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Draft rules for a 2017 state law that enables charter-school operators to acquire "unused" or "underutilized" public school district buildings need better definitions of the terms, a legislative sponsor of the law says.

Rep. Mark Lowery, R-Maumelle, urged state drafters of the rules to talk with lawmakers such as himself and Sen. Alan Clark, R-Lonsdale, sponsors of the revised law, to learn about what their intentions were for the law.

In addition to Lowery, others with expertise in school finance and school law have urged drafters of the proposed rules to add some specifics to the regulations but avoid anything that could jeopardize the status of still-outstanding tax-exempt bonds issued by conventional districts to finance a school's construction.

The draft rules are based on the provisions of Act 542 of 2017, and they describe the process by which a charter-school operator can buy or lease -- at a fair market price -- an unused or little-used school building from a conventional public school district.

Open-enrollment charter schools and conventional school districts often compete for the same students and for state funding for educating those students.

Leaders of the Arkansas Department of Education's Division of Public School Academic Facilities and Transportation held a hearing on the draft rules Thursday and will continue taking written comments through Jan. 15.

At that point, the draft rules could be revised and sent out again for public comment. Or, if there are no substantive revisions, the draft rules would be sent to the Commission for Public School Academic Facilities and Transportation and a couple of legislative committees for action.

The law and draft rules come at a time when multiple Arkansas school districts have vacant or partially used school buildings. Those are the result of several years of school and school district consolidations plus a new-school-construction boom brought on by the state's partnership program for assisting with school building costs.

"This process has been in the works for at least four years," Lowery told leaders of the state facilities division about efforts to enable charter schools to acquire empty campuses from conventional districts.

"The act that existed previously mandated that school districts give right of first refusal to charter schools if buildings were available," he said.

"Unfortunately, there were some situations where school districts gamed the process and did not make buildings available. That's the reason we had to come back in 2017 to clarify that there needs to be a right of access because these are public school buildings that we hope will continue to be used in a public education capacity by charter schools."

Act 542 of 2017 calls for school districts to notify the Education Department's facilities division by Feb. 1 of their empty or partially empty properties.

That's an issue for this year in light of unapproved rules for carrying out the law, Lowery said.

"We are approaching that Feb. 1 deadline and the school districts don't have proper guidance in terms of ascertaining whether certain properties are unused or underutilized," Lowery said. "They do not have those definitions now in place, so we believe there are going to be some errors made by school districts in terms of applying their own definitions."

Lowery noted that the division has defined an underutilized building in the proposed regulations as one in which "all of it" or a significant part of it is being used only "irregularly" or "intermittently."

"As far as I know there is no definition in existing code to define irregularly or intermittently, so now we have compounded the definition problem by putting other words in that I believe need to be defined," he said.

Lowery also called for the draft rules to specify a percentage of a building -- at least 50 percent -- that must be in use by a district to avoid its being made available to a charter school.

He further recommended that the rules be expanded to give charter-school operators the right to appeal to the three-member Commission for Public School Academic Facilities and Transportation in the event the state division declines to identify a conventional district school building as unused or underutilized.

The proposed rules already give the school districts the right to appeal to the commission should a district disagree with a division finding that a particular campus is available for charter-school acquisition.

Scott Smith, executive director of the Arkansas Public School Resource Center -- which provides support in terms of financial management, legal advice and curriculum to the state's school districts and charter schools -- called the draft rules a good first effort that need more details, including specific definitions.

Scott Beardsley, senior vice president of First Security Beardsley Public Finance, which serves as financial adviser to many districts in the state, cautioned that tax-exempt bonded indebtedness on a district building must be properly extinguished before the use of a building can be changed.

"There is often still debt related to a facility 30 or 35 years after it was constructed," Beardsley said, adding that what begins as a 20-year debt can be extended when districts refinance or extend their debt for more years.

Robert Beach of the Friday, Eldredge & Clark law firm in Little Rock said the Internal Revenue Service doesn't allow a change in the use of a public facility that was built with tax-exempt financing without going through procedures set out in IRS code. Further, a school district is limited with what it can do with the proceeds from selling or leasing their facilities, Beach said.

The Friday law firm has long represented the Little Rock School District, which is the state's largest district and home to multiple charter schools. The district also has at least two schools that are not currently being used for students -- Woodruff Early Childhood Education Center and the W.D. "Bill" Hamilton Learning Academy. The district's J.A. Fair High and Cloverdale Middle schools are likely to be vacated within a few years.

Once the state division identifies a public school facility as surplus, "a public charter school may give notice of its intent to purchase or lease the public school facility," according to the proposed rules.

However, a district that says it has plans to reuse, renovate or demolish a currently vacant building for another use will have time under the proposed rules -- two years -- to do that before a charter school can proceed to acquire the unused or underused property at a fair price to the district.

If a public school district and public charter school can't agree on terms of a sale or lease of the district property within 60 days, the charter-school operator can petition the state commission to set the lease price and the length of the lease, which can be between five and 30 years.

The proposed rules state that the commission can deny a charter-school operator's petition for a vacant public school building if there is evidence that the space will be needed by the school district to accommodate future growth of the school district. Or the petition can be denied if the charter-school acquisition of a space would have "a materially negative impact on the overall education" at another campus located within 500 feet of the property being sought.

Open-enrollment charter schools and conventional school districts often compete for the same students and for state funding for educating those students.

Written comments on the subject can be emailed through Jan. 15 to: ADE.RulesComments@arkansas.gov.

The proposed rules can be found on this Web page: http://bit.ly/2BTClJb.

Metro on 01/06/2018

Print Headline: Improved draft rules on school reuse urged; Process ‘gamed’ by some, lawmaker says

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