Lex-is School Law Services

2014 Charter School Law Update

Specializing in 
Charter School Law 

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Dear Lex-is Charter School Clients,

At last week's NC Public Charter Schools Association summer conference in Wilmington, I presented a charter school law update.  For those of you who could not attend,  my Update Outline is copied below.  

As you will see, the North Carolina legislature enacted a number of significant charter school changes (some awaiting the Governor's approval). 

There are several items that require your board's attention and potential school policy changes; these are noted in orange.  In addition, additional resources are linked in the outline and noted in yellow. 

I hope you have had a great summer and your schools are prepared for success this next year. Please let us know if we can help.

Best regards,

David Hostetler, Esq.
2014 N.C. Charter School Law Update

(Note: items with direct policy and practice impact are noted in orange font)

1. Introduction


A. Overview of topic/materials (Outline e-copy)

B. The unique nature of charter school ("CS") law (see diagram) and sources of law


C. When are CSs subject to new laws pertaining to "public schools"? 


"Except as provided in [The Charter Act] and pursuant to the provisions of its charter, a charter school is exempt from statutes and rules applicable to a local board of education or local school administrative unit."(115C-238.29E(f))]

D.How an idea becomes a law 

(see NCGA chart)


E. Legal terminology: "Bill", "Ratified Bill", "Session Law", "Statute," "Regulation/Rule"


F. Key Sources:NCGA, 115C, NC Charter Act, SBE Rules(search "charter"), CS AG Opinions


  (Senate-approved conference edition, 8/31/14)


A. SBE may offer system of property insurance to CSs, similar to Traditional Public Schools ("TPSs") (s. 8.10, amend. 115C-533)

B. Funds for testing in advance courses: expanded to include CSs along with TPSs

C. Schools to supply/administer of epi-pens (for allergic reactions) (s. 8.23, New 115C-375.2A). DPI to ensure CSs comply with 115C-375.2A (s.8.23b, amend. 115C-238.29F(a))

D. DPI response times to TPS and CS information requests (s.8.28).  Within 3 business days (when practicable); full responses within 14 days 


E. "Encourages" CS Anti-bullying policies (s.832.(b), amend. 115C-238.29F) (See Lex-is Policy Template, Student Series 305.4)

F. CS closure and fund reserve (s.8.34.(b), creates new 115C-239.29L) 

1. CSs to maintain at least $50,000 reserve in case of dissolution
2. Permissible options: escrow account, letter of credit, bond, deed of trust

3. All net assets purchased with public funds belong to LEA [old rule, new provision]


G. Virtual CS ("VCS") Pilot Program (s.8.35)

1. SBE "shall" establish pilot program for 2 VCSs to enroll for 2015-16
2. VCS may serve any k-12 grade level
3. 4-year program, ending in 2018-19 [presumably pre-opening = 1 year]
4. Max. of 1500 students (Y1) + 20% annual increase, up to 2952 students (Y4)
5. Max teacher-student ratios: 1:50 (grades k-8); 1:150 (grades 9-12)
6. Process for disenrollment for students who fail to participate per VCS policy
7. VCS NC office and meeting places in each of 8 Districts from which students drawn
8. Any 3rd party executive staff (principal, supt., finance officer) must be NC resident
9. 90% of teachers reside in NC, "appropriate state certification," virtual instruction training
10. Student withdrawal rate below 25% (unless planned and documented)
11. Learning coach assigned to each student to ensure daily contact, coordination

12. Similar per pupil funding with some limitations (e.g., no low-wealth supplement)


3. S 793: Charter School Modifications (Ratified) 


A. CS teacher may serve as "nonvoting" board member

B. SBE final decisions on charter applications by August 15 (formerly January 15)

C. Charter renewals for 10 years; less for financial, academic, or compliance problems 


D. Allows CS expansion by grade if sound financials, academics, governance

E. No more enrollment priority for children of initial members of charter school in 1st year 


F. CS subject to Public Records Act, Open Meetings, and Record Retention Rules

G. LEAs to provide all necessary student transferee records for determining LEA $ allocation

H. Any litigation judgment to be paid in full by LEA within 1 year (formerly 3 years) 

I. SBE to adopt process for assumption of charter school in jeopardy of shut-down due to
inadequate performance. Minimum criteria: operation of another NC charter school with three
years of "sound audits," and LEA-"comparable student outcomes" 

J. SBE to adopt, by December 14, 2014, rules for competitive bid process (of 150 days or less) to
develop procedures for fast-track charter approval for "high quality charter schools currently
operating in the state" (with no planning year required). 


4. H 844: CS Dropout Prevention Pilot / SBE Report on Use of Personnel Contracts (Ratified) 


A. SBE to establish a two-year Dropout Prevention and Recovery Pilot Program (Pilot Program),  selecting one charter high school to provide educational services and programming]

B. Purpose: reengage students, increase graduation rates "through an "program that provides flexible scheduling" and "individualized and self-paced learning options"

C. CS to adopt an "alternative accountability model"


5. North Carolina Charter Cases

(detailed outlines available online)


A. Thomas Jefferson Classical Academy v. Cleveland County BoE, 758 S.E.2d 688 (N.C. Ct. App. 2014) [Appeal sought]. NC Court of Appeals remands case to superior court, ordering trial judge to apply 2010 "clarifying" legislative amendments to funding statute regarding "restricted"  funds. An LEA is not a "state agency" (though it may be an "agent" of the state) and therefore not subject to attorney fees award.

B. Northeast Raleigh Charter Academy, Inc. (d/b/a Torchlight Academy) v. Wake County BoE,757 S.E.2d 527 (N.C. Ct. App. 2014) [Unpublished Opinion]. Affirming trial court denial of additional share of the fund balance to plaintiff charter school.

C. Charter Day School, Inc. v. New Hanover Co. BoE, 754 S.E.2d 229 (NCA 2014). Calculation of funds due to charter schools based only on fund amounts actually "appropriated." LEA may not count pre-kindergarten students in funding formula.

D. NC SBE. v. North Carolina Learns, Inc., 751 S.E. 2d 625 (NCA 2013). Statutes requiring SBEto act by deadline were directory rather than mandatory such that failure to act did not result in approval. Operator required to wait 120 days until after deadline to file hearing petition. 

6. Q&A

7. Conclusion 

A. A word about employee contracting practices (Lex-is contract template) 

B. Other Lex-is resources: 

- "10 Strategic Legal Practices"

CS Board Policy Series (TOC)


Contact Information:

Lex-is School Law Services
1289 Fordham Blvd, #251
Chapel Hill, NC  27514

Main Phone:  919.442.8593  

David Hostetler: 919-308-4652 / [email protected]