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Tennessee General Assembly· SB 714Signed by Governor.

Education - As enacted, requires an educational oversight board to be created for an LEA that meets certain criteria and is established to annually conduct a comprehensive needs assessment of the LEA to determine the fac, the official text

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                            PUBLIC CHAPTER NO. 1057

                                                     SENATE BILL NO. 714

                                                   By Taylor, Bowling, Rose

                                           Substituted for: House Bill No. 662

                  By White, Gillespie, Todd, Cepicky, Leatherwood, Moody, Maberry, Grills

AN ACT to amend Tennessee Code Annotated, Title 4; Title 5; Title 6; Title 7 and Title 49, relative to
         education.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

         SECTION 1. Tennessee Code Annotated, Title 49, Chapter 1, Part 6, is amended by adding
the following as a new section:

          49-1-616. Educational oversight boards for underperforming school districts.

                   (a) An educational oversight board, hereinafter referred to as an oversight board,
          must be created for an LEA that meets four (4) or more of the following six (6) criteria:

                             (1) The LEA's proficiency rate:

                                       (A) In mathematics on the most recently administered Tennessee
                             comprehensive assessment program tests, including end-of-course
                             examinations, reflects that fifty percent (50%) or more of the students enrolled
                             in the LEA are not proficient; and

                                       (B) In English language arts on the most recently administered
                             Tennessee comprehensive assessment program tests, including end-of-
                             course examinations, reflects that fifty percent (50%) or more of the students
                             enrolled in the LEA are not proficient;

                             (2) Twenty-five percent (25%) or more of the schools managed and controlled
                    by the LEA's local board of education were assigned a "D" or "F" letter grade for the
                    most recent school year for which letter grades were assigned by the department of
                    education pursuant to§ 49-1-228;

                             (3) Twenty-five percent (25%) or more of the students enrolled in the LEA
                    were chronically absent in the most recent school year. As used in this subdivision
                    (a)(3), "chronically absent" means that a student has been absent from school for ten
                    percent (10%) or more of the school year;

                              (4) At least one (1) school managed and controlled by the LEA's local board of
                    education was identified as a priority school or maintained a priority school
                    designation for each of the immediately preceding five (5) years;

                              (5) The commissioner of education determines that the findings of an audit
                    conducted, initiated, or directed by the comptroller of the treasury for the LEA show
                    deficiencies in the management, accounting, or internal controls of the LEA, or
                    instances of fraud, waste, abuse, or financial mismanagement, including, but not
                    limited to, the mismanagement of financial records; and

                              (6) The commissioner of education determines that the local board of
                    education for the LEA has employed more than two (2) directors of schools on an
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                   interim basis in the immediately preceding four (4) years, resulting in inconsistent
                   district leadership and operational instability for the LEA.

                   (b) If an LEA meets four (4) or more of the six (6) criteria in subsection (a), then the
         commissioner of education shall notify, in writing, the LEA's local board of education, the
         governor, the speaker of the senate, and the speaker of the house of representatives that an
         oversight board must be appointed for the LEA. An oversight board must be established for
         the LEA pursuant to this section no later than July 1 following the date of the commissioner's
         written notice.

                   (c)(1) An oversight board consists of the following nine (9) members:

                                       (A) Five (5) members appointed by the governor, each of whom must
                             reside in the county in which the LEA is located;

                                       (B) Two (2) members appointed by the speaker of the house of
                             representatives, one (1) of whom must reside in the county in which the LEA
                             is located and one (1) of whom must be a resident of this state who may or
                             may not reside in the county in which the LEA is located; and

                                       (C) Two (2) members appointed by the speaker of the senate, each of
                             whom must reside in the county in which the LEA is located.

                             (2) A vacancy created on an oversight board must be filled by the respective
                   appointing authority, and the member appointed to fill the vacancy serves until the
                   oversight board terminates.

                             (3) Members of an oversight board:

                                       (A) May be removed from the oversight board by the member's
                             appointing authority at any time for any reason; and

                                       (B) Must be compensated in the same manner as members of the
                             LEA's local board of education are compensated.

