HOUSE BILL No. 5384

February 18, 2016, Introduced by Reps. Garcia, Poleski, Price and Pscholka and referred to the Committee on Appropriations.

 

     A bill to amend 1976 PA 451, entitled

 

"The revised school code,"

 

by amending the title and sections 3, 5, 6, 11, 11a, 501, 502, 507,

 

522, 528, 551, 552, 561, 654, 705, 921, 1147, 1225, 1229, 1231,

 

1233, 1237, 1250, 1284, 1284a, 1284b, 1351a, and 1356 (MCL 380.3,

 

380.5, 380.6, 380.11, 380.11a, 380.501, 380.502, 380.507, 380.522,

 

380.528, 380.551, 380.552, 380.561, 380.654, 380.705, 380.921,

 

380.1147, 380.1225, 380.1229, 380.1231, 380.1233, 380.1237,

 

380.1250, 380.1284, 380.1284a, 380.1284b, 380.1351a, and 380.1356),

 

the title as amended by 2003 PA 179, section 3 as amended by 2007

 

PA 45, section 5 as amended by 2011 PA 232, sections 6 and 1250 as

 

amended by 2009 PA 205, section 11 as amended by 1995 PA 289,

 

section 11a as amended by 2010 PA 91, sections 501, 502, 507, 522,

 

528, 551, and 561 as amended by 2011 PA 277, section 552 as amended

by 2012 PA 129, section 705 as amended by 2003 PA 299, section 1147

 

as amended by 2014 PA 479, section 1225 as amended by 2012 PA 1,

 

section 1229 as amended by 2011 PA 105, section 1231 as amended by

 

2002 PA 735, section 1233 as amended by 2000 PA 288, section 1237

 

as added by 2000 PA 387, section 1284 as amended by 2006 PA 534,

 

section 1284a as added by 2007 PA 101, section 1284b as amended by

 

2006 PA 235, section 1351a as amended by 2002 PA 65, and section

 

1356 as amended by 2002 PA 181, and by adding sections 12b, 1233c,

 

1284c, and 1535b and part 5b; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to provide a system of public instruction and

 

elementary and secondary schools; to revise, consolidate, and

 

clarify the laws relating to elementary and secondary education; to

 

provide for the organization, regulation, and maintenance of

 

schools, school districts, public school academies, intermediate

 

school districts, and other public school entities; to prescribe

 

rights, powers, duties, and privileges of schools, school

 

districts, public school academies, intermediate school districts,

 

and other public school entities; to provide for the regulation of

 

school teachers and certain other school employees; to provide for

 

school elections and to prescribe powers and duties with respect

 

thereto; to provide for the levy and collection of taxes; to

 

provide for the borrowing of money and issuance of bonds and other

 

evidences of indebtedness; to establish a fund and provide for

 

expenditures from that fund; to make appropriations for certain

 

purposes; to provide for and prescribe the powers and duties of

certain state departments, the state board of education, and

 

certain other boards and officials; to provide for licensure of

 

boarding schools; to prescribe penalties; and to repeal acts and

 

parts of acts.

 

     Sec. 3. (1) "Area" as used in the phrase "area vocational-

 

technical education program" or "area career and technical

 

education program" means the geographical territory, within the

 

boundaries of a K to 12 school district, an intermediate school

 

district, or a community college district, that is designated by

 

the department as the service area for the operation of an area

 

vocational-technical education program.

 

     (2) "Area vocational-technical education program", "area

 

career and technical education program", or "career and technical

 

education program" means a program of organized, systematic

 

instruction designed to prepare the following persons individuals

 

for useful employment in recognized occupations:

 

     (a) Persons Individuals participating in career and technical

 

education readiness activities that lead to enrollment in a career

 

and technical education program in high school.

 

     (b) Persons Individuals enrolled in high school in a school

 

district, intermediate school district, public school academy, or

 

nonpublic school.

 

     (c) Persons Individuals who have completed or left high school

 

and who are available for full-time study in preparation for

 

entering the labor market.

 

     (d) Persons Individuals who have entered the labor market and

 

who need training or retraining to achieve stability or advancement

in employment.

 

     (3) "Board" or "school board" means the governing body of a

 

local school district unless clearly otherwise stated.

 

     (4) "Boarding school" means a place accepting for board, care,

 

and instruction 5 or more children under 16 years of age.

 

     (5) "Community district" means a school district organized

 

under part 5b.

 

     (6) (5) "Constituent district" means a local school district

 

the territory of which is entirely within and is an integral part

 

of an intermediate school district.

 

     Sec. 5. (1) "Local act school district" or "special act school

 

district" means a district governed by a special or local act or

 

chapter of a local act. "Local school district" and "local school

 

district board" as used in article 3 include a local act school

 

district and a local act school district board.

 

     (2) "Membership" means the number of full-time equivalent

 

pupils in a public school as determined by the number of pupils

 

registered for attendance plus pupils received by transfer and

 

minus pupils lost as defined by rules promulgated by the state

 

board.superintendent of public instruction.

 

     (3) "Michigan election law" means the Michigan election law,

 

1954 PA 116, MCL 168.1 to 168.992.

 

     (4) "Nonpublic school" means a private, denominational, or

 

parochial school.

 

     (5) "Objectives" means measurable pupil academic skills and

 

knowledge.

 

     (6) "Public school" means a public elementary or secondary

educational entity or agency that is established under this act or

 

under other law of this state, has as its primary mission the

 

teaching and learning of academic and vocational-technical skills

 

and knowledge, and is operated by a school district, local act

 

school district, special act school district, intermediate school

 

district, school of excellence corporation, public school academy

 

corporation, strict discipline academy corporation, urban high

 

school academy corporation, or by the department, or the state

 

board, or another public body. Public school also includes a

 

laboratory school or other elementary or secondary school that is

 

controlled and operated by a state public university described in

 

section 4, 5, or 6 of article VIII of the state constitution of

 

1963. Public school does not include a nonpublic school.

 

     (7) "Public school academy" means a public school academy

 

established under part 6a and, except as used in part 6a, also

 

includes an urban high school academy established under part 6c, a

 

school of excellence established under part 6e, and a strict

 

discipline academy established under sections 1311b to 1311m.

 

     (8) "Pupil membership count day" of a school district means

 

that term as defined in section 6 of the state school aid act of

 

1979, MCL 388.1606.

 

     (9) "Qualifying school district" means a school district that

 

was previously organized and operated as a first class school

 

district governed by part 6 that has a pupil membership of less

 

than 100,000 enrolled on its most recent pupil membership count

 

day, including, but not limited to, a school district that was

 

previously organized and operated as a first class school district

before the effective date of the amendatory act that added this

 

subsection.

 

     (10) (9) "Regular school election" or "regular election" means

 

the election held in a school district, local act school district,

 

or intermediate school district to elect a school board member in

 

the regular course of the terms of that office and held on the

 

school district's regular election date as determined under section

 

642c of the Michigan election law, MCL 168.642c.

 

     (11) (10) "Reorganized intermediate school district" means an

 

intermediate school district formed by consolidation or annexation

 

of 2 or more intermediate school districts under sections 701 and

 

702.

 

     (12) (11) "Rule" means a rule promulgated under the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328.

 

     Sec. 6. (1) "School district" or "local school district" means

 

a general powers school district organized under this act,

 

regardless of previous classification, a community district, or a

 

school district of the first class.

 

     (2) "School district filing official" means the school

 

district election coordinator as defined in section 4 of the

 

Michigan election law, MCL 168.4, or an authorized agent of the

 

school district election coordinator.

 

     (3) "School elector" means a person qualified as an elector

 

under section 492 of the Michigan election law, MCL 168.492, and

 

resident of the school district or intermediate school district on

 

or before the thirtieth day before the next ensuing regular or

special school election.

 

     (4) "School month" means a 4-week period of 5 days each unless

 

otherwise specified in the teacher's contract.

 

     (5) "School of excellence" means a school of excellence

 

established under part 6e.

 

     (6) "Special education building and equipment" means a

 

structure or portion of a structure or personal property accepted,

 

leased, purchased, or otherwise acquired, prepared, or used for

 

special education programs and services.

 

     (7) "Special education personnel" means persons engaged in and

 

having professional responsibility for students with a disability

 

in special education programs and services including, but not

 

limited to, teachers, aides, school social workers, diagnostic

 

personnel, physical therapists, occupational therapists,

 

audiologists, teachers of speech and language, instructional media-

 

curriculum specialists, mobility specialists, teacher consultants,

 

supervisors, and directors.

 

     (8) "Special education programs and services" means

 

educational and training services designed for students with a

 

disability and operated by local a school districts, district,

 

local act school districts, district, intermediate school

 

districts, district, the Michigan schools for the deaf and blind,

 

the department of community health, the department of health and

 

human services, or a combination of these, and ancillary

 

professional services for students with a disability rendered by

 

agencies approved by the state board. superintendent of public

 

instruction. The programs shall include vocational training, but

need not include academic programs of college or university level.

 

     (9) "Special school election" or "special election" means a

 

school district election to fill a vacancy on the school board or

 

submit a ballot question to the school electors that is held on a

 

regular election date established under section 641 of the Michigan

 

election law, MCL 168.641.

 

     (10) "State approved nonpublic school" means a nonpublic

 

school that complies with 1921 PA 302, MCL 388.551 to 388.558.

 

     (11) "State board" means the state board of education created

 

by section 3 of article VIII of the state constitution of 1963

 

unless clearly otherwise stated.

 

     (12) "Student with a disability" means that term as defined in

 

R 340.1702 of the Michigan administrative code.

 

     (13) "Department" means the department of education created

 

and operating under sections 300 to 305 of the executive

 

organization act of 1965, 1965 PA 380, MCL 16.400 to 16.405.

 

     (14) "State school aid" means allotments from the general

 

appropriating act for the purpose of aiding in the support of the

 

public schools of the state, including, but not limited to,

 

appropriations from the state school aid fund under the state

 

school aid act of 1979.

 

     (15) "The state school aid act of 1979" means the state school

 

aid act of 1979, 1979 PA 94, MCL 388.1601 to 388.1772.388.1896.

 

     Sec. 11. Each school district, except a school district of the

 

first class or a community district, shall be organized and

 

conducted as a general powers school district regardless of

 

previous classification.

     Sec. 11a. (1) Beginning on July 1, 1996, each school district

 

formerly organized as a primary school district or as a school

 

district of the fourth class, third class, or second class shall be

 

a general powers school district under this act.

 

     (2) Beginning on July 1, 1996, a school district operating

 

under a special or local act shall operate as a general powers

 

school district under this act except to the extent that the

 

special or local act is inconsistent with this act. Upon repeal of

 

a special or local act that governs a school district, that school

 

district shall become a general powers school district under this

 

act.

