Charter School Modifications, the official text

Charter School Modifications
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Heidi Balderree
House Sponsor: Candice B. Pierucci

LONG TITLE
General Description:
This bill establishes a charter school base funding study and creates a charter school educational service agency.
Highlighted Provisions:
This bill: requires a study of charter school administrative costs and funding options;
establishes a charter school base funding study group with specific membership;
requires charter school governing board members to take an oath of office;
clarifies that charter schools are public schools;
replaces the Charter School Revolving Account with the Charter School Revolving Fund;
requires the study group to examine charter school administrative costs and funding options;
directs the State Board of Education to report to the Legislature by December 1, 2026; and
makes technical changes.

Money Appropriated in this Bill: This bill appropriates $3,600,000 in operating and capital budgets for fiscal year 2027, all of which is from the various sources as detailed in this bill. Other Special Clauses: This bill provides a special effective date. Utah Code Sections Affected: AMENDS:
53F-2-706 Effective upon governor's approval, as last amended by Laws of Utah 2023, Chapter 467
53F-9-203 Effective upon governor's approval, as last amended by Laws of Utah 2024, Chapter 507
53G-5-104 Effective upon governor's approval, as last amended by Laws of Utah 2024, Chapter 63
53G-5-401 Effective upon governor's approval, as last amended by Laws of Utah 2024, Chapter 63

ENACTS:
53F-9-203.1 Effective upon governor's approval, Utah Code Annotated 1953
53G-5-406.5 Effective upon governor's approval, Utah Code Annotated 1953

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 53F-2-706 is amended to read:
53F-2-706 Effective upon governor's approval. Small charter school base funding -- Base funding study.
(1) Subject to legislative appropriation, the state board shall distribute small charter school base funding to charter schools with 2,000 or fewer students in the amount of the greater of $40,000 or $115 per student.
(2) A charter school's eligibility for small charter school base funding is determined by the charter school's student enrollment on October 1 of a given year.
(3) Notwithstanding this section and subject to legislative appropriations, including intent language for the applicable fiscal year, the state board may distribute to charter schools, regardless of size, one-time funding that the Legislature appropriates[to mitigate funding losses as described in legislative appropriations].
(4) (a) Subject to legislative appropriations, the state board shall coordinate and facilitate a comprehensive study of administrative and base funding costs for charter schools.
(b) The study described in Subsection (4)(a) shall include the following members to constitute the study group: (i) a charter school business administrator from a small charter school whom the chair of the state board appoints;
(ii) a charter school director from a large charter school whom the chair of the state board appoints;
(iii) a school district business administrator whom the chair of the state board appoints;
(iv) the director of each charter school association that has a member charter school operating in the state, or the director's designee;
(v) a member of the Utah State Charter School Board whom the chair of the state board appoints;
(vi) a member of the state board whom the chair of the state board appoints;
(vii) relevant staff from the state board whom the chair of the state board appoints; and
(viii) a representative from the Governor's Office of Planning and Budget whom the director of the Governor's Office of Planning and Budget appoints.

(c) The chair of the state board shall: (i) convene the first meeting of the study group no later than April 1, 2026; and
(ii) designate a member of the study group to serve as chair of the study group.

(5) The study group described in Subsection (4)(b) shall: (a) examine how factors such as school size, enrollment scale, and operational models impact the relative costs of operating charter schools;
(b) analyze the adequacy and effectiveness of the charter school base funding formula in addressing economies of scale challenges faced by charter schools of varying sizes;
(c) compare administrative and operational cost structures across charter schools of different sizes and configurations and applicable districts;
(d) evaluate whether current funding mechanisms appropriately account for: (i) fixed costs that do not scale proportionally with enrollment;
(ii) administrative requirements mandated by state and federal law; and
(iii) operational efficiencies or challenges unique to charter schools;

(e) consider funding models used in other states or jurisdictions that may provide insights for the charter school funding system; and
(f) identify any additional factors that significantly impact charter school operational costs beyond those currently considered in the funding formula.

(6) The state board shall submit a report to the Public Education Appropriations Subcommittee no later than December 1, 2026, that includes: (a) findings from the study described in this section;
(b) recommendations for any modifications to the charter school base funding formula;
(c) proposed criteria or metrics for evaluating the ongoing adequacy of charter school base funding;
(d) estimated fiscal impacts of any recommended changes; and
(e) a proposed timeline for implementation of any recommended modifications.

(7) Subject to legislative appropriations, the state board may contract with a qualified third party, including institutions of higher education or research organizations, to conduct part of the study described in this section.