                             (4) The governor shall call the first meeting of the oversight board, at which
                   time the members of the oversight board shall elect from its membership a chair, vice
                   chair, and any other officers deemed necessary.

                   (d)(1)

                                       (A)(i) An oversight board shall operate in the LEA for four (4) years
                                       beginning on July 1 following tlie date of the commissioner's written
                                       notice for the LEA pursuant to subsection (b). It is the intent of the
                                       general assembly that an oversight board operate in the respective
                                       LEA for four (4) consecutive years.

                                                 (ii) If, for any reason, an oversight board is enjoined, stayed, or
                                       otherwise barred from operating in the LEA by a court of competent
                                       jurisdiction, then, upon the expiration or lifting of any injunction or order
                                       barring the operation of the oversight board in the LEA, the oversight
                                       board shall operate in the LEA for the full four-year period described in
                                       subdivision (d)(1)(A)(i).

                                       (B) If the LEA continues to meet four (4) or more of the six (6) criteria
                             in subsection (a) at the end of the four-year period described in subdivision
                             (d)(1)(A), then the oversight board must be vacated, and the appointing
                             authorities shall appoint nine (9) new members to serve as the oversight
                             board for the LEA for the two (2) consecutive years immediately following the
                             four-year period described in subdivision (d)(1 )(A).

                             (2) An oversight board:

                                       (A) Shall comply with the open meetings law, compiled in title 8,
                             chapter 44, and the public records law, compiled in title 10, chapter 7;

                                       (B) May hold meetings in facilities owned or operated by the LEA;

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                                       (C) May conduct meetings, including executive committee or
                             subcommittee meetings, electronically or allow one (1) or more members to
                             participate in meetings electronically.

                             (3) The chair of the oversight board may appoint from among the members of
                   the oversight board an executive committee or subcommittee that has the power to
                   act on behalf of the oversight board.

                             (4) A majority of the members of the oversight board constitutes a quorum. A
                   majority of the members appointed to serve on any executive committee or
                   subcommittee appointed by the chair of the oversight board pursuant to subdivision
                   (d)(3) constitutes a quorum thereof.

                             (5) An oversight board may hire up to three (3) staff members to assist the
                   oversight board or may reassign one (1) or more employees of the LEA's central
                   office to assist the oversight board, or both. The oversight board shall determine the
                   amount of the salary or compensation paid to each staff member employed or
                   reassigned to assist the oversight board. Staff members employed or reassigned to
                   assist the oversight board must be compensated in the same manner as other LEA
                   employees are compensated.

                             (6) An oversight board shall annually conduct a comprehensive needs
                    assessment of the LEA to determine the factors that may be contributing to the LEA
                   meeting four (4) or more of the six (6) criteria in subsection (a). In conducting each
                   comprehensive needs assessment, the oversight board shall:

                                       (A) Identify the number of teachers employed by the LEA who:

                                                 (i) Teach a course or grade level for which the teacher holds
                                       the required educator license or endorsement;

                                                 (ii) Hold an emergency teaching credential issued by the
                                       department of education or state board of education; and

                                                 (iii) Have three (3) or more years of teaching experience;

                                       (B) Calculate, from the total number of teachers and principals
                             employed by the LEA, the number who earned a level of overall effectiveness
                             score on their most recent annual evaluation conducted pursuant to § 49-1-
                             302 in each of the following categories:

                                                 (i) Significantly below expectations;

                                                 (ii) Below expectations;

                                                 (iii) At expectations;

                                                 (iv) Above expectations; and

                                                 (v) Significantly above expectations;

                                       (C) Determine the teacher retention rate for the LEA;

                                       (D) Ascertain whether the LEA is complying with the maximum class
                             size and average class size requirements in§ 49-1-104, including the number
                             of any maximum· class size or average class size waivers approved for the
                             LEA by the commissioner;

                                       (E) Evaluate the quality, quantity, format, availability, and
                             appropriateness of the textbooks, instructional materials, supplemental
                              instructional materials, and curricula selected for, and used in, the public
                             schools managed and controlled by the LEA's local board of education;

