TITLE 7. EDUCATION CHAPTER 5. STATE BOARD FOR CHARTER … · 2019/7/1 · CHAPTER 5. STATE BOARD...

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The table of contents on the first page contains quick links to the referenced page numbers in this Chapter. Refer to the notes at the end of a Section to learn about the history of a rule as it was published in the Arizona Administrative Register.

Please note that the Chapter you are about to replace may have rules still in effect after the publication date of this supplement. Therefore, all superseded material should be retained in a separate binder and archived for future reference.

Sections, Parts, Exhibits, Tables or Appendices codified in this supplement. The list provided contains quick links to the updated rules.

The release of this Chapter in Supp. 19-3 replaces Supp.

R7-5-101. Definitions ............................................................ 2R7-5-208. Application for Replication Charter ..................... 8R7-5-301. Application for Charter Renewal; Early Renewal of

Charter .................................................................. 8R7-5-402. Minimum Financial Performance Expectations . 10R7-5-501. General Supervision .......................................... 13

R7-5-504. Annual Audit and Financial Performance Review .............................................................................14

R7-5-506. Five-year-interval Review ..................................15R7-5-509. Financial Intervention Submissions ...................16R7-5-602. Oversight of Charter Schools Assigned a Letter

Grade of “F” by the Department ........................18

Supp. 19-3

This Chapter contains rule Sections that were filed to be codified in the Arizona Administrative Code between the dates of July 1, 2019 through

Name: Charles Tack, Executive DirectorAddress: State Board for Charter Schools

1616 W. Adams St., Suite 170Phoenix, AZ 85007orP.O. Box 18328Phoenix, AZ 85005

Telephone: (602) 364-3080E-mail: [email protected]: https://asbcs.az.gov

Questions about these rules? Contact:

7 A.A.C. 5

Title 7

CHAPTER 5. STATE BOARD FOR CHARTER SCHOOLS

TITLE 7. EDUCATION

September 30, 2019

17-1, 1-17 pages

mailto:[email protected]

https://asbcs.az.gov

PREFACE

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Scott Cancelosi, Director ADMINISTRATIVE RULES DIVISION

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Arizona Administrative Code 7 A.A.C. 5

Administrative Rules DivisionThe Arizona Secretary of State electronically publishes each A.A.C. Chapter with a digital certificate. The certificate-based signature displays the date and time the document was signed and can be validated in Adobe Acrobat Reader.


TITLE 7. EDUCATION

Authority: A.R.S. § 15-182

Editor’s Note: 7 A.A.C. 5 made by final rulemaking at 10 A.A.R. 1141, effective March 2, 2004 (Supp. 04-1).

ARTICLE 1. GENERAL PROVISIONS

Article 1, consisting of R7-5-101, made by final rulemaking at10 A.A.R. 1141, effective March 2, 2004 (Supp. 04-1).

SectionR7-5-101. Definitions ........................................................... 2

ARTICLE 2. APPLICATION FOR A NEW CHARTER; APPLICATION FOR CHARTER REPLICATION

Article 2, consisting of R7-5-201 through R7-5-204, made byfinal rulemaking at 10 A.A.R. 1141, effective March 2, 2004 (Supp.04-1).

SectionR7-5-201. Application for a New Charter ............................ 3R7-5-202. New Charter Application Processing Fee 4R7-5-203. Time Frames for Granting or Denying a New

Charter ................................................................. 4R7-5-204. Review of Administratively Complete Application

Package for a New Charter, Technical Assistance, and In-person Interview ....................................... 5

R7-5-205. Execution of a New Charter ................................ 6R7-5-206. Good-cause Extension to Execute a New Charter 7R7-5-207. Good-cause Suspension of a New Charter .......... 7R7-5-208. Application for Replication Charter .................... 8

ARTICLE 3. POST-CHARTER ACTIONS

Article 3, consisting of R7-5-301 through R7-5-304, made byfinal rulemaking at 12 A.A.R. 577, effective February 7, 2006(Supp. 06-1).

SectionR7-5-301. Application for Charter Renewal; Early Renewal

of Charter ............................................................. 8R7-5-302. Charter Transfer Application ............................... 9R7-5-303. Charter Amendment Requests ............................. 9R7-5-304. Renumbered ....................................................... 10

ARTICLE 4. MINIMUM PERFORMANCE EXPECTATIONS

Article 4, consisting of R7-5-401, made by final rulemaking at

10 A.A.R. 1141, effective March 2, 2004 (Supp. 04-1).

SectionR7-5-401. Minimum Academic Performance Expectations 10R7-5-402. Minimum Financial Performance Expectations .10R7-5-403. Minimum Operational Performance Expectations

.............................................................................12R7-5-404. Development and Use of Performance Frameworks

.............................................................................13

ARTICLE 5. CHARTER SUPERVISION

Article 5, consisting of R7-5-501 through R7-5-504, made byfinal rulemaking at 12 A.A.R. 577, effective February 7, 2006(Supp. 06-1).

SectionR7-5-501. General Supervision ..........................................13R7-5-502. Site Visits............................................................ 13R7-5-503. Annual Academic Performance Review ............14R7-5-504. Annual Audit and Financial Performance Review

.............................................................................14R7-5-505. Operational Performance Review .......................15R7-5-506. Five-year-interval Review ..................................15R7-5-507. Complaints ..........................................................15R7-5-508. Demonstration of Sufficient Progress towards

Minimum Academic Performance Expectations 16R7-5-509. Financial Intervention Submissions ...................16R7-5-510. Corrective Action Plan .......................................17

ARTICLE 6. CHARTER OVERSIGHT

SectionR7-5-601. Charter Oversight: General Provisions ...............18R7-5-602. Oversight of Charter Schools Assigned a Letter

Grade of “F” by the Department ........................18R7-5-603. Oversight of Charter Schools Assigned a Letter

Grade of “D” by the Department ........................19R7-5-604. Civil Penalty for Fingerprinting Violation .........19R7-5-605. Withholding State Funds ....................................19R7-5-606. Consent Agreement ............................................19R7-5-607. Revocation ..........................................................20

September 30, 2019 Supp. 19-3 Page 1

7 A.A.C. 5 Arizona Administrative Code Title 7


ARTICLE 1. GENERAL PROVISIONS

Article 1, consisting of R7-5-101, made by final rulemaking at10 A.A.R. 1141, effective March 2, 2004 (Supp. 04-1).

R7-5-101. DefinitionsIn this Chapter, the following definitions apply:

“Academic performance dashboard” means color-codedgraphics that represent a charter school’s academic perfor-mance by measure for the three most recent fiscal years andidentifies whether the schools operated by the charter holdermeet the minimum academic performance expectations.

“Academic Performance Framework” means a document pub-licly available and posted on the Board’s web site that setsforth the minimum academic performance expectations forcharter schools, measures of progress towards meeting theexpectations, and consequences of failing to meet the expecta-tions.

“Accounting industry regulatory body” means any state or fed-eral regulatory body that has authority to discipline a certifiedpublic accountant or audit firm.

“Administrative completeness review time frame” means thenumber of days from the Board’s receipt of a submission forBoard consideration until the Board staff determines whetherthe submission contains all components and is formatted asrequired by statute and rule.

“Annual application cycle” means the process the Board con-ducts each year to receive and review new charter applicationpackages and grant or deny a charter.

“Applicant” means a person that applies to the Board for a newcharter.

“Application” means the Board-approved forms and instruc-tions used by an applicant or charter holder to apply for a newcharter, transfer a charter as provided under R7-5-302(A)(1),transfer a charter school as provided under R7-5-302(A)(2), orrenew or replicate a charter sponsored by the Board.

“Application package” means an application form, narratives,and documents, including exhibits and attachments, submittedby an applicant or charter holder.

“ASBCS Online” means the Board’s web-based interface,which is accessible through the web site of the Arizona StateBoard for Charter Schools.

“Audit” means a charter holder’s annual audit required underA.R.S. § 15-914.

“Audit contract” means an engagement letter provided by anaudit firm that describes the terms of a contract between acharter holder and the audit firm.

“Authorized representative” means an individual with thepower to bind an applicant contractually according to theapplicant’s Articles of Incorporation, operating agreement, orby-laws.

“Board” means the Arizona State Board for Charter Schools.

“CAP” means corrective action plan.

“Charter” means a contract between a person and the Board tooperate a charter school under A.R.S. § 15-181 et seq.

“Charter holder” means a person that enters into a charter withthe Board.

“Charter representative” means an individual with the powerto bind a charter holder contractually according to the charter

holder’s Articles of Incorporation, operating agreement, or by-laws and is the point of contact with the Board for the purposesof communication and accountability to charter terms and con-ditions.

“Charter school” has the meaning specified at A.R.S. § 15-101.

“Date of notice” means the date on which an electronic notifi-cation is sent by the Board to an applicant or charter holderthrough the authorized representative or charter representative.

“Day” means a business day.

“Demonstration of sufficient progress” means the process for acharter holder to show the charter holder is making progresstowards achieving the minimum academic performance expec-tations specified in the Academic Performance Framework.

“Department” means the Arizona Department of Education.

“Education Service Provider” means an organization that con-tracts with or has a governance relationship with an applicantor charter holder to provide academic services, administrativeservices or both. These organizations may also be commonlyreferred to as Charter Management Organizations or Educa-tion Management Organizations.

“Financial performance dashboard” means a color-codedgraphic that represents a charter holder’s financial perfor-mance by measure for the most recent audited fiscal years andidentifies whether the charter holder’s financial performancemeets the minimum financial performance expectations.

“Financial Performance Framework” means a document pub-licly available and posted on the Board’s web site, and incor-porated herein by reference, that sets forth the minimumfinancial performance expectations for charter holders, mea-sures of performance, and consequences of failing to meet theexpectations.

“Fiscal year” means the 12-month period beginning July 1 andending June 30.

