AMENDED IN SENATE SEPTEMBER 9, 2025

AMENDED IN SENATE AUGUST 29, 2025

AMENDED IN SENATE JULY 17, 2025

AMENDED IN SENATE JULY 8, 2025

AMENDED IN ASSEMBLY JUNE 3, 2025

AMENDED IN ASSEMBLY JUNE 2, 2025

AMENDED IN ASSEMBLY MAY 5, 2025

AMENDED IN ASSEMBLY MARCH 19, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

91

Introduced by Assembly Members Muratsuchi and Garcia

December 20, 2024

An act to amend Sections 1240, 14500, 14501, 14502.1, 14503, 14504, 14504.2, 14505, 14506, 14507, 14508, 14509, 41020, 41020.2, 41020.3, 41020.5, 41020.8, 41341, 41344.4, 42100, 44258.9, 45037, 45125.1, 47604.32, 47604.33, 47605, 47605.6, 47612.5, 47634.2, 51745.6, 51746, 51747.5, and 51748 of, to add Sections 33309.5, 41020.4, 46149, 47604.35, 47604.6, 47605.8, 47605.10, 47609, and 47634.3 to, to add Article 7 (commencing with Section 47670) to Chapter 6 of Part 26.8 of Division 4 of Title 2 of, and to add Article 11.5 (commencing with Section 51827) to Chapter 5 of Part 28 of Division 4 of Title 2 of, and to add and repeal Section 46306 of, the Education Code, relating to school accountability.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

(1) Existing law requires county superintendents of schools to provide for an audit of all funds under their jurisdiction and control, and requires the governing board of each local educational agency to either provide for an audit of the books and accounts of the local educational agency or make arrangements with county superintendents of schools to provide for that auditing. Existing law requires the governing board of each school district and each office of the county superintendent of schools to include specified provisions in their contracts for audits and requires financial and compliance audits to be performed in accordance with specified standards. If the governing board of a school district has entered into a contract for an independent audit of its financial statements and the audited financial statements have not been filed with the county superintendent of schools on or before a specified due date, existing law authorizes the county superintendent of schools to, among other things, investigate the causes for the delay, as provided.

This bill would expressly apply the above-described provisions to educational joint powers authorities and charter schools. The bill, among other things, would require those financial and compliance audits of local educational agencies to be conducted in accordance with specified filing deadlines and would revise requirements regarding which entity is responsible for providing an audit if a local educational agency has not provided for an audit of their respective books and accounts to include the Controller or a chartering authority, as provided. The bill would require, instead of authorize, a county superintendent of schools to investigate the causes for an above-described delay. The bill would require a local educational agency to post the local educational agency’s annual financial and compliance audits on its internet website.

Existing law requires the Controller to, among other things, on an annual basis, review and monitor the audit reports performed by independent auditors, determine whether audit reports are in conformance with specified reporting provisions, and notify each local educational agency, the responsible county superintendent of schools, the Superintendent, the Department of Finance, and the auditor regarding each determination. Existing law authorizes the Controller to perform quality control reviews of audit working papers to determine whether audits are performed in conformity with those specified standards. Existing law requires the Controller to annually report to the State Department of Education to apprise the department of school districts and offices of county superintendents of schools that are not in compliance with applicable statutes and regulations related to audits and requires the Controller to make recommendations as to what action should be taken by the department.

The bill would require the Controller to, if applicable, notify the responsible chartering authority of each determination made, as referenced above, and would require notification to applicable entities to be made within 6 months of the audit report due date or the audit report issue date, whichever is later. The bill would require the Controller to establish and publish as part of the audit guide a weighted risk-based criteria that considers auditor experience and quality factors in determining which audit engagements are required to undergo a quality control review, as provided. The bill would require the Controller to instead report and provide recommendations to the Superintendent of entities not in compliance with applicable statutes and regulations and would include educational joint powers authorities and charter schools as reported entities.

The bill, commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, would require the Controller to include, among other things, instructions requiring specified supplemental information and schedules in audit report components for local educational agency audits and an appendix with the Controller’s desk review checklist that is used to determine whether audit reports are in conformance with specified reporting requirements, as provided.

Existing law requires audits to be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by a local educational agency, as applicable, from a directory of certified public accountants and public accountants deemed by the Controller as qualified to conduct audits of local educational agencies.

In order to be added to, or remain on, the Controller’s directory of certified public accountants and public accountants as described above, the bill would require, commencing with the 2027–28 fiscal year, and every 2 years thereafter, audit engagement partners and certified public accountants or public accountants responsible for local educational agency audits to, among other things, complete 16 hours of continuing education, demonstrate specified experience, and maintain compliance with the California Board of Accountancy requirements to keep applicable licenses in active status and good standing, as provided. The bill would also apply the continuing education requirement to audit staff who perform audit procedures of local educational agencies.

To the extent the bill would impose additional duties on local educational agencies or local officials, the bill would impose a state-mandated local program.

(2) Existing law establishes the State Department of Education, under the administration of the Superintendent of Public Instruction, and assigns to it numerous duties relating to the governance and financing of the public elementary and secondary schools of this state.

This bill would establish the Office of the Education Inspector General in the department. General. The bill would provide for the appointment of the Education Inspector General by the Governor, Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee, subject to confirmation by a vote of the majority of the membership of the Senate. The bill would require the Education Inspector General to to, among other things, (A) conduct and supervise forensic audits and investigations relating to of the programs and operations of the department, school districts, county offices of education, charter schools, educational joint powers authorities, state special schools, and entities managing charter schools, schools related to fraud, misappropriation of funds, and other illegal practices and (B) provide leadership and coordination and recommend policies to prevent and detect fraud and abuse in programs and operations of the department, local educational agencies, and entities managing charter schools, and (C) provide a means for keeping the State Board of Education and the Legislature fully and currently informed about problems and deficiencies relating to the administration of the programs and operations of the department, local educational agencies, and entities managing charter schools and the necessity for and progress of corrective actions that the Inspector General deems to be appropriate. annually report to the appropriate policy committees of the Legislature on investigations and audits of the programs and operations of the department, local educational agencies, and entities managing a charter school.

(3) Existing law requires the Commission on Teacher Credentialing to establish standards for the issuance and renewal of credentials, certificates, and permits. Existing law requires the commission and the department to enter into a data sharing agreement for the department to provide the commission with educator assignment data necessary to annually identify educator misassignments and vacant positions at local educational agencies, as provided, as part of the State Assignment Accountability System. Existing law requires the commission to annually use data it receives from the department to produce an initial data file of vacant positions and educator assignments that do not have a clear match of credential to assignment and requires the commission to notify local educational agencies and monitoring authorities of the opportunity to access and review the initial data file of potential misassignments, as defined, and vacant positions. Existing law grants the commission the authority to make a final determination for all potential misassignments. Existing law requires, commencing with the 2020–21 school year, the commission to make annual educator assignment, misassignment, and vacant position data publicly available on its internet website.

This bill would require teachers employed by a local educational agency and offering certain courses to hold the certificate, permit, or other document required by the commission for that assignment and be monitored. To the extent that this provision would create new duties for county superintendents of schools and local educational agencies, it would constitute a state-mandated local program.

(4) Existing law establishes a public school financing system that requires state funding for school districts, county offices of education, and charter schools to be calculated pursuant to a local control funding formula, as specified. Existing law includes average daily attendance as a component of the calculation under the local control funding formula. Existing law establishes the California Longitudinal Pupil Achievement Data System, which is maintained by the State Department of Education and consists of pupil data from elementary and secondary schools, as specified, relating to demographics, program participation, enrollment, and statewide assessments, among other things.

This bill would require the department to, by January 1, 2030, and in consultation with the County Office Fiscal Crisis Management Assistance Team, complete a report with specified data relating to the possible integration of the California Longitudinal Pupil Achievement Data System and the average daily attendance apportionment data system, and would require the department to provide the report to the appropriate policy and fiscal committees of the Legislature, as provided.

(5) Existing law requires the Superintendent, if, during any fiscal year, the amount apportioned to a school district or to any fund from Section A of the State School Fund differs either positively or negatively from the amount to which the school district or fund was entitled by an amount equal to the local control funding formula allocation for one unit of average daily attendance, not later than the first succeeding fiscal year from the fiscal year in which the computational error was made, to withhold from, or add to, the apportionment made during that fiscal year, the amount of the excess of deficiency, as the case may be.

This bill would require the Superintendent to apply the above-described provisions to county offices of education and charter schools. If, during any fiscal year, a school district, county office of education, or charter school determines that the amount apportioned to the school district, county office of education, charter school, or to any fund from Section A of the State School Fund differs either positively or negatively from the amount to which the school district, county office of education, charter school, or fund was entitled by an amount equal to the local control funding formula allocation for one or more units of average daily attendance, the bill would require the local educational agency to report the corrected amount to the Superintendent. To the extent the bill would impose additional duties on a local educational agency, the bill would impose a state-mandated local program.

Existing law requires state funding to be calculated and withheld from a school district or county office of education for any fiscal year in which a person renders service as a teacher in kindergarten or any of grades 1 to 12, inclusive, who does not have a valid certification document, as provided.

The bill would apply the above-described provisions relating to the penalties for a person rendering services as a teacher who does not have a valid certification document to charter schools, as provided.

(6) The Charter Schools Act of 1992 authorizes the establishment, operation, and governance of charter schools. Existing law requires a petition to establish a charter school to include reasonably comprehensive descriptions of certain things, including the manner in which annual, independent financial audits shall be conducted, and the manner in which audit exceptions and deficiencies shall be resolved to the satisfaction of the chartering authority.

Commencing July 1, 2028, the bill would require each chartering authority to annually (A) verify to, with respect to each charter school under its authority, (A) annually review specified data relating to the reporting of average daily attendance by nonclassroom-based charter schools, (B) notify the certified public accountant or accountant performing the audit of the charter school if the charter school does not provide the required documentation needed to verify the specified data, review the agenda and minutes of the meetings of the governing body of the charter school, (C) annually attend a at least one meeting of the governing body of the charter school and, if applicable, a meeting of the governing body of the entity managing the charter school, as specified, and (D) monitor payments of charter schools to verify that the payments are legal and have proper authorization, as provided. identify and provide notification to the governing body of the charter school of any material concern arising out of the chartering authority’s ongoing oversight and monitoring activities.

The bill would require authorize the State Board of Education, in consultation with the Superintendent of Public Instruction, to revise regulations regulations, including emergency regulations, to require charter schools to report prepare periodic and annual financial data in the same manner and on the same form prescribed for school districts. districts, as provided. The bill would phase in, from the 2026–27 2028–29 fiscal year to the 2028–29 2030–31 fiscal year, inclusive, and based on the average daily attendance of the charter school and whether the charter school is a nonclassroom-based charter school, the requirement that charter schools report this data in the same manner and on the same form prescribed for school districts, as provided.

The bill would require the state board to appoint an advisory committee on charter schools that would include representatives from school district superintendents, charter schools, teachers, members of the governing boards of school districts, county superintendents of schools, and the Superintendent.

The bill would prohibit a school district with an average daily attendance of fewer than 10,000 pupils from authorizing one or more nonclassroom-based charter schools or approving a material revision to expand one or more nonclassroom-based charter schools if doing so would result in more than a totality of 100% of the average daily attendance of the school district and would create an exception for a nonclassroom-based charter school in operation on or before December 31, 2025, that exceeds that limitation if, as of December 31, 2025, certain requirements are met.

The bill would require charter schools to obtain the approval of the governing body of the charter school for any contract that would cause the charter school to compensate an individual contractor more than $100,000 in a fiscal year.

Existing law requires the amount of funding to be allocated to a charter school on the basis of average daily attendance that is generated by pupils engaged in nonclassroom-based instruction, as defined, to be adjusted by the state board, as provided.

This bill would revise and recast those provisions by, among other things, requiring the above-described determination for funding to instead be on a percentage basis and requiring the Superintendent of Public Instruction to implement the determination for funding by reducing the charter school’s reported average daily attendance by the determination for funding percentage specified by the state board, as provided. The bill would require charter schools to adhere to specified criteria when submitting a funding determination request, as provided. The bill would require the Superintendent to notify the chartering authority of a charter school that is maintaining an unassigned fund balance for economic uncertainties that is 5% or less of the charter school’s annual expenditures.

Beginning with the 2027–28 school year, the bill would require the State Department of Education to annually develop a list that identifies networks of nonclassroom-based charter schools, as defined, based on data from the prior school year.

To the extent that these additions to the act would impose new duties on local educational agencies, they would constitute a state-mandated local program.

(8) Existing law authorizes a school district, county office of education, or charter school to offer independent study to meet the educational needs of pupils when certain requirements are met, including, among others, that the local educational agency has adopted written policies, and implemented those policies, in accordance with rules and regulations adopted by the Superintendent, as specified. Existing law, for purposes of independent study, requires those programs to meet specified average-daily-attendance-to-certificated-employee ratios. Existing law authorizes a local educational agency to claim apportionment credit for independent study only to the extent of the time value of pupil work products. Existing law prohibits school districts and county offices of education from being eligible to receive apportionment for independent study attendance by any pupil who is not otherwise identified in the written records of the school district or county board of education, as provided.

This bill would, among other things, extend the latter-described prohibition to charter schools, revise required average-daily-attendance-to-certificated-employee ratios, and add requirements to the independent study policies and procedures, as provided. The bill would require a local educational agency to maintain one completed pupil work product in each of 4 specified subjects for a pupil enrolled in independent study for each of 3 specified attendance periods, except as provided.

The bill would require the governing board or body of a school district, educational joint powers authority, county office of education, or charter school, on or before July 1, 2027, to adopt a policy in order to evaluate and approve contractors. The bill would require the policy to include specified provisions, including, among other things, that a local educational agency is prohibited from (A) expending public funds for a contract unless the materials, programs, and activities are nonsectarian, (B) offering financial payments or gifts as an incentive for pupil enrollment, referral, or retention, and (C) purchasing or contracting for season passes or membership to amusement or theme parks, zoos, or family entertainment activities, except as provided.

(9) Existing law requires any entity that has a contract with a school district, county office of education, or charter school to ensure that any employee who interacts with pupils, outside of the immediate supervision and control of the pupil’s parent or guardian or a school employee, has a valid criminal records summary, as specified.

This bill would require an entity that has a contract with a local educational agency to instead ensure any employee who interacts with pupils has a valid criminal records summary without regard to whether the interaction takes place outside of the immediate supervision and control of the pupil’s parent or guardian or a school employee.

(10) 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.

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares all of the following:

(a) Accountability within public educational funding is the expressed interest of the Legislature.

(b) Consistency of the application of audit standards and requirements across school districts, county superintendents of schools, and charter schools, known collectively as local educational agencies, is an essential component of transparency.

(c) Sound fiscal management practices across local educational agencies promote the most efficient and effective use of public funds for the education of children by strengthening fiscal accountability at local educational agencies.

(d) Quality audits of local educational agencies are necessary for consistent financial and compliance transparency and to produce essential accountability measures.

(e) The quality of audits of local educational agencies is directly influenced by the quality of certified and noncertified public accountants who serve as auditors.

(f) The quality of individual auditors’ work product is correlated to training and experience.

(g) Processes that ensure a thorough and fair evaluation of audit and auditor quality and provide for appropriate discipline of auditors are essential.

SEC. 2.

Section 1240 of the Education Code is amended to read:

1240.

The county superintendent of schools shall do all of the following:

(a) Superintend the schools of that county.

(b) Maintain responsibility for the fiscal oversight of each school district in that county pursuant to the authority granted by this code.

(c) (1) Visit and examine each school in the county at reasonable intervals to observe its operation and to learn of its problems. The county superintendent of schools annually may present a report of the state of the schools in the county, and of the county office of education, including, but not limited to, observations from visiting the schools, to the board of education and the board of supervisors of the county.

(2) (A) (i) Commencing with the 2021–22 fiscal year, the Superintendent shall identify a list of schools, which shall include charter schools, for which the county superintendent, or a designee, shall inspect annually, and about which the county superintendent, or a designee, shall submit an annual report, at a regularly scheduled November board meeting, to the governing board of each school district under the jurisdiction of the county superintendent, the county board of education of that county, and the board of supervisors of that county, that describes the state of the schools in the county. The list established in the 2021–22 fiscal year shall also be used as the list established in the 2022–23 and 2023–24 fiscal years. The list of schools established pursuant to this section shall be reestablished in the 2024–25 fiscal year and again every three fiscal years thereafter. Each list shall be established in accordance with clause (ii), and shall be used for inspections beginning the following fiscal year.

(ii) The list of schools pursuant to clause (i) shall be compiled as follows:

(I) The Superintendent shall include on the list all schools that were most recently identified for comprehensive support and improvement and additional targeted support and improvement pursuant to the federal Every Student Succeeds Act (Public Law 114-95) or identified as low performing under the federal Elementary and Secondary Education Act of 1965 (Public Law 89-10), or any subsequent amendments to that act. For the list established in the 2021–22, 2022–23, and 2023–24 fiscal years, the Superintendent shall use the list of schools identified in the 2019–20 fiscal year for comprehensive support and improvement and for additional targeted support and improvement.

(II) The Superintendent shall include on the list all schools where 15 percent or more of the teachers are holders of a permit or certificate, such as a temporary or short-term permit, a substitute permit, a waiver, an intern credential, or any other authorization that is a lesser certification than a preliminary or clear California teaching credential. With the exception of alternative schools, all schools within a local educational agency that fail to meet the requirements of Sections 44258.9 and 60900 shall be included on the list for the applicable reporting cycle.

(III) The list of schools compiled pursuant to clause (i) shall exclude alternative schools within the meaning of subdivision (d) of Section 52052 and other schools accepted for participation in the Dashboard Alternative School Status program by the department.

(iii) The annual report shall include the determinations for each school made by the county superintendent, or the county superintendent’s designee, regarding the status of all of the circumstances listed in subparagraph (E) and teacher misassignments and teacher vacancies, as described in Section 44258.9, and the county superintendent, or the county superintendent’s designee, shall use a standardized template to report the circumstances listed in subparagraph (E) and teacher misassignments and teacher vacancies, as described in Section 44258.9, unless the current annual report being used by the county superintendent, or the county superintendent’s designee, already includes those details with the same level of specificity that is otherwise required by this subdivision.

(B) The county superintendent of the Counties of Alpine, Amador, Del Norte, Mariposa, Plumas, and Sierra, and the City and County of San Francisco shall contract with another county office of education or an independent auditor to conduct the required visits and make all reports required by this paragraph.

(C) On a quarterly basis, the county superintendent, or the county superintendent’s designee, shall report the results of the visits and reviews conducted that quarter to the governing board of the school district at a regularly scheduled meeting held in accordance with public notification requirements. The results of the visits and reviews shall include the determinations of the county superintendent, or the county superintendent’s designee, for each school regarding the status of all of the circumstances listed in subparagraph (E) and teacher misassignments and teacher vacancies, as described in Section 44258.9. If the county superintendent, or the county superintendent’s designee, conducts no visits or reviews in a quarter, the quarterly report shall report that fact.

(D) The visits made pursuant to this paragraph shall be conducted at least annually and shall meet the following criteria:

(i) Minimize disruption to the operation of the school.

(ii) Be performed by individuals who meet the requirements of Section 45125.1.

(iii) Consist of not less than 25 percent unannounced visits in each county. During unannounced visits in each county, the county superintendent shall not demand access to documents or specific school personnel. Unannounced visits shall only be used to observe the condition of school repair and maintenance, and the sufficiency of instructional materials, as defined by Section 60119.

(E) The priority objective of the visits made pursuant to this paragraph shall be to determine the status of all of the following circumstances:

(i) Sufficient textbooks, as defined in Section 60119 and as specified in subdivision (i).

(ii) The condition of a facility that poses an emergency or urgent threat to the health or safety of pupils or staff, as described in school district policy or paragraph (1) of subdivision (c) of Section 17592.72.

(iii) The accuracy of data reported on the school accountability report card with respect to the availability of sufficient textbooks and instructional materials, as defined by Section 60119, and the safety, cleanliness, and adequacy of school facilities, including good repair, as required by Sections 17014, 17032.5, 17070.75, and 17089.

(F) The county superintendent may make the status determinations described in subparagraph (E) during a single visit or multiple visits. In determining whether to make a single visit or multiple visits for this purpose, the county superintendent shall take into consideration factors such as cost-effectiveness, disruption to the schoolsite, deadlines, and the availability of qualified reviewers.

(G) If the county superintendent determines that the condition of a facility poses an emergency or urgent threat to the health or safety of pupils or staff as described in school district policy or paragraph (1) of subdivision (c) of Section 17592.72, or is not in good repair, as specified in subdivision (d) of Section 17002 and required by Sections 17014, 17032.5, 17070.75, and 17089, the county superintendent, among other things, may do any of the following:

(i) Return to the school to verify repairs.

(ii) Prepare a report that specifically identifies and documents the areas or instances of noncompliance if the school district has not provided evidence of successful repairs within 30 days of the visit of the county superintendent or, for major projects, has not provided evidence that the repairs will be conducted in a timely manner. The report may be provided to the governing board of the school district. If the report is provided to the school district, it shall be presented at a regularly scheduled meeting held in accordance with public notification requirements. The county superintendent shall post the report on the internet website of the county superintendent. The report shall be removed from the internet website when the county superintendent verifies the repairs have been completed.

(H) For schools that are identified on the list established in the 2024–25 fiscal year pursuant to subparagraph (A), and only in the fiscal years in which that list is used, a county superintendent shall complete the textbook and instructional materials review conducted for purposes of this paragraph and subparagraph (A) of paragraph (3) of subdivision (i) by the eighth week of the school year. The county superintendent shall prioritize reviewing, within the first four weeks of the school year where practicable, schools for which the county superintendent has received information from a survey, a complaint filed pursuant to Section 35186, or any other reliable source that the school does not have sufficient textbooks, as defined in Section 60119 and as specified in subdivision (i), or that a facility of the school poses an emergency or urgent threat to the health or safety of pupils or staff as described in school district policy or paragraph (1) of subdivision (c) of Section 17592.72, or is not in good repair, as specified in subdivision (d) of Section 17002 and required by Sections 17014, 17032.5, 17070.75, and 17089.

(d) Distribute all laws, reports, circulars, instructions, and blanks that the county superintendent may receive for the use of the school officers.

(e) Annually, on or before September 15, present a report to the governing board of the school district and the Superintendent regarding the fiscal solvency of a school district with a disapproved budget, qualified interim certification, or a negative interim certification, or that is determined to be in a position of fiscal uncertainty pursuant to Section 42127.6.

(f) Keep in the office of the county superintendent the reports of the Superintendent.

(g) Keep a record of the official acts of the county superintendent and of all the proceedings of the county board of education, including a record of the standing, in each study, of all applicants for certificates who have been examined, which shall be open to the inspection of an applicant or an authorized agent of the applicant.

(h) Enforce the course of study.

(i) (1) Enforce the use of state textbooks and instructional materials and of high school textbooks and instructional materials regularly adopted by the proper authority in accordance with Section 51050.

(2) For purposes of this subdivision, sufficient textbooks or instructional materials has the same meaning as in subdivision (c) of Section 60119.

(3) (A) Commencing with the 2022–23 school year, if a school is identified as specified in subparagraph (A) of paragraph (2) of subdivision (c), the county superintendent specifically shall review that school at least annually as a priority school. A review conducted for purposes of this paragraph shall be completed by the fourth week of the school year, except as specified in subparagraph (H) of paragraph (2) of subdivision (c).

(B) In order to facilitate the review of instructional materials before the fourth week of the school year, the county superintendent in a county with 200 or more schools that are identified as specified in subparagraph (A) of paragraph (2) of subdivision (c) may use a combination of visits and written surveys of teachers for the purpose of determining sufficiency of textbooks and instructional materials in accordance with subparagraph (A) of paragraph (1) of subdivision (a) of Section 60119 and as defined in subdivision (c) of Section 60119. If a county superintendent elects to conduct written surveys of teachers, the county superintendent shall visit the schools surveyed within the same academic year to verify the accuracy of the information reported on the surveys. If a county superintendent surveys teachers at a school in which the county superintendent has found sufficient textbooks and instructional materials for the previous two consecutive years and determines that the school does not have sufficient textbooks or instructional materials, the county superintendent shall, within 10 business days, provide a copy of the insufficiency report to the school district as set forth in paragraph (4).