                                       (F) Identify the parental involvement strategies, if any, utilized by the
                             LEA and the effectiveness of any such strategies;

                                       (G) Evaluate the capacity, quality, and effectiveness of the mentoring
                              program provided by the LEA for:

                                                 (i) Newly licensed teachers; and

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                                     (ii) Experienced teachers who have less than two (2) years of
                           experience teaching the subject area or grade level for which the
                           teacher is assigned;

                           (H) Examine the professional development opportunities made
                 available for, and those provided to, teachers employed by the LEA;

                           (I) Conduct a demographic analysis of the student population served
                 by the LEA, including all at-risk and special education populations;

                           (J) Review all available information related to student and teacher
                 disciplinary incidents, issues, reports, and complaints, as well as all school-
                 safety-related issues, incidents, and threats;

                           (K) Review all financial statements and accounting practices;

                           (L) Examine the needs, costs, and usage of all buildings and facilities
                 owned or operated by the LEA, including all maintenance needs;

                           (M) Review all employment contracts to which the LEA or the local
                 board of education is a party;

                           (N) Identify any grant opportunities available to the LEA that may serve
                 to improve areas of insufficient performance; and

                           (0) Review any other information, records, statistics, policies, and
                 practices that the oversight board deems relevant to identifying areas of
                 insufficient performance or mismanagement for the LEA. The LEA's local
                 board of education and each school managed and controlled by the LEA's
                 local board of education shall provide the oversight board with any and all
                 information requested by the oversight board within sixty (60) days of the
                 request.

                 (7) Based on the findings of a comprehensive needs assessment, the
        oversight board shall develop a transformation plan that identifies performance and
        operational goals for the LEA, benchmarks for assessing the LEA's progress toward
        meeting such goals, and that is designed, at a minimum, to:

                           (A) Optimize the education funding available to the LEA, including
                 TISA funding, federal and state grant funding, and local funding;

                           (B) Provide greater opportunities for students to complete workforce
                 credentials and career and technical education programs;

                           (C) Lower the chronic absenteeism rate for the LEA;

                           (D) Improve or expand early childhood literacy opportunities;

                           (E) Identify student supports to improve academic outcomes; and

                           (F) Remediate any deficiencies in the management, accounting,
                 information technology, or internal controls of the LEA and to remediate any
                 fraud, waste, abuse, or financial mismanagement in the LEA, including, but
                 not limited to, any mismanagement of financial records.

                  (8) The oversight board shall annually review and update the transformation
        plan for the LEA developed pursuant to subdivision (d)(7).

                  (9) The oversight board may contract with a third party for the third party to
        conduct a comprehensive needs assessment required in subdivision (d)(6) or to
        develop or update a transformation plan for the LEA.

                  (10) An oversight board may perform a duty or take an action directed or
        authorized in this section before the oversight board conducts or completes a
        comprehensive needs assessment or. develops a transformation plan.

                  (11) If one (1) or more members of the oversight board suspect that a member
        of the LEA's local board of education, the director of schools, or any other
        administrator, employee, contractor, or agent of the LEA has committed an act or
        omission in the performance of the duties of their office or position of employment

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                   with the LEA that, if substantiated, constitutes a state or federal offense, then the act
                   or omission must be reported to the appropriate federal, state, or local law
                   enforcement agency; the district attorney general; the United States attorney, if
                   applicable; and the comptroller of the treasury, if the act or omission involves the use
                   or misuse of public funds.

                             (12) An oversight board shall submit an annual progress report to the
                   governor; the speaker of the senate; the speaker of the house of representatives; the
                   commissioner of education; the local legislative body for the city or county that serves
                   as the local funding body for the LEA, if applicable; the senate education committee;
                   and the committee of the house of representatives having jurisdiction over
                   kindergarten through grade twelve (K-12) education regarding the progress made by
                   the LEA toward improving the academic performance of its student population;
                   implementing one (1) or more of the performance or operational goals identified in its
                   transformation plan; and addressing one (1) or more of the findings of the most recent
                   comprehensive needs assessment that the oversight board has determined to be a
                   contributing factor to the LEA meeting four (4) or more of the six (6) criteria in
                   subsection (a).