“Initial financial response” means the first response submittedto the Board by a charter holder assigned a summative finan-cial performance rating of “Intervention” under R7-5-402. Inits response, the charter holder must:

Provide the charter holder’s annual budget for the fiscalyear that begins on the July 1 following the fiscal yearend of the most recent audit conducted under R7-5-504and the charter holder’s budget for each quarter in the fis-cal year;

Provide a quarterly financial report for each applicablequarter as defined in R7-5-509(B)(3);

Provide a schedule of debt and lease obligations and thecurrent outstanding balances for each;

Summarize the factors that caused or contributed to thecharter holder’s financial performance in the audited fis-cal year; and

Summarize the specific actions taken or being taken toimprove the charter holder’s financial performance in thefiscal year that begins on the July 1 following the fiscalyear end of the most recent audit conducted under R7-5-504.

“June 30 quarterly financial report” means the report for thequarter ending June 30 submitted to the Board by a charterholder assigned a summative financial performance rating of

Page 2 Supp. 19-3 September 30, 2019

Title 7 Arizona Administrative Code 7 A.A.C. 5


“Intervention” under R7-5-402. In the June 30 report, the char-ter holder must include:

An unaudited balance sheet (statement of financial posi-tion) that identifies the charter holder’s results at June 30and the charter holder’s unrestricted and restricted cashbalances. Minimally, the charter holder’s restricted cashbalance must include the charter holder’s unspent Class-room Site Fund monies;

An unaudited income statement (statement of activities)that identifies the charter holder’s results for the yearended June 30;

The charter holder’s budget that includes actual resultsversus budgeted results for the quarter ending June 30;and

The charter holder’s calculation of its performance on allsix of the Financial Performance Framework’s measures.

“Operational performance dashboard” means a color-codedgraphic that represents a charter holder’s operational perfor-mance by measure for up to the five most recent fiscal yearsand identifies whether the charter holder’s operational perfor-mance meets the minimum operational performance expecta-tions.

“Operational Performance Framework” means a documentpublicly available and posted on the Board’s web site that setsforth the minimum operational performance expectations forcharter holders, measures of performance, and consequencesof failing to meet the expectations.

“Overall time frame” means the number of days after receiptof a submission for Board consideration until the Boarddecides whether to grant or deny the request contained in thesubmission. The overall time frame consists of both theadministrative completeness review time frame and the sub-stantive review time frame.

“Peer review” means an external quality-control review,required by generally accepted government auditing standards,which determines whether an audit firm’s internal quality-con-trol system exists, is operating effectively, and provides assur-ance that established policies and procedures and applicableauditing standards are being followed.

“Performance expectations” means the minimum academic,financial, and operational performance expectations estab-lished by the Board.

“Person” means an individual, partnership, corporation, asso-ciation, or public or private organization of any kind.

“Principals” means the officers, directors, members, partners,or board of an applicant or charter holder.

“Quarterly financial report” means the report for the quartersending September 30, December 31 and March 31 submittedto the Board by a charter holder assigned a summative finan-cial performance rating of “Intervention” under R7-5-402. Ineach quarterly report, the charter holder must include:

An unaudited balance sheet (statement of financial posi-tion) that identifies the charter holder’s results at thequarter end date and the charter holder’s unrestricted andrestricted cash balances. Minimally, the charter holder’srestricted cash balance must include the charter holder’sunspent Classroom Site Fund monies;

An unaudited income statement (statement of activities)that identifies the charter holder’s results year-to-date forthe quarter end date;

The charter holder’s budget for the applicable quarter thatincludes actual results versus budgeted results; and

The charter holder’s calculation of its performance on thedefault, unrestricted days liquidity, adjusted net incomeand average daily membership measures.

“Serious impact finding” means an issue identified by theBoard that the Board believes has or potentially has a detri-mental impact on the operation of the charter school or stu-dents, such as threat to the health and safety of children, failureto meet the academic needs of children, gross violation of gen-erally accepted accounting principles that increases the oppor-tunity for fraud or theft, or repeated issues of noncompliance.

“Substantive review time frame” means the number of daysafter a submission for Board consideration is determined to beadministratively complete until the Board decides whether togrant or deny the request contained in the submission.

“Sufficiently qualified” means the Board’s determination thatan applicant’s knowledge, experience, qualifications, currentand prior charter compliance, capacity, personal and profes-sional background, and creditworthiness indicate an ability toimplement a charter or operate a charter school in accordancewith federal and state law and the performance expectationsestablished by the Board.

“Supervising certified public accountant” means the certifiedpublic accountant responsible for leading the audit of a charterschool or signing the final audit report.

“Technical Review Panel” means individuals approved by theExecutive Director of the Board who use their expertise incharter school development, curriculum, and finance to assistthe Executive Director by conducting a preliminary evaluationof an application package.

Historical NoteNew Section made by final rulemaking at 10 A.A.R.

1141, effective March 2, 2004 (Supp. 04-1). Amended by final rulemaking at 12 A.A.R. 577, effective February 7, 2006 (Supp. 06-1). Amended by final rulemaking at 20

A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by final rulemaking at 23 A.A.R. 693, effective

May 6, 2017 (Supp. 17-1). Amended by final exempt rulemaking at 25 A.A.R. 1926, effective July 8, 2019

(Supp. 19-3).

ARTICLE 2. APPLICATION FOR A NEW CHARTER; APPLICATION FOR CHARTER REPLICATION

R7-5-201. Application for a New CharterA. By March 31 of each year, the Board shall approve and make

available on ASBCS Online an application for a new charterfor a specified annual application cycle.

B. A person that wants to establish a charter school shall submit acomplete application package by the submission deadlineidentified in the application.

C. A person may submit a complete application package byusing:1. The web-based application wizard on ASBCS Online; or2. An alternative submission process. Before using an alter-

native submission process, the person shall hand deliveror mail a signed, notarized waiver request to the Board, inthe form and by the waiver deadline identified in theapplication, and shall waive the right to have the Board




consider an application package submitted throughASBCS Online during the same annual application cycle.The Board shall not accept an application packagethrough the alternative submission process unless awaiver request has been submitted by the waiver deadlineand acknowledged as timely by the Board.D. An applicant for a new charter shall ensure the sub-

mitted application package contains all the informa-tion, materials, documents, and attachmentsidentified in the application and A.R.S. § 15-183(A),including the new charter application processing feespecified under R7-5-202, and is in the format speci-fied in the application.


1141, effective March 2, 2004 (Supp. 04-1). Amended by final rulemaking at 20 A.A.R. 437, effective April 5,

2014 (Supp. 14-1). Amended by final rulemaking at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-202. New Charter Application Processing FeeAs specifically authorized under A.R.S. § 15-183(CC), the Boardestablishes and shall collect a new charter application processingfee of $6,500 for each application package submitted to the Board.

1. An applicant shall pay the new charter application pro-cessing fee in the form of a single personal or cashier’scheck that:a. Is made payable to Arizona State Board for Charter

Schools,b. Has the applicant’s name imprinted on the front of

the check, andc. Is delivered by mail or hand to the Board office

during regular business hours by the submissiondeadline.

2. Board staff shall deem an application package adminis-tratively incomplete under R7-5-203(B) if the new char-ter application processing fee is not received by thesubmission deadline.

3. Board staff shall deposit all checks within five days ofsubmission. If an applicant’s check is dishonored for anyreason, Board staff shall:a. Deem the application package administratively

incomplete under R7-5-203(B), andb. Require the applicant to pay any future fees to the

Board by cashier’s check.4. If an application package is found to be administratively

incomplete under R7-5-203(B) and the applicant paid thenew charter application processing fee, the Board shallrefund the fee to the applicant by mailing a refund checkto the authorized representative at the address provided inthe application package.

5. If an application package is found to be administrativelycomplete under R7-5-203(B), the new charter applicationprocessing fee becomes non-refundable except asrequired under A.R.S. § 41-1077(A).


1141, effective March 2, 2004 (Supp. 04-1). Section R7-5-202 renumbered to Section R7-5-203; new Section R7-5-202 made by final rulemaking at 20 A.A.R. 437, effec-

tive April 5, 2014 (Supp. 14-1). Amended by final rulemaking at 23 A.A.R. 693, effective May 6, 2017

(Supp. 17-1).

R7-5-203. Time Frames for Granting or Denying a NewCharter

A. For granting or denying a new charter, the time frames are:1. Administrative completeness review time frame: 25 days;2. Substantive review time frame: 175 days; and3. Overall time frame: 200 days.

B. An applicant for a new charter shall submit to the Board anadministratively complete application package by the submis-sion deadline. An application package is complete if:1. The application package is from the current application

cycle;2. The application package contains all the information,

materials, documents, attachments, signatures, andnotarizations identified in the application;

3. All the application package’s components are formattedas required;

4. All curriculum samples address the required standard;5. All templates are unmodified and completed; and6. The application processing fee required under R7-5-202

is paid.C. The administrative completeness review time frame listed in

subsection (A)(1) begins the day after the Board receives anapplication package.

D. If an application package is administratively complete, Boardstaff shall send the applicant a written notice of administrativecompleteness.

E. If an application package is administratively incomplete,Board staff shall:1. Send the applicant a written notice of deficiency that

states the reasons the application package is administra-tively incomplete;

2. Administratively close the applicant’s file; and3. Refund the new charter application processing fee paid

under R7-5-202.F. If an applicant receives a written notice of deficiency under

subsection (E) and if the submission deadline has not yetpassed, the applicant may correct the deficiencies in theadministratively incomplete application package and submit anew application package in the same annual application cycleby complying with R7-5-201.

G. If an applicant receives a written notice of deficiency undersubsection (E) and believes the application package was erro-neously designated as administratively incomplete, the appli-cant may submit a written request for reconsideration to theBoard within 10 days after the date of the notice of deficiency.