 

     (3) A general powers school district has all of the rights,

 

powers, and duties expressly stated in this act; may exercise a

 

power implied or incident to a power expressly stated in this act;

 

and, except as otherwise provided by law, may exercise a power

 

incidental or appropriate to the performance of a function related

 

to operation of the school district a public school and the

 

provision of public education services in the interests of public

 

elementary and secondary education in the school district,

 

including, but not limited to, all of the following:

 

     (a) Educating pupils. In addition to educating pupils in

 

grades K-12, this function may include operation of preschool,

 

lifelong education, adult education, community education, training,

 

enrichment, and recreation programs for other persons. A school

 

district may do either or both of the following:

 

     (i) Educate pupils by directly operating 1 or more public

 

schools on its own.

     (ii) Cause public education services to be provided for pupils

 

of the school district through an agreement, contract, or other

 

cooperative agreement with another public entity, including, but

 

not limited to, another school district or an intermediate school

 

district.

 

     (b) Providing for the safety and welfare of pupils while at

 

school or a school sponsored activity or while en route to or from

 

school or a school sponsored activity.

 

     (c) Acquiring, Except as otherwise provided in this section,

 

acquiring, constructing, maintaining, repairing, renovating,

 

disposing of, or conveying school property, facilities, equipment,

 

technology, or furnishings.

 

     (d) Hiring, contracting for, scheduling, supervising, or

 

terminating employees, independent contractors, and others,

 

including, but not limited to, another school district or an

 

intermediate school district, to carry out school district powers.

 

A school district may indemnify its employees.

 

     (e) Receiving, accounting for, investing, or expending school

 

district public school money; borrowing money and pledging school

 

district public school funds for repayment; and qualifying for

 

state school aid and other public or private money from local,

 

regional, state, or federal sources.

 

     (4) A general powers school district may enter into

 

agreements, contracts, or other cooperative arrangements with other

 

entities, public or private, including, but not limited to, another

 

school district or an intermediate school district, or join

 

organizations as part of performing the functions of the school

district. An agreement, contract, or other cooperative arrangement

 

that is entered into under this act is not required to comply with

 

the provisions of the urban cooperation act of 1967, 1967 (Ex Sess)

 

PA 7, MCL 124.501 to 124.512, as provided under section 503 of that

 

act, MCL 124.503.

 

     (5) A general powers school district is a body corporate and

 

shall be governed by a school board. An act of a school board is

 

not valid unless approved, at a meeting of the school board, by a

 

majority vote of the members lawfully serving on the board.

 

     (6) The board of a general powers school district shall adopt

 

bylaws. These bylaws may establish or change board procedures, the

 

number of board officers, titles and duties of board officers, and

 

any other matter related to effective and efficient functioning of

 

the board. Regular meetings of the board shall be held at least

 

once each month, at the time and place fixed by the bylaws. Special

 

meetings may be called and held in the manner and for the purposes

 

specified in the bylaws. Board procedures, bylaws, and policies in

 

effect on the effective date of this section shall continue in

 

effect until changed by action of the board.

 

     (7) The board of a school district shall be elected as

 

provided under this act and the Michigan election law. The number

 

of members of the board of a general powers school district shall

 

remain the same as for that school district before July 1, 1996

 

unless changed by the school electors of the school district at a

 

regular or special school election. A ballot question for changing

 

the number of board members may be placed on the ballot by action

 

of the board or by petition submitted by school electors as

provided under chapter XIV of the Michigan election law, MCL

 

168.301 to 168.316.

 

     (8) Members of the board of a general powers school district

 

shall be elected by the school electors for terms of 4 or 6 years,

 

as provided by the school district's bylaws. At each regular school

 

election, members of the board shall be elected to fill the

 

positions of those whose terms will expire. A term of office begins

 

as provided in section 302 of the Michigan election law, MCL

 

168.302, and continues until a successor is elected and qualified.

 

     (9) The board of a general powers school district may submit

 

to the school electors of the school district a question that is

 

within the scope of the powers of the school electors and that the

 

board considers proper for the management of the school system or

 

the advancement of education in the school district. Upon the

 

adoption of a question by the board, the board shall submit the

 

question to the school electors by complying with section 312 of

 

the Michigan election law, MCL 168.312.

 

     (10) A special election may be called by the board of a

 

general powers school district as provided under chapter XIV of the

 

Michigan election law, MCL 168.301 to 168.316.

 

     (11) Unless expressly provided in 1995 PA 289, the powers of a

 

school board or school district are not diminished by this section

 

or by 1995 PA 289.

 

     (12) A school district operating a public library, public

 

museum, or community recreational facility as of July 1, 1996 may

 

continue to operate the public library, public museum, or community

 

recreational facility.

     (13) A school district may establish and administer

 

scholarships for its students or graduates to support their

 

attendance at a postsecondary educational institution from funds

 

the school district receives as a result of a compact entered into

 

between this state and a federally recognized Indian tribe pursuant

 

to the Indian gaming regulatory act, Public Law 100-497. A school

 

district that establishes a scholarship program funded under this

 

subsection shall ensure that the scholarship program provides for

 

all of the following:

 

     (a) That a student or graduate is not eligible to be awarded a

 

scholarship unless the student or graduate is enrolled in the

 

school district for all of grades 9 to 12 and meets 1 of the

 

following:

 

     (i) Is a resident of the school district for all of grades 9

 

to 12.

 

     (ii) Was enrolled in the school district for the 2009-2010

 

school year but was not a resident of the school district for that

 

school year, and is enrolled in the school district continuously

 

after that school year until graduation.

 

     (b) That the amount of a scholarship awarded to a student or

 

graduate who was not enrolled in and a continuous resident of the

 

school district for all of grades K to 12 shall be adjusted based

 

on length of enrollment and continuous residency or, for a student

 

or graduate described in subdivision (a)(ii), based on length of

 

enrollment.

 

     Sec. 12b. (1) Beginning on the effective date of the

 

amendatory act that added this section, if a school district is or

becomes a qualifying school district, the school district shall

 

lose its organization and be dissolved as provided in subsections

 

(2) and (3).

 

     (2) If a school district loses its organization under

 

subsection (1), except as otherwise provided in this section, all

 

records, funds, and property of the qualifying school district are

 

transferred on the transfer date to a community district created

 

with the same geographic boundaries of the qualifying school

 

district under part 5b. A school building or other real property

 

owned by and located in the qualifying school district becomes part

 

of and owned by the community district. If a qualifying school

 

district has outstanding debt on the transfer date, the qualifying

 

school district shall retain a limited separate identity as a

 

school district and the territory of the qualifying school district

 

shall continue as a separate taxing unit only for the limited

 

purposes of the repayment of the debt until the debt is retired and

 

compliance with the Michigan financial review commission act, 2014

 

PA 181, MCL 141.1631 to 141.1643. Until the elected members of the

 

school board of the community district are elected and take office

 

under section 384, the board of the qualifying school district

 

shall continue for the limited purpose of performing the functions

 

and satisfying the responsibilities of the board and officers of

 

the qualifying school district relating to the repayment of debt

 

and the dissolution of the qualifying school district, including,

 

but not limited to, all of the following:

 

     (a) Certifying and levying taxes for satisfaction of the debt

 

in the name of the qualifying school district.

     (b) Conducting school district elections.

 

     (c) Doing all other things relative to the repayment of

 

outstanding debt of the qualifying school district required by law

 

and by the terms of the debt, including, but not limited to,

 

levying or renewing a school operating tax under section 1211, or

 

refunding or refinancing debt at a lower rate.

 

     (d) Doing all other things relative to the dissolution of the

 

qualifying school district.

 

     (3) As permitted under federal law, on the transfer date the

 

superintendent of public instruction shall allocate to a community

 

district receiving the functions and responsibilities of a

 

qualifying school district for a public school under subsection (2)

 

all applicable grants under 20 USC 6333, 20 USC 6334, 20 USC 6335,

 

and 20 USC 6337, and other federal funds that would otherwise be

 

made available for grants to or federal funding for the public

 

school or make other adjustments in the allocation of federal funds

 

to implement the transfer of functions and responsibilities for the

 

public school.

 

     (4) Effective on the transfer date for a qualifying school

 

district and the community district created with the same

 

geographic boundaries of the qualifying school district under part

 

5b, all of the following apply:

 

     (a) The community district acquires, succeeds to, and assumes

 

the exclusive right, responsibility, and authority to own, occupy,

 

operate, control, use, lease, and convey the facilities of the

 

qualifying school district existing as of the transfer date,

 

including all lands, buildings, improvements, structures,

easements, rights of access, and all other privileges and

 

appurtenances. The officers of the qualifying school district shall

 

execute any instruments of conveyance, assignment, and transfer

 

that are necessary or appropriate to accomplish the acquisition and

 

succession under this subdivision.

 

     (b) The community district acquires, succeeds to, and assumes

 

all rights, title, and interests in and to the fixtures, equipment,

 

materials, furnishings, and other personal property owned and used

 

by the qualifying school district as of the transfer date. The

 

officers of the qualifying school district shall execute any

 

instruments of conveyance, assignment, and transfer that are

 

necessary or appropriate to accomplish the acquisition and

 

succession under this subdivision.

 

     (c) Except as otherwise provided in this section, the

 

community district acquires, succeeds to, and assumes all of the

 

rights of the qualifying school district relating to the qualifying

 

school district under any ordinances, agreements, or other

 

instruments and under law. This succession includes, and there is

 

transferred to the community district, all licenses, permits,

 

approvals, or awards related to the qualifying school district

 

along with all grant agreements, grant pre-applications, and the

 

right to receive the balance of any funds payable under the

 

agreements.

 

     (d) The community district has the right and authority to own,

 

occupy, operate, control, use, lease, and convey the facilities

 

transferred by the qualifying school district, subject to any liens

 

on the real property and restrictions and limitations on the use of

the real property.

 

     (e) Except for debt or other obligations retained by the

 

qualifying school district under this section, the community

 

district has the qualifying school district's right, title, and

 

interest in, and all of the qualifying school district's

 

responsibilities and authority arising under leases, concessions,

 

and other contracts for facilities.

 

     (f) All records and files, software, and software licenses

 

required for financial management, personnel management, accounting

 

and inventory systems, or general administration of the qualifying

 

school district are transferred to the community district.

 

     (g) A community district acquires, succeeds to, and assumes

 

all of the rights, duties, and obligations under a collective

 

bargaining agreement applicable to the qualifying school district

 

on the transfer date. The terms and conditions of that collective

 

bargaining agreement applicable to employees of the qualifying

 

school district on the transfer date shall be the terms and

 

conditions applicable to employees of the community district and

 

the community district shall be the successor employer for

 

employees of the qualifying school district on the transfer date.

 

An individual who is entitled to employment by the qualifying

 

school district on the transfer date shall be entitled to

 

employment by the community district following the transfer to the

 

community district.

 

     (5) A transfer to a community district under this section does

 

not impair a contract with a party in privity with the qualifying

 

school district.

     (6) Upon the transfer to a community district, the qualifying

 

school district is relieved from all operational jurisdiction over

 

the qualifying school district and facilities and is relieved from

 

all further costs and responsibility arising from or associated

 

with operating a public school or providing public education

 

services, except as otherwise required under obligations retained

 

by the qualifying school district under this section, including,

 

but not limited to, debt.