                   (e) Notwithstanding another law to the contrary:

                             (1)(A) The local board of education for an LEA for which an oversight board is
                             operating shall submit the proposed budget for the LEA, including any
                             proposed budget amendments, to the oversight board for approval before the
                             item may be submitted to the local legislative body for adoption or, for a
                             special school district, to its local board of education for adoption. The
                             oversight board shall establish the timeline and process by which the
                             proposed budget and any proposed budget amendments must be submitted
                             to the oversight board for approval;

                                       (8) The oversight board shall review the proposed budget or budget
                             amendment and may veto the proposed budget or budget amendment as a
                             whole or may veto one (1) or more line items in the proposed budget or
                             budget amendment;

                                       (C) If the oversight board vetoes the proposed budget or budget
                             amendment, then .the local board of education shall revise the proposed
                             budget or budget amendment as directed by the oversight board and shall
                             resubmit the item to the oversight board for approval;

                                       (D) If the local board of education fails to submit the proposed budget
                             or budget amendment to the oversight board for approval in accordance with
                             the timeline and process established by the oversight board, or fails to revise
                             the proposed budget or budget amendment as directed by the oversight
                             board, then the oversight board shall submit the budget or budget amendment
                             to the local legislative body for adoption or, for a special school district, to the
                             local board of education for adoption. The local board of education for a
                             special school district must adopt the budget or budget amendment adopted
                             for the special school district by the oversight board;

                                       (E) If the oversight board does not veto the proposed budget or budget
                             amendment in whole or in part or notify, in writing, the local board of education
                             that the proposed budget or budget amendment requires further review within
                             fifteen (15) business days from the date on which the proposed budget or
                             budget amendment is submitted to the oversight board for approval, then the
                             proposed budget or budget amendment is deemed to be approved by the
                             oversight board and may be submitted to the local legislative body for
                             adoption or, for a special school district, adopted by the local board of
                             education;

                                       (F) A local legislative body shall not adopt a budget or budget
                             amendment for an LEA for which an oversight board is operating unless:

                                                 (i) The chair of the local board of education certifies, in writing,
                                       to the local legislative body that:

                                                           (a) The budget or budget amendment was submitted to
                                                 the oversight board ·and has been approved for submission to

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                           the local legislative body in accordance with this subdivision
                           (e)(1 ); or

                                     (b) The budget or budget amendment was submitted to
                           the oversight board for approval, that the budget or budget
                           amendment was not vetoed by the oversight board in whole or
                           in part within fifteen (15) business days from the date on which
                           it was submitted to the oversight board for approval, and that
                           the oversight board did not notify the local board of education
                           during that same fifteen-day period that the budget or budget
                           amendment required further review by the oversight board; or

                           (ii) The oversight board certifies to the local legislative body
                 that the local board of education failed to submit the proposed budget
                 or budget amendment to the oversight board for approval in
                 accordance with the timeline and process established by the oversight
                 board and that the proposed budget or budget amendment submitted
                 to the local legislative body was adopted by the oversight board
                 pursuant to subdivision (e)(1)(D); and

                 (G) If the local legislative body rejects the proposed budget or a
        proposed budget amendment submitted for adoption by the local board of
        education or the oversight board pursuant to this subdivision (e)(1 ), then the
        rejected budget or budget amendment must be returned to the oversight
        board, and the oversight board shall revise the budget or budget amendment
        as necessary and resubmit the budget or budget amendment for the LEA to
        the local legislative body for adoption;

        (2)(A) The local board of education for an LEA for which an oversight board is
        operating shall not:

                           (i) Enter into, renew, or amend any contract with a total value of
                 fifty thousand dollars ($50,000) or more unless the contract is
                 approved by the oversight board; or

                           (ii) Authorize any purchase or make any expenditure that is not
                 being made pursuant to the terms of a contract with the LEA that was
                 entered into, renewed, or amended prior to the effective date of this
                 act, or pursuant to the terms of a contract approved by the oversight
                 board pursuant to this subdivision (e)(2), with a value of fifty thousand
                 dollars ($50,000) or more unless the purchase or expenditure is
                  approved by the oversight board;