H. An applicant that submits a written request for reconsiderationunder subsection (G) shall ensure the request: 1. Contains a clear statement indicating how the previously

submitted application package fulfilled each of therequirements identified as deficient; and

2. Has no new or additional information, documents, ormaterials included or attached.

I. Within 10 days after receiving a request for reconsideration,Board staff shall review the request and:1. Determine whether the request complies with the require-

ments in subsection (H) and if not, send the applicantwritten notice the request was not submitted properly andthe applicant’s file remains closed;

2. If Board staff determines the application package waserroneously designated as administratively incomplete,reopen the applicant’s file and send the applicant a writ-ten notice of administrative completeness; or

3. If Board staff determines the application package wascorrectly designated as administratively incomplete, sendthe applicant written notice the applicant’s file remainsclosed.

J. If Board staff does not provide a notice of deficiency oradministrative completeness to the applicant within the admin-




istrative completeness review time frame, the applicationpackage is deemed administratively complete.

K. The substantive review time frame listed in subsection (A)(2)begins when an application package is determined to beadministratively complete. Board staff shall ensure the sub-stantive review is conducted according to R7-5-204.

L. Within the time provided in subsection (A)(3), Board staffshall provide the applicant with written notice of the Board’sdecision to grant or deny a charter.1. The Board shall deny a charter if the Board determines

the application package does not meet the requirementsof statute or rule or the applicant is not sufficiently quali-fied to operate a charter school. Board staff shall includein the written notice the basis for the denial and otherinformation required under A.R.S. § 41-1092.03. Anapplicant that receives a notice of denial may:a. Submit a new application package under R7-5-201

in a later annual application cycle; orb. Appeal the Board’s decision under A.R.S. Title 41,

Chapter 6, Article 10.2. The Board shall grant a charter if it determines that the

application package meets the requirements of statute andrule and the applicant is sufficiently qualified to operate acharter school.


1141, effective March 2, 2004 (Supp. 04-1). Section R7-5-203 renumbered to Section R7-5-204; new Section R7-5-203 renumbered from R7-5-202 and amended by final

rulemaking at 20 A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by final rulemaking at 23 A.A.R.

693, effective May 6, 2017 (Supp. 17-1).

R7-5-204. Review of Administratively Complete Applica-tion Package for a New Charter, Technical Assistance, and In-person InterviewA. The Board shall ensure an administratively complete applica-

tion package for a new charter is reviewed as follows:1. The Technical Review Panel shall score an application

package using the evaluation criteria identified in theapplication to determine whether the application packagemeets the Board’s requirements.

2. The Technical Review Panel shall assign an applicationpackage a score of “Meets the Criteria,” “Approaches theCriteria,” or “Falls below the Criteria” for each evalua-tion criterion.a. The Technical Review Panel shall score an evalua-

tion criterion “Meets the Criteria” when the applica-tion section within which that evaluation criterion isidentified:i. Addresses the evaluation criterion fully with

specific and accurate information;ii. Reflects a thorough understanding of the evalu-

ation criterion; andiii. Is clear and coherent.

b. The Technical Review Panel shall score an evalua-tion criterion “Approaches the Criteria” when theapplication section within which that evaluation cri-terion is identified:i. Addresses the evaluation criterion partially or

lacks specific and accurate information forsome aspect of the evaluation criterion;

ii. Presents a partial understanding of the evalua-tion criterion; or

iii. Is not clear and coherent.

c. The Technical Review Panel shall score an evalua-tion criterion “Falls below the Criteria” when theapplication section within which that evaluation cri-terion is identified fails to address the evaluation cri-terion.

3. An application package meets the Board’s requirementsif:a. No evaluation criterion is scored “Falls below the

Criteria;”b. No more than one evaluation criterion in each appli-

cation section is scored “Approaches the Criteria;”and

c. At least 95 percent of the evaluation criteria in theeducational plan, operational plan, and business planis scored “Meets the Criteria.”

B. Board staff shall conduct a background and credit check ofeach principal and authorized representative of the applicantand determine whether each principal and authorized represen-tative possesses a valid fingerprint clearance card issued by theState of Arizona. If an issue arises during the background andcredit check of any principal or authorized representative,Board staff shall provide the principal or authorized represen-tative written notice of the issue and an opportunity to providea written response addressing the issue. The Board shall con-sider information obtained from the background and creditcheck when making the decision to grant or deny a new char-ter.

C. If an application package fails to meet the Board’s require-ments specified under subsection (A)(3), Board staff shall pro-vide written notice to the applicant. Board staff shall include inthe notice:1. The reasons the application package failed to meet the

Board’s requirements; 2. Comments of the Technical Review Panel, which will

serve as technical assistance and suggestions for improv-ing the application package; and

3. The options specified under subsection (D).D. If an applicant receives notice under subsection (C), the appli-

cant may, within 20 days of the date of notice, submit to theBoard:1. A revised application package, or 2. A written request that the previously submitted and

scored application package be forwarded to the Board.E. If an applicant that receives notice under subsection (C) fails

to act under subsection (D), Board staff shall close the appli-cant’s file. An applicant whose file is closed and wants toobtain a new charter shall apply again under R7-5-201 in alater annual application cycle.

F. If an applicant submits a revised application package undersubsection (D), the Technical Review Panel shall score therevised application package as specified under subsection (A).If the revised application package fails to meet the Board’srequirements as specified under subsection (A)(3), Board staffshall provide written notice to the applicant of the intent toclose the file. Board staff shall include with the notice thecomments of the Technical Review Panel.

G. An applicant that receives notice under subsection (F) may,within 20 days after the date of notice, submit a written requestthat the revised application package be forwarded to theBoard. If a written request is not submitted, Board staff shallclose the applicant’s file. An applicant whose file is closed andwants to obtain a new charter shall apply again under R7-5-201 in a later annual application cycle.

H. At least 30 days before the last Board meeting before the sub-stantive review time frame expires, and within 90 days afterdetermining an application package meets the Board’s require-




ments under subsection (A)(3) or receiving an applicant’srequest under subsection (D)(2) or (G), the principals andauthorized representative of the applicant shall make them-selves available for an in-person interview with two or moremembers of the Technical Review Panel. In the interview, themembers of the Technical Review Panel shall assess:1. The applicant’s understanding of the components pre-

sented in the application package;2. The applicant’s capacity to implement a plan to operate a

charter school in accordance with the performance expec-tations established by the Board;

3. The applicant’s clarification of any issue revealed in thecourse of the due diligence process for the applicant anyprincipal, authorized representative, or Education ServiceProvider; and

4. Any other factor relevant to determining whether theapplicant is sufficiently qualified to operate a charterschool.

I. Board staff shall provide an applicant with at least seven dayswritten notice of the date, time, and place of the meeting atwhich the Board will consider the applicant’s applicationpackage and determine d whether to grant or deny a new char-ter to the applicant. The Board shall use the following infor-mation to determine whether the applicant is sufficientlyqualified to operate a charter school:1. The application package;2. The scoring rubric completed by the Technical Review

Panel;3. The results of the in-person interview of the applicant’s

principals and authorized representative;4. Information obtained through d investigation and verifi-

cation of the employment, experience, and educationbackgrounds, fingerprint clearance card, and creditwor-thiness of each principal and authorized representative ofthe applicant;

5. Information concerning any current or former charteroperations for any principal, authorized representative, orEducation Service Provider of the applicant;

6. Board staff report; and7. Testimony presented at the Board meeting.

J. After the Board meeting held under subsection (I), Board staffshall provide written notice to the applicant regarding theBoard’s decision to grant or deny a new charter to the appli-cant. If the Board denies a new charter to the applicant, theBoard shall include the information required under A.R.S. §41-1092.03 in the written notice.


1141, effective March 2, 2004 (Supp. 04-1). Amended by final rulemaking at 12 A.A.R. 577, effective February 7, 2006 (Supp. 06-1). Section R7-5-204 renumbered to Sec-tion R7-5-205; new Section R7-5-204 renumbered from R7-5-203 and amended by final rulemaking at 20 A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by

final rulemaking at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-205. Execution of a New CharterA. After the Board decides to grant a new charter but before the

charter is signed, the applicant shall submit to the Board thefollowing:1. A completed I.R.S. Form W-9, Request for Taxpayer

Identification Number and Certification, obtained fromthe Department or online at https://www.irs.gov/pub/irs-pdf/fw9.pdf;

2. The following information for each charter schoolapproved for educational use:a. Certificate of occupancy; andb. Fire marshal report; orc. If either the certificate of occupancy or fire marshal

report is not available, a completed OccupancyCompliance Assurance and Understanding formobtained from the Board;

3. A completed General Statement of Assurances formobtained from the Department;

4. A statement indicating where all public notices of meet-ings will be posted as required under A.R.S. § 38-431.02;and

5. A copy of the lease agreement or other documentation ofa secured charter school facility for each charter school.

B. The Board President or designee and authorized representativeof the applicant shall sign the charter within 12 months afterthe Board’s decision to grant the charter.1. If the charter is not timely signed, the Board’s decision to

grant the new charter expires unless the applicant appliesfor and is granted a good-cause extension to execute thecharter under R7-5-206.

2. If an applicant that is granted a new charter but does nottimely sign the charter and does not obtain a good-causeextension wants to obtain a new charter, the applicantshall apply again under R7-5-201 in a later annual appli-cation cycle.

C. A charter holder shall begin providing educational instructionno later than the second fiscal year after the Board’s decisionto grant the charter unless the charter holder is granted a good-cause extension to execute a charter under R7-5-206 or good-cause suspension of a charter under R7-5-207.1. A charter holder that is granted a good-cause extension to

execute a charter under R7-5-206 or good-cause suspen-sion of a charter under R7-5-207 shall begin providingeducational instruction no later than the third fiscal yearafter the Board’s decision to grant the charter.

2. If a charter holder does not begin providing educationalinstruction as required under subsection (C) or (C)(1), theBoard shall issue the charter holder a notice of intent torevoke the charter in accordance with A.R.S. § 15-183(I).

