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SENATE FLOOR VERSION
April 12, 2022
ENGROSSED HOUSE
BILL NO. 3643 By: Dills, Hardin (David),
Provenzano, Johns, and
Waldron of the House
and
Pemberton of the Senate
An Act relating to schools; amending 70 O.S. 2021,
Section 3-145.3, which relates to duties of the
Statewide Virtual Charter School Board; requiring
compliance with the O klahoma Charter Schools Act;
modifying limitation on fee for administrative
expenses and support; deleting duplicative language;
subjecting virtual charter schools to the same
compliance requirements as charter schools; updating
statutory language; establishing certain requirements
for virtual charter school governing boards;
prescribing duties for certain personnel; requiring
State Department of Education a nd sponsor to publish
certain contracts on their websites; subjecting
certain board members to instru ction and continuing
education requirements; prohibiting certain conflic ts
of interest and pecuniary gain; disallowing certain
appointments or selections of members; designating
certain funds as public funds; prohibiting transfer
or conversion of state funds to private funds;
clarifying provision; requiring payments from charter
schools to comply with certain provisions; directing
organization to provide certain documents; subjecting
certain funds to audit, transparency, oversight and
financial reporting; requiring certain funds to
remain public funds; prescribing assignment of grade
for participation in certain extracurricular or
educational activities; d eclaring certain property to
remain public property of the charter school;
mandating an operating agreement review of certain
charter schools; establishing procedures for review;
requiring written agreement for certain expenditures;
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mandating criminal hist ory record checks for certain
personnel; prescribing process and payment of checks;
prohibiting certain activities by management
organizations; amending 70 O.S. 2021, Section 5-200,
which relates to management organizations; adding
definition for charter m anagement organization;
requiring amounts paid to certain organizations be
pursuant to contract terms; mandating disclosure
pursuant to certain guidelines; prohibiting
commingling of certain s chool funds; amending 70 O.S.
2021, Section 18-118, which relates to State Aid
audits; requiring return of state monies which are
illegally apportioned, disbursed, or expended by
certain organizations; specifying whe n state funds
shall be withheld; requiring suits to recover
illegally apportioned state monies; providing for
codification; providing an effective date; and
declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 70 O.S. 2 021, Section 3-145.3, is
amended to read as follows:
Section 3-145.3 A. Subject to the requirements of the Oklahoma
Charter Schools Act, the Statewide Virtual Charter Schoo l Board
shall:
1. Provide oversight of the operations of statewide virtual
charter schools in this state;
2. Establish a procedure for accepting, approving and
disapproving statewide virtual charter school applications and a
process for renewal or revoca tion of approved charter school
contracts which minimally meet the procedures set forth in the
Oklahoma Charter Schools Act;
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3. Make publicly available a list of supplemental online
courses which have been reviewed and certified by the Statewide
Virtual Charter School Board to ensure that the courses are high
quality options and are al igned with the subject matter standards
adopted by the State Board of Education pursuant to Section 11-103.6
of this title. The Statewide Virtual Charter School Board shall
give special emphasis on listing supplemental online courses in
science, technology, engineering and math (STEM), foreign language
and advanced placement courses. School districts shall not be
limited to selecting supplemental online courses that have bee n
reviewed and certified by the Statewide Virtual Charter School Board
and listed as provided for in this paragraph; and
4. In conjunction with the Office of Management and Enterprise
Services, negotiate and enter into contracts with supplemental
online course providers to offer a state rate price to school
districts for supplemental o nline courses that have been reviewed
and certified by the Statewide Virtual Charter School Board and
listed as provided for in paragraph 3 of this subsection.
B. Except as otherwise provided by law, each statewide virtual
charter school which has been ap proved and sponsored by the Board
shall be subject to and c omply with the requirements of the Oklahoma
Charter Schools Act. Each statewide virtual charter school which
has been approved and sponsored by the Board or any virtual charter
school for which the Board has assumed sponsorship of as provided
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for in Section 3-145.5 of this title shall be considered a statewide
virtual charter school and, except as provided in subsecti on H of
this section, the geographic boundaries of each statewide virtual
charter school shall be the borders of the state.