Section 2. Section 53F-9-203 is amended to read:
53F-9-203 Effective upon governor's approval. Charter School Revolving Account.
(1) (a) The terms defined in Section 53G-5-102 apply to this section.
(b) As used in this section, "account" means the Charter School Revolving Account.

(2) (a) There is created within the Uniform School Fund a restricted account known as the "Charter School Revolving Account" to provide assistance to charter schools to: (i) meet school building construction and renovation needs; and
(ii) pay for expenses related to the start[]up of a new charter school or the expansion of an existing charter school.

(b) The state board, in consultation with the State Charter School Board, shall administer the Charter School Revolving Account in accordance with rules adopted by the state board.

(3) The Charter School Revolving Account shall consist of: (a) money appropriated to the account by the Legislature;
(b) money received from the repayment of loans made from the account; and
(c) interest earned on money in the account.

(4) The state superintendent shall make loans to charter schools from the account to pay for the costs of: (a) planning expenses;
(b) constructing or renovating charter school buildings;
(c) equipment and supplies; or
(d) other start-up or expansion expenses.

(5) Loans to new charter schools or charter schools with urgent facility needs may be given priority.
(6) The state board shall: (a) review requests by charter schools for loans under this section; and
(b) in consultation with the State Charter School Board, approve or reject each request.

(7) A loan under this section may not be made unless the state board, in consultation with the State Charter School Board, approves the loan.
(8) The term of a loan to a charter school under this section may not exceed five years.
(9) The state board may not approve loans to charter schools under this section that exceed a total of $2,000,000 in any fiscal year.
(10) (a) On March 16, 2011, the assets of the Charter School Building Subaccount administered by the state board shall be deposited into the Charter School Revolving Account.
(b) Beginning on March 16, 2011, loan payments for loans made from the Charter School Building Subaccount shall be deposited into the Charter School Revolving Account.

(11) (a) On July 1, 2026, the state board shall transfer into the Charter School Revolving Fund created in Section 53F-9-203.1 the assets, unused money, and obligations of the Charter School Revolving Account administered under this section.
(b) Beginning July 1, 2026, the state board shall deposit loan payments received for loans made under this section into the Charter School Revolving Fund established in Section 53F-9-203.1.

Section 3. Section 53F-9-203.1 is enacted to read:
53F-9-203.1 Effective upon governor's approval. Charter School Revolving Fund.
(1) As used in this section: (a) The definitions in Section 53G-5-102 apply to this section.
(b) "Fund" means the Charter School Revolving Fund.

(2) (a) There is created within the Uniform School Fund a restricted account known as the Charter School Revolving Fund to provide assistance to charter schools to: (i) meet school building construction and renovation needs; and
(ii) pay for expenses related to the startup of a new charter school or the expansion of an existing charter school.

(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the Utah Charter Finance Authority shall make rules to administer the fund including: (i) establishing the interest rates of loans;
(ii) amortization schedules for loans; and
(iii) other terms of repayment.

(3) The fund shall consist of: (a) assets and money deposited in accordance with Subsection (9);
(b) money the Legislature appropriates to the fund;
(c) money received from the repayment of loans made from the fund; and
(d) interest earned on money in the fund.

(4) The Utah Charter Finance Authority shall make loans to charter schools from the fund for a loan of: (a) up to $1,000,000 to a charter school for a school facility addition or expansion; or
(b) up to 25% of a requested loan amount to a charter school for the acquisition or construction of a school facility.

(5) The Utah Charter Finance Authority shall: (a) review requests by charter schools for loans under this section; and
(b) approve or reject each request.

(6) The Utah Charter Finance Authority: (a) shall: (i) make a loan that is secured by a promissory note and a deed of trust from the charter school; and
(ii) require a recipient charter school to repay the funds if the recipient charter school sells or refinances any collateral associated with the loan; and

(b) may make a loan that is subordinate to senior debt.

(7) A loan under this section may not be made unless the Utah Charter Finance Authority approves the loan.
(8) The Utah Charter Finance Authority shall set the term of a loan to a charter school under this section.
(9) (a) On July 1, 2026, the state board shall transfer into the fund the assets, unused money, and obligations of the Charter School Revolving Account administered under Section 53F-9-203.
(b) Beginning on July 1, 2026, the state board shall deposit loan payments for loans made from the Charter School Revolving Account into the fund.

