84R10480 MEW-F
	By: Taylor of Galveston	S.B. No. 1898

	A BILL TO BE ENTITLED
	AN ACT
	relating to revocation of a charter for an open-enrollment charter
	school and procedures for the disposition of property owned by a
	charter school after revocation or surrender of a charter.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 12.116, Education Code, is amended by
	amending Subsections (a), (c), and (d) and adding Subsections (e)
	and (f) to read as follows:
	(a)  The commissioner shall adopt an informal review
	procedure to be used for revoking the charter of an open-enrollment
	charter school or for reconstituting the governing body of the
	charter holder as authorized by Section 12.115.
	(c)  A decision by the commissioner to revoke a charter is
	subject to review by the State Office of Administrative
	Hearings.  Notwithstanding Chapter 2001, Government Code:
	(1)  the State Office of Administrative Hearings shall
	conduct a revocation review hearing and issue a final decision not
	later than the 90th day after the date that the notice of hearing is
	filed with the State Office of Administrative Hearings;
	(2)  the administrative law judge shall uphold a
	decision by the commissioner to revoke a charter unless the judge
	finds the decision is arbitrary and capricious or clearly
	erroneous; and
	(3) [(2)]  a decision of the administrative law judge
	under this subsection is final and may not be appealed.
	(d)  If the commissioner issues a decision to revoke
	[revokes] the charter of an open-enrollment charter school, the
	commissioner may:
	(1)  manage the school until alternative arrangements
	are made for the school's students; [and]
	(2)  assign operation of one or more campuses formerly
	operated by the charter holder who held the revoked charter to a
	different charter holder who consents to the assignment; or
	(3)  appoint a board of managers under Section 12.1165
	or an agent of the commissioner to close the operations of the
	school and manage the disposition of the state's personal and real
	property in the possession of the charter holder.
	(e)  If the commissioner decides to manage the school under
	Subsection (d)(1), the commissioner may:
	(1)  allow the existing governing body of the school to
	manage the school, under the commissioner's direction, until the
	conclusion of the academic school year;
	(2)  appoint a board of managers under Section 12.1165;
	or
	(3)  appoint an individual to serve as the agent of the
	commissioner.
	(f)  The commissioner shall transfer to the charter school
	liquidation account established under Section 12.269 any funds
	received by the charter holder under Section 12.106 that remain
	after the operations of the school are closed under this section.
	SECTION 2.  Subchapter D, Chapter 12, Education Code, is
	amended by adding Sections 12.1165 and 12.1166 to read as follows:
	Sec. 12.1165.  BOARD OF MANAGERS FOR OPERATION OR
	DISSOLUTION. (a) If the commissioner issues a decision to revoke
	the charter of an open-enrollment charter school, the commissioner
	may appoint a board of managers and a charter superintendent to:
	(1)  manage the school under Section 12.116(d)(1); or
	(2)  close the operations of the school under Section
	12.116(d)(3).
	(b)  The commissioner may designate an individual member of
	the board of managers to submit to the agency any required data,
	reports, or other information necessary to close the operations of
	the school.
	(c)  The board of managers may exercise all of the powers and
	duties assigned to a governing body of a charter holder by any
	statute or rule.
	(d)  If the governing body of a charter holder is managing a
	school under Section 12.116(e)(1), the governing body's powers are
	terminated on the effective date of the commissioner's appointment
	of the board of managers.
	(e)  Notwithstanding any other provision of this code, the
	board of managers may amend the school's budget. The board of
	managers may use cash on hand received by the former charter holder
	under Section 12.106 or any allocation of state funding due to the
	former charter holder under Section 12.106 to close the operations
	of the school. Actions taken under this subsection are subject to
	the approval of the commissioner.
	(f)  A person who serves on the board of managers or as a
	charter superintendent under this section acts on behalf of the
	commissioner and is entitled to:
	(1)  sovereign immunity; and
	(2)  representation by the attorney general for any act
	or omission taken while acting in the person's official capacity.
	(g)  The board of managers shall continue to operate until
	dissolved by the commissioner. Members of the board of managers and
	a charter superintendent serve at the discretion of the
	commissioner and may be replaced by the commissioner at any time.
	(h)  Except as otherwise provided, this chapter applies to a
	school governed by a board of managers in the same manner this
	chapter applies to any other charter school.