                  (B) The oversight board shall establish the timeline and process by
        which a proposed contract, contract renewal, contract amendment, purchase,
        or expenditure described in subdivision (e)(2)(A) must be submitted to the
        oversight board for approval;

                  (C) If the local board of education submits a proposed contract,
        contract renewal, contract amendment, purchase, or expenditure to the
        oversight board for approval and the oversight board does not notify the local
        board of education within fifteen (15) business days from the date on which
        the item was submitted to the oversight board for approval that the contract,
        contract renewal, contract amendment, purchase, or expenditure requires
        further review or that its approval has been denied by the oversight board,
        then the item is deemed to be approved by the oversight board;

                 (D)(i) The chair of the local board of education shall certify, in writing,
                 to any individual or entity with which the local board of education
                 enters into, renews, or amends a contract for which approval of the
                 oversight board is required pursuant to this subdivision (e)(2) that:

                                     (a) The contract, contract renewal, or contract
                           amendment was submitted to the oversight board and has
                           been approved by the oversight board; or

                                   .. (b) The contract, contract renewal, or contract
                           amendment was submitted to the oversight board for approval;
                           that the contract, contract renewal, or contract amendment was
                           not denied approval by the oversight board, in whole or in part,

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                           within fifteen (15) business days from the date on which it was
                           submitted to the oversight board for approval; and that the
                           oversight board did not notify the local board of education
                           during that same fifteen-day period that the contract, contract
                           renewal, or contract amendment required further review by the
                           oversight board;

                           (ii) A contract, contract renewal, or contract amendment
                 executed on or after the effective date of this act by and between an
                 individual or entity and the local board of education for an LEA for
                 which an oversight board is operating is not legally enforceable in this
                 state if the chair of the local board of education did not issue the
                 certification required in subdivision (e)(2)(D)(i) before the contract,
                 contract renewal, or contract amendment was executed, or if the chair
                 issued a fraudulent or misleading certification; and

                           (iii) If the oversight board approves, or is deemed to have
                 approved, a contract, contract renewal, contract amendment,
                 purchase, or expenditure, then the local board of education may
                 proceed with the contract, contract renewal, contract amendment,
                 purchase, or expenditure in accordance with all applicable
                 procurement laws, rules, and policies;

                 (E) The local board of education for an LEA for which an oversight
        board is operating shall report to the oversight board each contract, contract
        renewal, or contract amendment executed by and between any individual or
        entity and the local board of education with a total value of less than fifty
        thousand dollars ($50,000) that was not submitted to the oversight board for
        approval pursuant to this subdivision (e)(2). The oversight board shall
        establish the timeline and process by which the local board of education must
        submit the report required in this subdivision (e)(2)(E); and

                 (F) For purposes of this subdivision (e)(2):

                           (i) "Contract" does not include an employment contract for a
                 teacher or school principal, but does include an employment contract
                 for a director of schools and for all other current or prospective
                  employees of the LEA, including, but not limited to, current or
                  prospective employees of the LEA's central office; and

                           (ii) "Expenditure" does not include the salaries or benefits paid
                 to a teacher or school principal, but does include the salary, benefits,
                  and any other contract or employment-related expenses for a director
                  of schools and for all other employees of the LEA, including, but not
                  limited to, employees of the LEA's central office;

        (3)(A) The local board of education for an LEA for which an oversight board is
        operating shall, if applicable, submit the comprehensive listing of all
        underutilized property or vacant property required in § 49-13-136(c)(2) to the
        oversight board for approval. The oversight board shall establish the timeline
        and process by which the local board of education must submit its
        comprehensive listing of all underutilized property or vacant property to the
        oversight board for approval;

                  (B) The oversight board shall review the proposed list and may revise
        the list as the oversight board deems necessary to accurately reflect the
        underutilized prop_erty or vacant property in the LEA that is available for use by
        a public charter school operating in the LEA;

