants before 
October 1, 1997, would be eligible to receive another grant for 
two more years. The bill would also establish priorities for 
allocating a portion of the federal charter school money based 
on factors such as whether states require charter schools to be 
treated as autonomous schools for the purposes of distributing 
other federal education funding and whether states monitor the 
performance of charter schools in meeting education standards.
    The estimated budgetary impact of H.R. 2616 is shown in the 
following table. CBO used historical spending patterns of the 
charter school program in estimating outlays. The costs of this 
legislation fall within budget function 500 (education, 
training, employment, and social services). This estimate 
assumes a November 15, 1997, enactment date.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
                                         WITH ADJUSTMENTS FOR INFLATION                                         
                                                                                                                
Current law authorizations of appropriations:                                                                   
    Estimated authorization...................................        52        54        55         0         0
    Estimated outlays.........................................        44        52        54        48        11
Proposed changes:                                                                                               
    Estimated authorization...................................        48        49        50       108       111
    Estimated outlays.........................................         6        38        48        57        97
Total spending under H.R. 2616:                                                                                 
    Estimated authorization...................................       100       103       105       108       111
    Estimated outlays.........................................        50        90       102       105       108
                                                                                                                
                                        WITHOUT ADJUSTMENTS FOR INFLATION                                       
                                                                                                                
Current law authorizations of appropriations:                                                                   
    Estimated authorizations..................................        51        51        51         0         0
    Estimated outlays.........................................        44        50        51        45        10
Proposed changes:                                                                                               
    Estimated authorization...................................        49        49        49       100       100
    Estimated outlays.........................................         6        39        48        55        90
Total spending under H.R. 2616:                                                                                 
    Estimated authorization...................................       100       100       100       100       100
    Estimated outlays.........................................        50        90        99       100       100
----------------------------------------------------------------------------------------------------------------

    Pay-as-you-go considerations: None.
    Estimated impact on State, local, and tribal governments: 
H.R. 2616 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments. Participation in the grant program authorized by 
this bill would be voluntary on the part of state educational 
agencies and schools.
    Estimated prepared by: Federal Cost: Sheila Dacey and 
Justine Latus; Impact on State, Local, and Tribal Governments: 
Marc Nicole, Impact on the Private Sector: Nabeel Alsalam.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.


         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

             ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965

          * * * * * * *

           TITLE VI--INNOVATIVE EDUCATION PROGRAM STRATEGIES

          * * * * * * *

                         PART B--STATE PROGRAMS

SEC. 6201. STATE USES OF FUNDS.

  (a) Authorized Activities.--A State educational agency may 
use funds made available for State use under this title only 
for--
          (1) State administration of programs under this title 
        including--
                  (A) supervision of the allocation of funds to 
                local educational agencies;
                  (B) planning, supervision, and processing of 
                State funds; and
                  (C) monitoring and evaluation of programs and 
                activities under this title; [and]
          (2) support for planning, designing, and initial 
        implementation of charter schools as described in part 
        C of title X; and
          [(2)] (3) technical assistance and direct grants to 
        local educational agencies and statewide education 
        reform activities including effective schools programs 
        which assist local educational agencies to provide 
        targeted assistance.
          * * * * * * *

              PART C--LOCAL INNOVATIVE EDUCATION PROGRAMS

SEC. 6301. TARGETED USE OF FUNDS.

  (a) * * *
  (b) Innovative Assistance.--The innovative assistance 
programs referred to in subsection (a) include--
          (1) * * *
          * * * * * * *
          (7) school reform activities that are consistent with 
        the Goals 2000: Educate America Act; [and]
          (8) planning, designing, and initial implementation 
        of charter schools as described in part C of title X; 
        and
          [(8)] (9) school improvement programs or activities 
        under sections 1116 and 1117.
          * * * * * * *

               TITLE X--PROGRAMS OF NATIONAL SIGNIFICANCE

          * * * * * * *

                    [PART C--PUBLIC CHARTER SCHOOLS

[SEC. 10301. FINDINGS AND PURPOSE.

  [(a) Findings.--The Congress finds that--
          [(1) enhancement of parent and student choices among 
        public schools can assist in promoting comprehensive 
        educational reform and give more students the 
        opportunity to learn to challenging State content 
        standards and challenging State student performance 
        standards, if sufficiently diverse and high-quality 
        choices, and genuine opportunities to take advantage of 
        such choices, are available to all students;
          [(2) useful examples of such choices can come from 
        States and communities that experiment with methods of 
        offering teachers and other educators, parents, and 
        other members of the public the opportunity to design 
        and implement new public schools and to transform 
        existing public schools;
          [(3) charter schools are a mechanism for testing a 
        variety of educational approaches and should, 
        therefore, be exempted from restrictive rules and 
        regulations if the leadership of such schools commits 
        to attaining specific and ambitious educational results 
        for educationally disadvantaged students consistent 
        with challenging State content standards and 
        challenging State student performance standards for all 
        students;
          [(4) charter schools, as such schools have been 
        implemented in a few States, can embody the necessary 
        mixture of enhanced choice, exemption from restrictive 
        regulations, and a focus on learning gains;
          [(5) charter schools, including charter schools that 
        are schools-within-schools, can help reduce school 
        size, which reduction can have a significant effect on 
        student achievement;
          [(6) the Federal Government should test, evaluate, 
        and disseminate information on a variety of charter 
        school models in order to help demonstrate the benefits 
        of this promising educational reform; and
          [(7) there is a strong documented need for cash-flow 
        assistance to charter schools that are starting up, 
        because State and local operating revenue streams are 
        not immediately available.
  [(b) Purpose.--It is the purpose of this part to increase 
national understanding of the charter schools model by--
          [(1) providing financial assistance for the design 
        and initial implementation of charter schools; and
          [(2) evaluating the effects of such schools, 
        including the effects on students, student achievement, 
        staff, and parents.

[SEC. 10302. PROGRAM AUTHORIZED.