 

     (7) A qualifying school district shall do all of the

 

following:

 

     (a) Refrain from any action that would impair a community

 

district's exercise of the powers granted to the community district

 

under this section or part 5b, or that would impair the efficient

 

operation and management of the community district.

 

     (b) Take all action reasonably necessary to cure any defects

 

in title to property transferred from the qualifying school

 

district to the community district.

 

     (c) Upon creation of a community district and before the

 

transfer date, conduct operations of the qualifying school district

 

in the ordinary and usual course of business.

 

     (d) Comply with the terms and conditions of any loan agreement

 

between the qualifying school district and the local financial

 

emergency assistance loan board under the emergency municipal loan

 

act, 1980 PA 243, MCL 141.931 to 141.942, including, but not

 

limited to, any terms and conditions providing for the payment of

 

transitional operating costs.

 

     (e) Notify the state treasurer upon the repayment of all

outstanding operating obligations of the qualifying school

 

district.

 

     (f) Notify the state treasurer upon the repayment of all

 

outstanding debt of the qualifying school district.

 

     (8) Upon the election and assumption of duties by the members

 

of the initial elected school board of the community district, the

 

school board of the qualifying school district is dissolved and the

 

functions and responsibilities of the qualifying school district

 

shall be exercised by the community district on behalf of the

 

qualifying school district until the qualifying school district is

 

fully dissolved under subsection (11).

 

     (9) If the state treasurer is notified that all outstanding

 

operating obligations of the qualifying school district have been

 

repaid, the state treasurer shall verify whether all outstanding

 

obligations of the qualifying school district have been repaid. The

 

state treasurer also may determine that the outstanding operating

 

obligations of a qualifying school district have been satisfied on

 

his or her own without notice. If the state treasurer determines

 

that all outstanding operating obligations of the qualifying school

 

district have been repaid, the state treasurer shall certify in a

 

written notice to a community district that has the same geographic

 

boundaries as the qualifying school district that the outstanding

 

operating obligations of the qualifying school district have been

 

repaid.

 

     (10) If the state treasurer is notified that all outstanding

 

debt of the qualifying school district has been repaid, the state

 

treasurer shall verify whether all of the outstanding debt of the

qualifying school district has been repaid. If the state treasurer

 

determines that all of the outstanding debt of the qualifying

 

school district has been repaid, the state treasurer shall certify

 

in a written notice to a community district that has the same

 

geographic boundaries as the qualifying district that all

 

outstanding debt of the qualifying school district has been repaid.

 

     (11) Upon certification by the state treasurer under

 

subsection (10), the qualifying school district is fully dissolved

 

and any remaining assets of the qualifying school district are

 

transferred to the community district.

 

     (12) As used in this section:

 

     (a) "Debt" means that term as defined in section 103 of the

 

revised municipal finance act, 2001 PA 34, MCL 141.2103, and also

 

includes any of the following:

 

     (i) Obligations of the qualifying school district under an

 

energy installment purchase contract.

 

     (ii) Obligations of the qualifying school district under a

 

capital lease.

 

     (iii) Any unpaid amounts payable by the qualifying school

 

district to the Michigan public school employees' retirement board

 

under the public school employees retirement act of 1979, 1980 PA

 

300, MCL 38.1301 to 38.1437.

 

     (iv) The repayment of any loan or obligations under any loan

 

agreement between the qualifying school district and the local

 

financial emergency assistance loan board under the emergency

 

municipal loan act, 1980 PA 243, MCL 141.931 to 141.942, including

 

any terms and conditions providing for the payment of transitional

operating costs not to exceed 3% of the taxable value of the

 

qualifying school district.

 

     (v) The repayment of any school financing stability bonds

 

under section 1356.

 

     (vi) Any other monetary obligations of the qualifying school

 

district.

 

     (b) "Operating obligation" means debt of a school district

 

incurred for purposes of financing the operation of a school

 

district or public schools operated by a school district,

 

including, but not limited to, fiscal stability bonds under section

 

1356 and an emergency loan under the emergency municipal loan act,

 

1980 PA 243, MCL 141.931 to 141.942, and transitional operating

 

costs. Operating obligation does not include debt of a school

 

district incurred for the purpose of constructing, renovating,

 

maintaining, or otherwise improving school facilities.

 

     (c) "Transfer date" means the first July 1 after the date a

 

school district becomes a qualifying school district. For a school

 

district that became a qualifying school district on the effective

 

date of the amendatory act that added this subdivision, the

 

transfer date is July 1, 2016.

 

     (d) "Transitional operating cost" means a cost of operating

 

public schools incurred by a community district as a result of the

 

transfer of functions and responsibilities from a qualifying school

 

district to a community district, as agreed to in writing,

 

including, but not limited to, academic and instructional support;

 

portfolio planning; professional transition costs such as

 

information technology, legal, accounting, human resources, and

financial; payments to vendors; costs relating to changes in timing

 

for grant funding or reimbursements; cash flow needs; insurance;

 

academic program expenditures; deferred maintenance; space

 

consolidation; and facilities rationalization.

 

PART 5B

 

COMMUNITY DISTRICTS

 

     Sec. 381. (1) A school district organized as a community

 

district shall be governed by this part, by the provisions of

 

article 2 not inconsistent with this part, and by articles 3 and 4.

 

     (2) A community district is a political subdivision and public

 

body corporate separate and distinct from this state and other

 

school districts in this state.

 

     (3) The name of a school district governed by this part shall

 

include the name of the city, village, or township with the largest

 

population located within the geographic boundaries of the

 

community district, the word "school" or "schools", and the word

 

"community" or "district", or both.

 

     (4) A school district governed by this part shall be under the

 

jurisdiction of the school board of the community district provided

 

for by section 384.

 

     Sec. 382. Except as otherwise provided in this part, a

 

community district shall be organized and conducted in the same

 

manner as a general powers school district. Except as otherwise

 

provided by law, a community district has all of the powers of a

 

general powers school district under section 11a and has all

 

additional powers granted by law to a community district or the

 

school board of a community district. If a financial review

commission is in place for a community district, both of the

 

following apply:

 

     (a) The appointment of a superintendent for the community

 

district is subject to the approval of the financial review

 

commission. Before the superintendent's appointment is final, the

 

school board of the community district shall submit the proposed

 

appointment in writing to the financial review commission for its

 

approval. If the proposed appointment is not approved by the

 

financial review commission within 45 days after it is submitted in

 

writing to the financial review commission, the appointment is

 

denied.

 

     (b) The community district may not alter the terms and

 

conditions of an employment contract with the superintendent of the

 

community district, alter the benefits provided to the

 

superintendent, or terminate the employment of the superintendent

 

unless that action is approved by the financial review commission.

 

     Sec. 383. Effective 30 days after a school district becomes a

 

qualifying school district, a community district is created for the

 

same geographic area of that qualifying school district to provide

 

public education services for residents of that geographic area and

 

to otherwise exercise the powers of a community district for that

 

geographic area beginning on the transfer date for that qualifying

 

school district. As used in this section, "transfer date" means

 

that term as defined in section 12b.

 

     Sec. 384. (1) The school board for a community district shall

 

consist of 9 school electors of the community district. The initial

 

school board shall include 3 members appointed by the chief

administrative officer, 4 members appointed by the governor, 1

 

member appointed by the governor from among 1 or more nominees

 

submitted by the senate majority leader, and 1 member appointed by

 

the governor from among 1 or more nominees submitted by the speaker

 

of the house of representatives. Members of the school board shall

 

be appointed within 30 days after the creation of the community

 

district. If the chief administrative officer fails to appoint a

 

member within that 30-day period, the member shall instead be

 

appointed by the governor. All members appointed shall be residents

 

of the community district.

 

     (2) Of the members initially appointed by the chief

 

administrative officer, 2 members shall be appointed for a term

 

expiring on the first December 31 occurring in an odd-numbered year

 

after the creation of the community district and 1 member shall be

 

appointed for a term expiring on the second December 31 occurring

 

in an odd-numbered year after the creation of the community

 

district.

 

     (3) Of the members initially appointed by the governor, 1

 

member shall be appointed for a term expiring on the second

 

December 31 occurring in an odd-numbered year after the creation of

 

the community district, 2 members shall be appointed for a term

 

expiring on the third December 31 occurring in an odd-numbered year

 

after the creation of the community district, and 1 member shall be

 

appointed for a term expiring on the fourth December 31 occurring

 

in an odd-numbered year after the creation of the community

 

district.

 

     (4) The member appointed from the nominees of the senate

majority leader and the member appointed from the nominees of the

 

speaker of the house of representatives shall be appointed for

 

terms that end on the fourth December 31 occurring in any odd-

 

numbered year after creation of the community district.

 

     (5) If a vacancy occurs during an initial term of an appointed

 

member of the school board of a community district, the vacancy

 

shall be filled in the same manner as the original appointment for

 

the balance of the unexpired term.

 

     (6) The chief administrative officer shall designate an

 

appointed member of the school board of the community district to

 

serve as its initial chairperson. If the chief administrative

 

officer fails to designate an initial chairperson within 30 days

 

after the creation of the community district, the governor shall

 

designate an initial chairperson. After the initial designation,

 

the members of the school board shall designate its chairperson.

 

     (7) A member of a school board for a qualifying school

 

district under section 12b may not also serve as a member of a

 

school board for a community district that has the same geographic

 

boundaries as the qualifying school district. A member of a school

 

board of a community district may not also serve as a member of a

 

school board for a qualifying school district that has the same

 

geographic boundaries as the community district.

 

     (8) A member of the school board appointed to an initial term

 

under this section shall continue to serve until a replacement

 

member is elected and takes office. Members elected to the board

 

shall be elected at the November regular election in odd-numbered

 

years, with nominations for the November regular election occurring

at the August primary election in odd-numbered years. After the

 

initial appointed terms, members of the school board of the

 

community district shall be elected to 6-year terms. The terms of

 

members elected to the school board of a community district shall

 

begin on January 1.

 

     (9) As used in this section, "chief administrative officer"

 

means the mayor of a city if the city has the largest population of

 

any city, village, or township located within the geographic area

 

of the community district; the president of a village if the

 

village has the largest population of any city, village, or

 

township located within the geographic area of the community

 

district; or the supervisor of a township if the township has the

 

largest population of any city, village, or township located within

 

the geographic area of the community district.

 

     Sec. 385. (1) Within 90 days after the creation of a community

 

district, the school board of the community district shall appoint

 

a superintendent for the community district, subject to section

 

382. The superintendent shall be selected based upon his or her

 

demonstrated ability, record of competence, experience in

 

increasing academic achievement, experience with education reform

 

and redesign, and expertise in the turnaround of academically

 

underperforming urban schools. A vacancy in the office of

 

superintendent shall be filled in the same manner as the original

 

appointment.