D. At least 10 days before beginning to provide educationalinstruction, a charter holder shall submit to the Board the fol-lowing written proof that the charter school is in compliancewith federal, state, and local laws relating to health, safety,civil rights, and insurance:1. Charter school contact information;2. Insurance policy binder issued by an insurance company

licensed to do business in Arizona;3. County health certificate for each charter school at which

students will be taught;4. Evidence of a public meeting, required by A.R.S. § 15-

183(C)(7), at least 30 days before the charter holderopens a charter school;

5. Certificate of attendance of the charter representative orprincipal at the special education training for new char-ters offered by the Department; and

6. Any other documents required to demonstrate compli-ance with federal, state, and local laws relating to health,safety, civil rights, and insurance.

E. If a charter holder submitted an Occupancy ComplianceAssurance and Understanding form under subsection (A)(2),the Board shall not advise the Department to initiate state aidfunding until Board staff determines the required certificate ofoccupancy and fire marshal report submissions are completeand sufficient.




F. A new charter is effective upon signing by both parties for 15years beginning on the date stated in the charter, unlessrevoked under A.R.S. § 15-183(I).

Historical NoteNew Section R7-5-205 renumbered from R7-5-204 and

amended by final rulemaking at 20 A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by final rulemaking

at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-206. Good-cause Extension to Execute a New CharterA. Before the Board’s decision to grant a new charter expires

under R7-5-205(B), an applicant that has not yet executed thecharter may submit to the Board a written request for a good-cause extension to execute a charter. The applicant shallensure the written request for a good-cause extension to exe-cute a charter:1. Explains and provides evidence of why the applicant is

unable to implement the plans contained in the applica-tion package and execute the charter within the allotted12 months;

2. Explains the applicant’s new timeline for implementingthe plans contained in the application package and whythe new timeline is viable and adequate to enable theapplicant to execute the charter by the new timeline; and

3. Provides clear and specific action steps with target com-pletion dates that will enable the applicant to implementthe plans contained in the application package in accor-dance with the new timeline and the requirements of R7-5-205(C)(1).

B. The Board shall grant a good-cause extension to execute acharter if an applicant demonstrates good cause. When decid-ing whether the applicant demonstrates good cause, the Boardshall consider:1. The timeliness of the request for a good-cause extension

and the proposed extension date;2. The viability of the applicant’s new timeline for imple-

menting the plans contained in the application package;3. Whether the new timeline is adequate to begin providing

educational instruction as required under R7-5-205(C)(1)and complies with the plans contained in the applicationpackage;

4. The circumstances the applicant indicates affected theapplicant’s ability to execute the charter within the allot-ted 12 months;

5. Whether there have been changes in the principals of theapplicant; and

6. The extent to which the applicant is in compliance withall applicable federal, state, and local laws.

C. The Board shall not grant more than one good-cause extensionto execute a particular charter.

D. If the Board grants a good-cause extension to execute a char-ter, the Board shall specify the date by which the applicantshall execute the charter and begin providing educationalinstruction based on the timeline provided by the applicant andthe requirements of R7-5-205(C)(1). If the applicant does notexecute the charter by the specified date, the Board’s decisionto grant the charter expires.

Historical NoteSection R7-5-206 made by final rulemaking at 20 A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by


R7-5-207. Good-cause Suspension of a New CharterA. Before the first day of the fiscal year in which a charter holder

must begin providing educational instruction, the charter

holder, if eligible under subsection (B), may submit to theBoard a written request for a good-cause suspension of thecharter.

B. A charter holder is eligible to apply for a good-cause suspen-sion of the charter if:1. The charter holder has not been granted a good-cause

extension to execute the charter,2. The charter holder has not begun providing educational

instruction under the charter, and3. The charter holder has not received or has returned state

equalization or other state or federal funding for whichprovision of instruction is a requirement of receipt.

C. The charter holder shall ensure the written request for a good-cause suspension of a charter:1. Explains and provides evidence for why the charter

holder is unable to implement the plans contained in theapplication package and begin providing educationalinstruction as required under R7-5-205(C);

2. Explains the charter holder’s new timeline for imple-menting the plans contained in the application packageand why the new timeline is viable and adequate toenable the charter holder to operate a charter school inaccordance with the charter and performance expecta-tions established by the Board; and

3. Provides clear and specific action steps with target com-pletion dates that will enable the charter holder to imple-ment the plans contained in the application package inaccordance with the new timeline and the requirements ofR7-5-205(C)(1).

D. The Board shall grant a good-cause suspension of a charter ifthe charter holder demonstrates good cause. When decidingwhether the charter holder demonstrates good cause, the Boardshall consider:1. Whether the charter holder is eligible under subsection

(B) for a good-cause suspension of a charter;2. The timeliness of the request for a good-cause suspension

of a charter and the proposed extension date;3. The viability of the charter holder’s new timeline for

implementing the plans contained in the application pack-age;

4. Whether the new timeline is adequate to begin providingeducational instruction as required under R7-5-205(C)(1)and complies with the plans contained in the applicationpackage;

5. The circumstances the charter holder indicates affectedthe charter holder’s ability to begin providing educationalinstruction as required under R7-5-205(C);

6. Whether there have been changes in the principals of thecharter holder; and

7. The extent to which the charter holder is in compliancewith all applicable federal, state, and local laws and termsof the charter.

E. The Board shall not grant more than one good-cause suspen-sion of a particular charter to any charter holder.

F. A charter holder granted a good-cause suspension of the char-ter shall not apply to receive any state equalization or otherstate or federal funding for which provision of instruction is arequirement of receipt until the fiscal year in which the charterholder plans to begin providing educational instruction. Theholder of a suspended charter shall promptly return any fund-ing it receives before the fiscal year in which it begins provid-ing educational instruction.

G. A charter holder granted a good-cause suspension of a chartershall begin providing educational instruction as required byR7-5-205(C). If a charter holder does not begin providing edu-cational instruction as required, the Board shall issue the char-




ter holder a notice of intent to revoke the charter in accordancewith A.R.S. § 15-183(I).

Historical NoteSection R7-5-207 made by final rulemaking at 20 A.A.R. 437, effective April 5, 2014 (Supp. 14-1). Amended by


R7-5-208. Application for Replication CharterA. The charter holder of an existing high quality charter school

may be eligible to apply for a replication charter rather than anew charter. A replication charter allows the charter holder toimplement the existing educational program, corporate andgovernance structure, and financial and operational processesat a new charter school.

B. A charter holder that wishes to apply for a replication chartershall submit to the Board a Replication Eligibility form. Boardstaff shall review the form and determine whether the charterholder is eligible to apply for a replication charter. A charterholder is eligible to apply for a replication charter if the charterholder is in compliance with provisions of its charter, contrac-tual agreements with the Board, federal and state law and thisChapter, and meets the academic and financial eligibilityrequirements specified in the replication application instruc-tions, which are publicly available and posted on the Board’sweb site.

C. Within 15 days after receiving a Replication Eligibility form,Board staff shall provide written notice to the charter holder ofwhether the charter holder may apply for a replication charterand, if eligible, shall make the replication application availableto the charter holder.

D. If a charter holder submits an application package for a repli-cation charter by the last business day of September, Boardstaff shall process the application package in an expeditedmanner and ensure the application package is considered at theBoard’s meeting in November.

E. As required under A.R.S. § 41-1073, the Board establishes thefollowing time frames for approving or disapproving a replica-tion charter:1. Administrative review time frame: 15 days;2. Substantive review time frame: 50 days; and3. Overall time frame: 65 days.

F. The provisions at R7-5-205(A), regarding execution of a newcharter, apply to a replication charter.

G. R7-5-206, regarding a good-cause extension to execute a newcharter, and R7-5-207, regarding good-cause suspension of anew charter, do not apply to a replication charter.

Historical NoteNew Section made by final rulemaking at 23 A.A.R. 693,

effective May 6, 2017 (Supp. 17-1). Amended by final exempt rulemaking at 25 A.A.R. 1926, effective July 8,

2019 (Supp. 19-3).

ARTICLE 3. POST-CHARTER ACTIONS

R7-5-301. Application for Charter Renewal; Early Renewalof CharterA. The Board shall make available on its web site instructions

regarding eligibility and submission requirements for renewaland early renewal of a charter.

B. A charter holder shall submit to the Board electronicallythrough ASBCS Online the renewal application package iden-tified in subsection (E) or the early renewal application pack-age identified in subsection (L). The Board shall not accept apaper submission.

C. The Board shall provide the charter holder at least 72-hours’written notice of the date, time, and location of the Boardmeeting at which the Board will consider the charter holder’srenewal or early renewal application package. The charterholder shall attend the Board meeting.

D. At least 18 months before a charter is scheduled to expire, theBoard shall provide the charter holder with a renewal applica-tion that is customized based on the charter holder’s perfor-mance history. The Board shall require a charter holder thatdoes not meet the performance expectations specified in Arti-cle 4 to submit more information than a charter holder thatdoes meet the performance expectations.

E. As required under A.R.S. § 15-183(I), a charter holder thatintends to seek renewal of the charter shall submit to the Boarda renewal application package at least 15 months before thecharter is scheduled to expire.

F. The Board shall not consider a renewal application packagethat is not submitted by the date specified in subsection (E).

G. As part of the charter renewal process, Board staff shall con-duct an academic-systems-review site visit, as described inR7-5-506, of the charter holder.

H. The Board shall notify a charter holder of the Board’s decisionto renew or deny renewal of the charter at least 12 monthsbefore the charter is scheduled to expire.

I. As specified under A.R.S. § 15-183(I), the Board may denyrenewal of a charter if the Board determines the charter holderfailed to meet or make sufficient progress toward the academicperformance expectations or failed to meet the operational per-formance expectations specified in Article 4, meet the finan-cial performance expectations specified in Article 4, completethe obligations of the charter, or comply with federal or statelaw or this Chapter. If the Board denies renewal of a charter,Board staff shall provide written notice to the charter holderthat includes the information required under A.R.S. § 41-1092.03(A).