(C) For purposes of this paragraph, “written surveys” may include paper and electronic or online surveys.

(4) If the county superintendent of schools determines that a school does not have sufficient textbooks or instructional materials in accordance with subparagraph (A) of paragraph (1) of subdivision (a) of Section 60119 and as defined by subdivision (c) of Section 60119, the county superintendent shall do all of the following:

(A) Prepare a report that specifically identifies and documents the areas or instances of noncompliance.

(B) Provide within five business days of the review, a copy of the report to the school district, as provided in subdivision (c), or, if applicable, provide a copy of the report to the school district within 10 business days pursuant to subparagraph (B) of paragraph (3).

(C) Provide the school district with the opportunity to remedy the deficiency. The county superintendent shall ensure that the deficiency is remedied no later than the second month of the school term.

(D) If the deficiency is not remedied as required pursuant to subparagraph (C), the county superintendent shall request the department to purchase the textbooks or instructional materials necessary to comply with the sufficiency requirement of this subdivision. If the department purchases textbooks or instructional materials for the school district, the department shall issue a public statement at the first regularly scheduled meeting of the state board occurring immediately after the department receives the request of the county superintendent and that meets the applicable public notice requirements, indicating that the district superintendent and the governing board of the school district failed to provide pupils with sufficient textbooks or instructional materials as required by this subdivision. Before purchasing the textbooks or instructional materials, the department shall consult with the school district to determine which textbooks or instructional materials to purchase. The amount of funds necessary for the purchase of the textbooks and materials is a loan to the school district receiving the textbooks or instructional materials. Unless the school district repays the amount owed based upon an agreed-upon repayment schedule with the Superintendent, the Superintendent shall notify the Controller and the Controller shall deduct an amount equal to the total amount used to purchase the textbooks and materials from the next principal apportionment of the school district or from another apportionment of state funds.

(5) If the county superintendent of schools determines that there are insufficient textbooks or instructional materials pursuant to a resolution received in accordance with subparagraph (A) of paragraph (2) of subdivision (a) of Section 60119 and as defined by subdivision (c) of Section 60119, or as a result of receiving a report of an unresolved complaint pursuant to subdivision (e) of Section 35186 or an audit exception pursuant to subdivision (l) of Section 41020, the county superintendent shall do both of the following:

(A) Provide the school district with the opportunity to remedy the deficiency. The county superintendent shall ensure that the deficiency is remedied no later than the second month of the school term.

(B) If the deficiency is not remedied as required pursuant to subparagraph (A), the county superintendent shall request the department to purchase the textbooks or instructional materials necessary to comply with the sufficiency requirement of this subdivision. If the department purchases the textbooks or instructional materials for the school district, the department shall issue a public statement at the first regularly scheduled meeting of the state board occurring immediately after the department receives the request of the county superintendent and that meets the applicable public notice requirements, indicating that the district superintendent and the governing board of the school district failed to provide pupils with sufficient textbooks or instructional materials as required by this subdivision. Before purchasing the textbooks or instructional materials, the department shall consult with the school district when determining which textbooks or instructional materials to purchase. The amount of funds necessary for the purchase of the textbooks and materials is a loan to the school district receiving the textbooks or instructional materials. Unless the school district repays the amount owed based upon an agreed-upon repayment schedule with the Superintendent, the Superintendent shall notify the Controller and the Controller shall deduct an amount equal to the total amount used to purchase the textbooks and materials from the next principal apportionment of the school district or from another apportionment of state funds.

(j) Preserve carefully all reports of school officers and teachers.

(k) Deliver to the county superintendent’s successor, at the close of the county superintendent’s official term, all records, books, documents, and papers belonging to the office, taking a receipt for them, which shall be filed with the department.

(l) (1) Submit two reports during the fiscal year to the county board of education in accordance with the following:

(A) The first report shall cover the financial and budgetary status of the county office of education for the period ending October 31. The second report shall cover the period ending January 31. Both reports shall be reviewed by the county board of education and approved by the county superintendent no later than 45 days after the close of the period being reported.

(B) As part of each report, the county superintendent shall certify in writing whether or not the county office of education is able to meet its financial obligations for the remainder of the fiscal year and, based on current forecasts, for two subsequent fiscal years. The certifications shall be classified as positive, qualified, or negative, pursuant to standards prescribed by the Superintendent, for purposes of determining subsequent state agency actions pursuant to Section 1240.1. For purposes of this subdivision, a negative certification shall be assigned to a county office of education that, based upon current projections, will not meet its financial obligations for the remainder of the fiscal year or for the subsequent fiscal year. A qualified certification shall be assigned to a county office of education that may not meet its financial obligations for the current fiscal year or two subsequent fiscal years. A positive certification shall be assigned to a county office of education that will meet its financial obligations for the current fiscal year and subsequent two fiscal years. In accordance with those standards, the Superintendent may reclassify a certification. If a county office of education receives a negative certification, the Superintendent, or the Superintendent’s designee, may exercise the authority set forth in subdivision (d) of Section 1630. Copies of each certification, and of the report containing that certification, shall be sent to the Superintendent at the time the certification is submitted to the county board of education. Copies of each qualified or negative certification and the report containing that certification shall be sent to the Controller at the time the certification is submitted to the county board of education.

(2) All reports and certifications required under this subdivision shall be in a format or on forms prescribed by the Superintendent, and shall be based on standards and criteria for fiscal stability adopted by the state board pursuant to Section 33127. The reports and supporting data shall be made available by the county superintendent to an interested party upon request.

(3) This subdivision does not preclude the submission of additional budgetary or financial reports by the county superintendent to the county board of education or to the Superintendent.

(4) The county superintendent is not responsible for the fiscal oversight of the community colleges in the county, however, the county superintendent may perform financial services on behalf of those community colleges.

(5) A county office of education having a negative or qualified certification, or classified as qualified or negative by the Superintendent, shall continue to be classified as qualified or negative until the next report required under this subdivision is filed.

(m) If requested, act as agent for the purchase of supplies for the city and high school districts of that county.

(n) For purposes of Section 44421.5, report to the Commission on Teacher Credentialing the identity of a certificated person who knowingly and willingly reports false fiscal expenditure data relative to the conduct of an educational program. This requirement applies only if, in the course of normal duties, the county superintendent discovers information that gives the county superintendent reasonable cause to believe that false fiscal expenditure data relative to the conduct of an educational program has been reported.

(o) If any activities authorized pursuant to this section are found to be a state reimbursable mandate pursuant to Section 6 of Article XIIIB of the California Constitution, funding provided for school districts and county offices of education pursuant to Sections 2574, 2575, 42238.02, and 42238.03 shall be used to directly offset any mandated costs.

SEC. 3.

Section 14500 of the Education Code is amended to read:

14500.

It is the intent of the Legislature in enacting this chapter to promote accountability over public educational funding by establishing a new program to review and report on financial and compliance audits of school districts, educational joint powers authorities, county superintendents of schools, and charter schools. It is further the intent of the Legislature that the Controller shall have the primary responsibility for implementing and overseeing the program.

SEC. 4.

Section 14501 of the Education Code is amended to read:

14501.

(a) As used in this chapter, “financial and compliance audit” shall be consistent with the definition provided in the generally accepted government auditing standards promulgated by the United States Government Accountability Office. Financial and compliance audits conducted under this chapter shall fulfill federal single audit requirements.

(b) For purposes of this chapter, the following definitions apply:

(1) “Compliance audit” means an audit that ascertains and verifies whether or not funds provided through apportionment, contract, or grant, either federal or state, have been properly disbursed and expended as required by law or regulation, or both, and includes the verification of each of the following, if applicable:

(A) Expenditure of funds in accordance with the local control and accountability plan adopted pursuant to Article 4.5 (commencing with Section 52059.5) of Chapter 6.1 of Part 28 of Division 4 of Title 2.

(B) The reporting requirements for the sufficiency of textbooks or instructional materials, or both, as defined in Section 60119.

(C) Teacher misassignments pursuant to Section 44258.9.

(D) The accuracy of information reported on the School Accountability Report Card required by Section 33126.

(2) “Local educational agency” means a school district, educational joint powers authority, charter school, or county superintendent of schools.

(c) The requirements set forth in subparagraphs (B) to (D), inclusive, of paragraph (1) of subdivision (b) shall be added to the audit guide requirements pursuant to subdivision (b) of Section 14502.1.

SEC. 5.

Section 14502.1 of the Education Code is amended to read:

14502.1.

(a) The Controller, in consultation with the Department of Finance and the department, shall develop a plan to review and report on financial and compliance audits. The plan shall commence with the 2003–04 fiscal year for audits of school districts, other local educational agencies, and the offices of county superintendents of schools. The Controller, in consultation with the Department of Finance, the department, and representatives of the California School Boards Association, the California Association of School Business Officials, the California County Superintendents Educational Services Association, the California Teachers Association, the California Society of Certified Public Accountants, the California Charter Schools Association, the Charter Schools Development Center, the California School Employees Association, and the County Office Fiscal Crisis and Management Assistance Team, shall recommend the statements and other information to be included in the audit reports filed with the state, and shall propose the content of an audit guide to carry out the purposes of this chapter. A supplement to the audit guide may be suggested in the audit year, following the above process, to address issues resulting from new legislation in that year that changes the conditions of apportionment. The proposed content of the audit guide and any supplement to the audit guide shall be submitted by the Controller to the Education Audit Appeals Panel for review and possible amendment.

(b) The audit guide and any supplement shall be adopted by the Education Audit Appeals Panel pursuant to the rulemaking procedures of the Administrative Procedure Act, as set forth in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. It is the intent of the Legislature that, for the 2003–04 fiscal year, the audit guide be adopted by July 1 of the fiscal year to be audited. A supplemental audit guide may be adopted to address legislative changes to the conditions of apportionment. It is the intent of the Legislature that supplements be adopted before March 1 of the audit year. Commencing with the 2004–05 fiscal year, and each fiscal year thereafter, the audit guide shall be adopted by July 1 of the fiscal year to be audited. A supplemental audit guide may be adopted to address legislative changes to the conditions of apportionment. The supplements shall be adopted before March 1 of the audit year. To meet these goals and to ensure the accuracy of the audit guide, the process for adopting emergency regulations set forth in Section 11346.1 of the Government Code may be followed to adopt the audit guide and supplemental audit guide. It is the intent of the Legislature that once the audit guide has been adopted for a fiscal year, as well as any supplement for that year, thereafter only suggested changes to the audit guide and any additional supplements need be adopted pursuant to the rulemaking procedures of the Administrative Procedure Act. The audit guide and any supplement shall be issued in booklet form and may be made available by any means deemed appropriate. The Controller and consultants in the development of the suggested audit guide and any supplement shall work cooperatively on a timeline that will allow the Education Audit Appeals Panel to meet the July 1 and March 1 issuance dates. Consistent with current practices for development of the audit guide before the 2003–04 fiscal year, the Controller shall provide for the adoption of procedures and timetables for the development of the suggested audit guide, any supplement, and the format for additions, deletions, and revisions.

(c) For the audit of school districts or county offices of education electing to take formal action pursuant to Sections 22714 and 44929, the audit guide content proposed by the Controller shall include, but not be limited to, the following:

(1) The number and type of positions vacated.

(2) The age and service credit of the retirees receiving the additional service credit provided by Sections 22714 and 44929.

(3) A comparison of the salary and benefits of each retiree receiving the additional service credit with the salary and benefits of the replacement employee, if any.

(4) The resulting retirement cost, including interest, if any, and postretirement health care benefits costs, incurred by the employer.

(d) The Controller shall annually prepare a cost analysis, based on the information included in the audit reports for the prior fiscal year, to determine the net savings or costs resulting from formal actions taken by school districts and county offices of education pursuant to Sections 22714 and 44929, and shall report the results of the cost analysis to the Governor and the Legislature by April 1 of each year.

(e) All costs incurred by the Controller to implement subdivision (c) shall be absorbed by the Controller.

(f) On or before January 1, 2015, the Controller, in consultation with the State Allocation Board, the Department of Finance, and the department, shall submit content to the Education Audit Appeals Panel to be included in the audit guide, Standards and Procedures for Audits of California K-12 Local Educational Agencies beginning in the 2015–16 fiscal year, that is related to the financial and performance audits required for school facility projects, as described in Section 15286.

SEC. 5.SEC. 6.

Section 14503 of the Education Code is amended to read:

14503.

Financial and compliance audits shall be performed in accordance with the generally accepted government auditing standards promulgated by the United States Government Accountability Office for financial and compliance audits and in accordance with the filing deadlines established pursuant to Sections 41020 and 41020.2. The audit guide prepared by the Controller shall be used in the performance of these audits until an audit guide is adopted by the Education Audit Appeals Panel pursuant to Section 14502.1. When an audit guide is adopted by that panel, the adopted audit guide shall be used in the performance of these audits. Every audit report shall specifically and separately address each of the state program compliance requirements included in the audit guide, stating whether or not the district is in compliance with those requirements. For each state program compliance requirement included in the audit guide, every audit report shall further state that the suggested audit procedures included in the audit guide for that requirement were followed in the making of the audit, if that is the case, or, if not, what other procedures were followed. If a local educational agency is not in compliance with a requirement that is a condition of eligibility for the receipt of state funds, the audit report shall include a statement of the number of units of average daily attendance, if any, that were inappropriately reported for apportionment.

SEC. 6.SEC. 7.

Section 14504 of the Education Code is amended to read:

14504.

(a) (1) To determine the practicability and effectiveness of the audits and audit guide, the Controller shall, on an annual basis, review and monitor the audit reports performed by independent auditors.

(2) (A) The Controller shall determine whether audit reports are in conformance with the reporting provisions of Section 14503 and shall notify each local educational agency, the responsible chartering authority, if applicable, the responsible county superintendent of schools, the Superintendent, the Department of Finance, and the auditor within six months of the audit report due date or the audit report issue date, whichever is later, regarding each determination.

(B) The local educational agency, the chartering authority, the county superintendent of schools, or the Superintendent contracting for the financial and compliance audit shall include a statement that will provide the Controller access to audit working papers.

(b) Commencing with the 2027–28 fiscal year, the audit guide developed by the Controller and adopted by the Education Audit Appeals Panel pursuant to Section 14502.1 shall include an appendix with the Controller’s desk review checklist that is used to determine whether audit reports are in conformance with the reporting requirements of Section 14503. The Controller’s desk review checklist shall focus on elements of reporting that are material, whether qualitative or quantitative, and areas with a higher risk of error or misstatement.

SEC. 7.SEC. 8.

Section 14504.2 of the Education Code is amended to read:

14504.2.

(a) The Controller may perform quality control reviews of audit working papers to determine whether audits are performed in conformity with Section 14503. The Department of Finance or the Superintendent may refer an independent auditor of a local educational agency to the Controller for a review pursuant to this section if the Department of Finance or the Superintendent finds that an audit of a local educational agency was conducted in a manner that may constitute noncompliance with Section 14503. The Controller shall communicate the results of the Controller’s reviews to the entity that referred the independent auditor to the Controller, the independent auditor, and the local educational agency for which the audit was performed, and shall review the Controller’s findings with the independent auditor.

(b) (1) Prior to the performance of any quality control reviews, the Controller shall develop and publish guidelines and standards for those reviews. Pursuant to the development of those guidelines and standards, the Controller shall provide opportunity for public comment.

(2) The Controller shall establish and publish as part of the audit guide a weighted risk-based criteria that considers auditor experience and quality factors in determining which audit engagements shall undergo a quality control review. Criteria shall primarily include, but not be limited to, all of the following:

(A) Audit reports that were found to have material nonconformance to the reporting provisions of Section 14503 through the Controller’s review.

(B) Audits conducted by an engagement partner who has not performed audits of local educational agencies in the preceding three years.

(C) Audits that are submitted after the due date established pursuant to subdivision (k) of Section 41020, or an approved extension date, whichever is later.

(3) If the quality control review of the Controller indicates that the audit was conducted in a manner that may constitute unprofessional conduct, as defined pursuant to Section 5100 of the Business and Professions Code, including, but not limited to, gross negligence resulting in a material misstatement in the audit, the Controller shall refer the case to the California Board of Accountancy. If the California Board of Accountancy finds that the independent auditor conducted an audit in an unprofessional manner, the independent auditor is prohibited from performing any audit of a local educational agency for a period of three years, in addition to any other penalties that the California Board of Accountancy may impose.

(c) In any matter that is referred to the California Board of Accountancy under paragraph (3) of subdivision (b), the Controller may suspend the independent auditor from performing any local educational agency audits pending final disposition of the matter by the California Board of Accountancy if the Controller gives the independent auditor notice and an opportunity to respond to that suspension. The independent auditor shall be given credit for any period of suspension if the California Board of Accountancy prohibits the independent auditor from performing audits of the local educational agency under paragraph (3) of subdivision (b). The Controller shall not suspend an independent auditor under this subdivision for a period of longer than three years.

(d) The county superintendent of schools, the school district, the charter school, the chartering authority, the Controller, or the Superintendent may refer an independent auditor of a local educational agency to the California Board of Accountancy for action described in paragraph (3) of subdivision (b) if either of the following circumstances exist:

(1) An audit of a local educational agency was conducted in a manner that may constitute unprofessional conduct, as defined by Section 5100 of the Business and Professions Code, including, but not limited to, gross negligence resulting in a material misstatement in the audit.

(2) Material deficiencies are discovered in the quality control review conducted pursuant to this section.

SEC. 8.SEC. 9.

Section 14505 of the Education Code is amended to read:

14505.

(a) (1) The governing board or body of a local educational agency shall include both of the following provisions in their contracts for audits:

(A) A provision to withhold 10 percent of the audit fee until the Controller certifies that the audit report conforms to the reporting provisions of Section 14503.

(B) A provision to withhold 50 percent of the audit fee for any subsequent year of a multiyear contract if the prior year’s audit report was not certified as conforming to the reporting provisions of Section 14503. This provision shall include a statement that a multiyear contract will be null and void if a firm or individual is declared ineligible pursuant to subdivision (c) of Section 41020.5. The amount withheld is not payable unless payment is ordered by the California Board of Accountancy or the audit report for that subsequent year is certified by the Controller as conforming to the reporting provisions of Section 14503.

(2) If the Controller has not provided a written certification that the audit report has conformed to the reporting provisions of Section 14503 or a written rejection letter detailing the exceptions noted by the Controller’s review with instructions for corrections by the sixth month following the audit issue date, or the audit due date, whichever is later, the governing board or body of the local educational agency may release the amounts withheld in audit fees pursuant to paragraph (1).

(b) Within 30 days from the date of receipt of written notification that the Controller refuses to certify an audit report as conforming to the reporting provisions of Section 14503, an auditor or audit firm having a portion of an audit fee withheld pursuant to these provisions may file an appeal in writing with the California Board of Accountancy. The California Board of Accountancy shall complete an investigation of the appeal within 90 days of the filing date and, on the basis of the investigation, do either of the following:

(1) Order the Controller to provide notification that the audit report conforms to the reporting provisions of Section 14503.

(2) Schedule the appeal for a hearing, in which case the final action on the appeal shall be completed by the California Board of Accountancy within one year from the date of filing the appeal.

(c) If the California Board of Accountancy orders the Controller to provide notification pursuant to paragraph (1) of subdivision (b), the Controller shall notify the contracting local educational agency which shall then release the portion of the audit fee being withheld in accordance with this section.

SEC. 9.SEC. 10.

Section 14506 of the Education Code is amended to read:

14506.

The Controller shall conduct any additional audits that are necessary to carry out the Controller’s duties and responsibilities pursuant to this code and the Government Code. This chapter does not authorize a local educational agency, or a subcontractor or subrecipient, to constrain, in any manner, the Controller from carrying out additional audits. To the extent that the required financial and compliance audits provide the Controller with the information necessary to carry out the Controller’s responsibilities, the Controller shall plan additional audits as appropriate to avoid unnecessary duplication of audit efforts. In performing additional audits, the Controller shall, to the extent deemed appropriate under the circumstances, build upon the work performed during the required financial and compliance audit. The Controller shall not bill the local educational agency for the costs of these additional audits.

SEC. 10.SEC. 11.

Section 14507 of the Education Code is amended to read:

14507.

The Controller shall report to the Superintendent on or before June 30 of each year in order to apprise the Superintendent of those local educational agencies that are not in compliance with the applicable statutes and regulations. The Controller’s report shall categorize audit exception by types and shall identify the reasons for the exceptions. The reasons may be the legislative intent or language is unclear or the administrative requirement is not feasible. The Controller shall make recommendations as to what action should be taken by the Superintendent. Before issuing the report, the Controller shall allow each local educational agency that is specified in the report a reasonable period of time to review and comment on the section of the report affecting that local educational agency.

SEC. 11.SEC. 12.

Section 14508 of the Education Code is amended to read:

14508.

Notwithstanding Section 10231.5 of the Government Code, the Controller shall submit a report, consistent with Section 9795 of the Government Code, to the Legislature on or before August 31 of each year regarding any recommendations made to the Superintendent pursuant to Section 14507.

SEC. 12.SEC. 13.

Section 14509 of the Education Code is amended to read:

14509.

The funding appropriated in Item 6100-161-0001 of the annual Budget Act for mental health services shall be subject to existing state and federal audit requirements. Audit procedures shall be included in the audit guide to review whether funding for educationally related mental health services pursuant to this item was used by local educational agencies for its intended purposes in the 2016–17 fiscal year. These audit procedures shall be included in future fiscal years if the addition of these procedures is recommended by the Controller pursuant to subdivision (a) of Section 14502.1. If any mental health audit findings are generated through this process, the Superintendent shall ensure that the local educational agency has either corrected or developed a plan of correction for state and federal mental health funds pursuant to subdivision (o) of Section 41020.

SEC. 13.SEC. 14.

Section 33309.5 is added to the Education Code, to read:

33309.5.

(a) (1) (A) The Office of the Education Inspector General is hereby established in the department. established. The Education Inspector General shall be appointed by the Governor, Governor to a four-year term from a list of three qualified individuals nominated by the Joint Legislative Audit Committee pursuant to subparagraph (B) and subject to confirmation by a majority of the membership of the Senate, without regard to political affiliation, and solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations. The Education Inspector General shall report to, and be under the general supervision of, the state board. The state board shall not prevent or prohibit the The Education Inspector General shall not be prevented from initiating, carrying out, or completing an audit or investigation, or from issuing a subpoena during the course of an audit or investigation.

(d) The Office of the Education Inspector General shall be responsible for all of the following:

(1) Conducting and supervising forensic audits and investigations relating to of the programs and operations of the department, local educational agencies, and entities managing a charter school. school related to fraud, misappropriation, or other illegal practices.

(A) Investigations of the programs and operations of the department, local educational agencies, and entities managing a charter school, and the school.

(C) The necessity for, and progress of, corrective actions that the Education Inspector General deems to be appropriate.

(h) For purposes of this section, the following definitions apply:

(1) “Entity managing a charter school” has the same meaning as defined in subdivision (a) of Section 47604.1.

(2) “Local educational agency” means a school district, county office of education, charter school, educational joint powers authority, or state special school.

SEC. 14.SEC. 15.

Section 41020 of the Education Code is amended to read:

41020.

(a) It is the intent of the Legislature to encourage sound fiscal management practices among local educational agencies for the most efficient and effective use of public funds for the education of children in California by strengthening fiscal accountability at the school district, county, and state levels.

(b) A local educational agency shall post the local educational agency’s annual financial and compliance audits on its internet website.

(c) (1) (A) On or before May 1 of each fiscal year, the governing board of each school district or educational joint powers authority shall either provide for an audit of all funds under the control of that school district or educational joint powers authority, including an audit of income and expenditures by source of funds, or shall make arrangements with the county superintendent of schools having jurisdiction over the school district or educational joint powers authority to provide for that auditing.