                  (C) The local board of education shall submit to the department of
        education and comptroller of the treasury the comprehensive listing of all
        underutilized property or vacant property approved by the oversight board,
        including any underutilized property or vacant property that may have been
        added to the list by the oversight board;

                  (D) If the local board of education fails to submit the comprehensive
        listing of all underutilized property or vacant property to the oversight board for
        approval in accordance with the timeline and process established by the
        oversight board, or fails to include on the list any underutilized property or

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        vacant property added to the list by the oversight board, then the oversight
        board shall submit the comprehensive listing of all underutilized property or
        vacant property for the LEA to the department of education and the
        comptroller of the treasury; and

                 (E) The department of education and the comptroller of the treasury
        shall not accept a comprehensive listing of all underutilized property or vacant
        property required pursuant to § 49-13-136(c)(2) for an LEA for which an
        oversight board is operating unless:

                           (i) The chair of the local board of education certifies, in writing,
                 to the department and comptroller that the list was submitted to the
                 oversight board for approval, that the list includes any underutilized
                 property or vacant property that was added to the list by the oversight
                 board, and that the comprehensive listing of all underutilized property
                  or vacant property .submitted to the department and comptroller has
                 been approved by the oversight board for submission to the
                 department and comptroller in accordance with this subdivision (e)(3);
                  or

                           (ii) The oversight board certifies, in writing, to the department
                  and comptroller that the local board of education failed to submit the
                  list to the oversight board for approval in accordance with the timeline
                  and process established by the .oversight board, or failed to include in
                 the comprehensive listing all underutilized property or vacant property
                  added to the list by the oversight board, and that the comprehensive
                  listing of all underutilized property or vacant property was adopted by
                 the oversight board for the LEA pursuant to subdivision (e)(3)(D);

        (4)(A) The local board of education for an LEA for which an oversight board is
        operating shall not deny an amended application to open a new public charter
        school, an application to convert an existing public school to a public charter
        school, an application to renew the charter agreement of a public charter
        school, or a petition to amend the charter agreement of a public charter school
        submitted to the local board of education unless the oversight board has
        approved the local board of education's decision to deny the application or
        petition;

                  (B) The local board of education shall submit an application or petition
        described in subdivision (e)(4)(A) that the local board of education seeks to
        deny to the oversight board for review along with the grounds upon which the
        local board of education is basing its decision to deny the application or
        petition. The oversight board shall establish the timeline and process by which
        an application or petition that the local board of education seeks to deny must
        be submitted to the oversight board for review; provided, that the timeline and
        process established by the oversight board must, at a minimum, require the
        local board of education to submit such an application or petition to the
        oversight board for review no later than fifteen (15) business days before the
        local board of education is required to issue a final decision to deny the
        application or petition pursuant to chapter 13 of this title;

                  (C)(i) If the oversight board approves the local board of education's
                  decision to deny an application or petition described in subdivision
                  (e)(4)(A), then the local board of education may issue a final decision,
                  ruling, or resolution denying the application or petition; and

                           (ii) This subdivision {e)(4)(C) does not prevent a sponsor or
                  governing body, as those terms are defined in § 49-13-104, from
                  appealing the denial to the Tennessee public charter school
                  commission in accordance with chapter 13 of this title; and

                  (D) If the oversight board disagrees with the local board of education's
        decision to deny an application or petition described in subdivision (e)(4)(A),
        then the local board of education shall issue a final decision, ruling, or
        resolution approving the application or petition; and

        (5)(A)

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                 (i) An oversight board may require the LEA's local board of
        education to take a discretionary action within the local board of
        education's authority, or prohibit the local board of education from
        taking a discretionary action within the local board of education's
        authority, if the oversight board determines that the action or inaction is
        necessary to improve the LEA's performance, operation, or
        management;

                  (ii) The local board of education shall take any discretionary
        action required by the oversight board pursuant to this subdivision
        (e)(S)(A). If the local board of education fails or refuses to take a
        discretionary action required by the oversight board, then the oversight
        board may take the action on behalf of the local board of education.
        The local board of education shall not take any action prohibited by the
        oversight board pursuant to this subdivision (e)(S)(A); and