J. A charter holder is eligible to apply for early renewal of thecharter if the charter holder:1. Submits to the Board a letter of intent to apply for early

renewal at least 24 months before the charter is scheduledto expire;

2. Has operated a school under the charter for at least fiveyears;

3. Meets the performance expectations specified in Article4; and

4. Had no compliance matters within the last three years thatrequired action by the Board or other governmentalentity.

K. Within 15 days after receiving a letter of intent to apply forearly renewal under subsection (J)(1), Board staff shall pro-vide written notice to the charter holder of whether the charterholder is eligible to apply for early renewal and, if eligible,shall provide the charter holder with the renewal applicationreferenced in subsection (D).

L. A charter holder that receives notification under subsection(K) of eligibility to apply for early renewal shall submit to theBoard the early renewal application package no later than onemonth after the charter holder receives notification under sub-section (K).

M. A charter holder applying for early renewal shall continue tomeet the eligibility requirements specified in subsection (J)until the Board considers the early renewal application pack-age at the Board meeting referenced under subsection (C). TheBoard shall not consider an early renewal application packagesubmitted by a charter holder that has a change in eligibilitystatus.




N. Within three months after a charter holder timely submits anearly renewal application package, Board staff shall conductan academic-systems-review site visit, as described in R7-5-506, of the charter holder and shall place the charter holder’searly renewal application package on an agenda for Boardconsideration.

O. As specified under A.R.S. § 15-183(I)(2), the Board may denyearly renewal of a charter if the Board determines the charterholder failed to meet or make sufficient progress toward theacademic performance expectations or failed to meet the oper-ational performance expectations specified in Article 4, meetthe financial performance expectations specified in Article 4,complete the obligations of the charter, or comply with federalor state law or this Chapter. If the Board denies early renewalof a charter, Board staff shall provide written notice to thecharter holder that includes the information required underA.R.S. § 41-1092.03(A).


effective February 7, 2006 (Supp. 06-1). Section R7-5-301 renumbered to R7-5-501; new Section R7-5-301 made by final rulemaking at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1). Amended by final exempt rulemaking at 25 A.A.R. 1926, effective July 8, 2019

(Supp. 19-3).

R7-5-302. Charter Transfer ApplicationA. A charter transfer application may be used to do either of the

following:1. Transfer a charter to the Board; or2. Transfer a charter school that has operated under an exist-

ing charter for at least three years to its own charter withthe same educational program and financial and opera-tional processes.

B. The Board shall make available on its web site instructionsregarding eligibility and submission requirements for transfersspecified under subsection (A).

C. A charter holder that intends to transfer as specified under sub-section (A) shall submit to the Board a letter of intent to trans-fer.

D. Within 15 days after receiving a letter of intent to transfer,Board staff shall provide written notice to the charter holder ofwhether the charter holder may apply for transfer.

E. A charter holder eligible to transfer under subsection (D) shallsubmit to the Board a paper charter transfer application pack-age until electronic submission through ASBCS Online isavailable. After electronic submission through ASBCS Onlineis available, the Board shall not accept a paper submission.

F. For a transfer to occur on July 1, a charter holder shall submitthe letter of intent to transfer by the last business day ofNovember of the prior fiscal year and the transfer applicationpackage by the last business day of February of the prior fiscalyear.

G. The Board shall provide the charter holder at least 72-hours’written notice of the date, time, and location of the Boardmeeting at which the Board will consider the charter holder’stransfer application package. The charter holder shall attendthe Board meeting.

H. As required under A.R.S. § 41-1073, the Board establishes thefollowing time frames for approving or disapproving a chartertransfer:1. Administrative review time frame: 15 days;2. Substantive review time frame: 60 days; and3. Overall time frame: 75 days.


effective February 7, 2006 (Supp. 06-1). Section R7-5-302 renumbered to R7-5-510; new Section R7-5-302 made by final rulemaking at 23 A.A.R. 693, effective

May 6, 2017 (Supp. 17-1).

R7-5-303. Charter Amendment RequestsA. A change to a charter requires the consent of both the Board

and charter holder. To obtain the Board’s consent to a changeto a charter, the charter holder shall submit a charter amend-ment request to the Board.

B. A charter holder shall not act in a manner contrary to the termsof the charter without obtaining the Board’s prior consent tothe change.

C. The Board shall make available on its web site instructionsregarding eligibility and submissions requirements for eachamendment request listed under subsection (D).

D. The Board shall accept requests for the following charteramendments:1. Add or remove a grade level to a charter;2. Addition of or change to an Arizona Online Instruction

Program of Instruction; as expressly authorized underA.R.S. § 15-183(X), the Board shall charge a non-refund-able processing fee of $3,000 for each grade categoryinvolved in the charter amendment request;

3. Change in charter holder entity name;4. Change in legal status of the charter holder;5 Change of entity that holds the charter;6. Change in charter mission;7. Increase or decrease the number of annual instructional

days;8. Change in program of instruction including methods of

instruction, criteria for promotion, and graduationrequirements;

9. Exception from state procurement requirements;10. Exception from the Uniform System of Financial Records

for Charter Schools;11. Change charter holder governance;12. Change the mailing or physical address of the charter

holder;13. Change charter representative;14. Increase or decrease the number of students the charter

holder may serve;15. Add a charter school to an existing charter;16. Close a charter school under an existing charter;17. Change membership of a charter school governing body;18. Change the name of a charter school;19. Change the mailing or physical address of a charter

school;20. Increase or decrease the grades served at a particular

charter school; and21. Transfer of a charter school from the current charter to

another existing charter with the same educational pro-gram and financial and operational processes.

E. A charter holder shall submit an amendment request listedunder subsection (D) to the Board electronically throughASBCS Online. The Board shall not accept a paper amend-ment request unless agreed to by Board staff and the charterholder before the amendment request is submitted.

F. As required under A.R.S. § 41-1073, the Board establishes thefollowing time frames for approving or disapproving a charteramendment request:1. Administrative review time frame: 20 days;2. Substantive review time frame: 40 days; and3. Overall time frame: 60 days.

G. To determine the date on which the Board will approve or dis-approve an amendment request listed under subsection (D),the charter holder shall consult the Board’s meeting and sub-




mission-deadline schedule, which is posted on the Board’sweb site and ASBCS Online.

H. The Board shall provide the charter holder at least 72-hours’written notice of the date, time, and location of the Boardmeeting at which the Board will consider the charter holder’sadministratively and substantively complete amendmentrequest. The charter holder shall attend the Board meeting.

I. The Board has delegated to staff authority to approve charteramendment requests listed under subsection (D) for which thestandards for approval can be applied without the exercise ofdiscretion.


effective February 7, 2006 (Supp. 06-1). Section R7-5-303 renumbered to R7-5-502; new Section R7-5-303 made by final rulemaking at 23 A.A.R. 693, effective

May 6, 2017 (Supp. 17-1).

R7-5-304. Renumbered


effective February 7, 2006 (Supp. 06-1). Section R7-5-304 renumbered to R7-5-601 at 12 A.A.R. 577, effective

February 7, 2006 (Supp. 06-1).

ARTICLE 4. MINIMUM PERFORMANCE EXPECTATIONS

R7-5-401. Minimum Academic Performance ExpectationsA. The Board shall assess a charter holder’s achievement of the

minimum academic performance expectations using studentachievement measures, specified in the Academic Perfor-mance Framework, that are indicators of academic perfor-mance.1. The Board may assess a charter holder’s achievement of

the minimum academic performance expectations at anytime.

2. The Board shall assess a charter holder’s achievement ofthe minimum academic performance expectations:a. Annually when state assessment data are released

for the previous year;b. During the five-year-interval review required under

A.R.S. § 15-183(I); c. When considering the following submitted by the

charter holder:i. An application for a new charter,ii. An application to transfer a charter school from

an existing charter contract to a separate chartercontract,

iii. A request to change the legal status of the char-ter holder; or

iv. A request to change the entity that holds thecharter;

d. When considering an expansion request submittedby the charter holder to;i. Add a new charter school to an existing charter,ii. Add one or more grade levels to a charter,iii. Increase the number of students the charter

holder may serve,iv. Add an Arizona Online Instruction program, orv. Replicate an existing charter;

e. When considering a charter contract renewal requestsubmitted by the charter holder;

f. Upon receipt of information that a charter schooloperated by the charter holder failed to meet theminimum academic performance expectations forthree consecutive years;

g. Upon receipt of information that a charter schooloperated by the charter holder has been assigned aletter grade of “F” by the Department; and

h. When making a decision related to the charterholder’s achievement of the minimum academic per-formance expectations or compliance with its char-ter, other contractual agreements with the Board,federal and state law, and this Chapter.

B. The Board shall annually assign a charter holder an overallacademic performance rating that reflects the degree to whichthe charter holder achieved the minimum academic perfor-mance expectations.

C. The Board shall determine a charter holder meets the mini-mum academic performance expectations if all charter schoolsoperated by the charter holder receive an annual overall aca-demic performance rating of “meets standard,” “above stan-dard,” or “exceeds standard” in the most recent year for whichdata are available. A charter holder that meets the minimumacademic performance expectations may be:1. Waived from some of the academic performance supervi-

sion requirements described in Article 5; and2. Entitled to reduced submission requirements:

a. Regarding requests made to the Board; andb. During the five-year-interval review required under

A.R.S. § 15-183(I).D. The Board shall determine a charter holder does not meet the

minimum academic performance expectations if one or moreof the charter schools operated by the charter holder did notreceive an overall academic performance rating of “meetsstandard,” “above standard,” or “exceeds standard” in the mostrecent year for which data are available. A charter holder thatdoes not meet the minimum academic performance expecta-tions:1. Shall be required to demonstrate sufficient progress

towards achieving the minimum academic performanceexpectations;

2. May be subject to heightened submission requirements:a. Regarding requests made to the Board, andb. During the five-year-interval review required under

A.R.S. § 15-183(I); and3. May be subject to charter oversight as specified in Article

6.