	Sec. 12.1166.  COMPENSATION OF BOARD OF MANAGERS AND CHARTER
	SUPERINTENDENT. (a)  The commissioner may authorize compensation
	for a member of a board of managers or a charter superintendent
	appointed under Section 12.1165.
	(b)  The commissioner shall establish the terms of
	compensation provided under Subsection (a).
	(c)  The commissioner shall use funds of the former school
	due or received under Section 12.106 for compensation of a charter
	superintendent or a member of a board of managers.
	(d)  If funds described by Subsection (c) are not available
	or the commissioner determines that the circumstances require, the
	commissioner may use available agency funds for compensation under
	this section, provided that the use of the available funds for that
	purpose is not prohibited by other law.
	(e)  If the commissioner determines that the amount
	appropriated for purposes of the Foundation School Program exceeds
	the amount to which school districts are entitled under Chapters 42
	and 46, the commissioner may authorize the comptroller to transfer
	funds from the Foundation School Program to the agency's
	administrative account for compensation as provided by this
	section.
	SECTION 3.  Section 12.128, Education Code, is amended by
	adding Subsections (c-1), (c-2), and (f) to read as follows:
	(c-1)  In supervising the disposition of property under
	Subsection (c)(2), the commissioner may:
	(1)  file a suit for receivership under Subchapter G;
	or
	(2)  seek a court of competent jurisdiction to declare
	the property to be state property and order the property to be
	titled in the name of the state.
	(c-2)  If the commissioner obtains a court declaration
	described by Subsection (c-1)(2):
	(1)  the General Land Office shall:
	(A)  sell any real property through any method
	available to the General Land Office; and
	(B)  transfer any proceeds of the sale of the real
	property to the charter school liquidation account established
	under Section 12.269; and
	(2)  the Texas Facilities Commission shall transfer any
	proceeds from the sale of property disposed of under Chapter 2175,
	Government Code, into the charter school liquidation account
	established under Section 12.269.
	(f)  The proceeds of the sale of property under Subsection
	(c-2) are not subject to the requirements of the General
	Appropriations Act or statutory requirements or rules related to
	the general revenue fund.
	SECTION 4.  Chapter 12, Education Code, is amended by adding
	Subchapter G to read as follows:
	SUBCHAPTER G. CHARTER SCHOOL RECEIVERSHIP AND LIQUIDATION
	Sec. 12.251.  PURPOSE. The purpose of this subchapter is to
	aid the commissioner in carrying out the commissioner's duty to
	supervise the disposition of public property of a charter school
	that ceases to operate. This subchapter shall be liberally
	construed to permit the commissioner, acting as a receiver, to
	promptly dispose of public property to preserve state funds.
	Sec. 12.252.  DEFINITIONS. In this subchapter:
	(1)  "Former charter school" means a charter school
	that may no longer function as a charter school under this chapter
	or Chapter 39 because the school's charter has been revoked or
	surrendered.
	(2)  "Liquidation order" means a final order entered by
	the receivership court approving the receiver's disposition of all
	public property and closing the receivership.
	(3)  "Proposed disposition plan" means a plan presented
	by the receiver to the court that accounts for the disposition of
	all assets in the possession of a former charter school.
	(4)  "Receiver" means the commissioner, acting in an
	official capacity to take possession, assume control, and dispose
	of public property of a former charter school. The term includes a
	special deputy receiver.
	(5)  "Receivership order" means a court order by which
	the court assumes jurisdiction, opens a receivership proceeding,
	and appoints the commissioner as the receiver for the assets of a
	former charter school.
	(6)  "Special deputy receiver" means a person appointed
	by or acting under a contract with the commissioner as a receiver on
	the commissioner's behalf.
	Sec. 12.253.  RECEIVERSHIP; JURISDICTION AND VENUE. (a) If
	the commissioner revokes or accepts the surrender of the charter of
	a charter school, the commissioner may determine that a
	receivership is warranted to conserve or dispose of public property
	over which the commissioner assumes control or possession under
	this chapter or Chapter 39.
	(b)  At the request of the commissioner, the attorney general
	shall bring an action in a Travis County district court to appoint a
	receiver to liquidate the assets of a former charter school or a
	charter school that has otherwise ceased to operate.
	(c)  A court does not have jurisdiction over any receivership
	proceeding for a charter school commenced on behalf of a person
	other than the commissioner.
	(d)  Not later than the 30th day after the date the attorney
	general brings an action to appoint a receiver under this section,
	the court shall enter a receivership order opening the receivership
	proceeding.