                  (iii) For purposes of this subdivision (e)(S)(A):

                           (a) "Authority" includes all powers and duties of a local
                  board of education authorized and established in state law and
                  in any applicable private act or charter; and

                           (b) "Discretionary action" includes any formal or
                  informal decision or. action that may be taken by a local board
                  of education pursuant. to its authority for which the local board
                  of education may exercise its judgment, including, but not
                  limited to, the scope and content of policies adopted by the
                  local board of education, as well as any formal or informal
                  decision or action to open, close, or consolidate one (1) or
                  more schools under the jurisdiction of the local board of
                  education;

        (B)(i) An oversight board may require the LEA's director of schools to
        take a discretionary action within the director's authority, or prohibit the
        director from taking a discretionary action within the director's
        authority, if the oversight board determines that the action or inaction is
        necessary to improve the LEA's performance, operation, or
        management;

                  (ii) The director of schools shall take any discretionary action
        required by the oversight board pursuant to this subdivision (e)(5)(8).
        The director shall not take any discretionary action prohibited by the
        oversight board pursuant to this subdivision (e)(S)(B). If the director
        fails or refuses to take an action required by the oversight board, or
        takes an action prohibited by the oversight board, then the director's
        employment with the LEA may be terminated by the oversight board
        and the termination is deemed to be a termination for cause; and

                  (iii) For purposes of this subdivision (e)(5)(8):

                           (a) "Authority" includes all powers and duties of a
                  director of schools authorized and established in state law and
                  in any applicable private act or charter; and

                           (b) "Discretionary action" includes any formal or
                  informal decision or action that may be taken by the director of
                  schools pursuant to the director's authority for which the
                  director may exercise the director's judgment; and

        (C)(i)

                           (a) Subject to .subdivision (e)(S)(C)(i)(b), an oversight
                  board may terminate, with or without cause, the employment of
                  any LEA employee, including the director of schools, on behalf
                  of the LEA or local boar,d of education, regardless of whether
                  the employee is employed at will or under a contract of
                  employment; and

                           (b) An oversight board shall not:

                                9
SB 714

                                     (1) Terminate the employment· of an LEA
                           employee who is employed under a contract of
                           employment in a manner that violates the express terms
                           of the contract. The oversight board may exercise, on
                           behalf of the LEA or local board of education, the rights
                           of the LEA or local board of education under the terms
                           of the contract to terminate the employment of the LEA
                           employee, with or without cause; or

                                     (2) Terminate the employment of a tenured
                           teacher or tenured principal without first providing the
                           teacher or principal with due process in accordance with
                           chapter 5, part 5 of this title. The oversight board may
                           initiate, on behalf of the LEA or local board of education,
                           the process required to terminate a tenured teacher or
                           principal if grounds for their termination exist under §
                           49-5-511;

                 (ii) An oversight board may terminate an LEA employee,
        including the director of schools, for cause, including, but not limited to,
        one (1) or more of the causes for termination described in this
        subdivision (e)(5)(C)(ii). A termination is deemed to be a termination
        for cause if the oversight board terminates the LEA employee,
        including the director of schools, for:

                           (a) Failing or refusing to comply with a directive of the
                 oversight board issued in accordance with this section,
                 including a directive issued by the oversight board pursuant to
                 subdivision (e)(5)(8), if applicable;

                           (b) Causing or contributing to one (1) or more
                 deficiencies in the management, accounting, or internal
                 controls of the LEA, or for causing or contributing to any fraud,
                 waste, abuse, or financial mismanagement, including any
                  mismanagement of financial records; or

                           (c) Having been negligent or derelict in the performance
                  of their duties such that the oversight board may reasonably
                 conclude that the negligence or dereliction of duty caused or
                 contributed to the LEA meeting four (4) or more of the six (6)
                  criteria in subsection (a);