(B) A contract to perform the audit of a school district or educational joint powers authority that has a disapproved budget or has received a negative certification on any budget or interim financial report during the current fiscal year or either of the two preceding fiscal years, or for which the county superintendent of schools has otherwise determined that a lack of going concern exists, is not valid unless approved by the responsible county superintendent of schools and the governing board of the school district or educational joint powers authority.

(2) (A) On or before May 1 of each fiscal year, the governing body of each charter school shall either provide for an audit of all funds under the control of the charter school, including an audit of income by source of funds, or shall make arrangements with the chartering authority to provide for that auditing. Except as provided in clause (ii) of subparagraph (B), an independent audit shall be separately conducted and reported for each charter school.

(B) (i) All charter schools shall be audited and subject to the applicable provisions of this section.

(ii) Notwithstanding subparagraph (A), financial data for charter schools that are included in the school district or county office of education audit shall be presented separately in one of the following manners:

(I) As a major fund, when applicable.

(II) As a Supplementary Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance. supplementary balance sheet and statement of revenues, expenditures, and changes in fund balance.

(III) As Supplementary Combining Statements supplementary combining statements for charter schools that are accounted for in the General Fund or when multiple charter schools are included in the charter school fund.

(3) On or before May 1 of each fiscal year, each county superintendent of schools shall either (A) provide for an audit of all funds under their jurisdiction and control, including an audit of income and expenditures by source of funds, or (B) make arrangements with the Controller to provide for that auditing.

(d) If the governing board of a school district or educational joint powers authority, the governing body of a charter school, or a county superintendent of schools pursuant to paragraph (3) of subdivision (c) has not provided for an audit of the books and accounts of the local educational agency by April 1, one of the following shall apply, as applicable:

(1) For a school district or an educational joint powers authority, the county superintendent of schools having jurisdiction over the school district or educational joint powers authority shall provide for the audit.

(2) For a charter school, the chartering authority having jurisdiction over the charter school shall provide for the audit.

(3) For a county superintendent of schools, the Controller shall provide for the audit.

(e) An audit conducted pursuant to this section shall comply fully with the Government Auditing Standards issued by the Comptroller General of the United States.

(f) Each audit conducted in accordance with this section shall include all of the following:

(1) All funds, books, and accounts of the local educational agency, including the student body and cafeteria funds and accounts and any other funds under the control or jurisdiction of the local educational agency.

(2) An audit of pupil attendance procedures and other applicable compliance items as detailed in the audit guide adopted pursuant to Section 14502.1.

(3) A determination of whether funds were expended pursuant to a local control and accountability plan or an approved annual update to a local control and accountability plan pursuant to Article 4.5 (commencing with Section 52059.5) of Chapter 6.1 of Part 28 of Division 4 or, for a charter school, Section 47606.5.

(4) Notwithstanding any other law, to the extent the governing body of a charter school engages in activities that are unrelated to the charter school, the financial and compliance audit required by this section shall not apply with regard to those unrelated activities.

(g) All audit reports for each fiscal year shall be developed and reported using a format established by the Controller after consultation with the Superintendent and the Director of Finance.

(h) (1) The cost of an audit provided for by a county superintendent of schools for a school district or educational joint powers authority shall be paid from the county school service fund and the county superintendent of schools shall transfer the pro rata share of the cost chargeable to each school district or educational joint powers authority from school district or educational joint powers authority funds.

(2) The cost of an audit provided for by a chartering authority for a charter school shall be paid by the chartering authority and the chartering authority shall collect the pro rata share of the cost chargeable to each charter school from charter school funds.

(3) The cost of an audit provided for by the Controller for a county superintendent of schools shall be paid by the Controller and the Controller shall collect the pro rata share of the cost chargeable to each county superintendent of schools from the respective county school service fund.

(4) The cost of an audit provided for by a governing board or body of a local educational agency shall be paid from local educational agency funds. The audit of the funds under the jurisdiction and control of a county superintendent of schools shall be paid from the county school service fund.

(i) (1) The audits shall be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by the local educational agency, as applicable, from a directory of certified public accountants and public accountants deemed by the Controller as qualified to conduct audits of local educational agencies, which shall be published by the Controller on or before December 31 of each year.

(2) Commencing with the 2003–04 fiscal year and except as provided in subdivision (d) of Section 41320.1, it is unlawful for a public accounting firm to provide audit services to a local educational agency if the lead audit partner, or coordinating audit partner, having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that local educational agency in each of the six previous fiscal years. The Education Audit Appeals Panel may waive this requirement if the panel finds that no otherwise eligible auditor is available to perform the audit.

(3) It is the intent of the Legislature that, notwithstanding paragraph (2), the rotation within public accounting firms conform to provisions of the federal Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7201 et seq.), and upon release of the report required by the act of the Comptroller General of the United States addressing the mandatory rotation of registered public accounting firms, the Legislature intends to reconsider paragraph (2). In determining which certified public accountants and public accountants shall be included in the directory, the Controller shall use the following criteria:

(A) The certified public accountants or public accountants shall be in good standing as certified by the Board of Accountancy.

(B) The certified public accountants or public accountants, as a result of a quality control review conducted by the Controller pursuant to Section 14504.2, shall not have been found to have conducted an audit in a manner constituting noncompliance with Section 14503.

(4) (A) (i) Commencing with the 2027–28 fiscal year, and every two years thereafter, in order to be added to, or remain on, the Controller’s directory of certified public accountants and public accountants deemed qualified to conduct audits of local educational agencies, audit engagement partners and certified public accountants or public accountants responsible for local educational agency audits and audit staff who perform audit procedures of local educational agencies shall complete 16 hours of continuing education that, at a minimum, covers both of the following:

(I) Training on the specific requirements included in the most current Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting.

(II) Training on compliance topics that include, but are not limited to, pupil attendance, independent study, charter schools, if applicable, nonclassroom-based instruction, school calendars, and instructional minutes.

(ii) Continuing education hours taken as part of the California Board of Accountancy license renewal requirements may be used to meet the requirements of clause (i) if the continuing education is specific to local educational agencies and includes the training content described in subclauses (I) and (II) of clause (i).

(B) Commencing with the 2027–28 fiscal year, in order to be added to, or remain on the Controller’s directory of certified public accountants and public accountants deemed qualified to conduct audits of local educational agencies, audit engagement partners, certified public accountant firms, and certified public accountants or public accountants responsible for local educational agency audits shall comply with both of the following:

(i) (I) Have demonstrated experience conducting financial and compliance audits for local educational agencies.

(II) Audit engagement partners, certified public accountant firms, and certified public accountants or public accountants may perform a financial and compliance audit for a local educational agency during their first year of conducting those audits, provided the audit report receives a preissuance review, consistent with applicable professional standards on quality control, performed by an auditor that has demonstrated experience in conducting financial and compliance audits for local educational agencies.

(ii) Have maintained compliance with the California Board of Accountancy requirements to keep applicable licenses in active status and good standing.

(C) The continuing education hours and prior experience required pursuant to this paragraph shall be evidenced by a certification to the Controller from the certified public accountant firms, the certified public accountant or public accountant, or the audit staff that the requirements have been met.

(5) The requirements of this subdivision shall apply to audits of local educational agencies regardless of whether the local educational agency is a governmental agency or a nonprofit organization.

(6) (A) A local educational agency and an auditor that is under contract with the local educational agency shall notify the chartering authority or the county superintendent of schools, as applicable, the Superintendent, and the Controller in the event that the auditor’s contract with the local educational agency is terminated or otherwise denied for renewal. The notification shall include the reason for the termination or denial for renewal and shall be made within 30 calendar days of the effective date of that termination or nonrenewal.

(B) (i) Before accepting a new engagement for a local educational agency, auditors shall request the local educational agency to provide authorization for predecessor auditors to respond fully and without limitation to the successor auditor’s inquiries and request to examine work papers related to subparagraph (C).

(ii) If the local educational agency refuses to authorize predecessor auditors to respond, or limits the response, the auditor shall inquire about the reasons and consider the implications of that refusal or limitation in deciding whether to accept the engagement.

(iii) If the local educational agency provides permission for predecessor auditors to respond fully, the successor auditor shall make the following inquiries of the predecessor auditors:

(I) Their knowledge of information that might bear on the integrity of management of the local educational agency.

(II) Whether there were any disagreements with management of the local educational agency regarding matters of accounting principles, financial reporting, compliance, or audit scope.

(III) Whether there were any communications to management of the local educational agency regarding fraud, illegal acts, noncompliance, or internal control matters.

(IV) The predecessor auditor’s understanding of the reason for the change of auditors.

(V) Any information relevant to the successor auditor’s risk assessments for the period being audited.

(C) The successor auditor may request to inspect work papers as needed to gain full context of any risks identified through inquiry or to perform necessary procedures on beginning balances.

(j) (1) The auditor’s report shall include each of the following:

(A) A statement that the audit was conducted pursuant to standards and procedures developed in accordance with Chapter 3 (commencing with Section 14500) of Part 9 of Division 1 of Title 1.

(B) A summary of audit exceptions and management improvement recommendations.

(C) An evaluation by the auditor on whether there is substantial doubt about the ability of the local educational agency to continue as a going concern for a reasonable period of time. This evaluation shall be based on the Statement on Auditing Standards No. 59, as issued by the American Institute of Certified Public Accountants regarding disclosure requirements relating to the ability of the entity to continue as a going concern.

(2) To the extent possible, a description of correction or plan of correction shall be incorporated in the audit report, describing the specific actions that are planned to be taken, or that have been taken, to correct the problem identified by the auditor. The descriptions of specific actions to be taken or that have been taken shall not solely consist of general comments such as “will implement,” “accepted the recommendation,” or “will discuss at a later date.”

(k) (1) On or before January 31, a report of each local educational agency audit for the preceding fiscal year shall be filed with specified entities, as follows:

(A) For school districts and educational joint powers authorities, with the county superintendent of schools of the county in which the local educational agency is located, the Superintendent, and the Controller.

(B) For charter schools, with its chartering authority, the Superintendent, the Controller, and the county superintendent of schools of the county in which the charter school is located, unless the county board of education of the county in which the charter school is located is the chartering authority.

(C) For county superintendents of schools, with the Superintendent and the Controller.

(2) The Superintendent shall make any adjustments necessary in future apportionments of all state funds to correct any audit exceptions revealed by those audit reports pursuant to Section 41344.

(l) (1) Pursuant to this section and subdivision (d) of Section 41320.1, each county superintendent of schools shall be responsible for reviewing the audit exceptions contained in an audit of a school district or educational joint powers authority under their jurisdiction related to attendance, inventory of equipment, internal control, teacher misassignments pursuant to Section 44258.9, audit exceptions related to instructional materials and information reported on the school accountability report card pursuant to Section 33126, and any miscellaneous items, and determining whether the exceptions have been either corrected or an acceptable plan of correction has been developed.

(2) Upon submission of the final audit report to the governing board of each school district or educational joint powers authority and subsequent receipt of the audit by the county superintendent of schools having jurisdiction over the school district or educational joint powers authority, the county superintendent of schools shall do all of the following:

(A) Review audit exceptions related to attendance, inventory of equipment, internal control, teacher misassignments pursuant to Section 44258.9, audit exceptions related to instructional materials and information reported on the school accountability report card pursuant to Section 33126, and other miscellaneous exceptions. Attendance exceptions or issues shall include, but not be limited to, those related to local control funding formula allocations pursuant to Section 42238.02, as implemented by Section 42238.03, and independent study.

(B) If a description of the correction or plan of correction has not been provided as part of the audit required by this section, the county superintendent of schools shall notify the school district or educational joint powers authority and request the governing board of the school district or educational joint powers authority to provide to the county superintendent of schools a description of the corrections or plan of correction before April 15.

(C) Review the description of correction or plan of correction and determine its adequacy. If the description of the correction or plan of correction is not adequate, the county superintendent of schools shall require the school district or educational joint powers authority to resubmit that portion of its response that is inadequate.

(3) Each county superintendent of schools shall certify to the Superintendent and the Controller, on or before June 15, that the county superintendent of schools’ staff has reviewed all audits of school districts or educational joint powers authorities under the county superintendent of schools’ jurisdiction for the prior fiscal year, that all exceptions that the county superintendent of schools was required to review were reviewed, and that all of those exceptions, except as otherwise noted in the certification, have been corrected by the school district or educational joint powers authority or that an acceptable plan of correction has been submitted to the county superintendent of schools. In addition, the county superintendent of schools shall identify, by school district or educational joint powers authority, any attendance-related audit exception or exceptions involving state funds, and require the local educational agency to which the audit exceptions were directed to submit appropriate reporting forms for processing by the Superintendent.

(4) In the audit of a school district or educational joint powers authority for a subsequent year, the auditor shall review the correction or plan or plans of correction submitted by the school district or educational joint powers authority to determine if the exceptions have been resolved. If an exception has not been resolved, the auditor shall restate the exception in the audit report. After receiving a finding in an audit report, the Superintendent shall either consult with the school district or educational joint powers authority to resolve the exception or require the county superintendent of schools to follow up with the school district or educational joint powers authority.

(m) (1) (A) Each chartering authority shall be responsible for reviewing the audit exceptions contained in an audit of a charter school under its jurisdiction and determining whether the exceptions have been either corrected or an acceptable plan of correction has been developed.

(B) If a description of the corrections or plan of correction has not been provided as part of the audit required by this section, the chartering authority shall notify the charter school and request the governing body of the charter school to provide to the chartering authority a description of the correction or plan of correction before April 15.

(C) The chartering authority shall review the description of the correction or plan of correction and determine its adequacy. If the description of the correction or plan of correction is not adequate, the chartering authority shall require the charter school to resubmit that portion of its response that is inadequate.

(2) (A) Except as provided in subparagraph (B), each chartering authority shall certify to the county superintendent of schools of the county in which the charter school is located, on or before May 15, that the chartering authority has done all of the following for the prior fiscal year:

(i) Reviewed all audits of charter schools under its jurisdiction.

(ii) Reviewed all exceptions that the charter school was required to review were reviewed, and that all of those exceptions, except as otherwise noted in the certification, have been corrected by the charter school or that an acceptable plan of correction has been submitted to the chartering authority.

(iii) Ensure that chartering authorities have certified that the charter schools they authorize have corrected or developed a plan of correction for exceptions identified in the audit report.

(iv) Identified any attendance-related audit exception or exceptions involving state funds and required the charter school to submit appropriate reporting forms for processing by the Superintendent.

(B) Notwithstanding subparagraph (A), if the county board of education of the county in which the charter school is located is the chartering authority, the county board of education shall certify to the Superintendent, on or before June 15, that the county superintendent of schools has done all of the following for the prior fiscal year:

(i) Reviewed all audits of charter schools under its jurisdiction.

(ii) Reviewed all exceptions that the charter school was required to review were reviewed, and that all of those exceptions, except as otherwise noted in the certification, have been corrected by the charter school or that an acceptable plan of correction has been submitted to the chartering authority.

(iii) Identified any attendance-related audit exception or exceptions involving state funds and required the charter school to submit appropriate reporting forms for processing by the Superintendent.

(3) (A) In the audit of a charter school for a subsequent year, the auditor shall review the correction or plan or plans of correction submitted by the charter school to determine if the exceptions have been resolved.

(B) (i) Except as provided in subparagraph (C), if the exceptions identified in subparagraph (A) have not been corrected, the auditor shall restate the exception in the audit report.

(ii) After receiving a finding in an audit report pursuant to clause (i), the county superintendent of schools shall either consult with the charter school to resolve the exception or require the chartering authority to follow up with the charter school.

(C) (i) Notwithstanding subparagraph (B), if the exceptions identified in subparagraph (A) have not been corrected and the county board of education of the county in which the charter school is located is the chartering authority, the auditor shall restate the exception in the audit report.

(ii) After receiving an audit report pursuant to clause (i), the Superintendent shall consult with the charter school to resolve the exception or shall require the county board of education as the chartering authority to follow up with the charter school.

(4) (A) In the audit of a county superintendent of schools for a subsequent year, the auditor shall review the correction or plan or plans of correction submitted by the county superintendent of schools to determine if the exceptions have been resolved.

(B) If the exceptions identified in subparagraph (A) have not been resolved, the auditor shall immediately notify the Superintendent and restate the exception in the audit report.

(n) (1) The Superintendent shall review the audit exceptions contained in an audit of a county superintendent of schools and shall determine whether the exceptions have been corrected or an acceptable plan of correction has been developed.

(2) After receiving a final audit report of a county superintendent of schools or the county board of education, the Superintendent shall do all of the following:

(A) Review audit exceptions, including attendance exceptions or issues, that shall include, but not be limited to, those related to local control funding formula allocations pursuant to Chapter 12.5 (commencing with Section 2574) of Part 2 of Division 1 of Title 1 and those related to independent study.

(B) Notify the county superintendent of schools and request the county superintendent of schools to provide to the Superintendent a description of the corrections or plan of correction no later than 60 calendar days after the Superintendent’s notification if a description of the correction or plan of correction has not been provided as part of the audit required by this section.

(C) Review the description of correction or plan of correction and determine its adequacy. If the description of the correction or plan of correction is not adequate, require the county superintendent of schools to resubmit that portion of its response that is inadequate.

(o) (1) The Superintendent is responsible for ensuring that local educational agencies have either corrected or developed plans of correction for any one or more of the following:

(A) All federal and state compliance audit exceptions identified in the audit.

(B) Exceptions that the county superintendent of schools certifies as of June 15 have not been corrected.

(C) Repeat audit exceptions that are not assigned to a county superintendent of schools to correct.

(2) In addition, the Superintendent is responsible for ensuring that county superintendents of schools and each county board of education that serves as the governing board or body of a local educational agency either correct all audit exceptions identified in the audits of county superintendents of schools and of the local educational agencies for which the county boards of education serve as the governing boards or develop acceptable plans of correction for those exceptions.

(3) The Superintendent shall report annually to the Controller on the Superintendent’s actions to ensure that school districts, county superintendents of schools, and each county board of education that serves as the governing board of a school district have either corrected or developed plans of correction for any of the exceptions noted pursuant to paragraph (1).

(p) To facilitate correction of the exceptions identified by the audits issued pursuant to this section, the Controller shall require auditors to categorize audit exceptions in each audit report in a manner that will make it clear to chartering authorities, the county superintendent of schools, and the Superintendent which exceptions they are responsible for ensuring the correction of by a local educational agency. In addition, the Controller annually shall select a sampling of chartering authorities and county superintendents of schools, perform a followup of the audit resolution process of those chartering authorities and county superintendents of schools, and report the results of that followup to the Superintendent, the chartering authorities, and the county superintendents of schools that were reviewed.

(q) County superintendents of schools shall adjust subsequent local property tax requirements to correct audit exceptions relating to local educational agency tax rates and tax revenues.

(r) If a governing board or body of a local educational agency, chartering authority, or county superintendent of schools fails or is unable to make satisfactory arrangements for the audit pursuant to this section, the Controller shall make arrangements for the audit and the cost of the audit shall be paid from local educational agency funds or the county school service fund, as the case may be.

(s) Audits of regional occupational centers and programs are subject to this section.

(t) This section does not authorize examination of, or reports on, the curriculum used or provided for in any local educational agency.

(u) Notwithstanding any other law, a nonauditing, management, or other consulting service to be provided to a local educational agency by a certified public accounting firm while the certified public accounting firm is performing an audit of the agency pursuant to this section shall be in accordance with the generally accepted government auditing standards promulgated by the United States General Accountability Office.

(v) For purposes of this section, “local educational agency” means a school district, educational joint powers authority, county superintendent of schools, or charter school.

SEC. 15.SEC. 16.

Section 41020.2 of the Education Code is amended to read:

41020.2.

(a) (1) If the governing board of a school district or educational joint powers authority has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the county superintendent of schools on or before the due date established under Section 41020, the county superintendent of schools shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(2) (A) If the governing body of a charter school has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the chartering authority on or before the due date established under Section 41020, the chartering authority shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(B) If a charter school has an approved audit extension pursuant to subdivision (b), a failure to file an audit on or before the legal deadline shall not be a cause for or contributing justification for charter nonrenewal or revocation. Failure to file an audit with the chartering authority on or before the legal deadline due to the inability of a charter school to contract for an audit due to market conditions of available auditors shall not be a cause for or contributing justification for charter nonrenewal or revocation.

(3) If the county superintendent of schools has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the Superintendent and the Controller on or before the due date established under Section 41020, the Superintendent shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(b) (1) (A) (i) The county superintendent of schools or chartering authority may, after consultation with the governing board or body of the local educational agency and the auditors under contract to the local educational agency, and with the consent of the Controller’s office and the Superintendent, grant an appropriate extension for the completion of the audit and the filing of the audited financial statements. An extension does not waive the legal deadline, but permits the filing of the report after the deadline.

(ii) If a charter school has an approved audit extension pursuant to this subdivision, a failure to file an audit on or before the legal deadline shall not be a cause for or contributing justification for charter nonrenewal or revocation. Failure to file an audit with the chartering authority on or before the legal deadline due to the inability of a charter school to contract for an audit due to market conditions of available auditors shall not be a cause for or contributing justification for charter nonrenewal or revocation.

(B) As applicable pursuant to subdivision (a), the Controller may, after consultation with the county board of education and the auditors under contract to the county board of education for the county office of education or for a charter school where the county board of education of the county in which the charter school is located is the chartering authority, and with the consent of the Superintendent, grant an appropriate extension for the completion of the audit and the filing of the audited financial statements. An extension does not waive the legal deadline, but permits the filing of the report after the deadline.

(2) An extension granted pursuant to this subdivision shall be appropriate if the extension adheres to all of the following requirements:

(A) The local educational agency and the auditor have certified that the audit cannot be completed on time due to unforeseen circumstances or complex situations.

(B) An extension shall be the shortest amount of time reasonable given the extenuating circumstances justifying the extension.

(C) Extensions shall be in increments of no longer than 30 calendar days.

(D) Extensions shall not be granted past March 31.

(3) As applicable pursuant to subdivision (a), the county superintendent of schools or chartering authority may, after consultation with the governing board or body of a local educational agency, the auditors under contract to the local educational agency and the Controller’s office, contract with another qualified certified public accountant or public accountant to obtain the required audited financial statements and charge the cost of the audit to the funds of the local educational agency. The county superintendent of schools or chartering authority or the Controller shall, to the extent feasible, assist the local educational agency in initiating action to avoid payment to the auditors under contract who did not complete the original audit.

(4) As applicable pursuant to subdivision (a), the county superintendent of schools, chartering authority, or Superintendent, may request the Controller’s office to investigate the situation and initiate action as provided in subdivision (c).

(c) (1) If the audited financial statements required by Section 41020 have not been filed by a local educational agency with the Controller’s office on or before the due date established under Section 41020, the Controller’s office shall determine the most advantageous method of obtaining the required audited financial statements. The Controller’s office may, after consultation with the governing board or body of the local educational agency and the auditor under contract with the local educational agency, do any of the following:

(A) Accept the action of the county superintendent of schools, the chartering authority, or the Superintendent, permitted by subdivision (b).

(B) Conduct the audit and prepare the auditor’s report, using the staff available within that office and charge the cost of the audit to the next regular apportionment from the State School Fund to the district or county superintendent of schools. local educational agency.

(C) Contract with any qualified certified public accountant or public accountant, using the appropriate contracting procedures, for the conduct of the audit and preparation of the audited financial statements and charge the cost of the audit to the next regular apportionment from the State School Fund to the local educational agency.

(D) Consistent with the limits described in paragraph (2) of subdivision (b), grant a reasonable extension of the time for filing the report if, in the judgment of the Controller’s office, this will provide the required audited financial statements within the shortest time period. The extension of the time for filing does not waive the legal deadline, but permits the filing of the report after the deadline.

(2) The Controller’s office shall consult with the governing board or body of the local educational agency, the auditors under contract to the local educational agency, and the county superintendent of schools or the chartering authority, as applicable, before making the determination of the method to be used in obtaining the audited financial statements. The Controller’s office shall, to the extent feasible, assist the local educational agency in initiating action to avoid payment to the auditors under contract who did not complete the original audit.