  [(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to 
section 10303 to enable such agencies to conduct a charter 
school grant program in accordance with this part.
  [(b) Special Rule.--If a State educational agency elects not 
to participate in the program authorized by this part or does 
not have an application approved under section 10303, the 
Secretary may award a grant to an eligible applicant that 
serves such State and has an application approved pursuant to 
section 10303(c).
  [(c) Program Periods.--
          [(1) Grants to states.--Grants awarded to State 
        educational agencies under this part shall be awarded 
        for a period of not more than 3 years.
          [(2) Grants to eligible applicants.--Grants awarded 
        by the Secretary to eligible applicants or subgrants 
        awarded by State educational agencies to eligible 
        applicants under this part shall be awarded for a 
        period of not more than 3 years, of which the eligible 
        applicant may use--
                  [(A) not more than 18 months for planning and 
                program design; and
                  [(B) not more than 2 years for the initial 
                implementation of a charter school.
  [(d) Limitation.--The Secretary shall not award more than one 
grant and State educational agencies shall not award more than 
one subgrant under this part to support a particular charter 
school.

[SEC. 10303. APPLICATIONS.

  [(a) Applications From State Agencies.--Each State 
educational agency desiring a grant from the Secretary under 
this part shall submit to the Secretary an application at such 
time, in such manner, and containing or accompanied by such 
information as the Secretary may require.
  [(b) Contents of a State Educational Agency Application.--
Each application submitted pursuant to subsection (a) shall--
          [(1) describe the objectives of the State educational 
        agency's charter school grant program and a description 
        of how such objectives will be fulfilled, including 
        steps taken by the State educational agency to inform 
        teachers, parents, and communities of the State 
        educational agency's charter school grant program;
          [(2) contain assurances that the State educational 
        agency will require each eligible applicant desiring to 
        receive a subgrant to submit an application to the 
        State educational agency containing--
                  [(A) a description of the educational program 
                to be implemented by the proposed charter 
                school, including--
                          [(i) how the program will enable all 
                        students to meet challenging State 
                        student performance standards;
                          [(ii) the grade levels or ages of 
                        children to be served; and
                          [(iii) the curriculum and 
                        instructional practices to be used;
                  [(B) a description of how the charter school 
                will be managed;
                  [(C) a description of--
                          [(i) the objectives of the charter 
                        school; and
                          [(ii) the methods by which the 
                        charter school will determine its 
                        progress toward achieving those 
                        objectives;
                  [(D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                  [(E) a description of how parents and other 
                members of the community will be involved in 
                the design and implementation of the charter 
                school;
                  [(F) a description of how the authorized 
                public chartering agency will provide for 
                continued operation of the school once the 
                Federal grant has expired, if such agency 
                determines that the school has met the 
                objectives described in subparagraph (C)(i);
                  [(G) a request and justification for waivers 
                of any Federal statutory or regulatory 
                provisions that the applicant believes are 
                necessary for the successful operation of the 
                charter school, and a description of any State 
                or local rules, generally applicable to public 
                schools, that will be waived for, or otherwise 
                not apply to, the school;
                  [(H) a description of how the subgrant funds 
                or grant funds, as appropriate, will be used, 
                including a description of how such funds will 
                be used in conjunction with other Federal 
                programs administered by the Secretary;
                  [(I) a description of how students in the 
                community will be--
                          [(i) informed about the charter 
                        school; and
                          [(ii) given an equal opportunity to 
                        attend the charter school;
                  [(J) an assurance that the eligible applicant 
                will annually provide the Secretary and the 
                State educational agency such information as 
                may be required to determine if the charter 
                school is making satisfactory progress toward 
                achieving the objectives described in 
                subparagraph (C)(i);
                  [(K) an assurance that the applicant will 
                cooperate with the Secretary and the State 
                educational agency in evaluating the program 
                assisted under this part; and
                  [(L) such other information and assurances as 
                the Secretary and the State educational agency 
                may require.
  [(c) Contents of Eligible Applicant Application.--Each 
eligible applicant desiring a grant pursuant to section 
10302(e)(1) or10302(b) shall submit an application to the State 
educational agency or Secretary, respectively, at such time, in such 
manner, and accompanied by such information as the State educational 
agency or Secretary, respectively, may reasonably require.
  [(d) Contents of Application.--Each application submitted 
pursuant to subsection (c) shall contain--
          [(1) the information and assurances described in 
        subparagraphs (A) through (L) of subsection (b)(3), 
        except that for purposes of this subsection 
        subparagraphs (I), (J), and (K) of such subsection 
        shall be applied by striking ``and the State 
        educational agency'' each place such term appears; and
          [(2) assurances that the State educational agency--
                  [(A) will grant, or will obtain, waivers of 
                State statutory or regulatory requirements; and
                  [(B) will assist each subgrantee in the State 
                in receiving a waiver under section 10304(e).

[SEC. 10304. ADMINISTRATION.