C. Each statewide virtual charter school approved by the
Statewide Virtual Charter School Board shall be eligible to receive
federal funds generated by students enrolled in the charter school
for the applicable year. Each statewide virtual charter school
shall be considered a separate local education agency for purposes
of reporting and accountability.
D. As calculated as provided f or in Section 3-142 of this
title, a statewide virtual charter sch ool shall receive the State
Aid allocation and any other state-appropriated revenue generated by
students enrolled in the virtual charter school for the applicable
year, less up to five percent (5%) three percent (3%) of the State
Aid allocation, which may be retained by the Statewide Virtual
Charter School Board for administrative expenses and to support the
mission of the Board. A statewide virtual charter school shall be
eligible for any other funding any other charter school is eligible
for as provided for in Section 3-142 of this title. Each statewide
virtual charter school shall be considered a separate local
education agency for purposes of reporting and accountability.
E. A virtual charter school shall be subject to the same
reporting requirements, financial audits, audit procedures, and
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audit requirements as a school district and compliance requirements
provided in Section 3-136 of this title. The State Department of
Education or State Auditor and Inspector may conduct financial,
program or compliance audits. A virtual charter school shall use
the Oklahoma Cost Account ing System (OCAS) to report financial
transactions to the State Department of Education.
F. A virtual charter school governing body board shall be
responsible for the policies tha t govern the operational decisions
of the virtual charter school. The gover ning body board of a
virtual charter school shall be subject to the same conflict of
interest requirements as a member of a local school board including,
but not limited to, Sectio ns 5-113 and 5-124 of this title. Members
appointed to the governing body board of a virtual charter school
after July 1, 2019, shall be subject to the same instruction and
continuing education requirements as a member of a local school
board and pursuant to Section 5-110 of this title, complete twelve
(12) hours of instruction w ithin fifteen (15) months of appointment
to the governing body board, and pursuant to Section 5-110.1 of this
title, attend continuing education. Members appointed to the
governing board of a vi rtual charter school prior to July 1, 2019,
shall comply with the requirements of this subsection and, within
fifteen (15) months of the effective date of t his act, shall
complete twelve (12) hours of instruct ion pursuant to Section 5-110
of this title.
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G. Students enrolled full-time in a statewide virtual charter
school sponsored by the Statewide Virtual Charter School Board shall
not be authorized to participate in any activities administered by
the Oklahoma Secondary Schools Activities Association. How ever, the
students may participate in intramural activities s ponsored by a
statewide virtual charter school, an online provider for the charter
school or any other outside organization.
H. 1. Beginning with the 2021-2022 school year, a public
school student who wishes to enroll in a virtual charter school
shall be considered a transfer student from their resident school
district. A virtual charter school shall pre-enroll any public
school student whose parent expresses intent to enroll in the
district virtual charter school. Upon pre-enrollment, the State
Department of Education shall initiate a transfer on a form to be
completed by the receiving virtual charter school. Upon approval of
the receiving virtual c harter school, the student may begin
instructional activities. Upon notice that a public sc hool student
has transferred to a virtual charter school, the resident school
district shall transmit the student's records within three (3)
school days.
2. The State Department of Education shall notify the
Legislature and Governor if it determines that the information
technology infrastructure necessary to process the transfer of
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students to a virtual chart er school is inadequate and one (1)
additional school year is needed for implementation.
3. A public school student may transfer to one statewide
virtual charter school at any time during a school year. For
purposes of this subsection, "school year" shall mean July 1 through
the following June 30. After one st atewide virtual charter school
transfer during a school year, no public school student shall be
permitted to transfer to any other statewide virtual charter school
without the concurrence of both th e resident school district and the
receiving virtual chart er school. A student shall have a grace
period of fifteen (15) school days from the first d ay of enrollment
in a statewide virtual charter school to withdraw without academic
penalty and shall cont inue to have the option of one virtual charter
school transfer without the concurrence of both districts during
that same school year. A statewide vi rtual charter school student
that has utilized the allowable one transfer pursuant to this
subsection shall not be permitted to transfer to another district or
other statewide virtual charter school without first notifying his
or her resident district and initiating a new transfer. Upon
cancellation of a transfer the virtual charter school shall transmit
the student's records to the student's new school district wit hin
three (3) school days. Students enrolled in a statewide virtual
charter school shall no t be required to submit a virtual charter
transfer for consecutive years of enrollment. Any student enrol led
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in a statewide virtual charter school the year prior t o the
implementation of this section shall not be required to submit a
transfer in order to remain enrolled.