(d) Notwithstanding any extension granted under subdivision (b) or subparagraph (D) of paragraph (1) of subdivision (c), the Controller’s office may determine at any time after the due date for filing of audit reports established by Section 41020 that the audited financial statements not yet filed with that office are delinquent and that the audit will be performed under subparagraph (B) or (C) of paragraph (1) of subdivision (c).

(e) If an extension has not been requested or granted and the audited financial statements required by Section 41020 have not been filed by a local educational agency with the Controller’s office on or before the due date established under Section 41020, the local educational agency and the auditors under contract with the local educational agency shall notify the chartering authority, the county superintendent of schools, the Superintendent, and the Controller that the audit filing is delayed, the reasons for the delay, and the estimated filing date. The notification shall be made no later than 15 calendar days from the due date established under Section 41020.

(f) The Controller shall notify the appropriate policy committees of the Legislature and the Department of Finance if local educational agencies are unable to contract for an audit due to market conditions of available auditors.

(g) By September 30, 2028, and every three years thereafter, the Controller shall, in consultation with the entities listed in Section 14502.1, provide recommendations to the appropriate committees of the Legislature regarding outdated or ineffective audit requirements in statute.

(h) For purposes of this section, “local educational agency” means a school district, educational joint powers authority, county superintendent of schools, or charter school.

SEC. 16.SEC. 17.

Section 41020.3 of the Education Code is amended to read:

41020.3.

By March 31 of each year, or 45 days after the issuance of an audit report, whichever is later, the governing board or body of each local educational agency shall review, at a public meeting, the annual audit of the local educational agency for the prior year, any audit exceptions identified in that audit, the recommendations or findings of any management letter issued by the auditor, and any description of correction or plans to correct any exceptions or management letter issue. This review shall be placed on the agenda of the meeting pursuant to Section 35145 or 47604.1, as applicable.

SEC. 17.SEC. 18.

Section 41020.4 is added to the Education Code, to read:

41020.4.

(a) Commencing with the 2027–28 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, the Controller shall include, but is not limited to, include the instructions necessary to require, at a minimum, all of the following supplemental information and schedules in audit report components for an audit of a local educational agency, except as noted: require all of the following:

(b) Commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, the Controller shall include, but is not necessarily limited to, instructions necessary to require, at a minimum, that all of the following compliance procedures are performed in an audit of a local educational agency, except as otherwise limited:

(1) Compliance: compliance with professional accounting and auditing standards with an emphasis in the audit guide that audits of local educational agencies shall be conducted in compliance with Governmental Accounting Standards Board (GASB) and or Financial Accounting Standards Board (FASB) statements and standards, as applicable, and Generally Accepted Auditing Standards (GAAS).

(2) (A) Sample selection: where representative samples of pupils, pupil work product, financial transactions, or other sampling are required to be performed and selected, the auditor shall independently identify the sample and make that selection personally. in a manner that cannot be predicted, in accordance with professional standards.

(B) Auditor transaction sampling shall include a sample size appropriate for the type of local educational agency pursuant to the test of compliance sample table in the Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting.

(C) Sampling of pupil enrollment, attendance, and instructional minutes shall be made from all programs, attendance months, and tracks, if applicable. representative of and inclusive of all the local education agencies’ tracks and grade spans as applicable and in consideration of materiality levels established in the Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting.

(3) Charter schools that are a component entity of locally funded and governed by a school district or county office of education shall report charter school financial data separately from the general fund of the school district or county office of education, and the auditor shall sample transactions of the charter school as if the financial data of the charter school represented a major fund of the school district or county office of education. The education. If the school district or county office of education audit includes more than one charter school, or if the charter school fund is not a major fund, the auditor shall also present financial data separately for each individual charter school in the supplemental section or footnotes of the audit report.

(4) Using appropriate sampling techniques, verify pupil enrollment for independent study programs at local educational agencies and verify that a pupil’s residence is located within the jurisdiction of the county in which the chartering authority is located or an adjacent county, meets applicable residency requirements based on residency documentation provided by the parent or guardian of the pupil at the time of enrollment. pupil, emancipated pupil, or other custodian of pupil, or, in the case of a pupil over 18 years of age, by the pupil.

(5) (A) Chartering authority input: require auditors to consult with and interview inquire of the chartering authority for input and information, including a focus on during planning stages of the audit of a charter school authorized by the chartering authority to assist the auditor in identifying potential audit risks, including, but not limited to, fiscal and compliance areas that the charter school excels in or may not meet expectations, potential fraud risks, irregularities in observations and reporting, and other background information pertinent to the audit.

(6) (A) Related parties: entity: determining if a related entity, as defined by generally accepted accounting principles, such as a charter management organization, education management organization, or similar third party with financial, economic, or controlling membership interest, exists with the charter school. A charter school that files a federal tax return shall include all related entities identified on the federal tax return.

(B) If a relationship is determined to exist pursuant to subparagraph (A), evaluate the level of the relationship to determine if it is material. For purposes of materiality, determine if the related party has a material financial, economic, or controlling interest in the charter school or can exercise material control, such as common management or board, majority voting interest, or sole corporate or statutory member or other arrangement.

(B) Verify the pupil-to-teacher ratio calculation. For independent study programs at school districts, county offices of education, and charter schools, verify the pupil-to-teacher ratio and calculations required pursuant to Section 51745.6 and report any discrepancies as a finding. For charter schools, verify the pupil-to-teacher ratio and calculations using the documentation provided to the department pursuant to clause (i) of subparagraph (A) of paragraph (3) of subdivision (d) of Section 47634.2. 51745.6.

(8) Payments: select a sample of all payments and verify that those payments are legal and have proper authorization. The sampling shall include, but not be limited to, payments obtained through credit card statements, debit card statements, other electronic payment methods and media, and bank statements.

(9) Nonclassroom-based charter school network: for For nonclassroom-based charter schools, determine all of the following:

(B) If a determination is made pursuant to subparagraph (A), identify whether the charter school employs teachers who are required to provide instruction to pupils enrolled in nonclassroom-based charter schools other than the charter school holding the teacher’s employment contract.

(C) If a determination is made pursuant to subparagraph (A), identify whether the charter school has teachers who are required to provide instruction to pupils who attend another nonclassroom-based charter school.

(D) If a determination is made pursuant to subparagraph (A), (B), or (C), identify the other nonclassroom-based charter schools within the network of nonclassroom-based charter schools and report these results to the chartering authority of the charter school and the department. department in a reporting method determined by the department.

(10) Funding determination thresholds: for nonclassroom-based charter schools, determine all of the following and report any discrepancies: following:

(A) Whether the charter school submitted a determination of funding request to the state board.

(C) Whether the charter school is complying with the thresholds has met the pupil-to-teacher ratio pursuant to Section 51745.6 and both the percentage of revenue expended on certificated staff salaries and benefits, and the percentage of revenue expended on instruction and related services included in the state board approved determination of funding using the documentation provided to the department pursuant to subparagraph (A) of paragraph (3) of subdivision (d) of subdivision (c) of Section 47634.2. Verify the percentage of revenue expended on instruction and related services with detailed information and financial records necessary to determine the qualifying expenditures consistent with the definition of instruction and related services.

(c) Commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, the Controller shall include a minimum of two sample audit reports that incorporate best practices and meet audit reporting requirements for format and content. At a minimum, the two sample audit reports shall include a sample audit report for a school district and a sample audit report for a charter school. library of sample letters and schedules applicable to the Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting requirements for school districts and charter schools as a means of guidance to auditors.

(d) For purposes of this section, “local educational agency” means a school district, county office of education, charter school, or educational joint powers authority.

SEC. 18.SEC. 19.

Section 41020.5 of the Education Code is amended to read:

41020.5.

(a) (1) If the Controller determines by two consecutive quality control reviews pursuant to Section 14504.2, or if the Superintendent, chartering authority, or a county superintendent of schools determines, that audits performed by a certified public accountant or public accountant under Section 41020 were not performed in substantial conformity with provisions of the audit guide, or that the audit reports, including amended reports, submitted by February 15 following the close of the fiscal year audited, for two consecutive years do not conform to provisions of the audit guide as required by Section 14504, the Controller, the Superintendent, the chartering authority, or the county superintendent of schools, as appropriate, shall notify in writing the certified public accountant or public accountant and the California Board of Accountancy.

(2) If the certified public accountant or public accountant does not file an appeal in writing with the California Board of Accountancy within 30 calendar days after receipt of the notification from the Controller, Superintendent, chartering authority, or county superintendent of schools, the determination of the Controller, Superintendent, chartering authority, or county superintendent of schools pursuant to this section shall be final.

(b) If an appeal is filed with the California Board of Accountancy, the board shall complete an investigation of the appeal within 90 days of the filing date. On the basis of the investigation, the board may do either of the following:

(1) Find that the determination of the Controller, Superintendent, chartering authority, or county superintendent of schools should not be upheld and has no effect.

(2) Schedule the appeal for a hearing, in which case, the final action on the appeal shall be completed by the board within one year from the date of filing the appeal.

(c) If the determination of the Controller, Superintendent, chartering authority, or county superintendent of schools under subdivision (a) becomes final, the certified public accountant or public accountant shall be ineligible to conduct audits under Section 41020 for a period of three years, or, in the event of an appeal, for any period, and subject to the conditions, that may be ordered by the California Board of Accountancy. Not later than the first day of March of each year, the Controller shall notify each school district, charter school, and county office of education of those certified public accountants or public accountants determined to be ineligible under this section. School districts, charter schools, and county offices of education shall not use the audit services of a certified public accountant or public accountant ineligible under this section.

(d) For purposes of this section, “certified public accountant or public accountant” includes any person or firm entering into a contract to conduct an audit under Section 41020.

(e) This section does not preclude the California Board of Accountancy from taking any disciplinary action it deems appropriate under other laws.

SEC. 19.SEC. 20.

Section 41020.8 of the Education Code is amended to read:

41020.8.

(a) Notwithstanding any other law, the auditor conducting an annual audit pursuant to Section 41020 shall, upon request, provide pertinent financial and compliance information related to the circumstances listed in subdivision (b) to specified entities as follows:

(1) To the county superintendent of schools for a school district or educational joint powers authority within the county superintendent of schools’ jurisdiction.

(2) To the chartering authority or county superintendent of schools for a charter school if the county superintendent of schools is not the chartering authority.

(3) To the Superintendent and the Controller for any local educational agency.

(b) The circumstances described in subdivision (a) include all of the following:

(1) The local educational agency has a financial audit finding, an audit finding for a material weakness or significant deficiency in internal controls, or a material noncompliance finding.

(2) The audit of a local educational agency contains an audit opinion other than unmodified.

(3) The audit has included a statement that there is substantial doubt about the local educational agency’s ability to continue as a going concern for a reasonable period of time.

(4) A determination has been made that a school district may not be able to meet its obligations of the current or subsequent fiscal year pursuant to Section 42127.6.

(5) There is evidence that the school district is showing fiscal distress under the standards and criteria adopted in Section 33127 pursuant to paragraph (1) of subdivision (a) of Section 42127.6.

(6) A school district has a negative unrestricted fund balance or negative cash balance pursuant to Section 42127.5.

(7) A school district has received an emergency apportionment pursuant to Article 2 (commencing with Section 41320) or Article 2.5 (commencing with Section 41325) of Chapter 3 of Part 24 of Division 3 of Title 2.

(8) The budget of the school district, educational joint powers authority, or county superintendent of schools is disapproved or the school district or county superintendent of schools has received a negative certification on any budget or interim financial report, as defined in Sections 1240, 1622, 42127, and 42131, during the current or preceding fiscal year.

(9) A quality control review by the Controller is triggered pursuant to Section 14504.2.

(c) Information provided by an auditor to the chartering authority, a county superintendent of schools, the Controller, or the Superintendent pursuant to this section shall be submitted simultaneously to the named school district, charter school, or county superintendent of schools, as applicable, and shall not constitute a violation of auditor-client confidentiality.

SEC. 20.SEC. 21.

Section 41341 of the Education Code is amended to read:

41341.

(a) (1) If, during any fiscal year, the amount apportioned to a school district, county office of education, charter school, or to any fund from Section A of the State School Fund differs either positively or negatively from the amount to which the school district, county office of education, charter school, or fund was entitled by an amount equal to the local control funding formula allocation pursuant to Section 2574 or 42238.02, as implemented pursuant to Section 42238.03, for one unit of average daily attendance, the Superintendent, in accordance with regulations that the Superintendent is hereby authorized to adopt, not later than the first succeeding fiscal year from the fiscal year in which the computational error was made, shall withhold from, or add to, the apportionment made during that fiscal year, the amount of the excess or deficiency, as the case may be. Notwithstanding any other provision of this code to the contrary, excesses withheld or deficiencies added by the Superintendent pursuant this subdivision shall be added to or allowed from any portion of the State School Fund.

(2) Notwithstanding paragraph (1), excesses may be withheld or deficiencies added to apportionments on account of audit exceptions reported in an audit or review, as described in subdivision (e) of Section 41344, or audit or review conducted by a certified public accountant or public accounting firm designated by a governmental agency that provided the local educational agency the opportunity to provide a written response.

(3) If, during any fiscal year, a school district, county office of education, or charter school determines that the amount apportioned to the school district, county office of education, charter school, or to any fund from Section A of the State School Fund differs either positively or negatively from the amount to which the school district, county office of education, charter school, or fund was entitled by an amount equal to the local control funding formula allocation pursuant to Section 2574 or 42238.02, as implemented pursuant to Section 42238.03, for one or more units of average daily attendance, the school district, county office of education, or charter school shall report the corrected amount to the Superintendent.

(b) If, during any fiscal year, the amount apportioned to a community college district or to any fund from Section B of the State School Fund differs either positively or negatively from the amount to which the community college district or fund was entitled, by an amount equal to the funding of one full-time equivalent student, the Chancellor of the California Community Colleges, in accordance with regulations that the chancellor is hereby authorized to adopt, not later than the first succeeding fiscal year from the fiscal year in which the computational error was made, shall withhold from, or add to, the apportionment made during that fiscal year, the amount of the excess or deficiency, as the case may be. Notwithstanding any other provision of this code to the contrary, excesses withheld or deficiencies added by the Chancellor of the California Community Colleges under this subdivision shall be added to or allowed from any portion of the State School Fund.

SEC. 21.SEC. 22.

Section 41344.4 of the Education Code is amended to read:

41344.4.

Notwithstanding any other law, a local educational agency shall not be required to repay an apportionment based on a significant audit exception related to the requirements specified in subparagraphs (A), (B), and (C) of paragraph (1) of subdivision (b) of Section 14501 if the county superintendent of schools certifies to the Superintendent and the Controller that the audit exception was corrected by the local educational agency or that an acceptable plan of correction was submitted to the county superintendent of schools pursuant to paragraph (3) of subdivision (l) of Section 41020. With respect to textbooks and instructional materials, the plan shall be consistent with the requirements of subparagraph (A) of paragraph (2) of subdivision (a) of Section 60119.

SEC. 23.

Section 42100 of the Education Code is amended to read:

42100.

(a) On or before September 15, the governing board of each school district shall approve, in a format prescribed by the Superintendent of Public Instruction, Superintendent, an annual statement of all receipts and expenditures of the school district for the preceding fiscal year and shall file the statement, along with the statement received pursuant to subdivision (b), with the county superintendent of schools. On or before October 15, the county superintendent of schools shall verify the mathematical accuracy of the statements and shall transmit a copy to the Superintendent of Public Instruction. Superintendent.

(b) On or before September 15, each charter school shall approve, in a format prescribed by the Superintendent of Public Instruction, Superintendent, an annual statement of all receipts and expenditures of the charter school for the preceding fiscal year and shall file the statement with the entity that approved the charter school.

SEC. 22.SEC. 24.

Section 44258.9 of the Education Code is amended to read:

44258.9.

(a) (1) The Legislature finds and declares both of the following:

(A) That continued monitoring of educator assignments by the commission and the county superintendents of schools and continued reporting of educator assignments by the department will help ensure that local educational agencies meet state and federal reporting requirements, including the requirements of the federal Every Student Succeeds Act (Public Law 114-95), or any other federal law that effectively replaces that act, and will ensure that the rate of educator misassignments remains low.

(B) That local educational agencies, state officials, pupils, and guardians have a vested interest in knowing and understanding the capacity of local educational agencies to fill all available and funded teaching assignments with educators who are fully credentialed for the subjects and pupils they are teaching, and a vested interest in understanding the scope of the teacher shortage across the TK/K–12 educational system, including, but not limited to, those instances where vacancies cannot be filled, resulting in the use of substitutes, increases in class size, or cancellation of courses or classes.

(2) To support pupil access to credentialed and appropriately assigned educators, the commission and the department shall collaborate to publish annual data on educator credentialing and assignment, at the school, local educational agency, and state levels. To the extent possible, and with the funds provided for that purpose, each county office of education shall perform its duties as a monitoring authority, as specified in subdivision (e).

(3) The commission and the department shall collaborate to perform the duties specified in this section, with the commission executing the assignment monitoring process and the department facilitating the annual teaching assignment monitoring data production and publication.

(4) The teaching assignment monitoring outcome data reporting shall be executed in a manner consistent with the statewide system of support and the school accountability system established pursuant to Article 4.5 (commencing with Section 52059.5) of Chapter 6.1 of Part 28 of Division 4, county office of education monitoring established pursuant to Article 2 (commencing with Section 1240) of Chapter 2 of Part 2 of Division 1 of Title 1, and the state plan approved by the state board that is required for compliance with the federal Every Student Succeeds Act, or any other federal law that effectively replaces that act.

(b) For purposes of this section, the following definitions and identifications apply:

(1) (A) “An instance of a teacher shortage” means an identification by the commission that a course or class assignment is not any of the following:

(i) Permanently filled as of Census Day.

(ii) Filled by a fully credentialed teacher.

(iii) Filled by a teacher who is appropriately assigned.

(B) A “fully credentialed teacher” means an individual who has completed a teacher preparation program, as defined in subdivision (e) of Section 44225.7, and who holds a valid preliminary or clear credential issued based upon the completion of that teacher preparation program.

(C) An assignment is “permanently filled as of Census Day” if the educator serving as a teacher has been contracted as of Census Day to provide instruction for either the entire school year or for a one-semester course for the entire semester.

(D) A teacher is “appropriately assigned” if the teacher holds a credential, permit, or waiver issued by the commission that contains an authorization to legally teach in the setting, in the subject area, and the pupil population associated with the assignment.

(2) “An unfilled position” shall be identified in each instance where a local educational agency has attempted to fill or is actively trying to fill an open and funded position, but is unable to do so.

(3) “A vacant position” shall be identified in each instance where, as of Census Day, a course or class assignment has not been permanently filled by a single-designated certificated employee serving for either the entire school year or for a one-semester course for the entire semester. For purposes of identifying an instance of a teacher shortage pursuant to paragraph (3) of subdivision (h), a “vacant position” shall be limited to an employee serving as a teacher.

(4) “Assignment” means the placement of an individual in a teaching or services position. An “assignment” can be filled legally by an individual with a credential, permit, waiver, or any other document issued by the commission authorizing the assignment, or the individual may be otherwise authorized by statute.

(5) “Local educational agency” means a school district, county office of education, charter school, or state special school.

(6) “Misassignment” has the same meaning as defined in Section 33126. For purposes of this section, “employee,” as used in the definition of “misassignment” in Section 33126, includes an individual hired on a contract. For purposes of this section, in a charter school, “misassignment” shall apply only to employees in teaching positions.

(7) “Monitoring authority” means:

(A) The county office of education for school districts in the county and programs operated by the county office of education.

(B) The commission for a school district or county office of education that operates within a city or county in which there is a single school district, including the Counties of Alpine, Amador, Del Norte, Mariposa, Plumas, and Sierra, and the City and County of San Francisco, and the state special schools.

(C) (i) The chartering authority for a charter school.

(ii) Notwithstanding clause (i), in cases where a charter school operates under the authority of a school district in which the charter school is the sole schoolsite in the school district, the commission shall serve as the monitoring authority.

(8) “System,” unless the context requires otherwise, means the California Statewide Assignment Accountability System, which is an electronic data system administered by the commission for monitoring educator assignments and vacant positions and uses department data collected pursuant to Sections 10600 and 60900 for its functioning.

(c) The commission and the department shall enter into a data sharing agreement for the department to provide the commission with educator assignment data necessary to annually identify educator assignments, including assignments filled by individuals on preliminary or clear credentials, intern credentials, permits or waivers, misassignments, and vacant positions at local educational agencies. The data sharing agreement shall also require the commission to make credential, permit, waiver, misassignment, vacant positions, and other relevant data available to the department to support reporting consistent with the state plan approved by the state board that is required for compliance with the federal Every Student Succeeds Act (Public Law 114–95), or any other federal law that effectively replaces that act, and applicable state reporting requirements, including for the statewide system of support established pursuant to Article 4.5 (commencing with Section 52059.5) of Chapter 6.1 of Part 28 of Division 4.

(d) The commission and the department may engage in a variety of activities designed to inform school administrators, teachers, and personnel within the county offices of education of the regulations and statutes affecting the assignment of educators and how data on educator assignments is published and used. These activities may include, but shall not necessarily be limited to, the preparation of instructive brochures and the holding of regional workshops.

(e) (1) The commission shall annually use the data provided by the department pursuant to subdivision (c) to produce an initial data file of vacant positions and educator assignments that do not have a clear match of credential to assignment. The commission shall notify local educational agencies and monitoring authorities of the opportunity to access the system and review the initial data file of potential misassignments and vacant positions.

(2) A local educational agency may do any of the following within 60 days of the commission’s notification pursuant to paragraph (1):

(A) Access and review the initial data file in the system to determine if each educator included in the initial data file is otherwise legally authorized for the assignment.

(B) Submit documentation or additional assignment information to the commission and monitoring authority showing that the educator is otherwise legally authorized for the assignment. This information may include the use of local assignment options outlined in any statute or regulation.

(C) Submit documentation to the commission and monitoring authority showing that a position identified in the initial data file as vacant was miscoded and that a legally authorized educator was assigned to the position.

(3) Information submitted to the commission and monitoring authority pursuant to paragraph (2) shall be submitted electronically through the system.

(4) A monitoring authority shall access the system to review the initial data file and any documentation or additional information submitted by a local educational agency for which it is a monitoring authority and make a determination of potential misassignments and vacant positions within 90 days of the commission’s notification pursuant to paragraph (1).

(5) The commission shall have the authority to make a final determination for all potential assignments and misassignments.

(6) After the 90-day review period pursuant to paragraph (4), the commission shall share all educator assignment data, including all preliminary and clear credentials, intern credentials, permits, waivers, misassignments, and vacant positions for that year, with the department for the department’s teaching assignment monitoring outcomes report and other state and federal reporting requirements.

(7) Once published, the commission shall post a link to the department’s teaching assignment monitoring outcomes reporting on its internet website, with resources for local educational agencies seeking to maintain a fully credentialed and appropriately assigned educator workforce.

(8) Notwithstanding any other law, the commission, when identifying misassignments using the system, shall identify an educator in a teaching or services position, including an educator at a charter school, as correctly assigned only when the educator holds the certificate or credential required by the commission for that assignment in a noncharter public school, taking into account local assignment options.

(9) Commencing in the 2020–21 school year, a chartering authority, as provided in this section, may request technical assistance to assist in its determination of potential misassignments and vacant positions from the county office of education in the county in which the chartering authority is located.

(10) For a school district, the county superintendent of schools shall notify, through the office of the school district superintendent, a certificated school administrator responsible for the assignment of a certificated person to a position for which the person has no legal authorization of the misassignment, and shall advise the school administrator to correct the assignment within 30 calendar days. For a charter school, the monitoring authority shall notify the charter school administrator responsible for the assignment of a certificated person to a position for which the person has no legal authorization of the misassignment and shall advise the charter school administrator to correct the assignment within 30 calendar days.