  [(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies 
under this part on the basis of the quality of the applications 
submitted under section 10303(b), after taking into 
consideration such factors as--
          [(1) the contribution that the charter schools grant 
        program will make to assisting educationally 
        disadvantaged and other students to achieving State 
        content standards and State student performance 
        standards and, in general, a State's education 
        improvement plan;
          [(2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's 
        charter schools law;
          [(3) the ambitiousness of the objectives for the 
        State charter school grant program;
          [(4) the quality of the strategy for assessing 
        achievement of those objectives; and
          [(5) the likelihood that the charter school grant 
        program will meet those objectives and improve 
        educational results for students.
  [(b) Selection Criteria for Eligible Applicants.--The 
Secretary shall award grants to eligible applicants under this 
part on the basis of the quality of the applications submitted 
under section 10303(c), after taking into consideration such 
factors as--
          [(1) the quality of the proposed curriculum and 
        instructional practices;
          [(2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local 
        educational agency to the charter school;
          [(3) the extent of community support for the 
        application;
          [(4) the ambitiousness of the objectives for the 
        charter school;
          [(5) the quality of the strategy for assessing 
        achievement of those objectives; and
          [(6) the likelihood that the charter school will meet 
        those objectives and improve educational results for 
        students.
  [(c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this part, shall use a peer 
review process to review applications for assistance under this 
part.
  [(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this part, shall 
award subgrants under this part in a manner that, to the extent 
possible, ensures that such grants and subgrants--
          [(1) are distributed throughout different areas of 
        the Nation and each State, including urban and rural 
        areas; and
          [(2) will assist charter schools representing a 
        variety of educational approaches, such as approaches 
        designed to reduce school size.
  [(e) 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 
10306(1), if--
          [(1) the waiver is requested in an approved 
        application under this part; and
          [(2) the Secretary determines that granting such a 
        waiver will promote the purpose of this part.
  [(f) Use of Funds.--
          [(1) State educational agencies.--Each State 
        educational agency receiving a grant under this part 
        shall use such grant funds to award subgrants to one or 
        more eligible applicants in the State to enable such 
        applicant to plan and implement a charter school in 
        accordance with this part.
          [(2) Eligible applicants.--Each eligible applicant 
        receiving funds from the Secretary or a State 
        educational agency shall use such funds to plan and 
        implement a charter school in accordance with this 
        part.
          [(3) Allowable activities.--An eligible applicant 
        receiving a grant or subgrant under this part may use 
        the grant or subgrant funds only for--
                  [(A) post-award planning and design of the 
                educational program, which may include--
                          [(i) refinement of the desired 
                        educational results and of the methods 
                        for measuring progress toward achieving 
                        those results; and
                          [(ii) professional development of 
                        teachers and other staff who will work 
                        in the charter school; and
                  [(B) initial implementation of the charter 
                school, which may include--
                          [(i) informing the community about 
                        the school;
                          [(ii) acquiring necessary equipment 
                        and educational materials and supplies;
                          [(iii) acquiring or developing 
                        curriculum materials; and
                          [(iv) other initial operational costs 
                        that cannot be met from State or local 
                        sources.
          [(4) Administrative expenses.--Each State educational 
        agency receiving a grant pursuant to this part may 
        reserve not more than 5 percent of such grant funds for 
        administrative expenses associated with the charter 
        school grant program assisted under this part.
          [(5) Revolving loan funds.--Each State educational 
        agency receiving a grant pursuant to this part may 
        reserve not more than 20 percent of the grant amount 
        for the establishment of a revolving loan fund. Such 
        fund may be used to make loans to eligible applicants 
        that have received a subgrant under this part, under 
        such terms as may be determined by the State 
        educational agency, for the initial operation of the 
        charter school grant program of such recipient until 
        such time as the recipient begins receiving ongoing 
        operational support from State or local financing 
        sources.

[SEC. 10305. NATIONAL ACTIVITIES.

  [The Secretary may reserve not more than ten percent of the 
funds available to carry out this part for any fiscal year 
for--
          [(1) peer review of applications under section 
        10304(c);
          [(2) an evaluation of the impact of charter schools 
        on student achievement, including those assisted under 
        this part; and
          [(3) other activities designed to enhance the success 
        of the activities assisted under this part, such as--
                  [(A) development and dissemination of model 
                State charter school laws and model contracts 
                or other means of authorizing and monitoring 
                the performance of charter schools; and
                  [(B) collection and dissemination of 
                information on successful charter schools.

[SEC. 10306. DEFINITIONS.

  [As used in this part:
          [(1) The term ``charter school'' means a public 
        school that--
                  [(A) in accordance with an enabling State 
                statute, is exempted 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, and part B of the Individuals with 
                Disabilities Education Act;
                  [(H) admits students on the basis of a 
                lottery, if more students apply for admission 
                than can be accommodated;
                  [(I) agrees to comply with the same Federal 
                and State audit requirements as do other 
                elementary and secondary schools in the State, 
                unless such requirements are specifically 
                waived for the purpose of this program;
                  [(J) meets all applicable Federal, State, and 
                local health and safety requirements; and
                  [(K) operates in accordance with State law.
          [(2) The term ``developer'' means an individual or 
        group of individuals (including a public or private 
        nonprofit organization), which may include teachers, 
        administrators and other school staff, parents, or 
        other members of the local community in which a charter 
        school project will be carried out.
          [(3) The term ``eligible applicant'' means an 
        authorized public chartering agency participating in a 
        partnership with a developer to establish a charter 
        school in accordance with this part.
          [(4) The term ``authorized public chartering agency'' 
        means a State educational agency, local educational 
        agency, or other public entity that has the authority 
        pursuant to State law and approved by the Secretary to 
        authorize or approve a charter school.

[SEC. 10307. AUTHORIZATION OF APPROPRIATIONS.

  [For the purpose of carrying out this part, there are 
authorized to be appropriated $15,000,000 for fiscal year 1995 
and such sums as may be necessary for each of the four 
succeeding fiscal years.]

                     PART C--PUBLIC CHARTER SCHOOLS

SEC. 10301. FINDINGS AND PURPOSE.

  (a) Findings.--The Congress finds that--
          (1) enhancement of parent and student choices among 
        public schools can assist in promoting comprehensive 
        educational reform and give more students the 
        opportunity to learn to challenging State content 
        standards and challenging State student performance 
        standards, if sufficiently diverse and high-quality 
        choices, and genuine opportunities to take advantage of 
        such choices, are available to all students;
          (2) useful examples of such choices can come from 
        States and communities that experiment with methods of 
        offering teachers and other educators, parents, and 
        other members of the public the opportunity to design 
        and implement new public schools and to transform 
        existing public schools;
          (3) charter schools are a mechanism for testing a 
        variety of educational approaches and should, 
        therefore, be exempted from restrictive rules and 
        regulations if the leadership of such schools commits 
        to attaining specific and ambitious educational results 
        for educationally disadvantaged students consistent 
        with challenging State content standards and 
        challenging State student performance standards for all 
        students;
          (4) charter schools, as such schools have been 
        implemented in a few States, can embody the necessary 
        mixture of enhancedchoice, exemption from restrictive 
regulations, and a focus on learning gains;
          (5) charter schools, including charter schools that 
        are schools-within-schools, can help reduce school 
        size, which can have a significant effect on student 
        achievement;
          (6) the Federal Government should test, evaluate, and 
        disseminate information on a variety of charter school 
        models in order to help demonstrate the benefits of 
        this promising educational reform; and
          (7) there is a strong documented need for cash-flow 
        assistance to charter schools that are starting up, 
        because State and local operating revenue streams are 
        not immediately available.
  (b) Purposes.--The purposes of this part are--
          (1) to provide financial assistance for the planning, 
        design, initial implementation of charter schools;
          (2) to facilitate the ability of States and 
        localities to increase the number of charter schools in 
        the Nation to not less than 3,000 by the year 2000; and
          (3) to evaluate the effects of charter schools, 
        including the effects on students, student achievement, 
        staff, and parents.