4. For purposes of this subsection, "parent" shall mean the
parent of the student or per son having custody of the student as
provided for in parag raph 1 of subsection A of Section 1-113 of this
title.
I. 1. A student shall be eligible t o enroll in a statewide
virtual charter school if he or she is a student whose parent or
legal guardian is transferred or is pending transfer to a military
installation within this state while on active military duty
pursuant to an official military order.
2. A statewide virtual charter school shall accept applications
by electronic means for enrollment and c ourse registration for
students described in paragraph 1 of this subsection.
3. The parent or legal guardian of a student described in
paragraph 1 of this subsection shall provide proof of residence in
this state within ten (10) days after the published a rrival date
provided on official documentation. A parent or legal guardian may
use the following addresses as proof of residence:
a. a temporary on-base billeting facility,
b. a purchased or leased home or apartment, or
c. federal government or p ublic-private venture off-base
military housing.
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4. The provisions of paragraph 3 of subsection H shall apply to
students described in paragraph 1 o f this subsection.
5. For purposes of this subsection:
a. "active military duty" means full-time military duty
status in the active uniformed service of the United
States including members of the National Guard and
Military Reserve on active duty orders , and
b. "military installation" means a base, camp, post,
station, yard, center, homeport facility for any ship
or other installation under the jurisdiction of the
Department of Defense or the United States Coast
Guard.
J. A virtual charter school shall not accept o r deny a transfer
based on ethnicity, national origin, gender, income level, disabling
condition, proficiency in the English language, measure of
achievement, aptitude or athletic ability.
K. The decision of the Statewide Virtual Charter School Board
to deny, nonrenew or terminate the charter contract of a statewide
virtual charter school may be appealed t o the State Board of
Education within thirty (30) days of the decision by the Statewide
Virtual Charter School Board. The State Board of Education shall
act on the appeal within sixty (60) days of receipt of the request
from the statewide virtual charter school applicant. The State
Board of Education may reverse the decision of the Statewide Virtual
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Charter School Board or may remand the matter back to t he Statewide
Virtual Charter School Board for further proceeding as directed.
SECTION 2. NEW LAW A new sec tion of law to be codified
in the Oklahoma Statutes as Section 3-145.9 of Title 70, unless
there is created a duplication in nu mbering, reads as follows:
A. Beginning with the 2022-2023 school year, any governing
board of a charter sc hool which contracts with an educational
management organization or charter management organization as
defined in Section 5-200 of Title 70 of the Oklahoma Statutes shall:
1. Consist of a minimum of five (5) members, including one
member who shall be a pa rent, grandparent, legal guardian , or
learning coach of a student who attends the charter school. As used
in this paragraph, "learning coach" means a designated person who
has the primary responsibility of being actively involved in all
school-related work and activities of a student. The bylaws of the
charter school shall set specific terms of servic e for charter
school governing board members;
2. Meet at least one (1) time per month;
3. Adopt a charter which shall ensure compliance with the same
requirements and guidelines as provided in Section 3 -136 of Title 70
of the Oklahoma Statutes;
4. Appoint an encumbrance clerk as provided in Section 5-119 of
Title 70 of the Oklahoma Statutes and a treasurer as provided in
Section 5-114 of Title 70 of the Oklahoma Statutes. Upon
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appointment, the encumbrance clerk and treasurer shall attend and
complete at least eight (8) hours of instruction offered by an
auditor approved by the State Auditor and Inspector. Each year, the
encumbrance clerk and treasurer shall complete at least three (3)
hours of continuing education offered by an auditor approved by the
State Auditor and Inspector; and
5. Submit to the State Depar tment of Education copies of any
contract executed between the charter school governing board or
charter school sponsor governing board and an educational management
organization or charter management organization. The Department and
the sponsor shall pub lish the contracts on their websites.