(f) The system and the data reported from the system shall not be used by a local educational agency for purposes of evaluating certificated employees, certificated employee performance determinations, or employment decisions.

(g) If an employee, including an employee who is employed by a charter school, is required by a local educational agency to accept an assignment in a teaching or services position for which the employee has no legal authorization, all of the following shall occur:

(1) (A) After exhausting existing local remedies, an employee of a school district shall notify the superintendent of the school district, and an employee of a charter school shall notify the administrator of the charter school, in writing, of the illegal assignment.

(B) If no action is taken after the notice required pursuant to subparagraph (A), an employee of a school district shall notify the county superintendent of schools, and an employee of a charter school shall notify the chartering authority, in writing, of the illegal assignment.

(2) In the case of an assignment by a school district for which the employee has filed a notice that the employee has no legal authorization, the school district or county superintendent of schools shall advise the employee about the legality of the assignment within 15 working days. In the case of an assignment by a charter school for which the employee has filed a notice that the employee has no legal authorization, the administrator of the charter school or the chartering authority shall advise the employee about the legality of the assignment within 15 working days.

(3) A local educational agency shall not take adverse action against an employee who files a notice of misassignment pursuant to paragraph (1).

(4) Notwithstanding any other law, for purposes of a charter school authorized by the state board, the employee shall file the written notices regarding misassignment described in paragraph (1) with the commission.

(5) During the period of a misassignment, the certificated employee who files a written notice pursuant to subparagraph (B) of paragraph (1) shall be exempt from Section 45034.

(6) If it is determined that a misassignment has occurred, a performance evaluation pursuant to Article 11 (commencing with Section 44660) of Chapter 3 of the certificated employee in the misassignment shall be nullified.

(7) A certificated employee who has not attained permanent status is subject to the protections described in this subdivision and subdivision (f) even if the certificated employee does not provide notice pursuant to paragraph (1).

(h) For the 2019–20 school year, the final data file generated by the system to identify misassignments and vacant positions shall be nonconsequential and shall be provided to the department, local educational agencies, and monitoring authorities by the commission for informational purposes only.

(i) Commencing with the 2020–21 school year, and each school year thereafter, following the 90-day review period provided for monitoring authorities pursuant to subdivision (e), the commission shall do all of the following:

(1) Ensure local educational agencies have access to the results of the system’s process of assignment monitoring to support local continuous improvement efforts.

(2) Publish annual certificated educator assignment data that reflects the level of preparation and licensure of educators serving California pupils. This data shall include comprehensive information on all educator assignments, including those filled by individuals on permits or waivers, intern credentials, and preliminary or clear credentials, and those appropriately assigned and misassigned, at the schoolsite, local educational agency, county, and state levels. The commission may also publish data on educators serving on administrative and pupil services credentials, educator preparation pathways, and educator retention, and whether certificated staff are employed in K–12 education.

(3) (A) Identify instances of a teacher shortage in each instance where, as of Census Day, a course or class assignment is permanently filled by an employee who is not fully credentialed or who is not appropriately assigned, as identified in clauses (i) to (vii), inclusive, below:

(i) Individuals who are fully credentialed teachers and are serving outside their credential area based on holding a valid commission-issued permit authorizing the subject, setting, or pupil population being taught.

(ii) Individuals who are fully credentialed teachers and are serving outside of their credential area pursuant to a statute or Title 5 of the California Code Regulations that allows a local educational agency to otherwise legally assign the individual at the local level.

(iii) Individuals serving on a valid district or university intern credential that authorizes the subject, setting, or pupil population being taught.

(iv) Individuals who are fully credentialed teachers but are teaching a subject, setting, or pupil population not authorized by their credential area, excluding assignments authorized by subdivision (b) of Section 80005 of Title 5 of the California Code of Regulations.

(v) Individuals serving on the basis of a valid permit issued by the commission that authorizes the subject, setting, or pupil population being taught.

(vi) Individuals serving on a short-term or variable-term waiver document issued by the commission that authorizes the subject, setting, or pupil population being taught.

(vii) Individuals who are identified as misassigned by the commission, other than those educators described in clause (iv).

(B) Identify instances of a teacher shortage in each instance where, as of Census Day, a local educational agency identifies a vacant position or an unfilled position.

(4) Support the department to do all of the following:

(A) Make annual educator assignment, misassignment, and vacant position data generated by the system publicly available in a searchable format on the department’s internet website. Data shall be updated annually and provide comprehensive information on teaching assignment outcomes inclusive of all educator classifications at the schoolsite, school district, and county levels.

(B) Ensure that data for charter schools is distinguishable from data for noncharter public schools when made publicly available in a searchable format.

(C) Maintain each year’s data for no less than five years.

(D) Ensure that the publicly available misassignment data reported from the system shall not include any personally identifiable information, including names, social security numbers, home addresses, telephone numbers, or email addresses of individual educators.

(j) The commission may promulgate regulations that define standards for a local educational agency, including a charter school, that consistently misassigns educators and what sanctions, if any, to impose on that local educational agency.

(k) (1) On or before December 1, 2022, the commission shall report to the appropriate policy and fiscal committees of the Legislature on the development of the system, including, but not limited to, all of the following:

(A) The development and current status of the system.

(B) The ability of the system to efficiently produce accurate annual data on teacher misassignments.

(C) Statewide information regarding misassignments, delineated by credential type, assignment, and type of school.

(D) Use of local assignment options, delineated by local assignment option and type of school.

(E) Any recommendations to improve the system and the local assignment monitoring process required by this section.

(F) Identification of any need for further technical assistance for local educational agencies, including chartering authorities, to improve assignment monitoring and reduce the overall rate of misassignment.

(2) Pursuant to Section 10231.5 of the Government Code, the reporting requirement described in paragraph (1) shall be inoperative on December 1, 2026.

(l) This section shall not relieve a local educational agency from compliance with state and federal law regarding teachers of English learners or be construed to alter the definition of “misassignment” for purposes of Section 33126 or the definition of “vacancy” for purposes of Section 35186.

(m) This section does not change existing rights or obligations, including, but not limited to, those specified in Sections 33126 and 33315.

(n) (1) A teacher employed by a local educational agency and offering a course in which pupils receive course credit or that counts towards instructional minutes, or both, shall hold the certificate, permit, or other document required by the commission for that assignment and shall be monitored.

(2) Paragraph (1) does not authorize a local educational agency to assign a teacher of record that is not an employee of the local educational agency.

SEC. 23.SEC. 25.

Section 45037 of the Education Code is amended to read:

45037.

(a) Except as provided in Section 45036, for the a fiscal year 2001–02 and for any fiscal year thereafter in which a person renders service as a teacher in kindergarten or any of grades 1 to 12, inclusive, who does not have a valid certification document, consistent with the term described in Section 44002, the school district, county office of education, or charter school that the person is employed by shall be assessed a penalty that shall be calculated as provided in subdivision (b) and withheld from state funding otherwise due to the school district, county office of education, or charter school.

(1) Notwithstanding Section 46300, the attendance of the noncertificated person’s pupils during the period of service shall be included in the computation of average daily attendance.

(2) The noncertificated person’s period of service shall not be excluded from the determination of eligibility for instruction time pursuant to Article 8 (commencing with Section 46200) of Chapter 2 of Part 26.

(b) (1) For each person who rendered service in the employment of the school district, county office of education, or charter school as a teacher in kindergarten or any of grades 1 to 12, inclusive, during the fiscal year, add the total number of schooldays on which the person rendered any amount of the service.

(2) For each person who rendered service in the employment of the school district, county office of education, or charter school as a teacher in kindergarten or any of grades 1 to 12, inclusive, during the fiscal year, for a period of service during which the person did not have a valid certification document, add the number of schooldays on which the person rendered any amount of the service without a valid certification document.

(3) Divide the number determined in paragraph (2) by the number determined in paragraph (1) and carry the result to four decimal places.

(4) Multiply a school district’s or charter school’s local control funding formula grant apportionment for the fiscal year, calculated pursuant to Section 42238.02, as implemented by Section 42238.03, or a county office of education’s local control funding formula alternative education grant computed pursuant to Section 2574, as apportioned pursuant to Section 2575, for the fiscal year, for the program in which the noncertificated person rendered service by the number determined in paragraph (3).

(c) Beginning in 2002–03, if If a county office of education releases a warrant in favor of a person for whom a period of school district or charter school service is included in the calculation set forth in paragraph (2) of subdivision (b), and the warrant is either compensation for employment as a teacher or for employment in some other capacity if the county office of education has direct knowledge or is in possession of information giving rise to a reasonable inference that the person is rendering service as a teacher, the county office of education shall be assessed a penalty. The penalty assessed to a county office of education for any fiscal year in which one or more school district or charter school teachers did not have a valid certification document shall be equal to the lesser of three amounts as follows:

(1) Fifty percent of all penalties assessed for that fiscal year to all school districts or charter schools in the county office of education’s jurisdiction pursuant to subdivision (b).

(2) One-half percent of the total expenditures for that fiscal year from unrestricted resources, as defined in the California School Accounting Manual, in the county office of education’s county school service fund, when two or fewer school districts or charter schools in the county office of education’s jurisdiction are subject to penalties pursuant to subdivision (b).

(3) One percent of the total expenditures for that fiscal year from unrestricted resources, as defined in the California School Accounting Manual, in the county office of education’s county school service fund, when three or more school districts or charter schools in the county office of education’s jurisdiction are subject to penalties pursuant to subdivision (b).

(d) Except as provided in Section 41344.1, nothing in this section may be waived in whole or in part.

SEC. 24.SEC. 26.

Section 45125.1 of the Education Code is amended to read:

45125.1.

(a) Any entity that has a contract with a local educational agency shall ensure that any employee who interacts with pupils has a valid criminal records summary as described in Section 44237. When the contracting entity performs the criminal background check, it shall immediately provide any subsequent arrest and conviction information it receives to any local educational agency that it is contracting with pursuant to the subsequent arrest service.

(b) (1) This section does not apply to an entity providing services to a local educational agency, as described in subdivision (a), in an emergency or exceptional situation, such as when pupil health or safety is endangered or when repairs are needed to make school facilities safe and habitable.

(2) Notwithstanding subdivision (a), an employee of any entity that has a contract with a local educational agency, and that offers work experience opportunities for pupils, including, but not limited to, opportunities pursuant to Section 51760, 52336, 52372, 52410, or 52460, Article 1 (commencing with Section 52300), Article 5 (commencing with Section 52381), or Article 7 (commencing with Section 52450) of Chapter 9 of Part 28 of Division 4, Chapter 16.5 (commencing with Section 53070) of Part 28 of Division 4, Article 5 (commencing with Section 54690) of Chapter 9 of Part 29 of Division 4, or Part 54.5 (commencing with Section 88820) of Division 7 of Title 3, or workplace placements as part of a pupil’s individualized education program, including, but not limited to, the services described in Article 3 (commencing with Section 56470) of Chapter 4.5 of Part 30 of Division 4, is not required to have a valid criminal records summary pursuant to subdivision (a) if all of the following requirements are met:

(A) At least one adult employee in the workplace during the pupil’s work hours, who has direct contact with the pupil and has been designated by the employer as the employee of record who is responsible for the safety of the pupil, has a valid criminal records summary as described in Section 44237.

(B) A staff representative of the local educational agency makes visitations as specified in a pupil’s individualized education program, or, if unspecified, at least once every three weeks to consult with the pupil’s workplace liaison, observe the pupil at the workplace, and check in with the pupil to ensure the pupil’s health, safety, and welfare, including by addressing any concerns the pupil has raised.

(C) The parent or guardian of the pupil has signed a consent form regarding the pupil’s work placement, attesting that the parent or guardian understands the duties assigned to the pupil and the nature of the workplace environment.

(3) If a pupil participates in services provided by a contractor as part of an independent study program and the pupil is under the immediate supervision and control of the pupil’s parent or guardian during the provision of those services, the local educational agency shall do either of the following:

(A) Verify completion of a valid criminal records summary for all employees of the contractor who interact with the pupil.

(B) Ensure that the parent or guardian of the pupil has signed a consent form before the pupil’s interaction with a person employed by the contractor, attesting that the parent or guardian understands that the person employed by the contractor has not completed a valid criminal records summary as described in Section 44237.

(c) On a case-by-case basis, a local educational agency may require an entity with whom it has a contract to comply with the requirements of this section for employees in addition to those described in subdivision (a). The entity shall prepare and submit those employee’s fingerprints to the Department of Justice, as described in subdivision (a).

(d) (1) The Department of Justice shall ascertain whether the individual whose fingerprints were submitted to it pursuant to subdivision (a), (c), or (h) has been arrested or convicted of any crime insofar as that fact can be ascertained from information available to the Department of Justice. Upon implementation of an electronic fingerprinting system with terminals located statewide and managed by the Department of Justice, the Department of Justice shall ascertain the information required pursuant to this section within three working days. When the Department of Justice ascertains that an individual whose fingerprints were submitted to it pursuant to subdivision (a), (c), or (h) has a pending criminal proceeding for a felony as defined in Section 45122.1 or has been convicted of a felony as defined in Section 45122.1, the Department of Justice shall notify the employer designated by the individual of that fact. The notification shall be delivered by telephone or email to the employer.

(2) The Department of Justice, at its discretion, may notify the local educational agencies in instances when the employee is defined as having a pending criminal proceeding described in Section 45122.1 or has been convicted of a felony as defined in Section 45122.1.

(3) The Department of Justice shall forward one copy of the fingerprints to the Federal Bureau of Investigation to verify any record of previous arrests or convictions of the applicant. The Department of Justice shall review the criminal record summary it obtains from the Federal Bureau of Investigation and shall notify the employer only as to whether or not an applicant has any convictions or arrests pending adjudication for offenses that, if committed in California, would have been punishable as a violent or serious felony. The Department of Justice shall not provide any specific offense information received from the Federal Bureau of Investigation. The Department of Justice shall provide written notification to the contract employer only concerning whether an applicant for employment has any conviction or arrest pending final adjudication for any of those crimes, as specified in Section 45122.1, but shall not provide any information identifying any offense for which an existing employee was convicted or has an arrest pending final adjudication.

(e) (1) An entity having a contract as described in subdivision (a) or that is required to comply with this section for other employees pursuant to subdivision (c) shall not permit an employee to interact with pupils until the Department of Justice has ascertained that the employee has not been convicted of a felony as defined in Section 45122.1.

(2) The prohibition in paragraph (1) does not apply to an employee solely on the basis that the employee has been convicted of a felony if the employee has obtained a certificate of rehabilitation and pardon pursuant to Chapter 3.5 (commencing with Section 4852.01) of Title 6 of Part 3 of the Penal Code.

(3) The prohibition in paragraph (1) does not apply to an employee solely on the basis that the employee has been convicted of a serious felony that is not also a violent felony if that employee can prove to the sentencing court of the offense in question, by clear and convincing evidence, that the employee has been rehabilitated for the purposes of schoolsite employment for at least one year. If the offense in question occurred outside this state, then the person may seek a finding of rehabilitation from the court in the local educational agency in which the employee is a resident.

(f) An entity having a contract as described in subdivision (a) or that is required to comply with this section for other employees pursuant to subdivision (c) shall certify in writing to the local educational agency that neither the employer nor any of its employees who are required by this section to submit or have their fingerprints submitted to the Department of Justice and who may interact with pupils have been convicted of a felony as defined in Section 45122.1.

(g) Where reasonable access to the statewide electronic fingerprinting network is available, the Department of Justice may mandate electronic submission of the fingerprint cards and other information required by this section.

(h) (1) For purposes of this section, an individual operating as a sole proprietor of an entity that has a contract with a local educational agency, as described in subdivision (a), shall be considered an employee of that entity.

(2) To protect the safety of any pupil that may interact with an employee of an entity that is a sole proprietorship and has a contract as described in subdivision (a) or that is required to comply with this section for other employees pursuant to subdivision (c), a local educational agency shall prepare and submit the employee’s fingerprints to the Department of Justice, as described in subdivision (a).

(i) For purposes of this section, “local educational agency” means a school district, county office of education, or charter school.

SEC. 25.SEC. 27.

Section 46149 is added to the Education Code, immediately following Section 46148, to read:

46149.

Notwithstanding any other law, a school district, county office of education, or charter school that offers grades 10 and 12 shall also offer and enroll pupils in grade 11.

SEC. 26.SEC. 28.

Section 46306 is added to the Education Code, to read:

46306.

(a) The department, in consultation with the County Office Fiscal Crisis and Management Assistance Team, shall provide a report to the Legislature detailing the business and alternatives analysis of integrating the California Longitudinal Pupil Achievement Data System (CALPADS) and the average daily attendance apportionment data system for purposes of monitoring statewide average daily attendance by unique pupil identifier.

(b) The report shall include, but not be limited to, all of the following:

(1) A procurement and cost analysis to integrate CALPADS and the average daily attendance apportionment data system.

(2) The necessary timeline to complete an integration of CALPADS and the average daily attendance apportionment data system.

(3) The logistical and state- and end-user requirements for integrating CALPADS and the average daily attendance apportionment data system.

(4) A recommendation regarding the most efficient state department or entity to house an integrated CALPADS and the average daily attendance apportionment data system.

(5) A recommendation for a reasonable frequency for local educational agencies to report attendance information to the state.

(c) The report with recommendations shall be completed by January 1, 2030, and be presented to the appropriate policy and fiscal committees of the Legislature in compliance with Section 9795 of the Government Code.

(d) Pursuant to Section 10231.5 of the Government Code, this section shall remain in effect only until January 1, 2031, and as of that date is repealed.

SEC. 29.

Section 47604.32 of the Education Code is amended to read:

47604.32.

(a) Each chartering authority, in addition to any other duties imposed by this part, shall do all of the following with respect to each charter school under its authority:

(1) Identify at least one staff member as a contact person for the charter school.

(2) Visit each charter school schoolsite approved in a petition or material revision and established by the charter school at least annually.

(3) Ensure Verify that each charter school under its authority complies with all reports required of charter schools by law, including the local control and accountability plan and annual update to the local control and accountability plan required pursuant to Section 47606.5.

(4) Monitor the fiscal condition of each charter school under its authority.

(5) Provide timely notification to the department if any of the following circumstances occur or will occur with regard to a charter school for which it is the chartering authority:

(A) (i) A renewal of the charter is granted or denied. granted.

(C) The charter is revoked.

(D) The charter school will cease operation for any reason.

(b) The cost of performing the duties required by this section subdivision (a) shall be funded with supervisorial oversight fees collected pursuant to Section 47613.

SEC. 30.

Section 47604.33 of the Education Code is amended to read:

47604.33.

(a) Each (1) Pursuant to Section 47604.35, each charter school shall shall, except as provided in subdivision (e), annually prepare and submit the following reports using the department’s Standardized Account Code Structure Web financial reporting system to its chartering authority and the county superintendent of schools, or only to the county superintendent of schools if the county board of education is the chartering authority:

(A) On or before July 1, a preliminary budget. For a charter school in its first year of operation, the information submitted pursuant to subdivision (h) of Section 47605 satisfies this requirement.

(B) On or before December 15, an interim financial report. This report shall reflect changes through October 31.

(C) On or before March 15, a second interim financial report. This report shall reflect changes through January 31.

(D) On or before September 15, a final unaudited report for the full prior year.

(b) The chartering authority shall use any financial or other information it obtains from the charter school, including, but not limited to, the reports required by this section, to perform the duties described in subdivision (a) of Section 47604.32, including monitoring the fiscal condition of the charter school.

(c) The cost of performing the duties required by this section shall be funded with supervisorial oversight fees collected pursuant to Section 47613.

SEC. 28.SEC. 31.

Section 47604.35 is added to the Education Code, immediately following Section 47604.33, to read:

47604.35.

To ensure consistency in financial reporting, and promote transparency and accountability of all local educational agencies, the state board, in consultation with the Superintendent, shall is authorized to revise regulations regulations, including emergency regulations, to require that charter schools report prepare periodic and annual financial data data, as required by subdivision (a) of Section 47604.33, using the Standardized Account Code Structure (SACS) based forms and reports in the same manner and on the same form prescribed for school districts in accordance with all of the following: districts. SACS reporting shall be consistent with the annual audit when one or more local educational agencies are included in the annual audit. This requirement shall apply as follows:

(a) Charter Commencing with the 2028–29 fiscal year, for charter schools with an a 2027–28 average daily attendance of 5,000 or more pupils at the second principal apportionment and all nonclassroom-based charter schools shall report periodic and annual financial data in the same manner and on the same form prescribed for school districts commencing with the 2026–27 fiscal year. schools, as defined in paragraph (2) of subdivision (e) of Section 47612.5, as determined at the time of the 2027–28 second principal apportionment.

(b) Charter schools, excluding nonclassroom-based charter schools, Commencing with the 2029–30 fiscal year, for charter schools with an a 2028–29 average daily attendance of 2,500 or more pupils but fewer than 5,000 pupils shall report periodic and annual financial data in the same manner and on the same form prescribed for school districts commencing with the 2027–28 fiscal year. at the second principal apportionment and all nonclassroom-based charter schools, as defined in paragraph (2) of subdivision (e) of Section 47612.5, as determined at the time of the 2028–29 second principal apportionment.

SEC. 32.

Section 47604.6 is added to the Education Code, immediately following Section 47604.5, to read:

SEC. 29.SEC. 33.

Section 47605 of the Education Code is amended to read:

47605.

(a) (1) Except as set forth in paragraph (2), a petition for the establishment of a charter school within a school district may be circulated by one or more persons seeking to establish the charter school. A petition for the establishment of a charter school shall identify a single charter school that will operate within the geographic boundaries of that school district. A charter school may propose to operate at multiple sites within the school district if each location is identified in the charter school petition. The petition may be submitted to the governing board of the school district for review after either of the following conditions is met:

(A) The petition is signed by a number of parents or legal guardians of pupils that is equivalent to at least one-half of the number of pupils that the charter school estimates will enroll in the charter school for its first year of operation.

(B) The petition is signed by a number of teachers that is equivalent to at least one-half of the number of teachers that the charter school estimates will be employed at the charter school during its first year of operation.

(2) A petition that proposes to convert an existing public school to a charter school that would not be eligible for a loan pursuant to subdivision (c) of Section 41365 may be circulated by one or more persons seeking to establish the charter school. The petition may be submitted to the governing board of the school district for review after the petition is signed by not less than 50 percent of the permanent status teachers currently employed at the public school to be converted.

(3) A petition shall include a prominent statement that a signature on the petition means that the parent or legal guardian is meaningfully interested in having their child or ward attend the charter school, or in the case of a teacher’s signature, means that the teacher is meaningfully interested in teaching at the charter school. The proposed charter shall be attached to the petition.

(4) After receiving approval of its petition, a charter school that proposes to expand operations to one or more additional sites or grade levels shall request a material revision to its charter and shall notify the chartering authority of those additional locations or grade levels. The chartering authority shall consider whether to approve those additional locations or grade levels at an open, public meeting. If the additional locations or grade levels are approved pursuant to the standards and criteria described in subdivision (c), they shall be a material revision to the charter school’s charter.

(5) (A) A charter school that established one site outside the boundaries of the school district, but within the county in which that school district is located before January 1, 2020, may continue to operate that site until the charter school submits a request for the renewal of its charter petition. To continue operating the site, the charter school shall do either of the following:

(i) First, before submitting the request for the renewal of the charter petition, obtain approval in writing from the school district where the site is operating.

(ii) Submit a request for the renewal of the charter petition pursuant to Section 47607 to the school district in which the charter school is located.

(B) If a Presidential declaration of a major disaster or emergency is issued in accordance with the federal Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. Sec. 5121 et seq.) for an area in which a charter schoolsite is located and operating, the charter school, for not more than five years, may relocate that site outside the area subject to the Presidential declaration if the charter school first obtains the written approval of the school district where the site is being relocated to.

(C) Notwithstanding subparagraph (A), if a charter school was relocated from December 31, 2016, to December 31, 2019, inclusive, due to a Presidential declaration of a major disaster or emergency in accordance with the federal Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. Sec. 5121 et seq.), that charter school shall be allowed to return to its original campus location in perpetuity.