	Sec. 12.254.  RECEIVERSHIP ORDER. (a) A receivership order
	shall:
	(1)  appoint the commissioner and any successor in
	office as the receiver for the former charter school; and
	(2)  direct the receiver to take possession of the
	property of the former charter school and administer the property
	subject to this subchapter.
	(b)  The receiver may request that the receivership court
	appoint a single judge to supervise the receivership and hear any
	cases or controversies arising out of or related to the
	receivership.
	(c)  The rights and liabilities of all persons interested in
	the assets of the former charter school become fixed as of the date
	of entry of the court's receivership order.
	Sec. 12.255.  POWERS AND DUTIES OF RECEIVER. (a) The
	receiver may assume or reject any executory contract or unexpired
	lease of the former charter school.
	(b)  Notwithstanding any other law, the receiver is
	authorized to liquidate by sale or contract for sale any real
	property owned by a former charter school to satisfy debts of the
	school and return public property and proceeds to the state.
	(c)  The receiver may dispose of the former charter school's
	property using provisions for:
	(1)  the disposal of surplus and salvage property under
	Chapter 2175, Government Code; or
	(2)  the sale of real property under Section
	12.128(c-2).
	(d)  If the receiver disposes of real property under
	Subsection (c)(2), the receivership court shall assume sole
	jurisdiction of the transfer of title.
	(e)  The receiver shall dispose of any property determined to
	be held in trust or any federal property in compliance with
	applicable law.
	Sec. 12.256.  APPLICABILITY OF OTHER LAWS.  (a)  Any law
	governing the procurement of goods and services by the state does
	not apply to a contract entered into by the commissioner as a
	receiver. This section does not waive any immunity or create a
	cause of action against the state.
	(b)  A receiver appointed under this subchapter may not be
	required to pay any filing, recording, transcript, or
	authentication fee to any public officer in the state.
	Sec. 12.257.  SPECIAL DEPUTY RECEIVER; OTHER EMPLOYMENT.
	(a) The receiver may appoint or contract with one or more special
	deputy receivers to act for the receiver under this subchapter and
	employ or contract with legal counsel, actuaries, accountants,
	appraisers, consultants, clerks, assistants, and other personnel
	necessary to assist in the liquidation of the former charter
	school's assets.
	(b)  A special deputy receiver has all powers of the receiver
	granted by this subchapter, unless specifically limited by the
	receiver, and serves at the pleasure of the receiver.
	(c)  A special deputy receiver or other person with whom the
	receiver contracts under this section may act on behalf of the
	commissioner only in the commissioner's capacity as receiver.
	(d)  The receiver may determine the reasonable compensation
	for any special deputy, employee, or contractor and pay
	compensation in accordance with Section 12.262.
	Sec. 12.258.  PERFORMANCE BOND REQUIRED. The receiver shall
	execute a bond to ensure the proper performance of the receiver's
	duties under this subchapter in an amount to be set by the court.
	Sec. 12.259.  ASSETS OF FORMER CHARTER SCHOOL. (a) The
	receiver or a special deputy receiver shall take possession of all
	student records, books, papers, electronic data, personal and real
	property, and other assets purchased or acquired, wholly or partly,
	with state funds of a former charter school.
	(b)  If a record or asset described under Subsection (a) is
	in the possession of a special deputy receiver, the receiver may
	review that asset promptly on request made to the special deputy
	receiver.
	(c)  A receiver or special deputy receiver is required to
	comply with the Family Educational Rights and Privacy Act (20
	U.S.C. Section 1232g).
	Sec. 12.260.  IMMUNITY, INDEMNIFICATION, AND
	REPRESENTATION. (a) The commissioner is entitled to immunity for
	all acts taken as a receiver. A special deputy receiver is entitled
	to immunity to the same extent as the commissioner acting as a
	receiver.
	(b)  If any legal action is commenced against the receiver or
	a special deputy receiver, whether against the receiver or special
	deputy receiver personally or in their official capacity, resulting
	from an alleged act, error, or omission of the receiver or special
	deputy receiver arising out of or by reason of their duties or
	employment, the receiver or special deputy receiver is indemnified
	for all expenses, attorney's fees, judgments, settlements,
	decrees, or amounts due and owing or paid in satisfaction of or
	incurred in the defense of the legal action, unless it is determined
	on a final adjudication on the merits that the alleged act, error,
	or omission of the receiver or special deputy receiver giving rise
	to the claim:
	(1)  did not arise out of or by reason of the receiver's
	or special deputy receiver's duties or employment; or
	(2)  was caused by intentional or wilful and wanton
	misconduct.