Historical NoteNew Section made by final rulemaking at 10 A.A.R. 1141, effective March 2, 2004 (Supp. 04-1). Section

repealed; new Section R7-5-401 made by final rulemak-ing at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-402. Minimum Financial Performance ExpectationsA. The Board shall assess a charter holder’s achievement of the

minimum financial performance expectations using data con-tained in the annual audit required under A.R.S. § 15-914 andconducted according to the standards specified in R7-5-504and average daily membership calculations completed by theDepartment using student attendance data submitted to theDepartment by the charter holder.1. The Board may assess a charter holder’s achievement of

the minimum financial performance expectations at anytime.

2. The Board shall assess a charter holder’s achievement ofthe minimum financial performance expectations:a. During the five-year-interval review required under

A.R.S. § 15-183(I);b. When considering a charter contract renewal request

submitted by the charter holder;




c. Upon receipt of information that a charter schooloperated by the charter holder failed to meet theminimum academic performance expectations forthree consecutive years;

d. Upon receipt of information that a charter schooloperated by the charter holder has been assigned aletter grade of “F” by the Department; and

e. When making a decision related to the charterholder’s achievement of the minimum academic per-formance expectations or compliance with its char-ter, other contractual agreements with the Board,federal and state law, and this Chapter.

B. The Board shall annually assign a charter holder a summativefinancial performance rating, based on measures specified inthe Financial Performance Framework.1. The Board shall assign a summative financial perfor-

mance rating of “Good Standing” if the charter holderreceives no measures rated “below standard” and no morethan one measure rated “approaches standard” based onthe most recent audit conducted under R7-5-504.

2. The Board shall assign a summative financial perfor-mance rating of “Adequate Standing” if the charter holderreceives no measures rated “below standard” and two ormore measures rated “approaches standard” based on themost recent audit conducted under R7-5-504.

3. The Board shall assign a summative financial perfor-mance rating of “Intervention” if the charter holderreceives one or more measures rated “below standard”based on the most recent audit conducted under R7-5-504or if the charter holder has received a summative finan-cial performance rating of “Adequate Standing” for threeconsecutive years.

C. A charter holder assigned a summative financial performancerating of “Good Standing” or “Adequate Standing” based onthe most recent audit conducted under R7-5-504 is financiallyeligible to submit to the Board, if the charter holder meets allother eligibility criteria, an expansion request to:1. Add a new charter school to an existing charter;2. Add one or more grade levels to a charter;3. Increase the number of students the charter holder may

serve;4. Add an Arizona Online Instruction program;5. Replicate an existing charter;6. Transfer an existing charter school to its own charter con-

tract; or7. Transfer an existing charter school or charter contract

from the current charter holder to an existing charterholder with a different financial performance dashboard.

D. A charter holder assigned a summative financial performancerating of “Intervention” based on the most recent audit con-ducted under R7-5-504 is not eligible to submit to the Boardan expansion request specified in R7-5-402(C)(1)-(7).

E. The Board shall require a charter holder assigned a summativefinancial performance rating of “Intervention” based on themost recent audit conducted under R7-5-504 to prepare thefinancial intervention submissions as described in R7-5-509.

F. The Board shall determine that a charter holder assigned asummative financial performance rating of “Intervention” is“Not on Probation” if, after Board staff’s review of the charterholder’s submissions made under R7-5-509 and R7-5-501(C),all the following are true:1. The measure or measures rated “below standard” based

on the most recent audit conducted under R7-5-504 willlikely improve to at least an “approaches standard” ratingwhen calculations are completed using the charterholder’s next audit conducted under R7-5-504.

2. None of the Financial Performance Framework’s othermeasures will likely be rated “below standard” when cal-culations are completed using the charter holder’s nextaudit conducted under R7-5-504.

3. Since Board staff made the determination in R7-5-509(D), the Board has not substantiated any complaintsinvolving late payroll checks to employees, or healthinsurance or liability insurance cancellation due to non-payment and has not substantiated any complaints involv-ing failure to make required retirement plan contributionsor received notification from the Arizona State Retire-ment System of delinquent retirement contributions.

4. Since Board staff made the determination in R7-5-509(D), the charter holder has not been required to makeany submissions under R7-5-501(C).

G. The Board shall determine that a charter holder assigned asummative financial performance rating of “Intervention” is“On Probation” if, after Board staff’s review of the charterholder’s submissions made under R7-5-509 and R7-5-501(C),one or more of the following are true:1. One or more of the measures rated “below standard”

based on the most recent audit conducted under R7-5-504will likely continue to be rated “below standard” whencalculations are completed using the charter holder’s nextaudit conducted under R7-5-504.

2. One or more of the Financial Performance Framework’sother measures will likely be rated “below standard”when calculations are completed using the charterholder’s next audit conducted under R7-5-504.

3. Since Board staff made the determination in R7-5-509(D), the Board has substantiated at least one com-plaint involving late payroll checks to employees, orhealth insurance or liability insurance cancellation due tononpayment or has substantiated at least one complaintinvolving failure to make required retirement plan contri-butions or received notification from the Arizona StateRetirement System of delinquent retirement contribu-tions.

4. Since Board staff made the determination in R7-5-509(D), the charter holder has been required to make atleast one submission under R7-5-501(C).

H. After Board staff’s review of the charter holder’s submissionsmade under R7-5-509 and R7-5-501(C), the Board shall deter-mine that a charter holder is “On Probation” if within the mostrecent five-year period the charter holder has been assignedthree summative financial performance ratings of “Interven-tion” and two summative financial performance ratings of“Adequate Standing.”

I. If, based on the next audit conducted under R7-5-504, a char-ter holder identified as “Not on Probation” under subsection Fis assigned a summative performance rating of “Intervention,”then the Board shall determine that the charter holder is “OnProbation.”

J. The Board shall determine that a charter holder meets the min-imum financial performance expectations if the charter holder:1. Receives a summative financial performance rating of

“Good Standing” or “Adequate Standing” based on themost recent audit conducted under R7-5-504; or

2. Receives a determination of “Not on Probation” undersubsection (F).

K. The Board shall determine that a charter holder does not meetthe minimum financial performance expectations if the charterholder receives a determination of “On Probation” under sub-section (G) or subsection (H). A charter holder that does notmeet the minimum financial performance expectations:




1. May be subject to charter oversight specified in Article 6unless and until the charter holder achieves the minimumfinancial performance expectations;

2. Shall be required to submit to the Board a financial actionplan that:a. Details the specific steps being taken by the charter

holder to improve its financial performance in thefiscal year that begins on the July 1 following theJune 30 quarterly financial report,

b. Identifies the milestones the charter holder will usethroughout the fiscal year to benchmark its perfor-mance against, and

c. Has been developed and approved by the charterholder’s governing board; and

3. Shall be required to submit quarterly financial reports tothe Board until the Board receives the charter holder’snext audit conducted under R7-5-504.

L. The Board shall determine that a charter holder does not meetthe minimum financial performance expectations if the charterholder receives a determination of “On Probation” under sub-section (I). A charter holder that does not meet the minimumfinancial performance expectations under subsection (I):1. May be subject to charter oversight as specified in Article

6 unless and until the charter holder achieves the mini-mum financial performance expectations; and

2. Shall be required to submit to the Board a financial actionplan that:a. Details the specific steps being taken by the charter

holder to improve its financial performance in thefiscal year that begins on the July 1 following theJune 30 quarterly financial report,

b. Identifies the milestones the charter holder will usethroughout the fiscal year to benchmark its perfor-mance against, and

c. Has been developed and approved by the charterholder’s governing board.

M. Board staff shall report to the Board at a public meeting theaudited year performance and June 30 quarterly financialreport performance by measure for each charter holder thatdoes not meet the Board’s minimum financial performanceexpectations.

N. If a charter holder fails to submit or fails to submit timely theinformation required by subsections (K)(2), (K)(3) or (L)(2),the failure shall be noted in the charter holder’s operationalperformance dashboard posted on ASBCS Online.



2019 (Supp. 19-3).

R7-5-403. Minimum Operational Performance Expecta-tionsA. The Board shall assess a charter holder’s achievement of the

minimum operational performance expectations. To avoidduplicative reporting burdens, the Board shall use data col-lected from a variety of sources that reflect on the charterholder’s compliance with the charter contract, other contrac-tual agreements with the Board, federal and state law, and thisChapter.1. The Board may assess a charter holder’s achievement of

the minimum operational performance expectations atany time.

2. The Board shall assess a charter holder’s achievement ofthe minimum operational performance expectations:

a. When considering the following submitted by thecharter holder:i. An application for a new charter;ii. An application to transfer a charter school from

an existing charter contract to a separate chartercontract;

iii. A request to change the legal status of the char-ter holder;

iv. A request to change the entity that holds thecharter; or

v. A request to change program of instructionincluding methods of instruction, criteria forpromotion, or graduation requirements;

b. When considering an expansion request submittedby the charter holder to:i. Add a new charter school to an existing charter,ii. Add one or more grade levels to a charter,iii. Increase the number of students the charter

holder may serve,iv. Add an Arizona Online Instruction program, orv. Replicate an existing charter;

c. During the five-year-interval review required underA.R.S. § 15-183(I);

d. When considering an application for charter renewalsubmitted by the charter holder;

e. Upon receipt of information that a charter schooloperated by the charter holder failed to meet theminimum academic performance expectations forthree consecutive years; and

f. Upon receipt of information that a charter schooloperated by the charter holder has been assigned aletter grade of “F” by the Department.

B. The Board shall annually assign a charter holder an overalloperational performance rating based on the measures speci-fied in the Operational Performance Framework, which reflectthe degree to which the charter holder achieved the minimumoperational performance expectations. The Board shall makeeach charter holder’s operational performance dashboard pub-licly available and post it on ASBCS Online.