 

     (2) On an annual basis, the school board of a community

 

district shall evaluate and issue a report on the performance of

 

the community district based on the following factors:

     (a) The proportion of pupils enrolled in the community

 

district who achieve scores at least equivalent to proficient on

 

state assessments.

 

     (b) The proportion of pupils enrolled in the community

 

district who achieve at least a school year's worth of academic

 

growth in a school year.

 

     (c) The proportion of graduates from or pupils enrolled in the

 

community district who are enrolled in some form of postsecondary

 

education.

 

     (3) On at least an annual basis, the school board of a

 

community district shall evaluate the performance of the

 

superintendent of the community district.

 

     Sec. 386. If another school district is authorized to levy a

 

school operating tax under section 1211 within the geographic

 

boundaries of the community district during a tax year, the

 

community district shall not levy a school operating tax under

 

section 1211 during that tax year.

 

     Sec. 387. If the geographic area of a community district

 

includes a qualified city as that term is defined under the

 

Michigan financial review commission act, 2014 PA 181, MCL 141.1631

 

to 141.1643, the community district is subject to financial

 

oversight by the financial review commission for that qualified

 

city to the extent provided under that act.

 

     Sec. 388. (1) A community district shall not expend more than

 

6.3% of its current operating expenditures for administrative

 

expenditures.

 

     (2) The state treasurer shall monitor and verify compliance

with subsection (1) by obtaining the necessary information from the

 

department at least annually. If the state treasurer determines

 

that a community district is not in compliance with subsection (1),

 

the state treasurer shall notify the community district, the

 

department, and the legislature.

 

     (3) A community district shall prioritize a portion of its

 

funding to pay for facility-related improvements, such as costs

 

associated with deferred maintenance, space consolidation, and

 

school closure or other building closures.

 

     (4) As used in this section:

 

     (a) "Administrative expenditures" includes functions 23x, 25x,

 

and 28x and all object codes except 6xxx, as defined in the

 

Michigan Public School Accounting Manual Bulletin 1022, incurred in

 

the general, special education, and vocational education funds for

 

the benefit of the current fiscal year, whether paid or unpaid.

 

     (b) "Current operating expenditures" includes functions 1xx,

 

2xx, and 45x and all object codes except 6xxx, as defined in the

 

Michigan Public School Accounting Manual Bulletin 1022, and is

 

equal to the total of instructional and support services

 

expenditures, including the total general fund charges incurred in

 

the general, special education, and vocational education funds for

 

the benefit of the current fiscal year, whether paid or unpaid, and

 

all expenditures of the instructional programs plus applicable

 

supporting service costs reduced by capital outlay, debt service,

 

community services, and outgoing transfers and other transactions.

 

     Sec. 389. (1) Not later than 90 days after the transfer date,

 

the state school reform/redesign officer shall establish an "A-F"

accountability system for schools operated by a community district

 

and for all public school academies located within a community

 

district. The department shall implement and administer the

 

accountability system. Subject to subsection (2), the

 

accountability system shall be an A-F letter grading system that

 

assigns a letter grade for each school year for all schools

 

operated by the community district and for all public school

 

academies located within a community district, with an "A" school

 

being defined as a high-performing school, an "F" school being

 

defined as a school that is on the lowest achieving school list

 

under section 1280c, and shall utilize individual student growth,

 

as measured in years of academic progress, as being at least 33%

 

but not more than 50% of a school's overall grade calculation.

 

     (2) If the legislature enacts legislation establishing a

 

letter grading system for all public schools in this state, a

 

community district, the schools operated by a community district,

 

and the public school academies located within a community district

 

are subject to and shall comply with the statewide letter grading

 

system.

 

     (3) As used in this section, "transfer date" means that term

 

as defined in section 12b.

 

     Sec. 390. (1) If a school operated by a community district has

 

operated for at least 4 years and is listed on the list issued

 

under section 1280c(1) for 3 out of the previous 5 school years,

 

then the state school reform/redesign officer shall include that

 

school on the list of schools subject to closure under subsection

 

(3).

     (2) If a school operated by a community district or by a

 

public school academy located within a community district has

 

received a letter grade of "D" or lower for 3 consecutive school

 

years under the community district "A-F" accountability system

 

under section 389, the state school reform/redesign office shall

 

include that school on the list of schools subject to closure under

 

subsection (3).

 

     (3) By October 1 of each year, the state school

 

reform/redesign office shall prepare and publish a list of schools

 

subject to closure under this section. The department shall make

 

the list available to the public on the department's website and

 

shall provide the list to the community district and to each public

 

school academy located within the community district.

 

     (4) Within 30 days after the publication of the state school

 

reform/redesign office's list of schools subject to closure under

 

subsection (3), the superintendent of public instruction shall

 

issue an order subjecting each school on the list to closure

 

effective at the end of the current school year.

 

     Sec. 391. (1) Within 180 days after the transfer date, a

 

community district or a public school academy located within a

 

community district shall establish an early literacy system that

 

includes at least all of the following:

 

     (a) An early screening system to identify pupils with reading

 

deficiencies in grades K to 3.

 

     (b) Intervention programs to address each pupil's individual

 

barriers to reading, if any.

 

     (c) Additional class time dedicated to reading.

     (d) A "read at home" plan for parents and guardians to ensure

 

they have the resources necessary to provide the child with the

 

supplemental support the child needs.

 

     (2) If the legislature enacts legislation establishing an

 

early literacy system or elementary reading intervention

 

requirements for all public schools in this state, a community

 

district, the schools operated by a community district, and the

 

public school academies located within a community district are

 

subject to and shall comply with the statewide early literacy

 

system or elementary reading intervention requirements.

 

     (3) As used in this section, "transfer date" means that term

 

as defined in section 12b.

 

     Sec. 392. This part does not repeal or affect a general law or

 

local law governing the management and control of a public library

 

established in a community district under this part or a first

 

class school district under part 6. Any powers and duties of a

 

qualifying school district under section 12b relating to the

 

management and control of a public library are transferred to the

 

community district on the transfer date for the qualifying school

 

district under section 12b.

 

     Sec. 393. The validity of the formation of a community

 

district shall be conclusively presumed unless questioned in an

 

original action filed in the court of appeals within 60 days after

 

the community district is created under section 383. The court of

 

appeals has original jurisdiction to hear an action under this

 

section. The court shall hear the action in an expedited manner.

 

The department of treasury is a necessary party in any action under

this section.

 

     Sec. 394. (1) The board of a community district may appoint an

 

advisory board to assess academics and operations and make

 

recommendations on the use of facilities, enrollment, building

 

capacity, transportation, student proficiency and growth,

 

graduation rates and trends, special education, wrap-around

 

services, and other matters as requested by the board of the

 

community district. The advisory board may include representatives

 

of authorizing bodies for public school academies operating within

 

the community district, community groups, and other interested

 

parties with relevant experience.

 

     (2) If an advisory board is appointed under subsection (1),

 

the advisory body shall meet at least annually, shall regularly

 

report on its activities to the school board, and shall prepare and

 

submit to the board and superintendent of the community district an

 

annual written report of its assessment of and recommendations for

 

the community district. The community district shall provide a copy

 

of the annual report to the state school reform/redesign officer

 

and to the standing committees of the senate and house of

 

representatives with responsibility for education legislation.

 

     Sec. 395. For the state fiscal year ending September 30, 2016,

 

$250,000.00 is appropriated from the general fund to the department

 

of treasury for the purpose of providing financial support for the

 

organization and administration of any community district formed

 

under this part during the fiscal year ending September 30, 2016.

 

The state treasurer shall ensure that a portion of this money is

 

allocated as a grant to be used to provide school board training to

the initial elected members of the school board of the community

 

district. This training shall be provided to each of these board

 

members no later than 30 days after he or she takes office and

 

shall address at least school board governance, public school

 

financing, fiscal responsibility, and ethics.

 

     Sec. 501. (1) A public school academy is a public school under

 

section 2 of article VIII of the state constitution of 1963, is a

 

school district for the purposes of section 11 of article IX of the

 

state constitution of 1963 and for the purposes of section 1225 and

 

section 1351a, and is subject to the leadership and general

 

supervision of the state board over all public education under

 

section 3 of article VIII of the state constitution of 1963. A

 

public school academy is a body corporate and is a governmental

 

agency. The powers granted to a public school academy under this

 

part constitute the performance of essential public purposes and

 

governmental functions of this state.

 

     (2) As used in this part:

 

     (a) "Authorizing body" means any of the following that issues

 

a contract as provided in this part:

 

     (i) The board of a school district. that operates grades K to

 

12.

 

     (ii) An intermediate school board.

 

     (iii) The board of a community college.

 

     (iv) The governing board of a state public university.

 

     (v) Two or more of the public agencies described in

 

subparagraphs (i) to (iv) exercising power, privilege, or authority

 

jointly pursuant to an interlocal agreement under the urban

cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to

 

124.512.

 

     (b) "Certificated teacher" means an individual who holds a

 

valid teaching certificate issued by the superintendent of public

 

instruction under section 1531.

 

     (c) "Community college" means a community college organized

 

under the community college act of 1966, 1966 PA 331, MCL 389.1 to

 

389.195, or a federal tribally controlled community college that is

 

recognized under the tribally controlled colleges and universities

 

assistance act of 1978, 25 USC 1801 to 1852, 1864, and is

 

determined by the department to meet the requirements for

 

accreditation by a recognized regional accrediting body.

 

     (d) "Contract" means the executive act taken by an authorizing

 

body that evidences the authorization of a public school academy

 

and that establishes, subject to the constitutional powers of the

 

state board and applicable law, the written instrument executed by

 

an authorizing body conferring certain rights, franchises,

 

privileges, and obligations on a public school academy, as provided

 

by this part, and confirming the status of a public school academy

 

as a public school in this state.

 

     (e) "Entity" means a partnership, nonprofit or business

 

corporation, labor organization, or any other association,

 

corporation, trust, or other legal entity.

 

     (f) "State public university" means a state university

 

described in section 4, 5, or 6 of article VIII of the state

 

constitution of 1963.

 

     Sec. 502. (1) A public school academy shall be organized and

administered under the direction of a board of directors in

 

accordance with this part and with bylaws adopted by the board of

 

directors. A public school academy corporation shall be organized

 

under the nonprofit corporation act, 1982 PA 162, MCL 450.2101 to

 

450.3192, except that a public school academy corporation is not

 

required to comply with sections 170 to 177 of 1931 PA 327, MCL

 

450.170 to 450.177. To the extent disqualified under the state or

 

federal constitution, a public school academy shall not be

 

organized by a church or other religious organization and shall not

 

have any organizational or contractual affiliation with or

 

constitute a church or other religious organization.

 

     (2) Any of the following may act as an authorizing body to

 

issue a contract to organize and operate 1 or more public school

 

academies under this part:

 

     (a) The board of a school district. that operates grades K to

 

12. However, the board of a school district shall not issue a

 

contract for a public school academy to operate outside the school

 

district's boundaries, and a public school academy authorized by

 

the board of a school district shall not operate outside that

 

school district's boundaries.