SEC. 10302. PROGRAM AUTHORIZED.

  (a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to 
section 10303 to enable such agencies to conduct a charter 
school grant program in accordance with this part.
  (b) Special Rule.--If a State educational agency elects not 
to participate in the program authorized by this part or does 
not have an application approved under section 10303, the 
Secretary may award a grant to an eligible applicant that 
serves such State and has an application approved pursuant to 
section 10303.
  (c) Program Periods.--
          (1) Grants to states.--
                  (A) Basic grants.--Grants awarded to State 
                educational agencies under this part for 
                planning, design, or initial implementation of 
                charter schools, shall be awarded for a period 
                of not more than 5 years.
                  (B) Extension.--Any eligible applicant that 
                has received a grant or subgrant under this 
                part prior to October 1, 1997, shall be 
                eligible to receive an additional grant for a 
                period not to exceed 2 years in accordance with 
                this section.
          (2) Grants to eligible applicants.--
                  (A) Basic grants.--Grants awarded by the 
                Secretary to eligible applicants or subgrants 
                awarded by State educational agencies to 
                eligible applicants under this part shall be 
                awarded for planning, design, or initial 
                implementation of charter schools, for a period 
                not to exceed more than 5 years, of which the 
                eligible applicant may use--
                          (i) not more than 30 months for 
                        planning and program design; and
                          (ii) not more than 4 years for the 
                        initial implementation of a charter 
                        school.
                  (B) Extension.--Any eligible applicant that 
                has received a grant or subgrant under this 
                part prior to October 1, 1997, shall be 
                eligible to receive an additional grant for a 
                period not to exceed 2 years in accordance with 
                this section.
  (d) Limitation.--Except as otherwise provided under 
subsection (c), the Secretary shall not award more than one 
grant and State educational agencies shall not award more than 
one subgrant under this part to support a particular charter 
school.
  (e) Priority and Requirements.--
          (1) Priority.--
                  (A) Fiscal years 1998, 1999, and 2000.--In 
                awarding grants under this part for any of the 
                fiscal years 1998, 1999, and 2000 from funds 
                appropriated under section 10310 that are in 
                excess of $51,000,000 for the fiscal year, the 
                Secretary shall give priority to State 
                educational agencies in accordance with 
                subparagraph (C).
                  (B) Succeeding fiscal years.--In awarding 
                grants under this part for fiscal year 2001 or 
                any succeeding fiscal year from any funds 
                appropriated under section 10310, the Secretary 
                shall consider the number of charter schools in 
                each State and shall give priority to State 
                educational agencies in accordance with 
                subparagraph (C).
                  (C) Priority order.--In awarding grants under 
                subparagraphs (A) and (B), the Secretary shall, 
                in the order listed, give priority to a State 
                that--
                          (i) meets all requirements of 
                        paragraph (2);
                          (ii) meets 2 requirements of 
                        paragraph (2); and
                          (iii) meets 1 requirement of 
                        paragraph (2).
          (2) Requirements.--The requirements referred to in 
        paragraph (1)(C) are as follows:
                  (A) The State law regarding charter schools 
                ensures that each charter school has a high 
                degree of autonomy over its budgets and 
                expenditures.
                  (B) The State law regarding charter schools 
                provides that not less than 1 chartering 
                authority in the State allows for an increase 
                in the number of charter schools from 1 year to 
                the next year; and
                  (C) The State law regarding charter schools 
                provides for periodic review and evaluation by 
                the authorized public chartering agency of each 
                charter school to determine whether the school 
                is meeting or exceeding the academic 
                performance requirements and goals for charter 
                schools as set forth under State law or the 
                school's charter.

SEC. 10303. APPLICATIONS.