	(c)  Any indemnification shall first be paid from the assets
	of the former charter school. If no assets of the former charter
	school are available, the state shall indemnify the receiver or
	special deputy receiver.
	(d)  The attorney general shall represent the receiver or
	special deputy receiver:
	(1)  in all actions relating to a receivership under
	this subchapter; and
	(2)  in any suit challenging an action taken by the
	receiver or special deputy receiver in the receiver's or special
	deputy receiver's capacity as a receiver unless the conduct was
	caused by intentional or wilful and wanton misconduct.
	Sec. 12.261.  REQUESTED NOTICE. (a) On written request to
	the receiver, a person must be placed on the service list to receive
	notice of matters filed by the receiver. It is the responsibility
	of the person requesting notice to inform the receiver in writing of
	any changes in the person's address or to request that the person's
	name be deleted from the service list. The receiver may require
	that a person on the service list provide confirmation to remain on
	the service list. Any person who fails to confirm the person's
	intent to remain on the service list may be purged from the service
	list. Inclusion on the service list does not confer standing in the
	receivership proceeding to raise, appear, or be heard on any issue.
	(b)  Notice of a proposed disposition plan to a person on the
	service list must be provided as established by Section 12.265.
	Sec. 12.262.  APPROVAL AND PAYMENT OF EXPENSES. (a) The
	receiver shall submit an estimate of expenses to the receivership
	court for approval.
	(b)  The receiver may pay any expenses under contracts,
	leases, employment agreements, or other arrangements entered into
	by the former charter school before receivership from the assets of
	the former charter school. The receiver is not required to pay any
	expenses that the receiver determines are not necessary and may
	reject any contract under Section 12.257.
	(c)  The receiver may deposit former charter school funds in
	the charter school liquidation account established under Section
	12.269 and pay former charter school expenses from that account.
	(d)  If a special deputy receiver has been appointed to pay
	certain expenses and the special deputy receiver has insufficient
	funds to pay those expenses from the assets of the former charter
	school, the special deputy receiver may request that the receiver
	draw funds from the charter school liquidation account established
	under Section 12.269 to pay the expenses.
	(e)  If the receiver determines that the expenses under
	Subsection (d) are necessary, the receiver may withdraw the amount
	necessary to pay the expenses of the receivership.
	Sec. 12.263.  PRIORITIZATION AND SATISFACTION OF DEBTS. (a)
	The state, commissioner, or receiver may not be held liable for the
	debts or liabilities incurred by a former charter school.
	(b)  The receiver shall satisfy debts of a former charter
	school in accordance with a proposed disposition plan after payment
	of:
	(1)  debts to state and federal governmental entities,
	including payments to a conservator, monitor, superintendent, or
	member of a board of managers or management;
	(2)  perfected liens;
	(3)  secured debts; and
	(4)  expenses of the receivership.
	(c)  After satisfaction of the debts and expenses listed in
	Subsection (b), any remaining state assets of a former charter
	school shall be used to satisfy debts in the following priority,
	unless otherwise ordered by the receivership court:
	(1)  salary owed to non-administrative faculty and
	staff;
	(2)  unpaid, unsecured rent on leasehold;
	(3)  vendors; and
	(4)  any other debts recognized by law.
	Sec. 12.264.  PROPOSED DISPOSITION PLAN. (a) The receiver
	shall file with the court a proposed disposition plan that accounts
	for:
	(1)  the disposition of all known assets of the former
	charter school; and
	(2)  the amount of all expenses that the receiver may
	incur.
	(b)  The proposed disposition plan must specifically
	identify any property that is not considered to be public property
	under Section 12.128.
	(c)  If the commissioner appoints a special deputy receiver
	to develop the disposition plan, the special deputy receiver must
	present the plan to the commissioner for approval before filing the
	plan with the court.
	Sec. 12.265.  NOTICE OF PROPOSED DISPOSITION PLAN. (a)
	Unless the receivership court otherwise directs, the receiver shall
	give notice of the proposed disposition plan as soon as possible:
	(1)  by first class mail or electronic communication as
	permitted by the receivership court to:
	(A)  any person known or reasonably expected to
	have a claim against the former charter school, at the person's last
	known address as indicated by the records of the former charter
	school;
	(B)  each state and federal agency with an
	interest in the proceeding; and
	(C)  any person on the service list under Section
	12.261; and
	(2)  by publication in a newspaper of general
	circulation in the county in which the principal place of business
	of the former charter school was located, in any county in which the
	former charter holder operated a school, and in any other location
	as the receiver deems appropriate.