 

     (b) An intermediate school board. However, the board of an

 

intermediate school district shall not issue a contract for a

 

public school academy to operate outside the intermediate school

 

district's boundaries, and a public school academy authorized by

 

the board of an intermediate school district shall not operate

 

outside that intermediate school district's boundaries.

 

     (c) The board of a community college. However, except as

otherwise provided in this subdivision, the board of a community

 

college shall not issue a contract for a public school academy to

 

operate in a school district organized as a school district of the

 

first class, a public school academy authorized by the board of a

 

community college shall not operate in a school district organized

 

as a school district of the first class, the board of a community

 

college shall not issue a contract for a public school academy to

 

operate outside the boundaries of the community college district,

 

and a public school academy authorized by the board of a community

 

college shall not operate outside the boundaries of the community

 

college district. The board of a community college also may issue a

 

contract for not more than 1 public school academy to operate on

 

the grounds of an active or closed federal military installation

 

located outside the boundaries of the community college district,

 

or may operate a public school academy itself on the grounds of

 

such a federal military installation, if the federal military

 

installation is not located within the boundaries of any community

 

college district and the community college has previously offered

 

courses on the grounds of the federal military installation for at

 

least 10 years.

 

     (d) The governing board of a state public university. However,

 

the combined total number of contracts for public school academies

 

issued by all state public universities shall not exceed 300

 

through December 31, 2012 and shall not exceed 500 through December

 

31, 2014. After December 31, 2014, there is no limit on the

 

combined total number of contracts for public school academies that

 

may be issued by all state public universities.

     (e) Two or more of the public agencies described in

 

subdivisions (a) to (d) exercising power, privilege, or authority

 

jointly pursuant to an interlocal agreement under the urban

 

cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to

 

124.512.

 

     (3) To obtain a contract to organize and operate 1 or more

 

public school academies, 1 or more persons or an entity may apply

 

to an authorizing body described in subsection (2). The application

 

shall include at least all of the following:

 

     (a) Identification of the applicant for the contract.

 

     (b) Subject to the resolution adopted by the authorizing body

 

under section 503(5), a list of the proposed members of the board

 

of directors of the public school academy and a description of the

 

qualifications and method for appointment or election of members of

 

the board of directors.

 

     (c) The proposed articles of incorporation, which shall

 

include at least all of the following:

 

     (i) The name of the proposed public school academy.

 

     (ii) The purposes for the public school academy corporation.

 

This language shall provide that the public school academy is

 

incorporated pursuant to this part and that the public school

 

academy corporation is a governmental entity.

 

     (iii) The name of the authorizing body.

 

     (iv) The proposed time when the articles of incorporation will

 

be effective.

 

     (v) Other matters considered expedient to be in the articles

 

of incorporation.

     (d) A copy of the proposed bylaws of the public school

 

academy.

 

     (e) Documentation meeting the application requirements of the

 

authorizing body, including at least all of the following:

 

     (i) The governance structure of the public school academy.

 

     (ii) A copy of the educational goals of the public school

 

academy and the curricula to be offered and methods of pupil

 

assessment to be used by the public school academy. The educational

 

goals shall include demonstrated improved pupil academic

 

achievement for all groups of pupils. To the extent applicable, the

 

progress of the pupils in the public school academy shall be

 

assessed using at least a Michigan education assessment program

 

(MEAP) test both the mathematics and reading portions of the

 

Michigan student test of educational progress (M-STEP) or the

 

Michigan merit examination under section 1279g, as applicable.

 

     (iii) The admission policy and criteria to be maintained by

 

the public school academy. The admission policy and criteria shall

 

comply with section 504. This part of the application also shall

 

include a description of how the applicant will provide to the

 

general public adequate notice that a public school academy is

 

being created and adequate information on the admission policy,

 

criteria, and process.

 

     (iv) The school calendar and school day schedule.

 

     (v) The age or grade range of pupils to be enrolled.

 

     (f) Descriptions of staff responsibilities and of the public

 

school academy's governance structure.

 

     (g) For an application to the board of a school district, an

intermediate school board, or board of a community college,

 

identification of the local and intermediate school districts in

 

which the public school academy will be located.

 

     (h) An agreement that the public school academy will comply

 

with the provisions of this part and, subject to the provisions of

 

this part, with all other state law applicable to public bodies and

 

with federal law applicable to public bodies or school districts.

 

     (i) A description of and address for the proposed physical

 

plant in which the public school academy will be located. An

 

applicant may request the authorizing body to issue a contract

 

allowing the public school academy board of directors to operate

 

the same configuration of age or grade levels at more than 1 site.

 

     (4) An authorizing body shall oversee, or shall contract with

 

an intermediate school district, community college, or state public

 

university to oversee, each public school academy operating under a

 

contract issued by the authorizing body. The authorizing body is

 

responsible for overseeing compliance by the board of directors

 

with the contract and all applicable law. This subsection does not

 

relieve any other government entity of its enforcement or

 

supervisory responsibility.

 

     (5) If the superintendent of public instruction finds that an

 

authorizing body is not engaging in appropriate continuing

 

oversight of 1 or more public school academies operating under a

 

contract issued by the authorizing body, the superintendent of

 

public instruction may suspend the power of the authorizing body to

 

issue new contracts to organize and operate public school

 

academies. A contract issued by the authorizing body during the

suspension is void. A contract issued by the authorizing body

 

before the suspension is not affected by the suspension.

 

     (6) An authorizing body shall not charge a fee, or require

 

reimbursement of expenses, for considering an application for a

 

contract, for issuing a contract, or for providing oversight of a

 

contract for a public school academy in an amount that exceeds a

 

combined total of 3% of the total state school aid received by the

 

public school academy in the school year in which the fees or

 

expenses are charged. An authorizing body may provide other

 

services for a public school academy and charge a fee for those

 

services, but shall not require such an arrangement as a condition

 

to issuing the contract authorizing the public school academy.

 

     (7) A public school academy shall be presumed to be legally

 

organized if it has exercised the franchises and privileges of a

 

public school academy for at least 2 years.

 

     (8) An authorizing body may enter into an intergovernmental

 

agreement with another authorizing body to issue public school

 

academy contracts. At a minimum, the agreement shall further the

 

purposes set forth in section 501, describe which authorizing body

 

shall issue the contract, and set forth which authorizing body will

 

be responsible for monitoring compliance by the board of directors

 

of the public school academy with the contract and all applicable

 

law.

 

     (9) A public school academy that is located within a community

 

district is subject to sections 389 to 391.

 

     Sec. 507. (1) An authorizing body that issues a contract for a

 

public school academy under this part shall do all of the

following:

 

     (a) Ensure that the contract and the application for the

 

contract comply with the requirements of this part.

 

     (b) Within 10 days after issuing the contract, submit to the

 

department a copy of the contract.

 

     (c) Establish the method of selection, length of term, and

 

number of members of the board of directors of each public school

 

academy that it authorizes. The authorizing body shall ensure that

 

the board of directors includes representation from the local

 

community.

 

     (d) Oversee each public school academy operating under a

 

contract issued by the authorizing body. The oversight shall be

 

sufficient to ensure that the board of directors is in compliance

 

with the terms of the contract and with applicable law.

 

     (e) Develop and implement a process for holding a public

 

school academy accountable for meeting applicable academic

 

performance standards set forth in the contract and for

 

implementing corrective action for a public school academy that

 

does not meet those standards.

 

     (f) Take necessary measures to ensure that the board of

 

directors of a public school academy operates independently of any

 

educational management company involved in the operations of the

 

public school academy.

 

     (g) Oversee and ensure that the pupil admission process used

 

by the public school academy is operated in a fair and open manner

 

and is in compliance with the contract and this part.

 

     (h) Ensure that the board of directors of the public school

academy maintains and releases information as necessary to comply

 

with applicable law.

 

     (2) An authorizing body may enter into an agreement with 1 or

 

more other authorizing bodies to carry out any function of an

 

authorizing body under this act.

 

     (3) The authorizing body for a public school academy is the

 

fiscal agent for the public school academy. A state school aid

 

payment for a public school academy shall be paid to the

 

authorizing body that is the fiscal agent for that public school

 

academy, and the authorizing body shall then forward the payment to

 

the public school academy. Within 30 days after a contract is

 

submitted to the department by an authorizing body under subsection

 

(1), the department shall issue a district code to the public

 

school academy for which the contract was issued. If the department

 

does not issue a district code within 30 days after a contract is

 

filed, the state treasurer shall assign a temporary district code

 

in order for the public school academy to receive funding under the

 

state school aid act of 1979.

 

     (4) A contract issued under this part may be revoked by the

 

authorizing body if the authorizing body determines that 1 or more

 

of the following have occurred:

 

     (a) Failure of the public school academy to demonstrate

 

improved pupil academic achievement for all groups of pupils or

 

meet the educational goals set forth in the contract.

 

     (b) Failure of the public school academy to comply with all

 

applicable law.

 

     (c) Failure of the public school academy to meet generally

accepted public sector accounting principles and demonstrate sound

 

fiscal stewardship.

 

     (d) The existence of 1 or more other grounds for revocation as

 

specified in the contract.

 

     (5) Except for a public school academy that is an alternative

 

school serving a special student population, if the superintendent

 

of public instruction state school reform/redesign officer

 

determines that a public school academy site that has been

 

operating for at least 4 years is among the lowest achieving 5% of

 

all public schools in this state for 3 of the preceding 5 school

 

years, as defined for the purposes of the federal incentive grant

 

program created under sections 14005 and 14006 of title XIV of the

 

American recovery and reinvestment act of 2009, Public Law 111-5,

 

is in year 2 of restructuring sanctions under the no child left

 

behind act of 2001, Public Law 107-110, determined under section

 

1280c, not to include the any individualized education plan

 

subgroup, and is not currently undergoing reconstitution under this

 

section, or if the public school academy has been included on the

 

list of schools subject to closure under section 390(3), the

 

superintendent of public instruction state school reform/redesign

 

officer shall notify the public school academy's authorizing body.

 

If an authorizing body receives notice from the superintendent of

 

public instruction state school reform/redesign officer under this

 

subsection, the authorizing body shall amend the public school

 

academy's contract to eliminate the public school academy's

 

authority to operate the existing age and grade levels at the site

 

and the public school academy shall cease operating the existing

age and grade levels at the site, effective at the end of the

 

current school year. If the public school academy operates at only

 

1 site, and the authorizing body receives notice from the

 

superintendent of public instruction state school reform/redesign

 

officer under this subsection, the authorizing body shall revoke

 

the public school academy's contract, effective at the end of the

 

current school year.

 

     (6) The Except as otherwise provided in section 502, the

 

decision of an authorizing body to issue, not issue, or

 

reconstitute a contract under this part, or to terminate or revoke

 

a contract under this section, is solely within the discretion of

 

the authorizing body, is final, and is not subject to review by a

 

court or any state agency. An authorizing body that issues, does

 

not issue, or reconstitutes a contract under this part, or that

 

terminates or revokes a contract under this section, is not liable

 

for that action to the public school academy, the public school

 

academy corporation, a pupil of the public school academy, the

 

parent or guardian of a pupil of the public school academy, or any

 

other person.