  (a) Applications From State Agencies.--Each State educational 
agency desiring a grant from the Secretary under this part 
shall submit to the Secretary an application at such time, in 
such manner, and containing or accompanied by such information 
as the Secretary may require.
  (b) Contents of a State Educational Agency Application.--Each 
application submitted pursuant to subsection (a) shall--
          (1) describe the objectives of the State educational 
        agency's charter school grant program and a description 
        of how such objectives will be fulfilled, including 
        steps taken by the Stateeducational agency to inform 
teachers, parents, and communities of the State educational agency's 
charter school grant program;
          (2) describe how the State educational agency will 
        inform each charter school of available Federal 
        programs and funds that each such school is eligible to 
        receive and ensure that each such school receives its 
        appropriate share of Federal education funds allocated 
        by formula; and
          (3) contain assurances that the State educational 
        agency will require each eligible applicant desiring to 
        receive a subgrant to submit an application to the 
        State educational agency containing--
                  (A) a description of the educational program 
                to be implemented by the proposed charter 
                school, including--
                          (i) how the program will enable all 
                        students to meet challenging State 
                        student performance standards;
                          (ii) the grade levels or ages of 
                        children to be served; and
                          (iii) the curriculum and 
                        instructional practices to be used;
                  (B) a description of how the charter school 
                will be managed;
                  (C) a description of--
                          (i) the objectives of the charter 
                        school; and
                          (ii) the methods by which the charter 
                        school will determine its progress 
                        toward achieving those objectives;
                  (D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                  (E) a description of how parents and other 
                members of the community will be involved in 
                the design and implementation of the charter 
                school;
                  (F) a description of how the authorized 
                public chartering agency will provide for 
                continued operation of the school once the 
                Federal grant has expired, if such agency 
                determines that the school has met the 
                objectives described in subparagraph (C)(i);
                  (G) a request and justification for waivers 
                of any Federal statutory or regulatory 
                provisions that the applicant believes are 
                necessary for the successful operation of the 
                charter school, and a description of any State 
                or local rules, generally applicable to public 
                schools, that will be waived for, or otherwise 
                not apply to, the school;
                  (H) a description of how the subgrant funds 
                or grant funds, as appropriate, will be used, 
                including a description of how such funds will 
                be used in conjunction with other Federal 
                programs administered by the Secretary;
                  (I) a description of how students in the 
                community will be--
                          (i) informed about the charter 
                        school; and
                          (ii) given an equal opportunity to 
                        attend the charter school;
                  (J) an assurance that the eligible applicant 
                will annually provide the Secretary and the 
                State educational agency such information as 
                may be required to determine if the charter 
                school is making satisfactory progress toward 
                achieving the objectives described in 
                subparagraph (C)(i);
                  (K) an assurance that the applicant will 
                cooperate with the Secretary and the State 
                educational agency in evaluating the program 
                assisted under this part;
                  (L) such other information and assurances as 
                the Secretary and the State educational agency 
                may require; and
          (4) describe how the State educational agency will 
        disseminate best or promising practices of charter 
        schools in such State to each local educational agency 
        in the State.
  (c) Contents of Eligible Applicant Application.--Each 
eligible applicant desiring a grant pursuant to section 10302 
shall submit an application to the State educational agency or 
Secretary, respectively, at such time, in such manner, and 
accompanied by such information as the State educational agency 
or Secretary, respectively, may reasonably require.
  (d) Contents of Application.--Each application submitted 
pursuant to subsection (c) shall contain--
          (1) the information and assurances described in 
        subparagraphs (A) through (L) of subsection (b)(3), 
        except that for purposes of this subsection 
        subparagraphs (J), (K), and (L) of such subsection 
        shall be applied by striking ``and the State 
        educational agency'' each place such term appears; and
          (2) assurances that the State educational agency--
                  (A) will grant, or will obtain, waivers of 
                State statutory or regulatory requirements; and
                  (B) will assist each subgrantee in the State 
                in receiving a waiver under section 10304(e).

SEC. 10304. ADMINISTRATION.

  (a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies 
under this part on the basis of the quality of the applications 
submitted under section 10303(b), after taking into 
consideration such factors as--
          (1) the contribution that the charter schools grant 
        program will make to assisting educationally 
        disadvantaged and other students to achieving State 
        content standards and State student performance 
        standards and, in general, a State's education 
        improvement plan;
          (2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's 
        charter schools law;
          (3) the ambitiousness of the objectives for the State 
        charter school grant program;
          (4) the quality of the strategy for assessing 
        achievement of those objectives;
          (5) the likelihood that the charter school grant 
        program will meet those objectives and improve 
        educational results for students; and
          (6) the number of charter schools created under this 
        part in the State.
  (b) Selection Criteria for Eligible Applicants.--The 
Secretary shall award grants to eligible applicants under this 
part onthe basis of the quality of the applications submitted 
under section 10303(c), after taking into consideration such factors 
as--
          (1) the quality of the proposed curriculum and 
        instructional practices;
          (2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local 
        educational agency to the charter school;
          (3) the extent of community support for the 
        application;
          (4) the ambitiousness of the objectives for the 
        charter school;
          (5) the quality of the strategy for assessing 
        achievement of those objectives; and
          (6) the likelihood that the charter school will meet 
        those objectives and improve educational results for 
        students.
  (c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this part, shall use a peer 
review process to review applications for assistance under this 
part.
  (d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this part, shall 
award subgrants under this part in a manner that, to the extent 
possible, ensures that such grants and subgrants--
          (1) are distributed throughout different areas of the 
        Nation and each State, including urban and rural areas; 
        and
          (2) will assist charter schools representing a 
        variety of educational approaches, such as approaches 
        designed to reduce school size.
  (e) 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 
10309(1), if--
          (1) the waiver is requested in an approved 
        application under this part; and
          (2) the Secretary determines that granting such a 
        waiver will promote the purpose of this part.
  (f) Use of Funds.--
          (1) State educational agencies.--Each State 
        educational agency receiving a grant under this part 
        shall use such grant funds to award subgrants to one or 
        more eligible applicants in the State to enable such 
        applicant to plan and implement a charter school in 
        accordance with this part.
          (2) Eligible applicants.--Each eligible applicant 
        receiving funds from the Secretary or a State 
        educational agency shall use such funds to plan and 
        implement a charter school in accordance with this 
        part.
          (3) Allowable activities for basic grants.--An 
        eligible applicant receiving a basic grant or subgrant 
        under section 10302(c)(2) may use the grant or subgrant 
        funds only for--
                  (A) post-award planning and design of the 
                educational program, which may include--
                          (i) refinement of the desired 
                        educational results and of the methods 
                        for measuring progress toward achieving 
                        those results; and
                          (ii) professional development of 
                        teachers and other staff who will work 
                        in the charter school; and
                  (B) initial implementation of the charter 
                school, which may include--
                          (i) informing the community about the 
                        school;
                          (ii) acquiring necessary equipment 
                        and educational materials and supplies;
                          (iii) acquiring or developing 
                        curriculum materials; and
                          (iv) other initial operational costs 
                        that cannot be met from State or local 
                        sources.
          (4) Administrative expenses.--Each State educational 
        agency receiving a grant pursuant to this part may 
        reserve not more than 5 percent of such grant funds for 
        administrative expenses associated with the charter 
        school grant program assisted under this part.

SEC. 10305. NATIONAL ACTIVITIES.