C. The Board shall determine a charter holder meets the mini-mum operational performance standard if the charter holderreceives no measure rated “falls far below standard” and nomore than five measures rated “does not meet standard” for theevaluated year.

D. The Board shall determine a charter holder meets the mini-mum operational performance expectations if the charterholder receives an overall rating of “meets the Board’s opera-tional performance standard” in both of the two most recentyears for which an overall rating was calculated and has nomeasure rated “falls far below standard” in the current year.

E. The Board shall determine a charter holder does not meet theminimum operational performance expectations if the charterholder receives an overall rating of “does not meet the Board’soperational performance standard” in at least one of the twomost recent years for which an overall rating was calculated orhas at least one measure rated “falls far below standard” in thecurrent year.

F. If the Board determines a charter holder does not meet theminimum operational performance expectations, the Boardshall consider charter oversight under Article 6.


effective May 6, 2017 (Supp. 17-1).

R7-5-404. Development and Use of Performance Frame-works




A. The Board shall revise the Academic, Financial, and Opera-tional Performance Frameworks as needed. During the processof revision, the Board shall provide the public with notice andan opportunity to comment on proposed revisions. The Boardshall adopt revisions at a public meeting.

B. The Board shall ensure the Academic Performance Frame-work includes considerations for non-traditional charterschools, including small charter schools with very low enroll-ment and those designated by the Department as alternativeschools.

C. Use of the Academic Performance Framework is contingenton a charter school’s receipt of an annual achievement profileunder A.R.S. § 15-241. The Board shall assign a rating of “norating” to a charter school that does not provide enough data tomake a calculation.

D. If the Department does not timely release annual achievementprofiles under A.R.S. § 15-241, rather than assigning a ratingof “no rating” to all charter schools, the Board may use themost recent available data for each measure.



ARTICLE 5. CHARTER SUPERVISION

R7-5-501. General Supervision A. A charter holder shall:

1. Comply with the provisions of its charter, contractualagreements with the Board, federal and state laws, andthis Chapter; and

2. Meet the minimum performance expectations specified inArticle 4.

B. The Board may supervise a charter holder’s compliance withsubsection (A) using any of the following means:1. Oral or written communication with:

a. The charter representative or authorized charterschool personnel; and

b. Representatives of federal, state, and local agencieshaving jurisdiction over operation of the charterschool or having authority to investigate or adjudi-cate allegations of misconduct by any member of thecharter school’s staff;

2. Collection and review of reports, audits, data, records,documents, files, and communication from any sourcerelating to any activity or program conducted by or forthe charter school;

3. A site visit as described in R7-5-502;4. Annual academic performance review as described in R7-

5-503;5. Annual audit and financial performance review as

described in R7-5-504 and, if necessary, the financialintervention submissions as described in R7-5-509;

6. Operational performance review as described in R7-5-505;

7. Five-year-interval review of academic, financial, andoperational performance, as described in R7-5-506; and

8. Complaints as described in R7-5-507.C. A charter holder must report the following to the Board within

10 days of receipt or occurrence:1. Any notice from a lender or landlord regarding default;2. Filing a petition for bankruptcy;3. Any notice from the Internal Revenue Service, Arizona

State Retirement System, Arizona Department of Reve-nue, or Arizona Department of Economic Securityregarding a tax lien, levy or garnishment;

4. Correspondence from an insurance provider related tocancellation of health or liability insurance due to non-payment;

5. Notice of termination of line of credit whether initiatedby financial institution or charter holder when replace-ment credit line is not in effect; or

6. Withdrawals from debt service reserve funds.D. By September 1 of each year, each charter holder must notify

the Board, in writing, of whether they have an agreement orcontract with an Education Service Provider for the currentschool year. If the charter holder has an agreement or contractwith an Education Service Provider, then the charter holdermust provide:1. The name of the Education Service Provider; and2. A written statement describing the services provided to

the charter holder’s charter school or schools by the Edu-cation Service Provider.

E. Each charter school must conspicuously and permanently posta link on its website to the charter school’s academic perfor-mance dashboard and the charter holder’s financial and opera-tional performance dashboards on the Board’s website. Fornew schools, the link must be conspicuously posted by Sep-tember 1 of the charter school’s first school year of operation.

F. If the charter holder fails to submit or fails to timely submit theinformation required in subsection (C) or subsection (D) orfails to post the link required in subsection (E) on the charterschool’s website, the failure shall be noted in the charterholder’s operational performance dashboard posted onASBCS Online.

G. If the specified deadline has not passed, Board staff may granta charter holder an extension to submit a CAP or otherresponse required under subsection (C), subsection (D), sub-section (E), R7-5-502(G), R7-5-504(G), R7-5-505(D), R7-5-505(E), R7-5-506(B)(2), R7-5-507(C), R7-5-509(B), or R7-5-509(F). In determining whether to grant an extension, Boardstaff shall consider the following, as applicable:1. Whether the charter school at issue was in session when

the Board provided notice to the charter holder; 2. Whether the charter school at issue was in session during

the period provided in the notice for the charter holder torespond to the Board; and

3. Whether additional time is required by the charter holderbecause of the number or complexity of matters to beaddressed.


effective February 7, 2006 (Supp. 06-1). Section repealed; new Section renumbered from R7-5-301 and

amended by final rulemaking at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1). Amended by final exempt rulemaking at 25 A.A.R. 1926, effective July 8, 2019

(Supp. 19-3).

R7-5-502. Site VisitsA. A designee of the Board or Department may conduct a site

visit of a charter school to review or evaluate the charterholder’s compliance with R7-5-501(A).

B. A designee of the Board or Department may conduct a sitevisit to corroborate information submitted to the Board orDepartment and to gather information, documentation, andtestimony that permit the Board to evaluate the charterholder’s compliance with R7-5-501(A).

C. A designee of the Board or Department who conducts a sitevisit shall do so during regular operational hours of the charterschool or at any other reasonable time.




D. A designee of the Board or Department may conduct either anannounced or unannounced site visit.

E. Upon request by a designee of the Board or Department, acharter holder shall open for inspection all records, documents,and files relating to any activity or program conducted by orfor the charter school or the charter holder relating to the char-ter school.

F. Upon request by a designee of the Board or Department, acharter holder shall provide access to all school facilities. 1. During a site visit, a charter holder shall provide access to

classrooms for the purpose of counting students, observ-ing a program of instruction, or documenting individualsproviding instruction.

2. In conducting a site visit, the designee of the Board or theDepartment shall make every effort not to disrupt theclassroom environment.

G. The Board or Department shall inform a charter holder in writ-ing of any issue identified during a site visit and specify anyfurther action required by the charter holder. To assist with thisrequirement, Board staff shall direct the charter holder to sub-mit a CAP, as described in R7-5-510, which addresses theissue.


effective February 7, 2006 (Supp. 06-1). Section repealed; new Section renumbered from R7-5-303 and

amended by final rulemaking at 23 A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-503. Annual Academic Performance ReviewA. When the Department releases the annual achievement profile

under A.R.S. § 15-241, the Board shall:1. Calculate an overall academic rating for each charter

school sponsored by the Board using the Academic Per-formance Framework, and

2. Make the annual overall academic performance dash-board publicly available and post it on ASBCS Online.

B. If the Board determines a charter holder does not meet theBoard’s minimum academic performance expectations, asdefined under R7-5-401(D), the Board shall require the charterholder to demonstrate sufficient progress towards achievingthe minimum academic performance expectations.


effective February 7, 2006 (Supp. 06-1). Section repealed; new Section made by final rulemaking at 23

A.A.R. 693, effective May 6, 2017 (Supp. 17-1).

R7-5-504. Annual Audit and Financial Performance ReviewA. By July 1 of each year, the Board shall make available on its

web site written requirements regarding the audit each charterschool is required to submit annually under A.R.S. §§ 15-183(E)(6) and 15-914.

B. Before beginning the audit, a charter holder or the audit firmshall submit for the Board’s approval a copy of the audit con-tract the charter holder intends to execute with an audit firm.1. Board staff shall approve the audit contract unless the

Board has knowledge that one of the following is applica-ble:a. A person employed by the audit firm has been con-

victed under federal or state law of a crime indicat-ing lack of business integrity or honesty;

b. The audit firm or supervising certified publicaccountant is subject to a current or pending disci-plinary action or a regulatory action requiring theaudit firm or supervising certified public accountant

to complete conditions specified by an accountingindustry regulatory body;

c. The audit firm violates or fails to meet generallyaccepted auditing standards or generally acceptedgovernment auditing standards as identified by anaccounting industry regulatory body;

d. The audit firm receives an opinion of “fail” duringthe audit firm’s most recent peer review;

e. An auditor scheduled to work on the audit fails tomeet the continuing professional education require-ments prescribed by generally accepted governmentauditing standards; or

f. The audit firm fails to agree to adhere to the auditrequirements specified in subsection (A).

2. Within 10 days after receiving a copy of an audit contractunder subsection (B), the Board shall provide the charterholder and audit firm written notice whether the auditcontract is approved.

3. If the Board disapproves an audit contract submittedunder subsection (B), the Board shall include the reasonfor the disapproval in the written notice provided undersubsection (B)(2). If the charter holder or audit firm pro-vides documentation to the Board demonstrating thecause for the disapproval no longer exists, Board staffshall approve the audit contract and provide writtennotice to the charter holder and audit firm.

C. A charter holder or the audit firm that conducts an audit for thecharter holder shall submit the annual audit to the Board for adetermination whether the audit is complete. Within five daysafter receiving the annual audit, Board staff shall provide thecharter holder and audit firm written notice whether the auditis complete.