(D) (i) A charter school in operation and providing educational services to pupils before October 1, 2019, located on a federally recognized California Indian reservation or rancheria or operated by a federally recognized California Indian tribe shall be exempt from the geographic restrictions of paragraph (1) and subparagraph (A) of this paragraph and the geographic restrictions of subdivision (a) of Section 47605.1.

(ii) The exemption to the geographic restrictions of subdivision (a) of Section 47605.1 in clause (i) does not apply to nonclassroom-based charter schools operating pursuant to Section 47612.5.

(E) The department shall regard as a continuing charter school for all purposes a charter school that was granted approval of its petition, that was providing educational services to pupils before October 1, 2019, and is authorized by a different chartering authority due to changes to this paragraph that took effect January 1, 2020. This paragraph shall be implemented only to the extent it does not conflict with federal law. In order to prevent any potential conflict with federal law, this paragraph does not apply to covered programs as identified in Section 8101(11) of the federal Elementary and Secondary Education Act of 1965 (20 U.S.C. Sec. 7801) to the extent the affected charter school is the restructured portion of a divided charter school pursuant to Section 47654.

(6) Commencing January 1, 2003, a petition to establish a charter school shall not be approved to serve pupils in a grade level that is not served by the school district of the governing board considering the petition, unless the petition proposes to serve pupils in all of the grade levels served by that school district.

(b) No later than 60 days after receiving a petition, in accordance with subdivision (a), the governing board of the school district shall hold a public hearing on the provisions of the charter, at which time the governing board of the school district shall consider the level of support for the petition by teachers employed by the school district, other employees of the school district, and parents. Following review of the petition and the public hearing, the governing board of the school district shall either grant or deny the charter within 90 days of receipt of the petition, provided, however, that the date may be extended by an additional 30 days if both parties agree to the extension. A petition is deemed received by the governing board of the school district for purposes of commencing the timelines described in this subdivision on the day the petitioner submits a petition to the district office, along with a signed certification that the petitioner deems the petition to be complete. The governing board of the school district shall publish all staff recommendations, including the recommended findings and, if applicable, the certification from the county superintendent of schools prepared pursuant to paragraph (8) of subdivision (c), regarding the petition at least 15 days before the public hearing at which the governing board of the school district will either grant or deny the charter. At the public hearing at which the governing board of the school district will either grant or deny the charter, petitioners shall have equivalent time and procedures to present evidence and testimony to respond to the staff recommendations and findings.

(c) In reviewing petitions for the establishment of charter schools pursuant to this section, the chartering authority shall be guided by the intent of the Legislature that charter schools are and should become an integral part of the California educational system and that the establishment of charter schools should be encouraged. The governing board of the school district shall grant a charter for the operation of a school under this part if it is satisfied that granting the charter is consistent with sound educational practice and with the interests of the community in which the school is proposing to locate. The governing board of the school district shall consider the academic needs of the pupils the school proposes to serve. The governing board of the school district shall not deny a petition for the establishment of a charter school unless it makes written factual findings, specific to the particular petition, setting forth specific facts to support one or more of the following findings:

(1) The charter school presents an unsound educational program for the pupils to be enrolled in the charter school.

(2) The petitioners are demonstrably unlikely to successfully implement the program set forth in the petition.

(3) The petition does not contain the number of signatures required by subdivision (a).

(4) The petition does not contain an affirmation of each of the conditions described in subdivision (e).

(5) The petition does not contain reasonably comprehensive descriptions of all of the following:

(A) (i) The educational program of the charter school, designed, among other things, to identify those whom the charter school is attempting to educate, what it means to be an “educated person” in the 21st century, and how learning best occurs. The goals identified in that program shall include the objective of enabling pupils to become self-motivated, competent, and lifelong learners.

(ii) The annual goals for the charter school for all pupils and for each subgroup of pupils identified pursuant to Section 52052, to be achieved in the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served, and specific annual actions to achieve those goals. A charter petition may identify additional school priorities, the goals for the school priorities, and the specific annual actions to achieve those goals.

(iii) If the proposed charter school will serve high school pupils, the manner in which the charter school will inform parents about the transferability of courses to other public high schools and the eligibility of courses to meet college entrance requirements. Courses offered by the charter school that are accredited by the Western Association of Schools and Colleges may be considered transferable and courses approved by the University of California or the California State University as creditable under the “A to G” admissions criteria may be considered to meet college entrance requirements.

(B) The measurable pupil outcomes identified for use by the charter school. “Pupil outcomes,” for purposes of this part, means the extent to which all pupils of the charter school demonstrate that they have attained the skills, knowledge, and attitudes specified as goals in the charter school’s educational program. Pupil outcomes shall include outcomes that address increases in pupil academic achievement both schoolwide and for all pupil subgroups served by the charter school, as that term is defined in subdivision (a) of Section 52052. The pupil outcomes shall align with the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served by the charter school.

(C) The method by which pupil progress in meeting those pupil outcomes is to be measured. To the extent practicable, the method for measuring pupil outcomes for state priorities shall be consistent with the way information is reported on a school accountability report card.

(D) The governance structure of the charter school, including, but not limited to, the process to be followed by the charter school to ensure parental involvement.

(E) The qualifications to be met by individuals to be employed by the charter school.

(F) The procedures that the charter school will follow to ensure the health and safety of pupils and staff. These procedures shall require all of the following:

(i) That each employee of the charter school furnish the charter school with a criminal record summary as described in Section 44237.

(ii) For all schools, the development of a school safety plan, which shall include the safety topics listed in subparagraphs (A) to (M), inclusive, of paragraph (2) of subdivision (a) of Section 32282. For schools serving pupils in any of grades 7 to 12, inclusive, the development of a school safety plan shall also include the safety topic listed in subparagraph (N) of paragraph (2) of subdivision (a) of Section 32282.

(iii) That the school safety plan be reviewed and updated by March 1 of every year by the charter school.

(G) The means by which the charter school will achieve a balance of racial and ethnic pupils, special education pupils, and English learner pupils, including redesignated fluent English proficient pupils, as defined by the evaluation rubrics in Section 52064.5, that is reflective of the general population residing within the territorial jurisdiction of the school district to which the charter petition is submitted. Upon renewal, for a charter school not deemed to be a local educational agency for purposes of special education pursuant to Section 47641, the chartering authority may consider the effect of school placements made by the chartering authority in providing a free and appropriate public education as required by the federal Individuals with Disabilities Education Act (Public Law 101-476), on the balance of pupils with disabilities at the charter school.

(H) Admission policies and procedures, consistent with subdivision (e).

(I) The procedures by which pupils can be suspended or expelled from the charter school for disciplinary reasons or otherwise involuntarily removed from the charter school for any reason. These procedures, at a minimum, shall include an explanation of how the charter school will comply with federal and state constitutional procedural and substantive due process requirements that are consistent with all of the following:

(i) For suspensions of fewer than 10 days, provide oral or written notice of the charges against the pupil and, if the pupil denies the charges, an explanation of the evidence that supports the charges and an opportunity for the pupil to present the pupil’s side of the story.

(ii) For suspensions of 10 days or more and all other expulsions for disciplinary reasons, both of the following:

(I) Provide timely, written notice of the charges against the pupil and an explanation of the pupil’s basic rights.

(II) Provide a hearing adjudicated by a neutral officer within a reasonable number of days at which the pupil has a fair opportunity to present testimony, evidence, and witnesses and confront and cross-examine adverse witnesses, and at which the pupil has the right to bring legal counsel or an advocate.

(iii) Contain a clear statement that no pupil shall be involuntarily removed by the charter school for any reason unless the parent or guardian of the pupil has been provided written notice of intent to remove the pupil no less than five schooldays before the effective date of the action. The written notice shall be in the native language of the pupil or the pupil’s parent or guardian, or, if the pupil is a homeless child or youth, or a foster child or youth, in the native language of the homeless or foster child’s educational rights holder. In the case of a foster child or youth, the written notice shall also be provided to the foster child’s attorney and county social worker. If the pupil is an Indian child, as defined in Section 224.1 of the Welfare and Institutions Code, the written notice shall also be provided to the Indian child’s tribal social worker and, if applicable, county social worker. The written notice shall inform the pupil, the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, and county social worker, or the Indian child’s tribal social worker and, if applicable, county social worker of the right to initiate the procedures specified in clause (ii) before the effective date of the action. If the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, or county social worker, or the Indian child’s tribal social worker or, if applicable, county social worker initiates the procedures specified in clause (ii), the pupil shall remain enrolled and shall not be removed until the charter school issues a final decision. For purposes of this clause, “involuntarily removed” includes disenrolled, dismissed, transferred, or terminated, but does not include suspensions specified in clauses (i) and (ii).

(iv) A foster child’s educational rights holder, attorney, and county social worker and an Indian child’s tribal social worker and, if applicable, county social worker shall have the same rights a parent or guardian of a child has to receive a suspension notice, expulsion notice, manifestation determination notice, involuntary transfer notice, and other documents and related information.

(J) The manner by which staff members of the charter schools will be covered by the State Teachers’ Retirement System, the Public Employees’ Retirement System, or federal social security.

(K) The public school attendance alternatives for pupils residing within the school district who choose not to attend charter schools.

(L) The rights of an employee of the school district upon leaving the employment of the school district to work in a charter school, and of any rights of return to the school district after employment at a charter school.

(M) The procedures to be followed by the charter school and the chartering authority to resolve disputes relating to provisions of the charter.

(N) The procedures to be used if the charter school closes. The procedures shall ensure a final audit of the charter school to determine the disposition of all assets and liabilities of the charter school, including plans for disposing of any net assets and for the maintenance and transfer of pupil records.

(6) The petition does not contain a declaration of whether or not the charter school shall be deemed the exclusive public employer of the employees of the charter school for purposes of Chapter 10.7 (commencing with Section 3540) of Division 4 of Title 1 of the Government Code.

(7) The charter school is demonstrably unlikely to serve the interests of the entire community in which the school is proposing to locate. Analysis of this finding shall include consideration of the fiscal impact of the proposed charter school. A written factual finding under this paragraph shall detail specific facts and circumstances that analyze and consider the following factors:

(A) The extent to which the proposed charter school would substantially undermine existing services, academic offerings, or programmatic offerings.

(B) Whether the proposed charter school would duplicate a program currently offered within the school district and the existing program has sufficient capacity for the pupils proposed to be served within reasonable proximity to where the charter school intends to locate.

(8) The school district is not positioned to absorb the fiscal impact of the proposed charter school. A school district satisfies this paragraph if it has a qualified interim certification pursuant to Section 42131 and the county superintendent of schools, in consultation with the County Office Fiscal Crisis and Management Assistance Team, certifies that approving the charter school would result in the school district having a negative interim certification pursuant to Section 42131, has a negative interim certification pursuant to Section 42131, or is under state receivership. Charter schools proposed in a school district satisfying one of these conditions shall be subject to a rebuttable presumption of denial.

(d) (1) Charter schools shall meet all statewide standards and conduct the pupil assessments required pursuant to Section 60605 and any other statewide standards authorized in statute or pupil assessments applicable to pupils in noncharter public schools.

(2) Charter schools shall, on a regular basis, consult with their parents, legal guardians, and teachers regarding the charter school’s educational programs.

(e) (1) In addition to any other requirement imposed under this part, a charter school shall be nonsectarian in its programs, admission policies, employment practices, and all other operations, shall not charge tuition, and shall not discriminate against a pupil on the basis of the characteristics listed in Section 220. Except as provided in paragraph (2), admission to a charter school shall not be determined according to the place of residence of the pupil, or of that pupil’s parent or legal guardian, within this state, except that an existing public school converting partially or entirely to a charter school under this part shall adopt and maintain a policy giving admission preference to pupils who reside within the former attendance area of that public school.

(2) (A) A charter school shall admit all pupils who wish to attend the charter school.

(B) If the number of pupils who wish to attend the charter school exceeds the charter school’s capacity, attendance, except for existing pupils of the charter school, shall be determined by a public random drawing. Preference shall be extended to pupils currently attending the charter school and pupils who reside in the school district except as provided for in Section 47614.5. Preferences, including, but not limited to, siblings of pupils admitted or attending the charter school and children of the charter school’s teachers, staff, and founders identified in the initial charter, may also be permitted by the chartering authority on an individual charter school basis. Priority order for any preference shall be determined in the charter petition in accordance with all of the following:

(i) Each type of preference shall be approved by the chartering authority at a public hearing.

(ii) Preferences shall be consistent with federal law, the California Constitution, and Section 200.

(iii) Preferences shall not result in limiting enrollment access for pupils with disabilities, academically low-achieving pupils, English learners, neglected or delinquent pupils, homeless pupils, or pupils who are economically disadvantaged, as determined by eligibility for any free or reduced-price meal program, foster youth, or pupils based on nationality, race, ethnicity, or sexual orientation.

(iv) In accordance with Section 49011, preferences shall not require mandatory parental volunteer hours as a criterion for admission or continued enrollment.

(C) In the event of a drawing, the chartering authority shall make reasonable efforts to accommodate the growth of the charter school and shall not take any action to impede the charter school from expanding enrollment to meet pupil demand.

(3) If a pupil is expelled or leaves the charter school without graduating or completing the school year for any reason, the charter school shall notify the superintendent of the school district of the pupil’s last known address within 30 days, and shall, upon request, provide that school district with a copy of the cumulative record of the pupil, including report cards or a transcript of grades, and health information. If the pupil is subsequently expelled or leaves the school district without graduating or completing the school year for any reason, the school district shall provide this information to the charter school within 30 days if the charter school demonstrates that the pupil had been enrolled in the charter school. This paragraph applies only to pupils subject to compulsory full-time education pursuant to Section 48200.

(4) (A) A charter school shall not discourage a pupil from enrolling or seeking to enroll in the charter school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2).

(B) A charter school shall not request a pupil’s records or require a parent, guardian, or pupil to submit the pupil’s records to the charter school before enrollment.

(C) A charter school shall not encourage a pupil currently attending the charter school to disenroll from the charter school or transfer to another school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2). This subparagraph shall not apply to actions taken by a charter school pursuant to the procedures described in subparagraph (I) of paragraph (5) of subdivision (c).

(D) The department shall develop a notice of the requirements of this paragraph. This notice shall be posted on a charter school’s internet website. A charter school shall provide a parent or guardian, or a pupil if the pupil is 18 years of age or older, a copy of this notice at all of the following times:

(i) When a parent, guardian, or pupil inquires about enrollment.

(ii) Before conducting an enrollment lottery.

(iii) Before disenrollment of a pupil.

(E) (i) A person who suspects that a charter school has violated this paragraph may file a complaint with the chartering authority.

(ii) The department shall develop a template to be used for filing complaints pursuant to clause (i).

(5) Notwithstanding any other law, a charter school in operation as of July 1, 2019, that operates in partnership with the California National Guard may dismiss a pupil from the charter school for failing to maintain the minimum standards of conduct required by the Military Department.

(6) A charter school shall, at a governing body meeting, obtain the approval of the governing body of the charter school for any contract that would cause the charter school to compensate an individual contractor more than one hundred thousand dollars ($100,000) in a fiscal year.

(f) The governing board of a school district shall not require an employee of the school district to be employed in a charter school.

(g) The governing board of a school district shall not require a pupil enrolled in the school district to attend a charter school.

(h) The governing board of a school district shall require that the petitioner or petitioners provide information regarding the proposed operation and potential effects of the charter school, including, but not limited to, the facilities to be used by the charter school, the manner in which administrative services of the charter school are to be provided, and potential civil liability effects, if any, upon the charter school and upon the school district. The description of the facilities to be used by the charter school shall specify where the charter school intends to locate. The petitioner or petitioners also shall be required to provide financial statements that include a proposed first-year operational budget, including startup costs, and cashflow and financial projections for the first three years of operation. If the school is to be operated by, or as, a nonprofit public benefit corporation, the petitioner shall provide the names and relevant qualifications of all persons whom the petitioner nominates to serve on the governing body of the charter school.

(i) In reviewing petitions for the establishment of charter schools within the school district, the governing board of the school district shall give preference to petitions that demonstrate the capability to provide comprehensive learning experiences to pupils identified by the petitioner or petitioners as academically low achieving pursuant to the standards established by the department under Section 54032, as that section read before July 19, 2006.

(j) Upon the approval of the petition by the governing board of the school district, the petitioner or petitioners shall provide written notice of that approval, including a copy of the petition, to the applicable county superintendent of schools, the department, and the state board.

(k) (1) (A) (i) If the governing board of a school district denies a petition, the petitioner may elect to submit the petition for the establishment of a charter school to the county board of education. The petitioner shall submit the petition to the county board of education within 30 days of a denial by the governing board of the school district. At the same time the petition is submitted to the county board of education, the petitioner shall also provide a copy of the petition to the school district. The county board of education shall review the petition pursuant to subdivisions (b) and (c). If the petition submitted on appeal contains new or different material terms, the county board of education shall immediately remand the petition to the governing board of the school district for reconsideration, which shall grant or deny the petition within 30 days. If the governing board of the school district denies a petition after reconsideration, the petitioner may elect to resubmit the petition for the establishment of a charter school to the county board of education.

(ii) The county board of education shall review the appeal petition pursuant to subdivision (c). If the denial of the petition was made pursuant to paragraph (8) of subdivision (c), the county board of education shall also review the school district’s findings pursuant to paragraph (8) of subdivision (c).

(iii) As used in this subdivision, “material terms” of the petition means the signatures, affirmations, disclosures, documents, and descriptions described in subdivisions (a), (b), (c), and (h), but shall not include minor administrative updates to the petition or related documents due to changes in circumstances based on the passage of time related to fiscal affairs, facilities arrangements, or state law, or to reflect the county board of education as the chartering authority.

(B) If the governing board of a school district denies a petition and the county board of education has jurisdiction over a single school district, the petitioner may elect to submit the petition for the establishment of a charter school to the state board. The state board shall review a petition submitted pursuant to this subparagraph pursuant to subdivision (c). If the denial of a charter petition is reversed by the state board pursuant to this subparagraph, the state board shall designate the governing board of the school district in which the charter school is located as the chartering authority.

(2) If the county board of education denies a petition, the petitioner may appeal that denial to the state board.

(A) The petitioner shall submit the petition to the state board within 30 days of a denial by the county board of education. The petitioner shall include the findings and documentary record from the governing board of the school district and the county board of education and a written submission detailing, with specific citations to the documentary record, how the governing board of the school district and the county board of education abused their discretion. The governing board of the school district and county board of education shall prepare the documentary record, including transcripts of the public hearing at which the governing board of the school district and county board of education denied the charter, at the request of the petitioner. The documentary record shall be prepared by the governing board of the school district and county board of education no later than 10 business days after the request of the petitioner is made. At the same time the petition and supporting documentation is submitted to the state board, the petitioner shall also provide a copy of the petition and supporting documentation to the school district and the county board of education.

(B) If the appeal contains new or different material terms, as defined in clause (iii) of subparagraph (A) of paragraph (1), the state board shall immediately remand the petition to the governing board of the school district to which the petition was submitted for reconsideration. The governing board of the school district shall grant or deny the petition within 30 days. If the governing board of the school district denies a petition after reconsideration, the petitioner may elect to resubmit the petition to the state board.

(C) Within 30 days of receipt of the appeal submitted to the state board, the governing board of the school district or county board of education may submit a written opposition to the state board detailing, with specific citations to the documentary record, how the governing board of the school district or the county board of education did not abuse its discretion in denying the petition. The governing board of the school district or the county board of education may submit supporting documentation or evidence from the documentary record that was considered by the governing board of the school district or the county board of education.

(D) The state board’s Advisory Commission on Charter Schools shall hold a public hearing to review the appeal and documentary record. Based on its review, the Advisory Commission on Charter Schools shall submit a recommendation to the state board whether there is sufficient evidence to hear the appeal or to summarily deny review of the appeal based on the documentary record. If the Advisory Commission on Charter Schools does not submit a recommendation to the state board, the state board shall consider the appeal, and shall either hear the appeal or summarily deny review of the appeal based on the documentary record at a regular public meeting of the state board.

(E) The state board shall either hear the appeal or summarily deny review of the appeal based on the documentary record. If the state board hears the appeal, the state board may affirm the determination of the governing board of the school district or the county board of education, or both of those determinations, or may reverse only upon a determination that there was an abuse of discretion by both the governing board of the school district and the county board of education. Abuse of discretion is the most deferential standard of review, under which the state board must give deference to the decisions of the governing board of the school district and the county board of education to deny the petition. If the denial of a charter petition is reversed by the state board, the state board shall designate, in consultation with the petitioner, either the governing board of the school district or the county board of education in which the charter school is located as the chartering authority.

(3) A charter school for which a charter is granted by either the county board of education or the state board based on an appeal pursuant to this subdivision shall qualify fully as a charter school for all funding and other purposes of this part.

(4) A charter school that receives approval of its petition from a county board of education or from the state board on appeal shall be subject to the same requirements concerning geographic location to which it would otherwise be subject if it received approval from the chartering authority to which it originally submitted its petition. A charter petition that is submitted to either a county board of education or to the state board shall meet all otherwise applicable petition requirements, including the identification of the proposed site or sites where the charter school will operate.

(5) Upon the approval of the petition by the county board of education, the petitioner or petitioners shall provide written notice of that approval, including a copy of the petition, to the governing board of the school district in which the charter school is located, the department, and the state board.

(6) If either the county board of education or the state board fails to act on a petition within 180 days of receipt, the decision of the governing board of the school district to deny the petition shall be subject to judicial review.

(l) (1) Teachers in charter schools shall hold the Commission on Teacher Credentialing certificate, permit, or other document required for the teacher’s certificated assignment. These documents shall be maintained on file at the charter school and are subject to periodic inspection by the chartering authority. A governing body of a direct-funded charter school may use local assignment options authorized in statute and regulations for the purpose of legally assigning certificated teachers, in accordance with all of the requirements of the applicable statutes or regulations in the same manner as a governing board of a school district. A charter school shall have authority to request an emergency permit or a waiver from the Commission on Teacher Credentialing for individuals in the same manner as a school district.

(2) By July 1, 2020, all teachers in charter schools shall obtain a certificate of clearance and satisfy the requirements for professional fitness pursuant to Sections 44339, 44340, and 44341.

(3) The Commission on Teacher Credentialing shall include in the bulletins it issues pursuant to subdivision (k) of Section 44237 to provide notification to local educational agencies of any adverse actions taken against the holders of any commission documents, notice of any adverse actions taken against teachers employed by charter schools, and shall make this bulletin available to all chartering authorities and charter schools in the same manner in which it is made available to local educational agencies.

(m) A charter school shall provide for an annual and independent financial and compliance audit in accordance with Section 41020.

(n) A charter school may encourage parental involvement, but shall notify the parents and guardians of applicant pupils and currently enrolled pupils that parental involvement is not a requirement for acceptance to, or continued enrollment at, the charter school.

(o) The requirements of this section shall not be waived by the state board pursuant to Section 33050 or any other law.

SEC. 30.SEC. 34.

Section 47605.6 of the Education Code is amended to read:

47605.6.

(a) (1) In addition to the authority provided by Section 47605.5, a county board of education may also approve a petition for the operation of a charter school that operates at one or more sites within the geographic boundaries of the county and that provides instructional services that are not generally provided by a county office of education. A county board of education may approve a countywide charter only if it finds, in addition to the other requirements of this section, that the educational services to be provided by the charter school will offer services to a pupil population that will benefit from those services and that cannot be served as well by a charter school that operates in only one school district in the county. A petition for the establishment of a countywide charter school pursuant to this subdivision may be circulated throughout the county by any one or more persons seeking to establish the charter school. The petition may be submitted to the county board of education for review after either of the following conditions is met:

(A) The petition is signed by a number of parents or guardians of pupils residing within the county that is equivalent to at least one-half of the number of pupils that the charter school estimates will enroll in the school for its first year of operation and each of the school districts where the charter school petitioner proposes to operate a facility has received at least 30 days’ notice of the petitioner’s intent to operate a charter school pursuant to this section.