  The Secretary shall reserve for each fiscal year the lesser 
of 5 percent of the amount appropriated to carry out this part 
for the fiscal year or $5,000,000, to carry out, giving highest 
priority to carrying paragraph (2), the following:
          (1) To provide charter schools, either directly or 
        through the State educational agency, with information 
        regarding available education funds that such school is 
        eligible to receive, and assistance in applying for 
        Federal education funds which are allocated by formula, 
        including filing deadlines and submission of 
        applications; and
          (2) To provide, through 1 or more contracts using a 
        competitive bidding process--
                  (A) charter schools with assistance in 
                accessing private capital;
                  (B) pilot projects in a variety of States to 
                better understand and improve access to private 
                capital by charter schools; and
                  (C) collection on a nationwide basis, of 
                information regarding successful programs that 
                access private capital for charter schools and 
                disseminate any such relevant information and 
                model descriptions to all charter schools.
          (3) To provide for the completion of the 4-year 
        national study (which began in 1995) of charter schools 
        and any related evaluations or studies.
          (4)(A) To provide information to applicants for 
        assistance under this part;
          (B) assistance to applicants for assistance under 
        this part with the preparation of applications under 
        section 10303;
          (C) assistance in the planning and startup of charter 
        schools;
          (D) ongoing training and technical assistance to 
        existing charter schools; and
          (E) for the dissemination of best practices in 
        charter schools to other public schools.

SEC. 10306. PART A, TITLE I ALLOCATION DURING FIRST YEAR AND FOR 
                    SUCCESSIVE ENROLLMENT EXPANSIONS.

  For purposes of the allocation to schools by the States or 
their agencies of funds under part A of title I, or of any 
other Federaleducational assistance funds, the Secretary and 
each State educational agency shall take such measures not later than 6 
months after the date of the enactment of this part as are necessary to 
ensure that every charter school receives the Federal funding for which 
it is eligible in the calendar year in which it first opens, 
notwithstanding the fact that the identity and characteristics of the 
students enrolling in that school are not fully and completely 
determined until that school actually opens. These measures shall 
similarly ensure that every charter school expanding its enrollment in 
any subsequent year of operation receives the Federal funding for which 
it is eligible during the calendar year of such expansion.

SEC. 10307. RECORDS TRANSFER.

  State and local educational agencies, to the extent 
practicable, shall ensure that a student's records and if 
applicable a student's individualized education program as 
defined in section 602(11) of the Individuals with Disabilities 
Education Act (20 U.S.C. 1401(11)), are transferred to the 
charter school upon transfer of a student to a charter school 
in accordance with applicable State law.

SEC. 10308. PAPERWORK REDUCTION.

  To the extent practicable, the Secretary and each authorized 
public chartering agency, shall ensure that implementation of 
this part results in a minimum of paperwork for any eligible 
applicant or charter school.

SEC. 10309. DEFINITIONS.

  As used in this part:
          (1) The term ``charter school'' means a public school 
        that--
                  (A) in accordance with a specific State 
                charter school statute, is exempted 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, and part B of the Individuals with 
                Disabilities Education Act;
                  (H) is a school to which parents choose to 
                send their children, and that admits students 
                on the basis of a lottery, if more students 
                apply for admission than can be accommodated;
                  (I) agrees to comply with the same Federal 
                and State audit requirements as do other 
                elementary and secondary schools in the State, 
                unless such requirements are specifically 
                waived for the purpose of this program;
                  (J) meets all applicable Federal, State, and 
                local health and safety requirements;
                  (K) operates in accordance with State law; 
                and
                  (L) has a written performance contract with 
                the authorized public chartering agency in the 
                State.
          (2) The term ``developer'' means an individual or 
        group of individuals (including a public or private 
        nonprofit organization), which may include teachers, 
        administrators and other school staff, parents, or 
        other members of the local community in which a charter 
        school project will be carried out.
          (3) The term ``eligible applicant'' means an 
        authorized public chartering agency participating in a 
        partnership with a developer to establish a charter 
        school in accordance with this part.
          (4) The term ``authorized public chartering agency'' 
        means a State educational agency, local educational 
        agency, or other public entity that has the authority 
        pursuant to State law and approved by the Secretary to 
        authorize or approve a charter school.

SEC. 10310. AUTHORIZATION OF APPROPRIATIONS.

  For the purpose of carrying out this part, there are 
authorized to be appropriated $100,000,000 for fiscal year 1998 
and such sums as may be necessary for each of the four 
succeeding fiscal years.
          * * * * * * *

                            ADDITIONAL VIEWS

    Public charter schools are a bold and innovative public 
school choice mode. They provide an alternative to the 
traditional public school system, strengthen accountability for 
academic achievement, and inject innovation and reform into the 
public school system. In short, public charter schools expand 
choice for parents and students, and demand accountability for 
student achievement.
    I support the objective of expanding the number of public 
charter schools, but this growth must be balanced with results, 
including academic achievement. Thus, this bill includes two 
provisions that stress accountability for student performance, 
which are outlined in the Majority views.
    Evaluation plays a key role in measuring student 
performance, and for this reason, the committee has retained in 
the Purposes section of the bill the importance of evaluating 
the impact of charter schools on students, student achievement, 
staff, and parents. In addition, I believe that the US 
Department of Education should play a role in this evaluation. 
The National Activities section authorizes the continuation of 
the four-year study (which will be completed in 1999), and 
authorizes the Department to conduct other evaluation efforts, 
at this discretion.
    With regard to the first funding criteria, I urge caution 
in encouraging states to treat public charter schools as 
separate LEAs. I disagree with the Majority's report language 
that encourages states to treat public charter schools as 
separate LEAs, and it is apparent that such language could 
prove troublesome to governors and state local governments 
(although I have strong reservations about this instance of 
report language. I am in general agreement and support of the 
remaining report language).
    A preliminary GAO Report suggests that the barriers that 
public charter schools face in accessing federal funds appears 
to be unrelated to whether these schools are treated as 
independent LEAs or as members of schools districts. The GAO 
found that other factors may play a more significant role, 
including state systems that base funding allocations on the 
prior year's enrollment and student eligibility data, the costs 
of accessing funds relative to the amounts the school would 
receive, and the time restraints on charter school operators. I 
want to note that the final GAO report is due by April 30, 
1998.
    I would also note that the Department of Education is 
committed to addressing problems related to prior year 
enrollment, and HR 2616 directs the Secretary to ensure that 
charter schools receive the Federal funding for which it is 
eligible in the calendar year in which it first opens. HR 2616 
also instructs the Secretary to provide technical assistance to 
public charter schools, either directly or through the State 
education agency, with information on and assistance in 
receiving Federal education funds, specifically Title I and 
IDEA funds.
    I must emphasize again that encouraging states to treat 
public charter schools as separate LEAs is an inappropriate 
Federal intrusion into a state and local governance issue, and 
premature as evident by the GAO report. In addition, treating 
public charter schools as separate LEAs may place significant, 
and unwanted, burdens on an individual charter school. 
Moreover, while the Committee may choose to further investigate 
the significance of a public charter school's relationship with 
the LEA, such issues may be more comprehensively and equitably 
addressed within the larger context of ESEA reauthorization.
    Having noted this exception again, I want to iterate my 
support for this legislation and for responsible and 
intelligent support for charter schools. Charter schools are a 
needed and important tool for new ideas in education and 
important for innovative schooling.

