AB 1604: Charter schools: school facilities: Charter School Facility Grant Program: conduit financing.

Existing law requires the California School Finance Authority (authority) to administer the Charter School Facility Grant Program, and provides that the grant program is intended to provide assistance with facilities rent and lease costs for pupils in charter schools. Existing law requires the authority to, among other things, determine eligibility, as specified, including a requirement that the charter schoolsite either gives a preference in admission to pupils who are currently enrolled in a public elementary school in which 55% or more of the pupil enrollment is eligible for free or reduced-price meals and to pupils who reside in the elementary school attendance area where the charter schoolsite is located, or 55% or more of the pupil enrollment at the charter schoolsite is eligible for free or reduced-price meals.

This bill would clarify the above preference in admissions, including for when the charter school is a dual immersion program, and require that changes to the preference in admissions be incorporated into a charter schools charter petition during the next charter renewal cycle, as specified. The bill would also require the authority to update its regulations before opening the 202526 funding round to include specified requirements. The bill would require charter schools to identify their school type, confirm they are a classroom-based charter school, and include documentation confirming their status as nonprofit organizations in their applications.

This bill would require the sale or lease of an educational facility, as defined, other than to the charter school occupying the educational facility or a nonprofit related-party entity of the charter school, where the charter school occupying the facility has received substantial funding, as defined, from the Charter School Facility Grant Program (program) for an educational facility acquired, financed, constructed, or modernized on or after January 1, 2025, and for which the property title is held by a related-party entity, as defined, to be consistent with specified requirements, including that the educational facility is offered to certain entities in a specified order. If, within 60 days of issuing a notice, as provided, none of the entities listed has submitted an offer for the educational facility, the bill would authorize the educational facility to then be sold or leased to another entity, as specified. If a charter school occupying an educational facility has received substantial funding from the program and the title to the property is held by a related-party entity and the educational facility is sold within 10 years of the charter school last receiving program funds to any entity not listed and the proceeds are not used for capital outlay in the state, the bill would require an amount equal to the program funds received by the charter school in the previous 10 years to be returned to the authority, as specified.

This bill would require a charter school participating in a conduit financing program to notify the conduit issuer in certain situations, including, among others, when the charter school occupying the financed facility is closing. The bill would require a charter school to annually notify the conduit issuer of the status of a facility with outstanding conduit bonds when the charter school has closed or vacated the building but the building has not been sold, as provided. To the extent these provisions would impose additional duties on charter schools, the bill would impose a state-mandated local program.

The Charter Schools Act of 1992 provides for the establishment and operation of charter schools. Existing law requires a petition for the establishment of a charter school to contain comprehensive descriptions of various matters and procedures, including procedures to be used if the charter school closes, including a final audit of the charter school to determine the disposition of all assets and liabilities of the charter school, as specified.

If a charter school leases or rents its facility from a related party or subsidiary, as specified, or owns its facility, this bill would require the charter school to include a statement describing its plans for the use of the facility in its final audit.

This bill would incorporate additional changes to Section 47605 of the Education Code proposed by SB 10 and SB 671 to be operative only if this bill and either or both of those bills are enacted and this bill is enacted last.

This bill would incorporate additional changes to Section 47605.6 of the Education Code proposed by SB 10 and SB 671 to be operative only if this bill and either or both of those bills are enacted and this bill is enacted last.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.