Section 4. Section 53G-5-104 is amended to read:
53G-5-104 Effective upon governor's approval. Purpose of charter schools -- Charter schools are public schools.
(1) The purposes of the state's charter schools are to enhance school choice, meet the unique needs of Utah families, and encourage innovation within the public education system by: [(1)] (a) continuing to improve student learning;
[(2)] (b) encouraging the use of different and innovative teaching methods;
[(3)] (c) creating new professional opportunities for educators that allow educators to actively participate in designing and implementing learning programs at the school;
[(4)] (d) increasing choice of learning opportunities for students;
[(5)] (e) establishing new educational models and new forms of accountability that emphasize unique performance measures and innovative measurement tools to measure education outcomes;
[(6)] (f) providing opportunities for greater parental involvement in governance decisions at the school level;
[(7)] (g) expanding public school choice in areas where there is a lack of school choice or where schools have been identified for school improvement, corrective action, or restructuring; and
[(8)] (h) collaborating within the public education system.

(2) As described in Section 53G-5-401, a charter school is a public school for all purposes under Utah law, including: (a) the Legislature's authority under Utah Constitution, Article X, Section 3, to designate schools and educational programs, including charter schools, as part of the public education system;
(b) eligibility for public funding and resources;
(c) access to public facilities and property;
(d) participation in public school programs and initiatives; and
(e) application of laws governing an LEA.

Section 5. Section 53G-5-401 is amended to read:
53G-5-401 Effective upon governor's approval. Status of charter schools.
(1) Charter schools[are]: (a) are considered to be public schools within the state's public education system;
(b) are subject to Subsection 53E-3-401(8); and
(c) shall be governed by an independent [boards] board whose members have taken the oath of office as described in Section 53G-5-406.5, and held accountable to a legally binding written contractual agreement.

(2) A charter school may be established by: (a) creating a new school; or
(b) converting an existing district school to charter status.

(3) A parochial school or home school is not eligible for charter school status.

Section 6. Section 53G-5-406.5 is enacted to read:
53G-5-406.5 Effective upon governor's approval. Oath of office for charter school governing board members.
(1) Before entering upon the duties of office, each charter school governing board member shall take and subscribe to the following oath: "I do solemnly swear that I will support, obey, and defend the Constitution of the United States and the Constitution of the State of Utah, and that I will discharge the duties of my office as a charter school governing board member with fidelity."
(2) The charter school's authorizer shall ensure the oath is administered by: (a) in accordance with Section 78B-1-142, any person authorized to administer oaths;
(b) for a newly authorized charter school, a representative of the charter school's authorizer; or
(c) after the initial board is sworn in, the chair or another member of the charter school governing board.

(3) The charter school shall: (a) in accordance with Subsection 51-1-2(2), maintain a record of each governing board member's oath; and
(b) provide proof of compliance to the charter school's authorizer upon request.

Section 7. FY 2027 Appropriations.
The following sums of money are appropriated for the fiscal year beginning July 1, 2026, and ending June 30, 2027. These are additions to amounts previously appropriated for fiscal year 2027. Subsection 7(a). Operating and Capital Budgets Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, the Legislature appropriates the following sums of money from the funds or accounts indicated for the use and support of the government of the state of Utah. PUBLIC EDUCATION STATE BOARD OF EDUCATION - MINIMUM SCHOOL PROGRAM ITEM 1 State Board of Education - Minimum School Program - Related to Basic School Programs From Public Education Economic Stabilization Restricted Account, One-time 3,100,000 Charter School Funding Base Program 3,100,000 (1) The Legislature intends the state board to provide additional base funding to charter schools above the amounts directed in Section 53F-2-706 using a formula approved by the state board that distributes no more than $220,000 in total base funding to any charter school with amounts decreasing proportionately for each additional student. (2) The Legislature further intends the formula to distribute no more than $175,000 to charters with more than 2,000 students and for smaller charter schools, no more than what the state board's formula would provide per student for a charter school with 100 students. (3) The Legislature further intends the study described in Section 53F-2-706 shall be funded from this appropriation not to exceed $70,000. STATE BOARD OF EDUCATION ITEM 2 State Board of Education - Regional Education Service Agencies From Public Education Economic Stabilization Restricted Account, One-time 500,000 Charter School Educational Service Agency 500,000

Section 8. Effective Date.
This bill takes effect: (1) except as provided in Subsection (2), May 6, 2026; or
(2) if approved by two-thirds of all members elected to each house: (a) upon approval by the governor;
(b) without the governor's signature, the day following the constitutional time limit of Utah Constitution, Article VII, Section 8; or
(c) in the case of a veto, the date of veto override.

3-6-26 5:46 PM