                                                        Tim Roemer.

                             MINORITY VIEWS

                               discussion

    Federal grant assistance to provide start-up resources for 
public charter schools was authorized only three years ago as 
part of the Improving America Schools' Act (IASA). At this 
point, the program is simply too new for us to make a fair 
evaluation of the Act's strengths and weaknesses. For example, 
we currently have no comprehensive information regarding 
student achievement, teacher performance, and equality of 
services provided in public charter schools. This information 
is critical in order to appropriately evaluate the program's 
success and shortcomings.
    We also believe it is a mistake to consider changes to the 
charter school grant program in isolation. We believe the 
charger school legislation should be considered as part of a 
comprehensive review of all public school education programs 
during the reauthorization of the IASA.
    H.R. 2616 proposes to expand charter school aid, 
reprioritize Federal funding, and redefine national charter 
school activities. We believe these changes do little to 
enhance the quality of charter schools, and could undermine the 
oversight and accountability of charter schools across the 
country.
    Throughout the Subcommittee's hearings on charter schools, 
we heard of several serious problems regarding the admission 
and provision of services to children with disabilities. For 
example, Timothy Sindelar, an attorney with the Disability Law 
Center in Boston, Massachusetts, testified to the following on 
April 9, 1997:

          Information being disseminated by charter schools 
        also tended to discourage children with disabilities 
        from applying or completing the admissions process. 
        Statements by Boston Renaissance and Worcester Seven 
        Hills Charters Schools concerning the nature of the 
        programming offered to children with special needs have 
        caused families to remove their children from these 
        schools, as the schools made it clear their ``one-size-
        fits-all/take it or leave it'' philosophies * * * 
        Parents are urged to remove their children if they 
        believe that this model will not meet their children's 
        needs. The aides and services necessary to meet the 
        individual needs of students in the mainstream are not 
        being provided. This ``counseling-out'' process 
        resulted in more than 16 children with special needs 
        withdrawing from Seven Hills within the first two weeks 
        of operation and returning to the Worcester Public 
        schools.

    In addition, we also heard testimony of a charter school 
operator who allegedly fired teachers simply because they 
wished to enforce their collective bargaining rights.Further, 
it was recently reported by the Michigan Department of Education that 
charter schools in its State posted substantially lower scores than 
other public schools on State assessment tests. This information and 
other concerns raised during the Committee's hearings about charter 
schools needs additional review and consideration.
    We also have a number of significant policy concerns with 
the direction of this legislation. The bill requires the 
Secretary of Education to prioritize funding to States, for 
example, based on whether autonomy is afforded to charter 
schools regarding their budgets and expenditures of funds, and 
growth in the number of charter schools. States which have 
charter school statutes without these characteristics would be 
at a funding disadvantage. Congress should not be in the 
practice of establishing funding priorities on how a State 
administratively structures its oversight and support for 
charter schools. State experience with charter schools is too 
new to allow us to form conclusions on what attributes would 
ensure success. It is the prerogative of the Governor and State 
legislature, not this Committee, to dictate the state 
administrative structure for charter schools.
    We are also concerned about the increased duration for 
charter schools startup grants from 3 years to 5 years, and the 
additional 2 year extension grants. Why should we extend the 
amount of time which charter schools would continue to receive 
startup funds? Do we have charter schools taking 5 years to 
complete their startup activities? We see little if any 
justification for this provision.
    We also oppose the rewrite of the Act's national activities 
section, particularly its lack of focus on evaluation and 
accountability. The redraft of the national activities section 
emphasizes the Secretary of Education's role in ensuring 
private capital streams for charter schools without any effort 
to ensure the same for our traditional public schools. In fact, 
we find this strong effort towards the expansion of financing 
for charter schools ironic given the Majority's rejection of 
President Clinton's legislation to address crumbling and 
overcrowded schools. We believe that the emphasis of the 
Department's activities should be towards evaluation, technical 
assistance, outreach and ensuring accountability for 
educational results--not to act like a banker to secure 
financing for charter schools.

                         Democratic Amendments

    During the Committee's consideration of this legislation, 
the Majority rejected a number of Democratic amendments which 
would have improved this bill. Specifically, Republicans 
rejected amendments by Mr. Martinez to ensure compliance with 
the Individuals with Disabilities Education Act (IDEA), reduce 
the bill's provisions regarding 5 year grants to the current 3 
year period, and to clarify language of the bill relating to 
Title I allocations for charter schools. An amendment by Mr. 
Scott to require financial and educational records of charter 
schools to be available for public viewing was also rejected.
    The Committee heard testimony from several witnesses that 
charter schools in some areas of the country were not complying 
with the IDEA. The Martinez amendment would require the State 
Educational Agency, in its application for funding to the 
Secretary, to provide an assurance that charter schools which 
apply for startup dollars would have to provide an assurance of 
compliance with IDEA and describe how they would comply with 
IDEA. This was intended to raise the awareness of those who 
create and operate charter schools to the provisions of IDEA. 
Unfortunately, the Majority, through its defeat of this 
amendment, did not see the property enforcement of IDEA as an 
important priority.
    The Scott amendment would have ensured that the educational 
and financial records of charter schools are available for 
public viewing. The public has a right to see what 
instructional and educational materials are being used at 
public schools, including charter schools. Charter schools, 
especially because of several instances in which finances at 
such schools were grossly misused, should also ensure that 
their financial records are open to the public. Unfortunately, 
the same shortsightedness which propelled the Majority to vote 
against the IDEA amendment prevailed here.
    Changes to the charter school grant program should be 
supported by verifiable, objective data on charter school 
performance. The emphasis of such legislation should be on 
ensuring accountability for education results. Unfortunately, 
H.R. 2616 fails on both accounts.