 

     (7) Except as otherwise provided in subsection (5), this

 

section, before an authorizing body revokes a contract, the

 

authorizing body may consider and take corrective measures to avoid

 

revocation. An authorizing body may reconstitute the public school

 

academy in a final attempt to improve student educational

 

performance or to avoid interruption of the educational process. An

 

authorizing body shall include a reconstituting provision in the

 

contract that identifies these corrective measures, including, but

not limited to, canceling a contract with an educational management

 

organization, if any, withdrawing approval of a contract under

 

section 506, or appointing a new board of directors or a trustee to

 

take over operation of the public school academy.

 

     (8) If an authorizing body revokes a contract, the authorizing

 

body shall work with a school district or another public school, or

 

with a combination of these entities, to ensure a smooth transition

 

for the affected pupils. If the revocation occurs during the school

 

year, the authorizing body, as the fiscal agent for the public

 

school academy under this part, shall return any school aid funds

 

held by the authorizing body that are attributable to the affected

 

pupils to the state treasurer for deposit into the state school aid

 

fund. The state treasurer shall distribute funds to the public

 

school in which the pupils enroll after the revocation pursuant to

 

a methodology established by the department and the center for

 

educational performance and information.

 

     (9) Not more than 10 days after a public school academy's

 

contract terminates or is revoked, the authorizing body shall

 

notify the superintendent of public instruction in writing of the

 

name of the public school academy whose contract has terminated or

 

been revoked and the date of contract termination or revocation.

 

     Sec. 522. (1) An urban high school academy shall be organized

 

and administered under the direction of a board of directors in

 

accordance with this part and with bylaws adopted by the board of

 

directors. An urban high school academy corporation shall be

 

organized under the nonprofit corporation act, 1982 PA 162, MCL

 

450.2101 to 450.3192, except that an urban high school academy

corporation is not required to comply with sections 170 to 177 of

 

1931 PA 327, MCL 450.170 to 450.177. To the extent disqualified

 

under the state or federal constitution, an urban high school

 

academy shall not be organized by a church or other religious

 

organization and shall not have any organizational or contractual

 

affiliation with or constitute a church or other religious

 

organization.

 

     (2) The governing board of a state public university may act

 

as an authorizing body to issue a contract for the organization and

 

operation of an urban high school academy under this part.

 

     (3) A contract issued under this part shall be issued for an

 

initial term of 10 years. If the urban high school academy meets

 

the educational goals set forth in the contract and operates in

 

substantial compliance with this part, the authorizing body shall

 

automatically renew the contract for a subsequent 10-year term.

 

     (4) To obtain a contract to organize and operate 1 or more

 

urban high school academies, an entity may apply to an authorizing

 

body described in subsection (2). The contract shall be issued to

 

an urban high school academy corporation designated by the entity

 

applying for the contract. The application shall include at least

 

all of the following:

 

     (a) Name of the entity applying for the contract.

 

     (b) Subject to the resolution adopted by the authorizing body

 

under section 528, a list of the proposed members of the board of

 

directors of the urban high school academy and a description of the

 

qualifications and method for appointment or election of members of

 

the board of directors.

     (c) The proposed articles of incorporation, which shall

 

include at least all of the following:

 

     (i) The name of the proposed urban high school academy to

 

which the contract will be issued.

 

     (ii) The purposes for the urban high school academy

 

corporation. This language shall provide that the urban high school

 

academy is incorporated pursuant to this part and that the urban

 

high school academy corporation is a governmental entity and

 

political subdivision of this state.

 

     (iii) The name of the authorizing body.

 

     (iv) The proposed time when the articles of incorporation will

 

be effective.

 

     (v) Other matters considered expedient to be in the articles

 

of incorporation.

 

     (d) A copy of the proposed bylaws of the urban high school

 

academy.

 

     (e) Documentation meeting the application requirements of the

 

authorizing body, including at least all of the following:

 

     (i) The governance structure of the urban high school academy.

 

     (ii) A copy of the educational goals of the urban high school

 

academy and the curricula to be offered and methods of pupil

 

assessment to be used by the urban high school academy. The

 

educational goals shall include demonstrated improved pupil

 

academic achievement for all groups of pupils. To the extent

 

applicable, the progress of the pupils in the urban high school

 

academy shall be assessed using at least a Michigan education

 

assessment program (MEAP) test both the mathematics and reading

portions of the Michigan student test of educational progress (M-

 

STEP) or the Michigan merit examination under section 1279g, as

 

applicable.

 

     (iii) The admission policy and criteria to be maintained by

 

the urban high school academy. The admission policy and criteria

 

shall comply with section 524. This part of the application also

 

shall include a description of how the applicant will provide to

 

the general public adequate notice that an urban high school

 

academy is being created and adequate information on the admission

 

policy, criteria, and process.

 

     (iv) The school calendar and school day schedule.

 

     (v) The age or grade range of pupils to be enrolled.

 

     (f) Descriptions of staff responsibilities and of the urban

 

high school academy's governance structure.

 

     (g) A description of and address for the proposed building or

 

buildings in which the urban high school academy will be located,

 

and a financial commitment by the entity applying for the contract

 

to construct or renovate the building or buildings that will be

 

occupied by the urban high school academy that is issued the

 

contract.

 

     (5) If a particular state public university issues a contract

 

that allows an urban high school academy to operate the same

 

configuration of grades at more than 1 site, as provided in section

 

524(1), each of those sites shall be under the direction of the

 

board of directors that is a party to the contract.

 

     (6) If the superintendent of public instruction finds that an

 

authorizing body is not engaging in appropriate continuing

oversight of 1 or more urban high school academies operating under

 

a contract issued by the authorizing body, the superintendent of

 

public instruction may suspend the power of the authorizing body to

 

issue new contracts to organize and operate urban high school

 

academies. A contract issued by the authorizing body during the

 

suspension is void. A contract issued by the authorizing body

 

before the suspension is not affected by the suspension.

 

     (7) An authorizing body shall not charge a fee, or require

 

reimbursement of expenses, for considering an application for a

 

contract, for issuing a contract, or for providing oversight of a

 

contract for an urban high school academy in an amount that exceeds

 

a combined total of 3% of the total state school aid received by

 

the urban high school academy in the school year in which the fees

 

or expenses are charged. All of the following apply to this fee:

 

     (a) An authorizing body may use this fee only for the

 

following purposes:

 

     (i) Considering applications and issuing or administering

 

contracts.

 

     (ii) Compliance monitoring and oversight of urban high school

 

academies.

 

     (iii) Training for urban high school academy applicants,

 

administrators, and boards of directors.

 

     (iv) Technical assistance to urban high school academies.

 

     (v) Academic support to urban high school academies or to

 

pupils or graduates of urban high school academies.

 

     (vi) Evaluation of urban high school academy performance.

 

     (vii) Training of teachers, including supervision of teacher

interns.

 

     (viii) Other purposes that assist the urban high school

 

academies or traditional public schools in achieving improved

 

academic performance.

 

     (b) An authorizing body may provide other services for an

 

urban high school academy and charge a fee for those services, but

 

shall not require such an arrangement as a condition to issuing the

 

contract authorizing the urban high school academy.

 

     (8) An urban high school academy shall be presumed to be

 

legally organized if it has exercised the franchises and privileges

 

of an urban high school academy for at least 2 years.

 

     (9) An urban high school academy that is located within a

 

community district is subject to sections 389 to 391.

 

     Sec. 528. (1) An authorizing body that issues a contract for

 

an urban high school academy under this part shall do all of the

 

following:

 

     (a) Ensure that the contract and the application for the

 

contract comply with the requirements of this part.

 

     (b) Within 10 days after issuing the contract, submit to the

 

department a copy of the contract.

 

     (c) Adopt a resolution establishing the method of selection,

 

length of term, and number of members of the board of directors of

 

each urban high school academy that it authorizes. The resolution

 

shall be written or amended as necessary to include a requirement

 

that each member of the board of directors must be a citizen of the

 

United States.

 

     (d) Oversee the operations of each urban high school academy

operating under a contract issued by the authorizing body. The

 

oversight shall be sufficient to ensure that the urban high school

 

academy is in compliance with the terms of the contract and with

 

applicable law. An authorizing body may enter into an agreement

 

with 1 or more other authorizing bodies to oversee an urban high

 

school academy operating under a contract issued by the authorizing

 

body.

 

     (e) Develop and implement a process for holding an urban high

 

school academy board of directors accountable for meeting

 

applicable academic performance standards set forth in the contract

 

and for implementing corrective action for an urban high school

 

academy that does not meet those standards.

 

     (f) Take necessary measures to ensure that an urban high

 

school academy board of directors operates independently of any

 

educational management company involved in the operations of the

 

urban high school academy.

 

     (g) Oversee and ensure that the pupil admission process used

 

by the urban high school academy is operated in a fair and open

 

manner and is in compliance with the contract and this part.

 

     (h) Ensure that the board of directors of the urban high

 

school academy maintains and releases information as necessary to

 

comply with applicable law.

 

     (2) An authorizing body may enter into an agreement with 1 or

 

more other authorizing bodies to carry out any function of an

 

authorizing body under this act.

 

     (3) The authorizing body for an urban high school academy is

 

the fiscal agent for the urban high school academy. A state school

aid payment for an urban high school academy shall be paid to the

 

authorizing body that is the fiscal agent for that urban high

 

school academy, which shall then forward the payment to the urban

 

high school academy. Within 30 days after a contract is submitted

 

to the department by an authorizing body under subsection (1), the

 

department shall issue a district code to the urban high school

 

academy for which the contract was issued. If the department does

 

not issue a district code within 30 days after a contract is filed,

 

the state treasurer shall assign a temporary district code in order

 

for the urban high school academy to receive funding under the

 

state school aid act of 1979.

 

     (4) A contract issued under this part may be revoked by the

 

authorizing body that issued the contract if the authorizing body

 

determines that 1 or more of the following have occurred:

 

     (a) Failure of the urban high school academy to demonstrate

 

improved pupil academic achievement for all groups of pupils or

 

meet the educational goals set forth in the contract.

 

     (b) Failure of the urban high school academy to comply with

 

all applicable law.

 

     (c) Failure of the urban high school academy to meet generally

 

accepted public sector accounting principles and demonstrate sound

 

fiscal stewardship.

 

     (d) The existence of 1 or more other grounds for revocation as

 

specified in the contract.