B. Beginning with the 2022-2023 school year, members of a
charter school governing board which co ntracts with an educational
management organization or charter management organization shall:
1. Not receive pecuniary gain, incidentally or otherwise, from
the earnings of the educational management organization , charter
management organization , or school; and
2. Not be appointed or selected by any person affiliated with
the educational management organization or charter management
organization.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3-145.10 of Title 70, unless
there is created a duplication in numbering, reads as follows:
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A. 1. State funds appropriated to any charter school which
contracts with an educational management organization or charter
management organization as defined in Section 5 -200 of Title 70 of
the Oklahoma Statutes, including the State Aid allocation and any
other state-appropriated revenue pursuant to Section 3-142 of Title
70 of the Oklahoma Statutes, shall remain public funds maintained in
public accounts subject to audit, transparency, oversight , and
financial reporting and shall not be transferred or converted in any
way to private funds except for funds which are pa id for charter
school expenses and funds which a re paid to the educational
management organization or charter management orga nization from the
charter school pursuant to the terms of the contract and in
accordance with state law and Internal Revenue Service requirements.
If there is any question or potential discrepancy regarding use of
funds paid to the educational management organization or charter
management organization by the State Department of Education,
charter school governing board or charter school sponsor, the
educational managemen t organization or charter management
organization shall provide invoices and financial documentation to
the requesting entity proving the educational management
organization or charter management organization is following the
terms of the contract and is in compliance with the law.
2. Any state funds which are designated as student funds are
appropriated for the benefit of the student, including
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extracurricular and education al activity funds, and shall remain
public funds maintained in public accounts subject to audi t,
transparency, oversight and financial reporting and expended in
accordance with purchasing requirements provided in Section 5-135 of
Title 70 of the Oklahoma S tatutes. Students shall receive a grade
for participation in extracurricular or educational a ctivities as
described in this subsection.
3. Any property purchased with public funds pursu ant to this
section may be assigned to employees or students of the c harter
school for charter school employment, extracurricular, or
educational purposes, but sha ll remain public property of the
charter school.
B. In the third year of the charter school contract term, an
auditor selected from a list of auditors approved a nd maintained by
the State Auditor and Inspector s hall conduct an operating agreement
review of each charter school which contracts with an educational
management organization or charter management organization to verify
the charter school and the educatio nal management organization or
charter management organization are following the terms of t he
contract and complying with state law, federal law, and Internal
Revenue Service requirements. The auditor may request addition al
documentation from the charter school, educational management
organization, or charter management organization to address any
question or potential discrepancy. The chart er school sponsor shall
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pay for the expenses related to the review, oversee the re view, and
provide a full report of the review to the governing boards of the
charter school and the charter school sponsor.
C. Every provider or entity that contracts with a charter
school for expenditure of sta te funds pursuant to p aragraph 2 of
subsection A of this section shall:
1. Have an agreement in writing with the charter school which
clearly states the goods or services being provid ed by the provider
or entity pursuant to the contract and the costs thereof and that
such goods, services, and employees of the provider or entity comply
with federal and state laws; and
2. Have on file with the State Department of Education a
current Oklahoma criminal history record check from the Oklahoma
State Bureau of Investigation or equivale nt criminal history r ecord
check from another state as well as a national criminal history
record check as defined in Section 150.9 of Title 74 of the Oklahoma
Statutes for every owner and employ ee of the provider or entity who
will have contact with stude nts pursuant to the c ontract. Upon
receipt of the Oklahoma criminal history record check or equivalent
criminal history record check from another state, the provider or
entity may begin extracur ricular or educational activities until
receipt of the nation al criminal history r ecord check. The provider
or entity shall be responsible for the cost of the crimin al history
record checks. Results of the check s shall be included as a
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requirement of the contract and reported to the governing board of
the charter school.
D. An educational management organization or charter management
organization shall not:
1. Manage or control the governing board of a charter school ,
including, but not limited to, sett ing meeting agendas, adopting
charter school policies, or making budget decisions on behalf of the
charter school;
2. Employ a charter school superintendent who is a lso an owner
of the educational management organization or charter management
organization, unless the ownership stake of the supe rintendent is
less than ten percent (10%);
3. Employ legal counsel who also represents the charter school
or charter school governing board which has an agreement with the
educational management organization or charter management
organization; and
4. Request public employees, including, but not limited to,
teachers and other cha rter school employees to complete tasks or
perform duties that the educational management organization or
charter management organization has been contracted to fulfill .