                                   Bill L. Clay.
                                   Matthew G. Martinez.
                                   Patsy T. Mink.
                                   John F. Tierney.
                                   Dale E. Kildee.
                                   Donald M. Payne.
                                   Bobby C. Scott.
                                   Dennis J. Kucinich.

                            DISSENTING VIEW

    Congress is preparing to consider HR 2616, a bill amending 
titles VI and X of the Elementary and Secondary Education Act 
of 1965 to expand the use of charter schools. Despite the 
understandable enthusiasm many members of Congress feel toward 
charter schools, Congress should reject this bill as it 
represents an unconstitutional federal infringement upon the 
authority of states, local communities, and individual citizens 
to control education. The tenth amendment reserves to the 
states and the people ``all powers not delegated to the United 
States by the Constitution,'' and thus forbids the federal 
government from any interference in education be it by 
mandating a national curriculum or providing incentives to 
states and localities to form charter schools. The drafters of 
the constitution made no exception for education in the tenth 
amendment.
    HR 2616 encourages states to alter their education laws and 
policies for the purpose of increasing the number of charter 
schools to at least 3000 by the year 2000. In order to achieve 
this congressionally set goal, the Secretary of Education is 
instructed to give prioritized funding to states which allow 
charter schools a ``high degree of autonomy'' over their 
respective budgets and expenditures; have at least one 
chartering authority which allows for an increase in the number 
of charter schools each year; and provides for periodic review 
and evaluation by the authorized public chartering agency of 
each charter school. Thus, the federal government will use 
monies seized from the American people to ``persuade'' the 
states to create more charter schools with federal 
specifications. Of course, if the federal government reduced 
its oppressive level of taxation, the American people would 
have more resources to devote to education and states would 
feel less compelled to obey Congressional mandates in order to 
finance education.
    A federal policy of encouraging charter schools represents 
an exercise in legislative hubris incompatible with ending 
``the era of big government.'' The charter school model may not 
be appropriate for every state in the nation. Whether or not a 
charter school is appropriate for a local community is a 
decision best made by the people in that respective community. 
Yet, this bill makes it national policy to encourage the 
formation of charter schools throughout the nation because 
Congress has determined charter schools are desirable. However, 
a centralized body such as Congress is institutionally 
incapable of knowing what reforms work best for every school 
district in this large and diverse nation. Therefore, rather 
than expanding federal programs, Congress should defund the 
federal education bureaucracy and return control over education 
tothose best suited to design effective education programs--
local communities and individual citizens.
    Proponents of this bill claim that it expands the 
educational options available to the nations' children. 
However, increasing federal involvement in education actually 
decreases the ability of parents to control their child's 
education. As a greater percentage of the nation's educational 
resources are devoted to fulfilling the wishes of Congress, 
fewer resources will be devoted to fulfilling the wishes of 
America's parents. This is because some people who would 
otherwise operate a religious-based school, for example, will 
instead open charter schools in order to receive federal funds. 
Since charter school cannot offer religious instruction, those 
parents who would send their children to that school if it 
provided a parochial education are denied the ability to 
educate their children in accordance with their preferences.
    Further evidence of how this bill would actually limit 
educational options can be found in the language making 
``evaluations'' of charter schools one of the state purposes of 
the federal charter school program. National evaluation is a 
process whereby federal bureaucrats determine which are the 
best education practices, leading to a federally-approved set 
of ``best practices'' for charter schools. Over time, charter 
schools will face pressure, perhaps applied by future 
Congresses, to adopt those practices favored by the federal 
government. Language in this bill giving the Secretary of 
Education the power to make grants based on how well charter 
schools meet the academic performance requirements guarantees 
an increasing level of uniformity among the nation's charter 
schools. This may extend as far as federal control, or at least 
``oversight,'' of the curriculum offered by charter schools!
    Defenders of this bill may point out that the statute 
specifies the review and evaluation of charter schools to 
determine how well the charter school meets or exceeds state 
performance standards. However, it is unlikely that any sate 
seeking federal funds would set standards different from those 
favored by the federal educates. Furthermore, states applying 
for federal funds for charter schools must describe to the 
Secretary the goals of charter schools and the means by which 
charter schools will be evaluated by the state, as well as the 
curriculum and instructional practices to be used by the states 
charter schools, thus giving the Secretary another means by 
which to impose a uniform federal model of charter schools.
    This bill further centralizes education by ratifying the 
appropriations increase of federal expenditures for charter 
schools to one-hundred million dollars for this fiscal year and 
``such sums as necessary for each of the four succeeding fiscal 
years.'' An authorization of ``such sums as necessary'' gives 
appropriators carte blanche to increase appropriations every 
year. Since federal education programs are funded by taking 
money from hard-working American taxpayers, increasing federal 
expenditures on charter schools, or any other education program 
favored by Congress, leaves America's parents with fewer 
resources to educate their children in the way they deem fit.
    If educational choice is to be the priority, Congress 
should support large educational tax credits for parents, such 
as those contained in the Family Education Freedom Act (HR 
1816). Insofar as ``he who pays the piper calls the tune,'' 
expanding federal education programs and federal education 
expenditures will inevitably lead to increased federal control. 
Conversely, education tax credits will restore parental control 
over education. Moreover, the tax credit approach is much more 
consistent with this Congress' stated goal of decentralizing 
educational authority.
    In conclusion, this bill, while dressed up in the rhetoric 
of ``fostering educational innovation and increased parental 
empowerment,'' is really yet another unconstitutional 
infringement upon the rights of states, localities, and 
especially, parents to control education.
    Charter schools may be a valuable educational reform. 
However, it is neither the constitutional nor partial role of 
Congress to encourage states to adopt a particular reform. 
Therefore, Congress should reject this proposal and instead, 
work to eliminate all federal educational programs which 
interfere with education and, instead, return authority over 
education to the rightful owner--the American people.

                                                          Ron Paul.

                                
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