BILL NUMBER: SB 1728 CHAPTERED 09/13/00 CHAPTER 429 FILED WITH SECRETARY OF STATE SEPTEMBER 13, 2000 APPROVED BY GOVERNOR SEPTEMBER 12, 2000 PASSED THE SENATE AUGUST 22, 2000 PASSED THE ASSEMBLY AUGUST 18, 2000 AMENDED IN ASSEMBLY AUGUST 10, 2000 AMENDED IN ASSEMBLY JUNE 19, 2000 AMENDED IN SENATE MAY 23, 2000 AMENDED IN SENATE APRIL 26, 2000 INTRODUCED BY Senator Lewis FEBRUARY 23, 2000 An act to amend Section 41365 of the Education Code, relating to charter schools, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 1728, Lewis. Charter schools: Charter School Revolving Loan Fund. Existing law creates the Charter School Revolving Loan Fund in the State Treasury to provide loans to a chartering authority for charter schools that are not a conversion of an existing school, or directly to a charter school under certain conditions. Existing law specifies that a loan from this fund is for use by the charter school during the period from the date the charter is granted to the end of the fiscal year in which the charter school first enrolls pupils. This bill would remove the restriction requiring a charter school to use a loan from the Charter School Revolving Loan Fund during certain time periods. The bill would provide that the loan to a chartering authority for a charter school, or to a charter school, may not exceed $250,000 over the lifetime of the charter school. The bill would also authorize the Superintendent of Public Instruction to consider certain criteria when making a determination as to approval of a charter school's loan application and give priority for the loans to new charter schools for startup costs. The bill would incorporate additional changes in Section 41365 of the Education Code proposed by SB 1759, that would become operative only if SB 1759 and this bill are both chaptered and become effective on or before January 1, 2001, and this bill is chaptered last. The bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 41365 of the Education Code is amended to read: 41365. (a) The Charter School Revolving Loan Fund is hereby created in the State Treasury. The Charter School Revolving Loan Fund shall be comprised of federal funds obtained by the state for charter schools and any other funds appropriated or transferred to the fund through the annual budget process. Funds appropriated to the Charter School Revolving Loan Fund shall remain available for the purposes of the fund until reappropriated or reverted by the Legislature through the annual Budget Act or any other act. (b) Loans may be made from moneys in the Charter School Revolving Loan Fund to a chartering authority for charter schools that are not a conversion of an existing school, or directly to a charter school that qualifies to receive funding pursuant to Chapter 6 (commencing with Section 47630) that is not a conversion of an existing school, upon application of a chartering authority or charter school and approval by the Superintendent of Public Instruction. Money loaned to a chartering authority for a charter school, or to a charter school, pursuant to this section shall be used only to meet the purposes of the charter granted pursuant to Section 47605. The loan to a chartering authority for a charter school, or to a charter school, pursuant to this subdivision shall not exceed two hundred fifty thousand dollars ($250,000) over the lifetime of the charter school. A charter school may receive money obtained from multiple loans made directly to the charter school or to the school's chartering authority from the Charter School Revolving Loan Fund, as long as the total amount received from the fund over the lifetime of the charter school does not exceed two hundred fifty thousand dollars ($250,000). This subdivision does not apply to a charter school that obtains renewal of a charter pursuant to Section 47607. (c) The Superintendent of Public Instruction may consider all of the following when making a determination as to the approval of a charter school's loan application: (1) Soundness of the financial business plans of the applicant charter school. (2) Availability to the charter school of other sources of funding. (3) Geographic distribution of loans made from the Charter School Revolving Loan Fund. (4) The impact that receipt of funds received pursuant to this section will have on the charter school's receipt of other private and public financing. (5) Plans for creative uses of the funds received pursuant to this section, such as loan guarantees or other types of credit enhancements. (6) The financial needs of the charter school. (d) Priority for loans from the Charter School Revolving Loan Fund shall be given to new charter schools for startup costs. (e) Commencing with the first fiscal year following the fiscal year the charter school receives the loan, the Controller shall deduct from apportionments made to the chartering authority or charter school, as appropriate, an amount equal to the annual repayment of the amount loaned to the chartering authority or charter school for the charter school under this section and pay the same amount into the Charter School Revolving Loan Fund in the State Treasury. Repayment of the full amount