                  (iii)(a) Subject to subdivision (e)(5)(C)(iii)(b), an LEA employee,
                  including the director of schools, who is employed by the LEA
                  or local board of education under a contract of employment and
                 whose employment is terminated by the oversight board for
                  cause pursuant to this subdivision (e)(5)(C), forfeits all
                  compensation due under the terms of the contract of
                  employment with the LEA or local board of education beginning
                  on the date of their termination, including any compensation
                  payable only on ,their separation from employment. The
                  terminated LEA employee may be compensated for any actual
                  services performed before the date of their termination; and

                           (b) An oversight board shall not deny payment of
                  compensation due to a terminated LEA employee, including the
                  director of schools, under the terms of their contract of
                  employment, if denying the compensation would violate the
                  express terms of the contract. The oversight board may
                  exercise, on behalf of the LEA or local board of education, the
                  rights of the LEA or local board of educ~tion. under the terms of
                  the contract to deny payment of compensation due to the
                  terminated LEA employee beginning on the date of their
                  termination, including any compensation payable only on their
                  separation from employment; and

                  (iv)(a) The oversight board shall select and employ, on behalf
                  of the LEA or local board of education, a qualified individual to
                  fill a position vacated by an LEA employee whose employment

                                 10
SB 714

                                                 was terminated by the oversight board pursuant to this
                                                 subdivision (e)(S)(C), and may enter into a contract of
                                                 employment with the individual on behalf of the LEA or local
                                                 board of education to do so;

                                                           (b) Except as provided in subdivision (e)(S)(C)(iv)(c),
                                                 subdivision (e)(S)(C)(iv)(a) does not require an oversight board
                                                 to fill a vacated position if the oversight board determines that
                                                 the position is redundant or unnecessary for the efficient
                                                 operation of the LEA; and

                                                           (c) If the oversight board terminates the employment of
                                                 the director of schools, then the oversight board shall select
                                                 and employ a director of schools on behalf of the LEA or local
                                                 board of education under a written contract of up to four (4)
                                                 years' duration, which may be renewed in the same manner as
                                                 if the local board of education selected and employed the
                                                 director of schools. A director of schools employed by an
                                                 oversight board has the same powers and duties as a director
                                                 of schools employed by a local board pursuant to § 49-2-203.

                    (f)(1) There is created a special account in the state treasury to be administered by
                   the department of education and to be known as the educational oversight board
                    reserve fund, hereinafter referred to as the fund. It is the intent of the general
                    assembly that a nonrecurring appropriation in an amount of no less than five hundred
                   thousand dollars ($500,000) and no more than one million dollars ($1,000,000) be
                    appropriated for the fund for the 2026-2027 fiscal year.

                             (2) Upon application by an oversight board created pursuant to this section,
                    and for good cause shown, the department may disburse moneys in the fund to the
                    oversight board to be used for any purpose necessary or attendant to the operation of
                    the oversight board in furtherance of this section.

                              (3) Any amounts remaining in the fund at the end of a fiscal year must not
                    revert to the general fund, but must be carried forward into the subsequent fiscal year
                    and remain available for use by an oversight board.

                    (g) The local board of education for an LEA for which an oversight board is operating
          pursuant to this section is not authorized to assert a cause of action, intervene in any cause
          of action, or provide funding for any cause of action challenging any action taken by an
          oversight board pursuant to, and in accordance with, this section.
          SECTION 2. If any provision of this act or the application of any provision of this act to any
person or circumstance is held invalid, the invalidity does not affect other provisions or applications
of the act that can be given effect without the invalid provision or application, and to that end, the
provisions of this act are severable.

          SECTION 3. The heading in this act is for reference purposes only and does not constitute a
part of the law enacted by this act. However, the Tennessee Code Commission is requested to
include the heading in any compilation or publication containing this act.

          SECTION 4. This act takes effect upon becoming a law, the public welfare requiring it.

                                                                11
         SENATE BILL NO. 714

PASSED:  April 22, 2026

                                                    RANDY'40cNALLY
                                      SPEAKER OF THE"sENA TE

                         CAMERON SEXTON, SPEAKER
                         HOUSE OF REPRESENTATIVES

JJ APPROVED this  .,,,J. day of {VJ!            2026

         &;,, ~ ~
                             BILL LEc,GOVERNOR
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