 

     (5) Except for an urban high school academy that is an

 

alternative school serving a special student population, if the

 

superintendent of public instruction state school reform/redesign

officer determines that an urban high school academy site that has

 

been operating for at least 4 years is among the lowest achieving

 

5% of all public schools in this state for 3 of the preceding 5

 

school years, as defined for the purposes of the federal incentive

 

grant program created under sections 14005 and 14006 of title XIV

 

of the American recovery and reinvestment act of 2009, Public Law

 

111-5, is in year 2 of restructuring sanctions under the no child

 

left behind act of 2001, Public Law 107-110, determined under

 

section 1280c, not to include the any individualized education plan

 

subgroup, and is not currently undergoing reconstitution under this

 

section, or if the urban high school academy has been included on

 

the list of schools subject to closure under section 390(3), the

 

superintendent of public instruction state school reform/redesign

 

officer shall notify the urban high school academy's authorizing

 

body. If an authorizing body receives notice from the

 

superintendent of public instruction state school reform/redesign

 

officer under this subsection, the authorizing body shall amend the

 

urban high school academy's contract to eliminate the urban high

 

school academy's authority to operate the existing age and grade

 

levels at the site and the urban high school academy shall cease

 

operating the existing age and grade levels at the site, effective

 

at the end of the current school year. If the urban high school

 

academy operates at only 1 site, and the authorizing body receives

 

notice from the superintendent of public instruction state school

 

reform/redesign officer under this subsection, the authorizing body

 

shall revoke the urban high school academy's contract, effective at

 

the end of the current school year.

     (6) The decision of an authorizing body to issue, not issue,

 

or reconstitute a contract under this part, or to terminate or

 

revoke a contract under this section, is solely within the

 

discretion of the authorizing body, is final, and is not subject to

 

review by a court or any state agency. An authorizing body that

 

issues, does not issue, or reconstitutes a contract under this

 

part, or that terminates or revokes a contract under this section,

 

is not liable for that action to the urban high school academy, the

 

urban high school academy corporation, a pupil of the urban high

 

school academy, the parent or guardian of a pupil of the urban high

 

school academy, or any other person.

 

     (7) Except as otherwise provided in subsection (5), this

 

section, before an authorizing body revokes a contract, the

 

authorizing body may consider and take corrective measures to avoid

 

revocation. An authorizing body may reconstitute the urban high

 

school academy in a final attempt to improve student educational

 

performance or to avoid interruption of the educational process. An

 

authorizing body shall include a reconstituting provision in the

 

contract that identifies these corrective measures, including, but

 

not limited to, removing 1 or more members of the board of

 

directors, withdrawing approval to contract under section 527, or

 

appointing a new board of directors or a trustee to take over

 

operation of the urban high school academy.

 

     (8) If an authorizing body revokes a contract, the authorizing

 

body shall work with a school district or another public school, or

 

with a combination of these entities, to ensure a smooth transition

 

for the affected pupils. If the revocation occurs during the school

year, the authorizing body, as the fiscal agent for the urban high

 

school academy under this part, shall return any school aid funds

 

held by the authorizing body that are attributable to the affected

 

pupils to the state treasurer for deposit into the state school aid

 

fund. The state treasurer shall distribute funds to the public

 

school in which the pupils enroll after the revocation pursuant to

 

a methodology established by the department and the center for

 

educational performance and information.

 

     (9) If an authorizing body revokes a contract issued under

 

this part, the authorizing body may issue a new contract within the

 

1-year period following the revocation without the new contract

 

counting toward the maximum number of contracts that may be issued

 

under this part.

 

     (9) (10) Not more than 10 days after an urban high school

 

academy's contract terminates or is revoked, the authorizing body

 

shall notify the superintendent of public instruction in writing of

 

the name of the urban high school academy whose contract has

 

terminated or been revoked and the date of contract termination or

 

revocation.

 

     (10) (11) If an urban high school academy's contract

 

terminates or is revoked, title to all real and personal property,

 

interest in real or personal property, and other assets owned by

 

the urban high school academy shall revert to the state. This

 

property shall be distributed in accordance with the following:

 

     (a) Within 30 days following the termination or revocation,

 

the board of directors of an urban high school academy shall hold a

 

public meeting to adopt a plan of distribution of assets and to

approve the dissolution of the urban high school academy

 

corporation, all in accordance with chapter 8 of the nonprofit

 

corporation act, 1982 PA 162, MCL 450.2801 to 450.2864.

 

     (b) The urban high school academy shall file a certificate of

 

dissolution with the bureau of commercial services department of

 

licensing and regulatory affairs within 10 business days following

 

board approval.

 

     (c) Simultaneously with the filing of the certificate of

 

dissolution under subdivision (b), the urban high school academy

 

board of directors shall provide a copy of the board of directors'

 

plan of distribution of assets to the state treasurer for approval.

 

Within 30 days, the state treasurer, or his or her designee, shall

 

review and approve the board of directors' plan of distribution of

 

assets. If the proposed plan of distribution of assets is not

 

approved within 30 days, the state treasurer, or his or her

 

designee, shall provide the board of directors with an acceptable

 

plan of distribution of assets.

 

     (d) The state treasurer, or his or her designee, shall monitor

 

the urban high school academy's winding up of the dissolved

 

corporation in accordance with the plan of distribution of assets

 

approved or provided under subdivision (c).

 

     (e) As part of the plan of distribution of assets, the urban

 

high school academy board of directors shall designate the director

 

of the department of technology, management, and budget, or his or

 

her designee, to dispose of all real property of the urban high

 

school academy corporation in accordance with the directives

 

developed for disposition of surplus land and facilities under

section 251 of the management and budget act, 1984 PA 431, MCL

 

18.1251.

 

     (f) If the board of directors of an urban high school academy

 

fails to take any necessary action under this section, the state

 

treasurer, or his or her designee, may suspend the urban high

 

school academy board of directors and appoint a trustee to carry

 

out the board's plan of distribution of assets. Upon appointment,

 

the trustee shall have all the rights, powers, and privileges under

 

law that the urban high school academy board of directors had

 

before being suspended.

 

     (g) Following the sale of the real or personal property or

 

interests in the real or personal property, and after payment of

 

any urban high school academy debt secured by the property or

 

interest in property, whether real or personal, the urban high

 

school academy board of directors, or a trustee appointed under

 

this section, shall forward any remaining money to the state

 

treasurer. Following receipt, the state treasurer, or his or her

 

designee, shall deposit this remaining money in the state school

 

aid fund.

 

     Sec. 551. (1) A school of excellence is a public school under

 

section 2 of article VIII of the state constitution of 1963, is a

 

school district for the purposes of section 11 of article IX of the

 

state constitution of 1963 and for the purposes of section 1225 and

 

section 1351a, and is subject to the leadership and general

 

supervision of the state board over all public education under

 

section 3 of article VIII of the state constitution of 1963. A

 

school of excellence is a body corporate and is a governmental

agency. The powers granted to a school of excellence under this

 

part constitute the performance of essential public purposes and

 

governmental functions of this state.

 

     (2) As used in this part:

 

     (a) "Authorizing body" means any of the following that issues

 

a contract as provided in this part:

 

     (i) The board of a school district. that operates grades K to

 

12.

 

     (ii) An intermediate school board.

 

     (iii) The board of a community college.

 

     (iv) The governing board of a state public university.

 

     (v) Two or more of the public agencies described in

 

subparagraphs (i) to (iv) exercising power, privilege, or authority

 

jointly pursuant to an interlocal agreement under the urban

 

cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to

 

124.512.

 

     (b) "Certificated teacher" means an individual who holds a

 

valid teaching certificate issued by the superintendent of public

 

instruction under section 1531.

 

     (c) "Community college" means a community college organized

 

under the community college act of 1966, 1966 PA 331, MCL 389.1 to

 

389.195, or a federal tribally controlled community college that is

 

recognized under the tribally controlled colleges and universities

 

assistance act of 1978, 25 USC 1801 to 1852, 1864, and is

 

determined by the department to meet the requirements for

 

accreditation by a recognized regional accrediting body.

 

     (d) "Contract" means the executive act taken by an authorizing

body that evidences the authorization of a school of excellence and

 

that establishes, subject to the constitutional powers of the state

 

board and applicable law, the written instrument executed by an

 

authorizing body conferring certain rights, franchises, privileges,

 

and obligations on a school of excellence, as provided by this

 

part, and confirming the status of a school of excellence as a

 

public school in this state.

 

     (e) "Cyber school" means a school of excellence established

 

under this part that has been issued a contract to be organized and

 

operated as a cyber school under section 552(2) and that provides

 

full-time instruction to pupils through online learning or

 

otherwise on a computer or other technology, which instruction and

 

learning may be remote from a school facility.

 

     (f) "Educational management organization" means an entity that

 

enters into an agreement with the governing board of a public

 

school to provide comprehensive educational, administrative,

 

management, or instructional services or staff to the public

 

school.

 

     (g) "Entity" means a partnership, nonprofit or business

 

corporation, labor organization, or any other association,

 

corporation, trust, or other legal entity.

 

     (h) "State public university" means a state university

 

described in section 4, 5, or 6 of article VIII of the state

 

constitution of 1963.

 

     Sec. 552. (1) An authorizing body may issue contracts under

 

this subsection to organize and operate a school of excellence. All

 

of the following apply to the issuance of a contract by an

authorizing body under this subsection:

 

     (a) The issuance of the contract must be approved by the

 

superintendent of public instruction. The superintendent of public

 

instruction shall approve issuance of a contract if he or she

 

determines that the proposed school of excellence is modeled after

 

a high-performing school or program.

 

     (b) The first 5 contracts issued by all authorizing bodies

 

under this subsection shall be for schools of excellence that offer

 

1 or more of high school grades 9 to 12, or any combination of

 

those grades, as specified in the contract.

 

     (c) A school of excellence authorized under this subsection

 

shall not be located in a school district that has a graduation

 

rate of over 75%, on average, for the most recent 3 school years

 

for which the data are available, as determined by the department.

 

     (2) Subject to the limitations in this subsection and

 

subsection (14), subsections (14) and (15), an authorizing body may

 

issue contracts under this subsection for 1 or more schools of

 

excellence that are cyber schools. Until December 31, 2013, the

 

combined total number of contracts that may be issued by all

 

statewide authorizing bodies under this subsection for schools of

 

excellence that are cyber schools shall not exceed 5. Until

 

December 31, 2014, the combined total number of contracts that may

 

be issued by all statewide authorizing bodies under this subsection

 

for schools of excellence that are cyber schools shall not exceed

 

10. After December 31, 2014, the The combined total number of

 

contracts issued by all statewide authorizing bodies under this

 

subsection for schools of excellence that are cyber schools shall

not exceed 15. The board of a school district, an intermediate

 

school board, the board of a community college that is not a

 

statewide authorizing body, or 2 or more public agencies acting

 

jointly as described in subsection (6)(e) may not act as the

 

authorizing body for more than 1 school of excellence that is a

 

cyber school. An authorizing body shall not issue a contract for a

 

school of excellence that is a cyber school unless the school of

 

excellence that is a cyber school meets all of the following

 

requirements:

 

     (a) Is available for enrollment to all pupils in this state.

 

     (b) Offers some configuration of or all of grades K to 12.

