H.R. 8606 — CHARTER Act

This section states the purpose of the Act, which is to ensure charter schools receiving funding under the Elementary and Secondary Education Act of 1965 (ESEA) or Individuals with Disabilities Education Act (IDEA) comply with those Acts' funding requirements and prohibit the schools and their charter management organizations from contracting with for-profit entities that operate, oversee, or manage the school while receiving a portion of school revenues for profit extraction. The section includes congressional findings that (1) ESEA and IDEA define elementary and secondary schools (including public charter schools) as nonprofit institutions; (2) IDEA defines a nonprofit as an entity owned and operated by nonprofit corporations or associations with no net earnings inuring to private shareholders or individuals; (3) a 2003 Department of Education Office of Inspector General audit found Arizona improperly distributed ESEA and IDEA funds to for-profit charter schools; (4) a 2006 Ninth Circuit decision in Arizona State Bd. of Educ. v. U.S. Dept. of Educ. held for-profit charter schools ineligible for such funds; (5) for-profit operators reorganized as managers of nonprofit entities to continue receiving funds; and (6) students and taxpayers are entitled to public education funds without profit extraction.

This section revises the definition of charter school in ESEA §4310(2)—for purposes of the Charter Schools Program—to prohibit an eligible school from entering into a contract with a for-profit entity (or having a charter management organization or other nonprofit enter such a contract on its behalf) under which the for-profit entity operates, oversees, manages, or administers the school, including curriculum development, budget management, and faculty management (such as hiring, terminating, or supervising staff). It permits contracts with for-profit or nonprofit entities for (1) food, payroll, facilities maintenance, or transportation services; (2) classroom supplies such as textbooks; or (3) ancillary services or supplies. (Thus, charter schools contracting with for-profits for core operations become ineligible for federal Charter Schools Program grants.) This section also incorporates the §4310 definition of charter school into ESEA's general definitions section (§8101).

This section establishes a definition of "charter school" in the Individuals with Disabilities Education Act (IDEA) by cross-referencing the definition in section 4310 of the Elementary and Secondary Education Act of 1965.

This section establishes that the amendments made by the Act take effect 3 years after the date of enactment and apply only to contracts entered into, renewed, or extended on or after the date of enactment.