loaned to the chartering authority shall be deducted by the Controller in equal annual amounts over a number of years agreed upon between the loan recipient and the State Department of Education, not to exceed five years for any loan. (f) (1) Notwithstanding other provisions of law, a loan may be made directly to a charter school pursuant to this section only in the case of a charter school that is incorporated. (2) Notwithstanding other provisions of law, in the case of default of a loan made directly to a charter school pursuant to this section, the chartering authority shall, also, be liable for repayment of the loan. SEC. 1.5. Section 41365 of the Education Code is amended to read: 41365. (a) The Charter School Revolving Loan Fund is hereby created in the State Treasury. The Charter School Revolving Loan Fund shall be comprised of federal funds obtained by the state for charter schools and any other funds appropriated or transferred to the fund through the annual budget process. Funds appropriated to the Charter School Revolving Loan Fund shall remain available for the purposes of the fund until reappropriated or reverted by the Legislature through the annual Budget Act or any other act. (b) Loans may be made from moneys in the Charter School Revolving Loan Fund to a chartering authority for charter schools that are not a conversion of an existing school, or directly to a charter school that qualifies to receive funding pursuant to Chapter 6 (commencing with Section 47630) that is not a conversion of an existing school, upon application of a chartering authority or charter school and approval by the Superintendent of Public Instruction. Money loaned to a chartering authority for a charter school, or to a charter school, pursuant to this section shall be used only to meet the purposes of the charter granted pursuant to Section 47605. The loan to a chartering authority for a charter school, or to a charter school, pursuant to this subdivision shall not exceed two hundred fifty thousand dollars ($250,000) over the lifetime of the charter school. A charter school may receive money obtained from multiple loans made directly to the charter school or to the school's chartering authority from the Charter School Revolving Loan Fund, as long as the total amount received from the fund over the lifetime of the charter school does not exceed two hundred fifty thousand dollars ($250,000). This subdivision does not apply to a charter school that obtains renewal of a charter pursuant to Section 47607. (c) The Superintendent of Public Instruction may consider all of the following when making a determination as to the approval of a charter school's loan application: (1) Soundness of the financial business plans of the applicant charter school. (2) Availability to the charter school of other sources of funding. (3) Geographic distribution of loans made from the Charter School Revolving Loan Fund. (4) The impact that receipt of funds received pursuant to this section will have on the charter school's receipt of other private and public financing. (5) Plans for creative uses of the funds received pursuant to this section, such as loan guarantees or other types of credit enhancements. (6) The financial needs of the charter school. (d) Priority for loans from the Charter School Revolving Loan Fund shall be given to new charter schools for startup costs. (e) Commencing with the first fiscal year following the fiscal year the charter school receives the loan, the Controller shall deduct from apportionments made to the chartering authority or charter school, as appropriate, an amount equal to the annual repayment of the amount loaned to the chartering authority or charter school for the charter school under this section and pay the same amount into the Charter School Revolving Loan Fund in the State Treasury. Repayment of the full amount loaned to the chartering authority shall be deducted by the Controller in equal annual amounts over a number of years agreed upon between the loan recipient and the State Department of Education, not to exceed five years for any loan. (f) (1) Notwithstanding other provisions of law, a loan may be made directly to a charter school pursuant to this section only in the case of a charter school that is incorporated. (2) Notwithstanding other provisions of law, in the case of default of a loan made directly to a charter school pursuant to this section, the charter school shall be solely liable for repayment of the loan. SEC. 2. Section 1.5 of this bill incorporates amendments to Section 41365 of the Education Code proposed by both this bill and SB 1759. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2001, (2) each bill amends Section 41365 of the Education Code, and (3) this bill is enacted after SB 1759, in which case Section 1 of this bill shall not become operative. SEC. 3. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to allow charter schools to begin using loans from the Charter School Revolving Loan Fund beyond the first year in which the charter schools first enroll pupils and to thereby continue educating pupils enrolled in those schools, it is necessary that this act take effect immediately.