(B) The petition is signed by a number of teachers that is equivalent to at least one-half of the number of teachers that the charter school estimates will be employed at the school during its first year of operation and each of the school districts where the charter school petitioner proposes to operate a facility has received at least 30 days’ notice of the petitioner’s intent to operate a charter school pursuant to this section.

(2) An existing public school shall not be converted to a charter school in accordance with this section.

(3) After receiving approval of its petition, a charter school that proposes to establish operations at additional sites within the geographic boundaries of the county board of education shall notify the school districts where those sites will be located. The charter school shall also request a material revision of its charter by the county board of education that approved its charter and the county board of education shall consider whether to approve those additional locations at an open, public meeting, held no sooner than 30 days following notification of the school districts where the sites will be located. If approved, the location of the approved sites shall be a material revision of the charter school’s approved charter.

(4) A petition shall include a prominent statement indicating that a signature on the petition means that the parent or guardian is meaningfully interested in having their child or ward attend the charter school, or in the case of a teacher’s signature, means that the teacher is meaningfully interested in teaching at the charter school. The proposed charter shall be attached to the petition.

(b) No later than 60 days after receiving a petition, in accordance with subdivision (a), the county board of education shall hold a public hearing on the provisions of the charter, at which time the county board of education shall consider the level of support for the petition by teachers, parents or guardians, and the school districts where the charter school petitioner proposes to place school facilities. Following review of the petition and the public hearing, the county board of education shall either grant or deny the charter within 90 days of receipt of the petition. However, this date may be extended by an additional 30 days if both parties agree to the extension. A petition is deemed received by the county board of education for purposes of commencing the timelines described in this subdivision when the petitioner submits a petition, in accordance with subparagraph (A) or (B) of paragraph (1) of subdivision (a), to the county office of education. The county board of education shall publish all staff recommendations, including the recommended findings, regarding the petition at least 15 days before the public hearing at which the county board of education will either grant or deny the charter. At the public hearing at which the county board of education will either grant or deny the charter, petitioners shall have equivalent time and procedures to present evidence and testimony to respond to the staff recommendations and findings. A county board of education may impose any additional requirements beyond those required by this section that it considers necessary for the sound operation of a countywide charter school. A county board of education may grant a charter for the operation of a charter school under this part only if it is satisfied that granting the charter is consistent with sound educational practice and that the charter school has reasonable justification for why it could not be established by petition to a school district pursuant to Section 47605. The county board of education shall deny a petition for the establishment of a charter school if it finds one or more of the following:

(1) The charter school presents an unsound educational program for the pupils to be enrolled in the charter school.

(2) The petitioners are demonstrably unlikely to successfully implement the program set forth in the petition.

(3) The petition does not contain the number of signatures required by subdivision (a).

(4) The petition does not contain an affirmation of each of the conditions described in subdivision (e).

(5) The petition does not contain reasonably comprehensive descriptions of all of the following:

(A) (i) The educational program of the charter school, designed, among other things, to identify those pupils whom the charter school is attempting to educate, what it means to be an “educated person” in the 21st century, and how learning best occurs. The goals identified in that program shall include the objective of enabling pupils to become self-motivated, competent, and lifelong learners.

(ii) The annual goals for the charter school for all pupils and for each subgroup of pupils identified pursuant to Section 52052, to be achieved in the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served by the charter school, and specific annual actions to achieve those goals. A charter petition may identify additional school priorities, the goals for the school priorities, and the specific annual actions to achieve those goals.

(iii) If the proposed charter school will enroll high school pupils, the manner in which the charter school will inform parents regarding the transferability of courses to other public high schools. Courses offered by the charter school that are accredited by the Western Association of Schools and Colleges may be considered to be transferable to other public high schools.

(iv) If the proposed charter school will enroll high school pupils, information as to the manner in which the charter school will inform parents as to whether each individual course offered by the charter school meets college entrance requirements. Courses approved by the University of California or the California State University as satisfying their prerequisites for admission may be considered as meeting college entrance requirements for purposes of this clause.

(B) The measurable pupil outcomes identified for use by the charter school. “Pupil outcomes,” for purposes of this part, means the extent to which all pupils of the charter school demonstrate that they have attained the skills, knowledge, and aptitudes specified as goals in the charter school’s educational program. Pupil outcomes shall include outcomes that address increases in pupil academic achievement both schoolwide and for all pupil subgroups served by the charter school, as that term is defined in subdivision (a) of Section 52052. The pupil outcomes shall align with the state priorities, as described in subdivision (d) of Section 52060, that apply for the grade levels served by the charter school.

(C) The method by which pupil progress in meeting those pupil outcomes is to be measured. To the extent practicable, the method for measuring pupil outcomes for state priorities shall be consistent with the way information is reported on a school accountability report card.

(D) The location of each charter school facility that the petitioner proposes to operate.

(E) The governance structure of the charter school, including, but not limited to, the process to be followed by the charter school to ensure parental involvement.

(F) The qualifications to be met by individuals to be employed by the charter school.

(G) The procedures that the charter school will follow to ensure the health and safety of pupils and staff. These procedures shall require all of the following:

(i) That each employee of the charter school furnish the charter school with a criminal record summary as described in Section 44237.

(ii) For all schools, the development of a school safety plan, which shall include the safety topics listed in subparagraphs (A) to (M), inclusive, of paragraph (2) of subdivision (a) of Section 32282. For schools serving pupils in any of grades 7 to 12, inclusive, the development of a school safety plan shall also include the safety topic listed in subparagraph (N) of paragraph (2) of subdivision (a) of Section 32282.

(iii) That the school safety plan be reviewed and updated by March 1 of every year by the charter school.

(H) The means by which the charter school will achieve a balance of racial and ethnic pupils, special education pupils, and English learner pupils, including redesignated fluent English proficient pupils as defined by the evaluation rubrics in Section 52064.5, that is reflective of the general population residing within the territorial jurisdiction of the county board of education to which the charter petition is submitted. Upon renewal, for a charter school not deemed to be a local educational agency for purposes of special education pursuant to Section 47641, the chartering authority may consider the effect of school placements made by the chartering authority in providing a free and appropriate public education as required by the federal Individuals with Disabilities Education Act (Public Law 101-476), on the balance of pupils with disabilities at the charter school.

(I) The procedures by which pupils can be suspended or expelled from the charter school for disciplinary reasons or otherwise involuntarily removed from the charter school for any reason. These procedures, at a minimum, shall include an explanation of how the charter school will comply with federal and state constitutional procedural and substantive due process requirements that is consistent with all of the following:

(i) For suspensions of fewer than 10 days, provide oral or written notice of the charges against the pupil and, if the pupil denies the charges, an explanation of the evidence that supports the charges and an opportunity for the pupil to present the pupil’s side of the story.

(ii) For suspensions of 10 days or more and all other expulsions for disciplinary reasons, both of the following:

(I) Provide timely, written notice of the charges against the pupil and an explanation of the pupil’s basic rights.

(II) Provide a hearing adjudicated by a neutral officer within a reasonable number of days at which the pupil has a fair opportunity to present testimony, evidence, and witnesses and confront and cross-examine adverse witnesses, and at which the pupil has the right to bring legal counsel or an advocate.

(iii) Contain a clear statement that no pupil shall be involuntarily removed by the charter school for any reason unless the parent or guardian of the pupil has been provided written notice of intent to remove the pupil no less than five schooldays before the effective date of the action. The written notice shall be in the native language of the pupil or the pupil’s parent or guardian, or, if the pupil is a homeless child or youth, or a foster child or youth, in the native language of the homeless or foster child’s educational rights holder. In the case of a foster child or youth, the written notice shall also be provided to the foster child’s attorney and county social worker. If the pupil is an Indian child, as defined in Section 224.1 of the Welfare and Institutions Code, the written notice shall also be provided to the Indian child’s tribal social worker and, if applicable, county social worker. The written notice shall inform the pupil, the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, and county social worker, or the Indian child’s tribal social worker and, if applicable, county social worker of the right to initiate the procedures specified in clause (ii) before the effective date of the action. If the pupil’s parent or guardian, the homeless child’s educational rights holder, the foster child’s educational rights holder, attorney, or county social worker, or the Indian child’s tribal social worker or, if applicable, county social worker initiates the procedures specified in clause (ii), the pupil shall remain enrolled and shall not be removed until the charter school issues a final decision. For purposes of this clause, “involuntarily removed” includes disenrolled, dismissed, transferred, or terminated, but does not include suspensions specified in clauses (i) and (ii).

(iv) A foster child’s educational rights holder, attorney, and county social worker and an Indian child’s tribal social worker and, if applicable, county social worker shall have the same rights a parent or guardian of a child has to receive a suspension notice, expulsion notice, manifestation determination notice, involuntary transfer notice, and other documents and related information.

(J) The manner by which staff members of the charter school will be covered by the State Teachers’ Retirement System, the Public Employees’ Retirement System, or federal social security.

(K) The procedures to be followed by the charter school and the county board of education to resolve disputes relating to provisions of the charter.

(L) Admission policy and procedures, consistent with subdivision (e).

(M) The public school attendance alternatives for pupils residing within the county who choose not to attend the charter school.

(N) The rights of an employee of the county office of education, upon leaving the employment of the county office of education, to be employed by the charter school, and any rights of return to the county office of education that an employee may have upon leaving the employment of the charter school.

(O) The procedures to be used if the charter school closes. The procedures shall ensure a final audit of the charter school to determine the disposition of all assets and liabilities of the charter school, including plans for disposing of any net assets and for the maintenance and transfer of pupil records.

(6) A declaration of whether or not the charter school shall be deemed the exclusive public school employer of the employees of the charter school for purposes of the Educational Employment Relations Act (Chapter 10.7 (commencing with Section 3540) of Division 4 of Title 1 of the Government Code).

(7) Any other basis that the county board of education finds justifies the denial of the petition.

(c) A county board of education that approves a petition for the operation of a countywide charter may, as a condition of charter approval, enter into an agreement with a third party, at the expense of the charter school, to oversee, monitor, and report to the county board of education on the operations of the charter school. The county board of education may prescribe the aspects of the charter school’s operations to be monitored by the third party and may prescribe appropriate requirements regarding the reporting of information concerning the operations of the charter school to the county board of education.

(d) (1) Charter schools shall meet all statewide standards and conduct the pupil assessments required pursuant to Section 60605 and any other statewide standards authorized in statute or pupil assessments applicable to pupils in noncharter public schools.

(2) Charter schools shall on a regular basis consult with their parents and teachers regarding the charter school’s educational programs.

(e) (1) In addition to any other requirement imposed under this part, a charter school shall be nonsectarian in its programs, admission policies, employment practices, and all other operations, shall not charge tuition, and shall not discriminate against any pupil on the basis of ethnicity, national origin, gender, gender identity, gender expression, or disability. Except as provided in paragraph (2), admission to a charter school shall not be determined according to the place of residence of the pupil, or of the pupil’s parent or guardian, within this state.

(2) (A) A charter school shall admit all pupils who wish to attend the charter school.

(B) If the number of pupils who wish to attend the charter school exceeds the charter school’s capacity, attendance, except for existing pupils of the charter school, shall be determined by a public random drawing. Preference shall be extended to pupils currently attending the charter school and pupils who reside in the county except as provided for in Section 47614.5. Preferences, including, but not limited to, siblings of pupils admitted or attending the charter school and children of the charter school’s teachers, staff, and founders identified in the initial charter, may also be permitted by the chartering authority on an individual charter school basis. Priority order for any preference shall be determined in the charter petition in accordance with all of the following:

(i) Each type of preference shall be approved by the chartering authority at a public hearing.

(ii) Preferences shall be consistent with federal law, the California Constitution, and Section 200.

(iii) Preferences shall not result in limiting enrollment access for pupils with disabilities, academically low-achieving pupils, English learners, neglected or delinquent pupils, homeless pupils, or pupils who are economically disadvantaged, as determined by eligibility for any free or reduced-price meal program, foster youth, or pupils based on nationality, race, ethnicity, or sexual orientation.

(iv) In accordance with Section 49011, preferences shall not require mandatory parental volunteer hours as a criterion for admission or continued enrollment.

(C) In the event of a drawing, the county board of education shall make reasonable efforts to accommodate the growth of the charter school and in no event shall take any action to impede the charter school from expanding enrollment to meet pupil demand.

(3) If a pupil is expelled or leaves the charter school without graduating or completing the school year for any reason, the charter school shall notify the superintendent of the school district of the pupil’s last known address within 30 days and shall, upon request, provide that school district with a copy of the cumulative record of the pupil, including report cards or a transcript of grades, and health information. If the pupil is subsequently expelled or leaves the school district without graduating or completing the school year for any reason, the school district shall provide this information to the charter school within 30 days if the charter school demonstrates that the pupil had been enrolled in the charter school. This paragraph applies only to pupils subject to compulsory full-time education pursuant to Section 48200.

(4) (A) A charter school shall not discourage a pupil from enrolling or seeking to enroll in the charter school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2).

(B) A charter school shall not request a pupil’s records or require a parent, guardian, or pupil to submit the pupil’s records to the charter school before enrollment.

(C) A charter school shall not encourage a pupil currently attending the charter school to disenroll from the charter school or transfer to another school for any reason, including, but not limited to, academic performance of the pupil or because the pupil exhibits any of the characteristics described in clause (iii) of subparagraph (B) of paragraph (2). This subparagraph shall not apply to actions taken by a charter school pursuant to the procedures described in subparagraph (I) of paragraph (5) of subdivision (b).

(D) The department shall develop a notice of the requirements of this paragraph. This notice shall be posted on a charter school’s internet website. A charter school shall provide a parent or guardian, or a pupil if the pupil is 18 years of age or older, a copy of this notice at all of the following times:

(i) When a parent, guardian, or pupil inquires about enrollment.

(ii) Before conducting an enrollment lottery.

(iii) Before disenrollment of a pupil.

(E) (i) A person who suspects that a charter school has violated this paragraph may file a complaint with the chartering authority.

(ii) The department shall develop a template to be used for filing complaints pursuant to clause (i).

(5) Notwithstanding any other law, a charter school in operation as of July 1, 2019, that operates in partnership with the California National Guard may dismiss a pupil from the charter school for failing to maintain the minimum standards of conduct required by the Military Department.

(6) A charter school shall, at a governing body meeting, obtain the approval of the governing body of the charter school for any contract that would cause the charter school to compensate an individual contractor more than one hundred thousand dollars ($100,000) in a fiscal year.

(f) The county board of education shall not require an employee of the county or a school district to be employed in a charter school.

(g) The county board of education shall not require a pupil enrolled in a county program to attend a charter school.

(h) The county board of education shall require that the petitioner or petitioners provide information regarding the proposed operation and potential effects of the charter school, including, but not limited to, the facilities to be used by the charter school, the manner in which administrative services of the charter school are to be provided, and potential civil liability effects, if any, upon the charter school, any school district where the charter school may operate, and upon the county board of education. The petitioner or petitioners shall also be required to provide financial statements that include a proposed first-year operational budget, including startup costs, and cashflow and financial projections for the first three years of operation. If the charter school is to be operated by, or as, a nonprofit public benefit corporation, the petitioner shall provide the names and relevant qualifications of all persons whom the petitioner nominates to serve on the governing body of the charter school.

(i) In reviewing petitions for the establishment of charter schools within the county, the county board of education shall give preference to petitions that demonstrate the capability to provide comprehensive learning experiences to pupils identified by the petitioner or petitioners as academically low achieving pursuant to the standards established by the department under Section 54032, as that section read before July 19, 2006.

(j) Upon the approval of the petition by the county board of education, the petitioner or petitioners shall provide written notice of that approval, including a copy of the petition, to the school districts within the county, the Superintendent, and the state board.

(k) If a county board of education denies a petition, the petitioner shall not elect to submit the petition for the establishment of the charter school to the state board.

(l) (1) Teachers in charter schools shall be required to hold the Commission on Teacher Credentialing certificate, permit, or other document required for the teacher’s certificated assignment. These documents shall be maintained on file at the charter school and shall be subject to periodic inspection by the chartering authority. A governing body of a direct-funded charter school may use local assignment options authorized in statute and regulations for the purpose of legally assigning certificated teachers, in accordance with all of the requirements of the applicable statutes or regulations in the same manner as a governing board of a school district. A charter school shall have authority to request an emergency permit or a waiver from the Commission on Teacher Credentialing for individuals in the same manner as a school district.

(2) The Commission on Teacher Credentialing shall include in the bulletins it issues pursuant to subdivision (k) of Section 44237 to provide notification to local educational agencies of any adverse actions taken against the holders of any commission documents, notice of any adverse actions taken against teachers employed by charter schools. The Commission on Teacher Credentialing shall make this bulletin available to all chartering authorities and charter schools in the same manner in which it is made available to local educational agencies.

(m) A charter school shall provide for an annual and independent financial and compliance audit in accordance with Section 41020.

(n) A charter school may encourage parental involvement but shall notify the parents and guardians of applicant pupils and currently enrolled pupils that parental involvement is not a requirement for acceptance to, or continued enrollment at, the charter school.

(o) The requirements of this section shall not be waived by the state board pursuant to Section 33050 or any other law.

SEC. 31.SEC. 35.

Section 47605.8 is added to the Education Code, to read:

47605.8.

The state board shall appoint an advisory committee on charter schools. The advisory committee shall include, but shall not necessarily be limited to, representatives from school district superintendents, charter schools, teachers, parents, members of the governing boards of school districts, county superintendents of schools, and the Superintendent.

SEC. 32.SEC. 36.

Section 47605.10 is added to the Education Code, immediately following Section 47605.9, to read:

47605.10.

(a) Notwithstanding any other law, a school district shall be limited in the size of the totality of the nonclassroom-based charter schools that it may authorize, except as provided in subdivision (d). A school district with an average daily attendance of fewer than 10,000 pupils shall not authorize one or more nonclassroom-based charter schools or approve a material revision to expand one or more existing nonclassroom-based charter schools if doing so would result in more than a totality of 100 percent of the average daily attendance of the school district authorizing the charter.

(b) For purposes of this section, the determination of the average daily attendance used shall be the second principal apportionment in the prior year.

(c) Except as provided in subdivision (d), if the average daily attendance of a nonclassroom-based charter school exceeds the limits established in this section, the charter school shall, at the next renewal of the charter school, present their renewal to the existing chartering authority. If the chartering authority approves the renewal, the chartering authority shall notify the state board of the approval. The state board shall, in consultation with the charter school and the school district, assign a new school district with an average daily attendance that meets the requirements of this section to be the chartering authority of the charter school. If there is not a school district in the county where the chartering authority is located that meets the average daily attendance requirements of this section, the state board shall assign the county board of education in which the chartering authority is located as the chartering authority of the charter school.

(d) (1) Notwithstanding subdivisions (a) and (c), a chartering authority that authorized a nonclassroom-based charter school in operation on or before December 31, 2025, and that exceeds the limits established in subdivision (a), may reauthorize and continue to be the chartering authority for that nonclassroom-based charter school if, as of December 31, 2025, the chartering authority employs at least four full-time equivalent executive-level staff members whose primary responsibilities are related to the following job classifications and areas of employment:

(A) Superintendent.

(B) Chief business official.

(C) Human resources.

(D) Special education.

(E) Curriculum.

(2) Staff members who have the job responsibilities described in subparagraphs (A), (C), (D), and (E) of paragraph (1) shall hold an administrative credential issued by the Commission on Teacher Credentialing, as required by Section 35028.

SEC. 34.SEC. 37.

Section 47612.5 of the Education Code is amended to read:

47612.5.

(a) Notwithstanding any other law and as a condition of apportionment, a charter school shall do all of the following:

(1) For each fiscal year, offer, at a minimum, the following number of minutes of instruction:

(A) To pupils in kindergarten, 36,000 minutes.

(B) To pupils in grades 1 to 3, inclusive, 50,400 minutes.

(C) To pupils in grades 4 to 8, inclusive, 54,000 minutes.

(D) To pupils in grades 9 to 12, inclusive, 64,800 minutes.

(2) Maintain written contemporaneous records that document all pupil attendance and make these records available for audit and inspection.

(3) Certify that its pupils have participated in the state testing programs specified in Chapter 5 (commencing with Section 60600) of Part 33 in the same manner as other pupils attending public schools as a condition of apportionment of state funding.

(b) Notwithstanding any other law and except to the extent inconsistent with this section and Section 47634.2, a charter school that provides independent study shall comply with Article 5.5 (commencing with Section 51745) of Chapter 5 of Part 28 and implementing regulations adopted thereunder. The state board shall adopt regulations that apply Article 5.5 (commencing with Section 51745) of Chapter 5 of Part 28 to charter schools. To the extent that these regulations concern the qualifications of instructional personnel, the state board shall be guided by subdivision (l) of Section 47605.

(c) A reduction in apportionment made pursuant to subdivision (a) shall be proportional to the magnitude of the exception that causes the reduction. For purposes of paragraph (1) of subdivision (a), for each charter school that fails to offer pupils the minimum number of minutes of instruction specified in that paragraph, the Superintendent shall withhold from the charter school’s apportionment for average daily attendance of the affected pupils, by grade level, the sum of that apportionment multiplied by the percentage of the minimum number of minutes of instruction at each grade level that the charter school failed to offer.

(d) (1) Notwithstanding any other law and except as provided in paragraph (1) of subdivision (e), a charter school that has an approved charter may receive funding for nonclassroom-based instruction only if a determination for funding is made pursuant to Section 47634.2 by the state board. The determination for funding shall be subject to any conditions or limitations the state board may prescribe. The state board shall adopt regulations on or before January 1, 2027, to commence with the 2027–28 fiscal year, that define and establish general rules governing nonclassroom-based instruction that apply to all charter schools and to the process for determining funding of nonclassroom-based instruction by charter schools offering nonclassroom-based instruction other than the nonclassroom-based instruction authorized by paragraph (1) of subdivision (e). Nonclassroom-based instruction includes, but is not limited to, independent study, home study, workstudy, and distance and computer-based education. In prescribing any conditions or limitations relating to the qualifications of instructional personnel, the state board shall be guided by subdivision (l) of Section 47605.

(2) A charter school that receives a determination pursuant to Section 47634.2 is not required to reapply annually for a funding determination of its nonclassroom-based instruction program if an update of the information the state board reviewed when initially determining funding would not require material revision, as that term is defined in regulations adopted by the state board. Notwithstanding any other law, the state board may require a charter school to provide updated information at any time it determines that a review of that information is necessary. The state board may terminate a determination for funding if updated or additional information requested by the state board is not made available to the state board by the charter school within a reasonable amount of time or if the information otherwise supports termination. A determination for funding pursuant to Section 47634.2 shall not exceed five years.

(3) A charter school that offers nonclassroom-based instruction in excess of the amount authorized by paragraph (1) of subdivision (e) is subject to the determination for funding requirement of Section 47634.2 to receive funding each time its charter is renewed or materially revised pursuant to Section 47607. A charter school that materially revises its charter to offer nonclassroom-based instruction in excess of the amount authorized by paragraph (1) of subdivision (e) is subject to the determination for funding requirement of Section 47634.2.

(e) (1) Notwithstanding any other law, and as a condition of apportionment, “classroom-based instruction” in a charter school, for purposes of this part, occurs only when charter school pupils are engaged in educational activities required of those pupils and are under the immediate supervision and control of an employee of the charter school who possesses a valid certification document registered as required by law. For purposes of calculating average daily attendance for classroom-based instruction apportionments, at least 80 percent of the instructional time offered by the charter school shall be at the schoolsite, and the charter school shall require the attendance of all pupils for whom a classroom-based apportionment is claimed at the schoolsite for at least 80 percent of the minimum instructional time required to be offered pursuant to paragraph (1) of subdivision (a).

(2) For the purposes of this part, “nonclassroom instruction” or “nonclassroom-based instruction” means instruction that does not meet the requirements specified in paragraph (1). The state board may adopt regulations pursuant to paragraph (1) of subdivision (d) specifying other conditions or limitations on what constitutes nonclassroom-based instruction, as it deems appropriate and consistent with this part.