SECTION 4. AMENDATORY 70 O.S. 2021, Section 5-200, is
amended to read as follows:
Section 5-200. A. As used in this section, "educational title:
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1. "Educational management organization" means a for-profit or
nonprofit organization that rece ives public funds to provide
administration and management services for a charter school,
statewide virtual charter school , or traditional public school ; and
2. "Charter management organization" means a nonprofit
organization that receives public funds to provide administration
and management services for a charter schoo l, statewide virtual
charter school, or traditional publ ic school.
B. A charter school that contracts w ith an educational
management organization or charter management organization shall use
the Oklahoma Cost Accounting System (OCAS) to report the total
amount paid to an educational management organization or charter
management organization pursuant to the terms of the contract as
well as actual itemized expenditure information for the good s or
services provided by the management organization as defined by OC AS
expenditure codes, including the total compensatio n package of the
superintendent including the ba se salary, insurance, retirement and
other fringe benefits.
C. Any Pursuant to Internal Revenue Service guidelines, any
owner of an educational management o rganization or charter
management organization shall be required to disclose to the
governing board of the school in a public meeting any ownership
position in any business that contra cts or proposes to contract with
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the same public school that the educati onal management organization
or charter management organization is managing.
D. An educational management or ganization or a charter
management organization which contracts with more than one school
district shall not commingle funds of the school districts.
E. Whenever any person shall enter into a c ontract with any
school district or public charter school in the state to teach in
such school district or public charter sc hool the contract shall be
binding on the teacher and on the board of education until the
teacher legally has been discharged from t he teaching position or
released by the board of education f rom the contract. Except as
provided in Section 5 -106A of Title 70 of the Oklahoma Statutes this
title, until such teacher has been thus discharged o r released, the
teacher shall not have authority to enter into a contract with any
other board of educatio n in Oklahoma for the same time covered by
the original contract . If upon written complaint by the board of
education in a district any teacher is re ported to have failed to
obey the terms of the c ontract previously made and to have entered
into a contract with another board of education, including a public
charter school board of education, without having been released from
the former contract except as provided in Section 5-106A of Title 70
of the Oklahoma Statutes this title, the teacher, upon being fou nd
to be employed full-time for another public school, including a
public charter school in the state, at a hearing held before the
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State Board of Education, shall have such teacher's certificate
suspended for the remainder of the term for which the contra ct was
made.
SECTION 5. AMENDATORY 70 O.S. 2021, Section 18 -118, is
amended to read as foll ows:
Section 18-118. A. The State Auditor and Inspector shall
approve auditors who shall audit the funds of the public school
districts and the use made of the monies thereof, and shall make
such other audits as may be required by the State Auditor and
Inspector.
B. School districts and officers and employees thereof who
divert any monies received by a district from the purpose for which
the monies were apportioned to the district shall be jointly and
severally liable for any such diversion.
C. If audits disclose that state monies have been illegally
apportioned to, or illegally dis bursed or expended by, a school
district or any of its off icers or employees or an educational
management organization or charter management organizati on as
defined in Section 5-200 of this title or any of its owners or
employees, the State Board of Education shall make demand that the
monies be returned to the S tate Treasurer by such the school
district or educational management organization or charter
management organization. If the monies are illegally apportioned to
or disbursed or expended by a school district or any of its officers
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or employees and the monies are not returned, the State Board of
Education shall withhold the unreturned amoun t from subsequent
allocations of state funds otherwise due the di strict.
D. The State Board of Education shall cause suit to be
instituted to recover for the state any monies illegally
apportioned, disbursed, or expended, if not otherwise recovered as
provided herein.
SECTION 6. This act shall become e ffective July 1, 2022.
SECTION 7. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by re ason whereof this act shall take effect and
be in full force from a nd after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON EDUCATION
April 12, 2022 - DO PASS