 

     (c) The entity applying for the school of excellence that is a

 

cyber school demonstrates experience in delivering a quality

 

education program that improves pupil academic achievement. In

 

determining whether this requirement is met, an authorizing body

 

shall refer to the standards for quality online learning

 

established by the national association of charter school

 

authorizers or other similar nationally recognized standards for

 

quality online learning.

 

     (d) The enrollment in the school of excellence that is a cyber

 

school is limited to not more than 2,500 pupils in membership for

 

the first school year of operation of the school of excellence that

 

is a cyber school, not more than 5,000 pupils in membership for the

 

second school year of operation of the school of excellence that is

 

a cyber school, and not more than 10,000 pupils in membership for

 

the third and subsequent school years of operation of the school of

 

excellence that is a cyber school. As used in this subdivision,

"membership" means that term as defined in section 6 of the state

 

school aid act of 1979, MCL 388.1606.

 

     (e) The school of excellence that is a cyber school offers

 

each pupil's family a computer and subsidizes the cost of internet

 

access.

 

     (3) For a public school academy operating under part 6a that

 

meets the requirements of subsection (4), with the approval of its

 

authorizing body, the board of directors of the public school

 

academy may adopt a resolution choosing to convert the public

 

school academy to a school of excellence under this part. If the

 

board of directors of a public school academy that meets the

 

requirements of subsection (4) is issued a contract as a school of

 

excellence under this subsection, all the following apply:

 

     (a) The public school academy shall cease to operate as a

 

public school academy under part 6a and shall operate as a school

 

of excellence upon the issuance of a contract or at another time as

 

determined by the authorizing body.

 

     (b) The public school academy shall be considered to be a

 

school of excellence for all purposes upon the issuance of a

 

contract or at another time as determined by the authorizing body,

 

but shall retain its corporate identity.

 

     (c) The conversion of a public school academy under part 6a to

 

a school of excellence operating under this part shall not impair

 

any agreement, mortgage, loan, bond, note or other instrument of

 

indebtedness, or any other agreement entered into by a public

 

school academy while it was operating under part 6a.

 

     (d) The contract issued to the public school academy under

part 6a shall automatically terminate upon the issuance of a

 

contract or at another time as determined by the authorizing body.

 

     (4) Subsection (3) applies to a public school academy that is

 

determined by the department to meet all of the following, as

 

applicable:

 

     (a) If the public school academy operates only some or all of

 

grades K to 8, meets at least 1 of the following:

 

     (i) On average over a 3-year period, at least 90% of the

 

pupils enrolled in the public school academy achieved a score of

 

proficient or better on the Michigan education assessment program

 

mathematics and reading tests or successor state assessment

 

program.

 

     (ii) On average over a 3-year period, at least 70% of the

 

pupils enrolled in the public school academy achieved a score of

 

proficient or better on the Michigan education assessment program

 

mathematics and reading tests or successor state assessment program

 

and at least 50% of the pupils enrolled in the public school

 

academy met the income eligibility criteria for the federal free or

 

reduced-price lunch program, as determined under the Richard B.

 

Russell national school lunch act, 42 USC 1751 to 1769i, 1769j, and

 

reported to the department.

 

     (b) If the public school academy operates grades 9 to 12, at

 

least 80% of the school's pupils graduate from high school or are

 

determined by the department to be on track to graduate from high

 

school, the school has at least 80% average attendance, and the

 

school has at least an 80% postsecondary enrollment rate.

 

     (5) A school of excellence shall be organized and administered

under the direction of a board of directors in accordance with this

 

part and with bylaws adopted by the board of directors. A school of

 

excellence shall be organized under the nonprofit corporation act,

 

1982 PA 162, MCL 450.2101 to 450.3192, except that a school of

 

excellence is not required to comply with sections 170 to 177 of

 

1931 PA 327, MCL 450.170 to 450.177. To the extent disqualified

 

under the state or federal constitution, a school of excellence

 

shall not be organized by a church or other religious organization

 

and shall not have any organizational or contractual affiliation

 

with or constitute a church or other religious organization.

 

     (6) Any of the following may act as an authorizing body to

 

issue a contract to organize and operate 1 or more schools of

 

excellence under this part:

 

     (a) The board of a school district. that operates grades K to

 

12. However, except as otherwise provided in this subdivision, the

 

board of a school district shall not issue a contract for a school

 

of excellence to operate outside the school district's boundaries,

 

and a school of excellence authorized by the board of a school

 

district shall not operate outside that school district's

 

boundaries. If the board of a school district issues a contract for

 

a school of excellence that is a cyber school, the contract may

 

authorize the school of excellence that is a cyber school to

 

operate outside that school district's boundaries.

 

     (b) An intermediate school board. However, except as otherwise

 

provided in this subdivision, the board of an intermediate school

 

district shall not issue a contract for a school of excellence to

 

operate outside the intermediate school district's boundaries, and

a school of excellence authorized by the board of an intermediate

 

school district shall not operate outside that intermediate school

 

district's boundaries. If the board of an intermediate school

 

district issues a contract for a school of excellence that is a

 

cyber school, the contract may authorize the school of excellence

 

that is a cyber school to operate outside that intermediate school

 

district's boundaries.

 

     (c) The board of a community college. Except as otherwise

 

provided in this subdivision, the board of a community college

 

shall not issue a contract for a school of excellence to operate

 

outside the boundaries of the community college district, and a

 

school of excellence authorized by the board of a community college

 

shall not operate outside the boundaries of the community college

 

district. If the board of a community college issues a contract for

 

a school of excellence that is a cyber school, the contract may

 

authorize the school of excellence that is a cyber school to

 

operate outside the boundaries of the community college district.

 

The board of a community college also may issue a contract for not

 

more than 1 school of excellence to operate on the grounds of an

 

active or closed federal military installation located outside the

 

boundaries of the community college district, or may operate a

 

school of excellence itself on the grounds of such a federal

 

military installation, if the federal military installation is not

 

located within the boundaries of any community college district and

 

the community college has previously offered courses on the grounds

 

of the federal military installation for at least 10 years.

 

     (d) The governing board of a state public university.

     (e) Two or more of the public agencies described in

 

subdivisions (a) to (d) exercising power, privilege, or authority

 

jointly pursuant to an interlocal agreement under the urban

 

cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to

 

124.512.

 

     (7) To obtain a contract to organize and operate 1 or more

 

schools of excellence, 1 or more persons or an entity may apply to

 

an authorizing body described in this section. The application

 

shall include at least all of the following:

 

     (a) Identification of the applicant for the contract.

 

     (b) Subject to the resolution adopted by the authorizing body

 

under section 553(4), a list of the proposed members of the board

 

of directors of the school of excellence and a description of the

 

qualifications and method for appointment or election of members of

 

the board of directors.

 

     (c) The proposed articles of incorporation, which shall

 

include at least all of the following:

 

     (i) The name of the proposed school of excellence.

 

     (ii) The purposes for the school of excellence corporation.

 

This language shall provide that the school of excellence is

 

incorporated pursuant to this part and that the school of

 

excellence is a governmental entity.

 

     (iii) The name of the authorizing body.

 

     (iv) The proposed time when the articles of incorporation will

 

be effective.

 

     (v) Other matters considered expedient to be in the articles

 

of incorporation.

     (d) A copy of the proposed bylaws of the school of excellence.

 

     (e) Documentation meeting the application requirements of the

 

authorizing body, including at least all of the following:

 

     (i) The governance structure of the school of excellence.

 

     (ii) A copy of the educational goals of the school of

 

excellence and the curricula to be offered and methods of pupil

 

assessment to be used by the school of excellence. The educational

 

goals shall include demonstrated improved pupil academic

 

achievement for all groups of pupils. To the extent applicable, the

 

progress of the pupils in the school of excellence shall be

 

assessed using at least a Michigan education assessment program

 

(MEAP) test both the mathematics and reading portions of the

 

Michigan student test of educational progress (M-STEP) or the

 

Michigan merit examination under section 1279g, as applicable.

 

     (iii) The admission policy and criteria to be maintained by

 

the school of excellence. The admission policy and criteria shall

 

comply with section 556. This part of the application also shall

 

include a description of how the applicant will provide to the

 

general public adequate notice that a school of excellence is being

 

created and adequate information on the admission policy, criteria,

 

and process.

 

     (iv) Except for a school of excellence that is a cyber school,

 

the school calendar and school day schedule.

 

     (v) The age or grade range of pupils to be enrolled.

 

     (f) Descriptions of staff responsibilities and of the school

 

of excellence governance structure.

 

     (g) For an application to the board of a school district, an

intermediate school board, or board of a community college,

 

identification of the school district and intermediate school

 

district in which the school of excellence will be located.

 

     (h) An agreement that the school of excellence will comply

 

with the provisions of this part and, subject to the provisions of

 

this part, with all other state law applicable to public bodies and

 

with federal law applicable to public bodies or school districts.

 

     (i) A description of and address for the proposed physical

 

plant in which the school of excellence will be located. An

 

applicant may request the authorizing body to issue a contract

 

allowing the board of directors of the school of excellence to

 

operate the same configuration of age or grade levels at more than

 

1 site.

 

     (8) An authorizing body shall oversee, or shall contract with

 

an intermediate school district, community college, or state public

 

university to oversee, each school of excellence operating under a

 

contract issued by the authorizing body. The authorizing body is

 

responsible for overseeing compliance by the board of directors

 

with the contract and all applicable law. This subsection does not

 

relieve any other government entity of its enforcement or

 

supervisory responsibility.

 

     (9) If the superintendent of public instruction finds that an

 

authorizing body is not engaging in appropriate continuing

 

oversight of 1 or more schools of excellence operating under a

 

contract issued by the authorizing body, the superintendent of

 

public instruction may suspend the power of the authorizing body to

 

issue new contracts to organize and operate schools of excellence.

A contract issued by the authorizing body during the suspension is

 

void. A contract issued by the authorizing body before the

 

suspension is not affected by the suspension.

 

     (10) An authorizing body shall not charge a fee, or require

 

reimbursement of expenses, for considering an application for a

 

contract, for issuing a contract, or for providing oversight of a

 

contract for a school of excellence in an amount that exceeds a

 

combined total of 3% of the total state school aid received by the

 

school of excellence in the school year in which the fees or

 

expenses are charged. The authorizing body may provide other

 

services for a school of excellence and charge a fee for those

 

services, but shall not require such an arrangement as a condition

 

to issuing the contract authorizing the school of excellence.

 

     (11) A school of excellence shall be presumed to be legally

 

organized if it has exercised the franchises and privileges of a

 

public school academy for at least 2 years.

 

     (12) A member of the board of directors of a school of

 

excellence is a public officer and shall, before entering upon the

 

duties of the office, take the constitutional oath of office for

 

public officers under section 1 of article XI of the state

 

constitution of 1963.

 

     (13) A school of excellence that is a cyber school may make

 

available to other public schools for purchase any of the course

 

offerings that the cyber school offers to its own pupils.

 

     (14) If the department determines that the combined total

 

statewide final audited membership for all pupils in membership in

 

schools of excellence that are cyber schools for the 2012-2013