(3) For purposes of this part, a schoolsite is a facility that is used principally for classroom instruction.

(4) Notwithstanding any other law, the state board and the Superintendent shall not waive the requirements of paragraph (1) of subdivision (a).

SEC. 35.SEC. 38.

Section 47634.2 of the Education Code is amended to read:

47634.2.

(a) (1) Notwithstanding any other provision of law, through the 2025–26 fiscal year, the amount of funding to be allocated to a charter school on the basis of average daily attendance that is generated by pupils engaged in nonclassroom-based instruction, including funding provided on the basis of average daily attendance pursuant to Sections 47613.1, 47633, and 47664, shall be adjusted by the state board. The state board shall update the regulations setting forth criteria and processes for the determination of funding for nonclassroom-based instruction, and, at a minimum, the regulations shall specify that the nonclassroom-based instruction is conducted for the instructional benefit of the pupil and substantially dedicated to that function. In developing these criteria and determining the amount of funding to be allocated to a charter school pursuant to this section, the state board shall consider, among other factors it deems appropriate, the amount of the charter school’s total expenditures on certificated employee salaries and benefits, the amount of the charter school’s total expenditures on instruction and related services, expenditures on facilities pursuant to paragraph (2) of subdivision (e), and the teacher-to-pupil ratio in the school.

(2) The determination for funding shall be on a percentage basis and the Superintendent shall implement the determination for funding by reducing the charter school’s reported average daily attendance by the determination for funding percentage specified by the state board in accordance with this section.

(b) The state board shall appoint an advisory commission to recommend criteria to the state board in accordance with this section if it has not done so by January 1, 2002. The advisory commission shall include, but is not limited to, representatives from school district superintendents, charter schools, teachers, parents, members of the governing boards of school districts, county superintendents of schools, and the Superintendent.

(c) Commencing with the 2027–28 fiscal year, the state board’s Advisory Commission on Charter Schools shall recommend to the state board the approval of a funding determination request submitted by a charter school consistent with all of the following:

(1) (A) Approval of the request at 70 percent if both of the following criteria are met, unless there is a reasonable basis to recommend otherwise:

(i) The percentage calculated for certificated employee salaries and benefits equals at least 35 percent but less than 40 percent. percent of total public revenue.

(ii) The percentage calculated for total expenditures on instruction and related services equals at least 60 percent but less than 70 percent. percent of total revenue.

(B) If the recommended percentage made pursuant to this paragraph is lower than the requested percentage, the recommendation shall include the reasons justifying the reduction, and, if appropriate, a description of how any deficiencies or problems can be addressed by the charter school.

(2) (A) Approval of the request at 85 percent, unless there is a reasonable basis to recommend otherwise, if both of the following criteria are met:

(i) The percentage calculated for certificated employee salaries and benefits equals at least 40 percent. percent of total public revenue.

(ii) The percentage calculated for total expenditures on instruction and related services equals at least 70 percent but less than 80 percent. percent of total revenue.

(B) A recommendation made pursuant to this paragraph shall include the reasons justifying a percentage that is greater than 70 percent or if the recommended percentage is lower than the requested percentage, the reasons justifying the reduction, and, if appropriate, a description of how any deficiencies or problems can be addressed by the charter school.

(3) (A) Approval of the request at 100 percent, unless there is a reasonable basis to recommend less, if all of the following criteria are met:

(i) The percentage calculated for certificated employee salaries and benefits equals at least 40 percent. percent of total public revenue.

(ii) The percentage calculated for total expenditures on instruction and related services equals at least 80 percent. percent of total revenue.

(iii) The ratio of average daily attendance for independent study pupils to full-time certificated employees responsible for independent study does not exceed a pupil-teacher ratio of 25:1 or the equivalent ratio of pupils to full-time certificated employees for all other educational programs operated by the largest unified school district, as measured by average daily attendance, in the county or counties in which the charter school operates. the ratio specified in Section 51745.6.

(B) If the recommended percentage made pursuant to this paragraph is lower than the requested percentage, the recommendation shall include the reasons justifying the reduction and, if appropriate, a description of how any deficiencies or problems can be addressed by the charter school.

(4) (A) Due to the nonclassroom-based instruction not being substantially dedicated to the instructional benefit of the pupils, a denial of the request if one or both of the following criteria are met, unless there is a reasonable basis to recommend otherwise:

(i) The percentage calculated for certificated employee salaries and benefits is less than 35 percent. percent of total public revenue.

(ii) The percentage calculated for total expenditures on instruction and related services is less than 60 percent. percent of total revenue.

(B) A recommendation made pursuant to this paragraph shall include the reasons justifying the denial and, if appropriate, a description of how any deficiencies or problems can be addressed by the charter school.

(d) Commencing with the 2027–28 fiscal year, all of the following shall apply:

(1) An approved determination of funding for a new charter school in its first year of operation shall be submitted by December 1 and shall be for two fiscal years. Within 90 days after the end of its first fiscal year of operation, a charter school shall submit unaudited actual expense reports and a funding determination form based on the charter school’s actual second-year budget. If the Advisory Commission on Charter Schools determines that the actual expenditures of the charter school or the second-year funding determination form do not support the funding determination for the second year, the Advisory Commission on Charter Schools shall recommend that the state board revise the funding determination. The Advisory Commission on Charter Schools and the state board shall give charter schools that are in their first year of operation serious consideration of full funding.

(2) Charter schools that are part of a network of nonclassroom-based charter schools shall apply for a funding determination at within the same time fiscal year in a year determined by the department and shall be considered by the state board shall consider the funding determination for each of the schools within a network at the same hearing. The department shall determine the year based on the furthest funding determination date within the network, but no later than five years after the network is identified. The funding determination for a charter school that is part of a network of nonclassroom-based charter schools shall not exceed three five years. If a charter school already has a multiyear funding determination prior to being identified as part of a network, that determination shall be deemed invalid and the network shall submit documentation for a new funding determination. During the review of a funding determination for a charter school that is part of a network of nonclassroom-based charter schools that do not use the audit process pursuant to subparagraph (B) of paragraph (3) of subdivision (a) of Section 41020.4, the department shall additionally review and compare the annual uniform electronic data template with unique teacher identifier information, full-time equivalent status, and salary and benefit information across the network of charter schools in order to determine whether any of the components described in paragraph (2) of subdivision (a) of Section 41020.4 are inappropriately double counted in multiple schools across the network that adversely impact any of the components described in paragraph (2) of subdivision (a) of Section 41020.4. By January 1, 2027, the department shall develop an electronic template document to collect only the unique teacher identifier, full-time equivalency status, and salary and benefit amounts.

(3) The Advisory Commission on Charter Schools shall recommend to the state board funding determinations for each nonclassroom-based charter school that is part of a network, as defined in Section 47634.3, that do not use the audit process pursuant to subparagraph (B) of paragraph (3) of subdivision (a) of Section 41020.4 based on a review of aggregate expenditure and revenue information from all years since the prior funding determination was made for that school and shall recommend reducing modifying the funding accordingly.

(4) Any multiyear funding determination approved by the state board may be modified by the state board, including the terms of the multiyear approval and the funding authorized. The state board may terminate a determination of funding if updated or additional information requested by the department or the advisory committee pursuant to this section is not made available by a charter school within a reasonable amount of time or if credible information from any source supports termination. termination or reduction. If credible information from a source supports termination, termination or reduction, the charter school shall have a reasonable amount of time prior to the termination or reduction of funding to provide additional information to support the charter school’s determination of funding.

(5) A charter school that is eligible for a funding determination based on the criteria pursuant to subdivision (c) may be eligible for an increase in the funding determination only if the state board finds a reasonable basis to recommend an increase in accordance with the mitigating circumstances described in paragraph (7). A charter school granted an increase in the funding determination based on mitigating circumstances shall receive a funding determination not to exceed two years.

(6) A reasonable basis for the Advisory Commission on Charter Schools to make make, or the state board to approve, a recommendation other higher than one that results from the criteria described in subdivision (c) includes, but is not limited to, includes documented data regarding the individual circumstances of the charter school related to the following: one-time, unique, or exceptional expenses for facilities, the acquisition of one or more schoolbuses, the acquisition and installation of computer hardware not related to the instructional program, special education charges levied on the charter school by a local educational agency, or restricted private grants of funds awarded to the charter school that cannot be expended for teacher salaries. The Advisory Commission on Charter Schools may give charter schools that are in their first year of operation serious consideration of full funding. the charter school.

(e) Commencing with the 2027–28 fiscal year, charter schools that submit a funding determination request shall adhere to all of the following:

(1) Exclude unspent one-time local, state, or federal revenues that are permitted to be spent over multiple fiscal years from the calculations of the percentage of school total revenues spent on instruction and related instruction-related services and total public revenue for certificated staff salaries and benefits if the charter school recognizes these revenues and expenditures in the year the funds are actually spent.

(2) May include in the total expenditures for instruction and related services any funds spent on resource centers centers, meeting spaces, satellite facilities, or site-based instructional facilities operated or leased by the charter school used primarily for purposes of in-person instruction and pupil support services, including, but not limited to, tutoring, counseling, special education services, libraries, testing, and visual and performing arts facilities. A charter school shall provide the department with supporting documentation related to these costs.

(3) Report the amount and classification of its reserves on funding determination forms consistent with state accounting categories of assigned, unassigned, restricted, committed, and nonspendable.

(5) If applicable, explain on the funding determination form the purposes for which the governing body designated reserve for economic uncertainties that is a component part of unrestricted net assets or unassigned fund balances balances, where applicable, are being maintained at a level that is 10 percent or more of the charter school’s annual expenditures.

(f) This section does not authorize the state board to adjust the amount of funding a charter school receives on the basis of average daily attendance generated through classroom-based instruction, as defined for purposes of calculating average daily attendance for classroom-based instruction apportionments by paragraph (1) of subdivision (d) of Section 47612.5.

(g) Each charter school offering nonclassroom-based instruction shall, in each report provided to the Superintendent for apportionment purposes, identify the portion of its average daily attendance that is generated through nonclassroom-based instruction.

(h) Notwithstanding any other provision of law, charter schools shall be subject, with regard to subdivisions (c) and (d) of Section 47612.5 and this section, to audits conducted pursuant to Section 41020.

(p) For purposes of this section, the following definitions apply:

(4) “Network of nonclassroom-based charter schools” has the same meaning as defined in subdivision (b) of Section 47634.3.

(5) “Nonclassroom-based instruction” has the same meaning as defined in paragraph (2) of subdivision (e) of Section 47612.5.

(6) “Pupil-teacher ratio” has the same meaning as described in Section 51745.6.

SEC. 36.SEC. 39.

Section 47634.3 is added to the Education Code, to read:

47634.3.

(a) Beginning with the 2027–28 school year, the department shall annually develop a list that identifies networks of nonclassroom-based charter schools, as described in this section, and the schools that make up those networks, based on data from the prior school year.

(b) For purposes of this section, a “network of nonclassroom-based charter schools” means two or more nonclassroom-based charter schools, as defined pursuant to paragraph (2) of subdivision (e) of Section 47612.5, that meet one or more of the following:

(1) Have a shared governance or management structure, including having supervisors and managers who typically function on a multischool level and oversee, evaluate, control teaching assignments, control class rosters, or discipline teachers or who set wages, hours, benefits, job duties, or other terms and conditions of employment for employees across multiple schools.

(2) Are under the control of the same corporate or legal entity, or are controlled by legal entities wherein one or more of the corporate directors are appointed or elected by another common entity.

(3) Have two or more nonclassroom-based charter schools that are have been determined by the Public Employment Relations Board to constitute either a single employer or joint employer. employer as of July 1, 2025.

SEC. 40.

Article 7 (commencing with Section 47670) is added to Chapter 6 of Part 26.8 of Division 4 of Title 2 of the Education Code, to read:

SEC. 37.SEC. 41.

Section 51745.6 of the Education Code is amended to read:

51745.6.

(a) (1) Except as provided in paragraph (2), the ratio of average daily attendance for independent study pupils 18 years of age or less for a school district or county office of education, and for independent study pupils regardless of age for a charter school, to full-time equivalent certificated employees responsible for independent study, calculated as specified by the department, shall comply with one of the following:

(A) It shall not exceed the equivalent ratio of average daily attendance to full-time equivalent certificated employees providing instruction in other educational programs operated by the school district, county office of education, or charter school.

(B) It shall not exceed the equivalent prior year ratio of average daily attendance to full-time equivalent certificated employees for all other educational programs operated by the high school or unified school district with the largest average daily attendance of pupils in the county or the collectively bargained alternative ratio used by that high school or unified school district in the prior year. In the case of a charter school serving pupils in more than one county, the ratio shall not exceed the ratio of the high school or unified school district with the average daily attendance of pupils in the county in which the chartering authority is located. The computation of the ratios shall be performed annually by the reporting agency at the time of, and in connection with, the second principal apportionment report to the Superintendent. A high school or unified school district shall annually report the attendance ratios to the county office of education by a date established by the county office of education. The county office of education shall annually report the attendance ratios on their internet website.

(C) It shall not exceed a fixed average-daily-attendance-to-certificated-employee ratio of 25 to 1, or a fixed ratio of less than 25 pupils per certificated employee.

(2) Notwithstanding paragraph (1), a new higher or lower ratio for all other educational programs offered by a school district, county office of education, or charter school may be negotiated in a collective bargaining agreement, or a memorandum of understanding is entered into that indicates an existing collective bargaining agreement contains an alternative average daily attendance ratio.

(b) Only those units of average daily attendance for independent study that reflect a pupil-teacher ratio that does not exceed the ratios described in subdivision (a) shall be eligible for apportionment pursuant to Section 2575 for county offices of education and Section 42238.05 for school districts. This section does not prevent a school district or county office of education from serving additional units of average daily attendance greater than the ratios described in subdivision (a), except that those additional units shall not be funded pursuant to Section 2575 or 42238.05, as applicable. If a school district, charter school, or county office of education has a memorandum of understanding to provide instruction in coordination with the school district, charter school, or county office of education at which a pupil is enrolled, the ratios that shall apply for purposes of this paragraph are the ratios for the local educational agency providing the independent study program to the pupil pursuant to Section 51749.5.

(c) The calculations performed for purposes of this section shall not include either of the following:

(1) The average daily attendance generated by special education pupils enrolled in special day classes on a full-time basis, or the teachers of those classes.

(2) The average daily attendance or teachers in necessary small schools that are eligible to receive funding pursuant to Article 4 (commencing with Section 42280) of Chapter 7 of Part 24 of Division 3.

(d) Commencing with the 2021–22 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, the Controller shall incorporate verification of the ratios included in this section, including fiscal penalties for noncompliance as described in this section.

SEC. 38.SEC. 42.

Section 51746 of the Education Code is amended to read:

51746.

It is the intent of the Legislature that local educational agencies offering independent study shall provide appropriate existing services and resources to enable pupils to complete their independent study successfully and shall ensure the same access to all existing services and resources in the school in which the pupil is enrolled pursuant to Section 51748 as is available to all other pupils in the school. In addition, the services and resources may include, but need not be limited to, any of the following:

(a) A designated learning center or study area staffed by appropriately trained personnel.

(b) The services of qualified personnel to assess the achievement, abilities, interests, aptitudes, and needs of participating pupils to determine each of the following:

(1) Whether full-time independent study is the most appropriate placement for the pupil being referred.

(2) If the answer to paragraph (1) is affirmative, the determination of the most appropriate individualized plan and resources to be made available to pupils enrolled in full-time independent study.

SEC. 39.SEC. 43.

Section 51747.5 of the Education Code is amended to read:

51747.5.

(a) The independent study by each pupil shall be coordinated, evaluated, and, notwithstanding subdivision (a) of Section 46300, shall be under the general supervision of an employee of the local educational agency who possesses a valid certification document pursuant to Section 44865 or an emergency credential pursuant to Section 44300, registered as required by law.

(b) (1) A local educational agency may claim apportionment credit for independent study only to the extent of the time value of pupil work products, as personally judged in each instance by a certificated teacher employed by the local educational agency, or the combined time value of pupil work product and pupil participation in synchronous instruction pursuant to paragraph (2). It is the intent of the Legislature that teachers be given access to digital assignment tracking systems to reduce workload associated with evaluating and accounting for pupil work and synchronous instruction participation.

(2) For purposes of computing average daily attendance for each pupil enrolled in independent study pursuant to Section 51747, the following computations shall apply:

(A) (i) For each schoolday, add the combined equivalent daily time value of pupil work products, as personally judged by a certificated employee of the local educational agency.

(ii) For purposes of this section, pupil work products may include the daily time value spent by a pupil engaged in asynchronous instruction, including work completed on an online or computer-based instructional activity, regardless of whether pupil work products are produced, if the computer program documents pupil participation. The local educational agency shall maintain documentation of hours or fraction of an hour of both pupil work products and the time that the pupil engaged in asynchronous instruction.

(iii) (I) Except as provided in subclause (II), a local educational agency shall maintain one completed pupil work product in each of the subjects of English language arts, mathematics, history-social science, and science for a pupil enrolled in independent study for each of three attendance periods as follows:

(ia) The beginning of the school year through the first attendance period.

(ib) The day following the end of the first attendance period to the end of the school’s second attendance period.

(ic) The day following the end of the school’s second attendance period to the end of the school year.

(II) Notwithstanding subclause (I), if a pupil is not enrolled in one or more of the subjects identified in subclause (I) during an attendance period, the local educational agency shall maintain four completed pupil work products per attendance period that are representative of the pupil’s course schedule.

(B) (i) For each schoolday, add the combined daily instructional minutes a pupil participated in synchronous instruction, as defined by subdivision (d) of Section 51745.5 and offered pursuant to subdivision (e) of Section 51747, for which evidence of pupil participation is furnished and maintained. Evidence of pupil participation may include, but is not limited to, pupil work produced or performed, or documentation that the pupil participated in an instructional period either visually or verbally, as verified by a certificated employee and maintained by the local educational agency for each hour or fraction thereof of the synchronous instructional offering.

(ii) Pursuant to paragraph (1), a local educational agency may claim apportionment credit in this paragraph insofar as a pupil’s participation in a synchronous instructional offering augments the time value of pupil work product.

(C) For each schoolday, add the sum of subparagraphs (A) and (B). If the sum of subparagraphs (A) and (B) meets the applicable minimum schoolday requirements for each schoolday, and all other requirements in this section have been met, each schoolday shall be credited as up to one schoolday of attendance.

(3) The average daily attendance computed pursuant to this subdivision shall not result in more than one unit of average daily attendance per pupil.

(4) Notwithstanding any other law, average daily attendance computed for pupils enrolled in independent study shall not be credited with average daily attendance other than what is specified in this section.

(c) A local educational agency shall document each pupil’s participation in live interaction and synchronous instruction pursuant to Section 51747 on each schoolday, as applicable, in whole or in part, for which live interaction or synchronous instruction is provided as part of the independent study program. A pupil who does not participate in scheduled live interaction or synchronous instruction shall be documented as nonparticipatory for that schoolday for purposes of pupil participation reporting and tiered reengagement pursuant to Section 51747.

(d) A local educational agency shall maintain written or computer-based evidence of pupil engagement that includes, but is not limited to, a grade book or summary document that, for each class, lists all assignments, assessments, and associated grades.

(e) For purposes of this section, a local educational agency shall not be required to sign and date pupil work products when assessing the time value of pupil work products for apportionment purposes.

(f) Commencing with the 2021–22 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, the Controller shall incorporate compliance reviews for subdivisions (a) to (d), inclusive, unless compliance verification for those subdivisions is already included in the audit guide. Findings of noncompliance shall result in the loss of apportionment equal to the average daily attendance impacted by the noncompliance.

(g) The provisions of this section are not subject to waiver by the state board, by the Superintendent, or under any provision of Part 26.8 (commencing with Section 47600).

SEC. 40.SEC. 44.

Section 51748 of the Education Code is amended to read:

51748.

School districts, charter schools, and county offices of education shall not be eligible to receive apportionment for independent study attendance by a pupil who is not otherwise identified in the written records of the school district, charter school, or county board of education by grade level, program placement, and the school in which the pupil is enrolled.

SEC. 41.SEC. 45.

Article 11.5 (commencing with Section 51827) is added to Chapter 5 of Part 28 of Division 4 of Title 2 of the Education Code, to read:

Article 11.5. Local Educational Agency Contracting

51827.

(a) On or before July 1, 2027, the governing board or body of a local educational agency shall adopt a policy for the local educational agency to comply with in order to evaluate and approve contractors. The policy shall include all of the following provisions:

(1) A local educational agency shall not expend public funds for a contract unless the materials, programs, and activities are nonsectarian and comply with nondiscrimination provisions of state and federal law.

(2) A local educational agency shall not expend public funds for a contract that pays for tuition or fees for a pupil at a private school that has filed an affidavit pursuant to Section 33190, except if required pursuant to a pupil’s individualized education program.

(3) (A) Financial payments or gifts shall not be offered by a local educational agency to a pupil, prospective pupil, or a pupil’s parent, guardian, or relative as an incentive for enrollment, referral, or retention.

(4) For a nonclassroom-based charter school, contracts shall itemize costs attributed to credentialed staff, administrative staff, and instruction and related services with sufficient detail to determine a qualifying expense for purposes of a funding determination.

(5) A local educational agency shall ensure contracts reflect a reasonable market value.

(6) A local educational agency shall not purchase or contract for season passes or membership to amusement or theme parks, zoos, or family entertainment activities, except that a local educational agency may offer a one-time admission that is aligned with teacher assignments, or graduation activities funded through parent or student organizations. Family entertainment activities include, but are not limited to, laser tag, arcades, miniature golf, and trampoline parks.

(7) A local educational agency shall only contract with an entity that has a business license or business certificate, where applicable, and has appropriate insurance for the service being offered. Government agencies are not required to have a business license.

(8) A local educational agency shall not contract with a pupil or a pupil’s parent, guardian, or relative for services provided exclusively to that pupil, except for any of the following persons who are compensated by the local educational agency to provide school-related transportation for a pupil:

(A) A parent or legal guardian.

(B) A relative, as defined in paragraph (2) of subdivision (c) of Section 361.3 of the Welfare and Institutions Code, or a nonrelative extended family member, as defined in Section 362.7 of the Welfare and Institutions Code.

(C) A court-appointed educational rights holder.

(D) A court-appointed special advocate.

(9) A local educational agency shall not reimburse parents or guardians for any activities or services. This paragraph does not prohibit a local educational agency from reimbursing parents or guardians for activities or services for pupils with disabilities pursuant to an individualized education program and required by a legal settlement or agreement.

(10) A contractor who interacts with pupils outside the immediate supervision and control of a school employee shall have policies and procedures related to pupil and site safety, including in virtual settings, emergency response, and accident reporting that are reasonable for the instruction or activity.

(11) Contractor personnel interacting with pupils shall have a valid criminal records summary as described in Section 45125.1.

(12) As part of a contract with a local educational agency, contractors shall provide evidence of qualification and expertise for the activities to be provided, in accordance with policies of the governing board or body of the local educational agency.

(13) As part of a contract with a local educational agency, contractors shall not charge fees to pupils or the pupil’s parent or legal guardian.

(b) Auditing of the approval of, and compliance with, policies enacted in accordance with subdivision (a) shall be included in the audit guide, Standards and Procedures for Audits of California K-12 Local Educational Agencies, described in Section 14502.1.

(c) This section does not supersede or invalidate a contract that is in effect on or before July 1, 2027. If a contract is in effect on or before July 1, 2027, the contract shall remain in effect until the expiration of the contract or the parties to the agreement negotiate a successor agreement that will be operative after July 1, 2027, that complies with this section. A local educational agency shall not enter into a contract or make an amendment or other ancillary agreement to an existing contract on or after January 1, 2026, that would be operative after July 1, 2027, unless it would comply with this section.

(d) For purposes of this section, “local educational agency” means a school district, educational joint powers authority, county office of education, or charter school.

SEC. 42.SEC. 46.

If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.