	(b)  The notice of the proposed disposition plan must contain
	or provide directions for obtaining the following information:
	(1)  a statement that the former charter school has
	ceased to operate and that the commissioner has taken possession
	and assumed control of the school's assets under Section 12.128;
	(2)  a statement of the date, time, and location of any
	initial status hearing scheduled at the time the notice is sent;
	(3)  a description of the process for obtaining notice
	of matters before the receivership court; and
	(4)  any other information the receiver or the
	receivership court deems appropriate.
	(c)  If notice is given in accordance with this section, the
	distribution of property of the former charter school under this
	subchapter is conclusive with respect to all claimants, regardless
	of whether the claimant received notice.
	(d)  Notwithstanding any other provision of this section,
	the receiver has no duty to locate any person if an address is not
	found in the records of the former charter school or if mailings are
	returned to the receiver because of the inability to deliver to the
	address shown in the records of the school. If notice is not given
	to a person as provided by this subsection, notice by publication or
	actual notice received is sufficient.
	(e)  Written certification by the receiver or other
	knowledgeable person acting for the receiver that the notice was
	deposited in the United States mail, postage prepaid, or that the
	notice has been electronically transmitted is prima facie evidence
	of mailing and receipt of notice. All claimants shall keep the
	receiver informed of any changes of address.
	Sec. 12.266.  HEARING AND APPEAL ON DISPOSITION PLAN. (a)
	Any party objecting to the proposed disposition plan must file an
	objection specifying the grounds for the objection not later than
	the 45th day after the date of the notice of the filing of the
	proposed disposition plan or within another period as the
	receivership court may set.  An objection must also be served on the
	receiver and any other person served with the proposed disposition
	plan. An objecting party has the burden of showing why the
	receivership court should not authorize the proposed disposition
	plan or any other action proposed by the receiver.
	(b)  If no objection to the proposed disposition plan is
	timely filed, the receivership court shall enter an order approving
	the application without a hearing. The receiver may request that
	the receivership court enter an order or hold a hearing on any
	outstanding motions on an expedited basis.
	(c)  If an objection is timely filed, the receivership court
	may hold a hearing. If the receivership court approves the proposed
	disposition plan and, on a motion by the receiver, determines that
	the objection was frivolous or filed for delay or for another
	improper purpose, the receivership court shall order the objecting
	party to pay the receiver's reasonable costs and fees of defending
	the action.
	Sec. 12.267.  LIQUIDATION ORDER. (a) When the receiver has
	disposed of all assets according to the proposed disposition plan
	approved by the court, the receiver shall promptly apply to the
	receivership court for entry of a liquidation order.
	(b)  On demonstration to the court that the receiver has
	complied with the disposition plan and all assets have been
	disposed of in accordance with the plan, the court shall enter a
	liquidation order discharging the receiver and closing the
	receivership.
	(c)  A liquidation order under this subchapter is final and
	may not be appealed.
	Sec. 12.268.  DISPOSITION OF REMAINING FUNDS. After a
	liquidation order has been entered, the commissioner shall deposit
	any remaining funds from the former charter school in the charter
	school liquidation account established under Section 12.269.
	Sec. 12.269.  CHARTER SCHOOL LIQUIDATION ACCOUNT. (a) The
	commissioner shall remit to the comptroller funds received under
	Sections 12.116 and 12.128 and this subchapter for deposit in an
	interest-bearing deposit account in the Texas Treasury Safekeeping
	Trust Company to be known as the charter school liquidation
	account. Money in the account may be spent by the commissioner only
	for the purposes provided by this section.
	(b)  The charter school liquidation account shall be
	administered by the commissioner to pay the expenses incurred
	during a receivership of any former charter school.
	(c)  The commissioner shall annually review the charter
	school liquidation account and transfer any funds exceeding $2
	million to the comptroller for deposit in the charter district bond
	guarantee reserve fund established under Section 45.0571. The
	commissioner may delay a transfer under this subsection if the
	excess does not exceed $100,000.
	Sec. 12.270.  RULES. The commissioner may adopt rules
	necessary to implement this subchapter.
	SECTION 5.  This Act takes effect September 1, 2015.