D. Board staff shall find an audit is incomplete if it does not com-ply with all requirements specified under subsection (A) or ifthe audit is prepared by an audit firm that fails to meet therequirements under subsection (B)(1)(a)-(e). If Board stafffinds an audit is incomplete, Board staff shall include the rea-son for the finding in the notice provided under subsection (C).If the charter holder or audit firm provides documentation tothe Board demonstrating the reason for the finding no longerexists, Board staff shall find the annual audit is complete andprovide written notice to the charter holder and audit firm.

E. A charter holder that fails to submit timely a complete auditmay be subject to charter oversight as specified in Article 6.

F. Board staff shall review each audit deemed complete.G. The Board shall annually calculate a performance rating for

each charter holder using the Financial Performance Frame-work, the annual audit submitted to the Board by the charterholder and the average daily membership calculations com-pleted by the Department using student attendance data sub-mitted to the Department by the charter holder. The Boardshall make each charter holder’s financial performance dash-board publicly available and post it on ASBCS Online.

H. Board staff shall send notice to a charter holder after the auditis reviewed unless the Board has been notified the charterholder will not be operating during the next fiscal year. 1. If the Board identifies an issue in the audit, Board staff

shall direct the charter holder to address the issue andmay require the charter holder to submit a CAP, asdescribed in R7-5-510.

2. The Board shall require a charter holder that receives asummative financial performance rating of “Intervention”under R7-5-402 to prepare the financial intervention sub-missions as described in R7-5-509.

I. If Board staff identifies a serious impact finding in the audit,the charter holder shall be subject to charter oversight as spec-




ified in Article 6 unless the charter holder provides credibleevidence to the Board that the charter holder’s next audit willfind the charter holder in compliance.


effective February 7, 2006 (Supp. 06-1). Section repealed; new Section made by final rulemaking at 23

A.A.R. 693, effective May 6, 2017 (Supp. 17-1). Amended by final exempt rulemaking at 25 A.A.R. 1926,

effective July 8, 2019 (Supp. 19-3).

R7-5-505. Operational Performance ReviewA. Board staff shall conduct a site visit to a charter school during

the charter school’s first year of operation, and thereafter asspecified in R7-5-502, to evaluate the charter holder’s compli-ance with its charter, other contractual agreements with theBoard, federal and state law, and this Chapter.

B. Before conducting the first-year site visit specified under sub-section (A), Board staff shall ask the charter holder to identifydates within a specified time frame not conducive to anunscheduled first-year site visit. This includes dates of an earlyrelease, parent conferences, or school not being in session.

C. Board staff may conduct a compliance check of a charterholder’s operational performance at any time. The Board shallconduct a compliance check when:1. The charter holder seeks to amend the charter or makes

another request of the Board; or2. A lending institution, bond rating agency, or similar

entity that has a loan or bond arrangement with the char-ter holder contacts Board staff to discuss the charterholder’s current standing with the Board.

D. Within 10 days after completing the site visit under subsection(A), Board staff shall provide the charter holder with writtennotice of any compliance issues identified and, if applicable,require the charter holder to submit a CAP as described in R7-5-510.

E. Within 10 days after completing a compliance check undersubsection (C), Board staff shall provide the charter holderwith written notice of any compliance issues identified andspecify a deadline for addressing the issues.

F. After receiving the notice provided under subsection (E), thecharter holder shall provide the Board with written noticedemonstrating that all identified compliance issues have beenaddressed by the specified deadline.

G. The Board shall require a charter holder that fails to providethe notice required under subsection (F) or fails to demonstratethat all identified compliance issues have been addressed toappear before the Board and:1. May subject the charter holder’s requests to heightened

review,2. Shall not place the charter holder’s requests on a Board

agenda, and3. May subject the charter holder to charter oversight as

described in Article 6.



R7-5-506. Five-year-interval ReviewA. As required under A.R.S. § 15-183(I)(3), the Board shall

review a charter holder at five-year intervals for:1. Compliance with its charter, other contractual agreements

with the Board, federal and state law, and this Chapter;and

2. Achievement of the minimum performance expectationsspecified in Article 4.

B. Board staff shall provide a charter holder with notice of a five-year-interval review. Board staff shall include in the notice:1. The information the charter holder is required to submit

to the Board,2. The deadline by which the charter holder shall submit the

required information, and3. A request for the charter holder to identify dates within a

specified time frame not conducive to an unscheduledacademic-systems-review site visit. This includes datesof an early release, parent conferences, or school notbeing in session.

C. The Board shall require a charter holder to review and confirminformation concerning the charter’s mission statement, pro-gram of instruction, instructional days, school calendar, char-ter representative, grade levels served, enrollment cap,principals, school site, and charter holder locations and, asapplicable submit requests for appropriate post-charter actionsas described in Article 3.

D. A charter holder that fails to submit the information requiredby the deadline specified in subsection (B) shall appear beforethe Board and may be subject to charter oversight as describedin Article 6.

E. As part of a five-year-interval review, Board staff shall con-duct an unscheduled academic-systems-review site visit, inaccordance with R7-5-502, to gather evidence regarding thecharter holder’s implementation of a comprehensive programof instruction and a method to measure pupil progress towardoutcomes required in the charter. Using the information pro-vided by the charter holder under subsection (B)(3), Boardstaff shall provide written notice to the charter holder of thetwo-week interval during which Board staff will conduct theunscheduled academic-systems-review site visit.



2019 (Supp. 19-3).

R7-5-507. ComplaintsA. To make a complaint regarding a charter holder, a person shall

submit to the Board a document through ASBCS Online that: 1. Alleges with particularity the charter holder is not in

compliance with its charter, other contractual agreementswith the Board, federal or state law, or this Chapter;

2. Includes a statement of the facts on which the allegationof violation is based; and

3. Includes supporting evidence, if available.B. Board staff shall review the complaint to determine whether

the complaint is within the Board’s jurisdiction.1. If Board staff determines the complaint is not within the

Board’s jurisdiction but may be within the jurisdiction ofanother agency, Board staff shall inform the complainantof the agency that has jurisdiction and that the com-plainant may file the complaint with the appropriateagency; or

2. If Board staff determines the complaint is within theBoard’s jurisdiction, Board staff shall, within five daysafter receiving the complaint, send a copy to the charterholder complained against.

C. A charter holder complained against shall, within 10 days afterreceiving a copy of the complaint provided under subsection(B)(2), provide a written response to the Board that addresseseach allegation, the statement of facts, and supporting evi-dence in the complaint. The charter holder may include evi-dence of compliance with the response. Board staff may grantthe charter holder an extension to submit the written response.




D. Board staff shall review the complaint and the charter holder’sresponse to determine whether a violation of the charter, othercontractual agreements with the Board, federal or state law, orthis Chapter can be substantiated. Board staff shall conductfurther investigation if additional information is needed. Boardstaff may place the charter holder on an agenda for the Boardto determine whether the charter holder is in compliance withthe charter, other contractual agreements with the Board, fed-eral and state law, and this Chapter.

E. Within 10 days after receiving the charter holder’s responseunder subsection (C), Board staff shall send:1. The complainant a copy of the response, and2. The complainant and charter holder notice of the final

action to be taken.



R7-5-508. Demonstration of Sufficient Progress towardsMinimum Academic Performance ExpectationsA. The Board shall require a charter holder to demonstrate the

charter holder is making sufficient progress towards achievingthe minimum academic performance expectations if:1. The Board determines under R7-5-401(D) the charter

holder does not meet the minimum academic perfor-mance expectations; or

2. A charter school operated by the charter holder isassigned a letter grade of “F” by the Department.

B. Within 30 days after issuing overall ratings, the Board shallprovide the charter holder with a written notification of thecharter holder’s progress toward meeting the minimum aca-demic performance expectations.

C. If a charter school operated by a charter holder receives anoverall rating of “does not meet” or “falls far below” for threeconsecutive years, the Board shall conclude the charter holderhas failed to demonstrate sufficient progress.

D. If the Board concludes a charter holder has failed to demon-strate sufficient progress, the charter holder may be subject tocharter oversight as specified in Article 6.



R7-5-509. Financial Intervention SubmissionsA. The Board shall require a charter holder assigned a summative

financial performance rating of “Intervention” under R7-5-402to prepare an initial financial response, quarterly financialreports and a June 30 quarterly financial report.

B. Board staff shall provide written notice to a charter holder thatis required to submit an initial financial response. Board staffshall ensure the notice includes the following:1. Information on how to access the charter holder’s finan-

cial performance dashboard,2. The deadline, which will be set 30 calendar days from the

written notice’s date, for submitting the initial financialresponse to the Board, and

3. The quarters that must be addressed in the charterholder’s initial financial response.a. If the written notice date is between October 1 and

December 31, the initial financial response mustaddress the quarter ending September 30.

b. If the written notice date is between January 1 andMarch 31, the initial financial response must addressthe quarters ending September 30 and December 31.

c. If the written notice date is between April 1 and June30, the initial financial response must address the

quarters ending September 30, December 31 andMarch 31.

d. If the written notice date is after June 30, the initialfinancial response must address the quarters endingSeptember 30, December 31, March 31 and June 30.

C. Board staff shall review the initial financial response and pre-pare a report on the initial financial response. Board staff’sreport will answer each of the following questions and brieflyexplain the basis for each answer:1. Is there a sound explanation for why the charter holder

underperformed on the Financial Performance Frame-work’s measures?

2. Did the charter holder perform at a level just below orwell below the Financial Performance Framework’s mea-sure targets?

3. In what direction is the charter holder’s financial healthheading?

4. Do the charter holder’s proposed or implemented actionsaddress the problems that contributed to or caused thecharter holder’s underperformance on the Financial Per-formance Framework’s measures and are they realistic toimplement?

D. Board staff shall place the charter holder in the interventiontier that aligns with the following criteria:1. If the charter holder’s financial performance dashboard

based on the most recent audit conducted under R7-5-504indicates a rating of “below standard” for the going con-cern or default measure and indicates a rating of“approaches standard” on zero or more measures, thenthe charter holder shall be placed in intervention tier 1notwithstanding subsection (D)(5).

2. If the charter holder’s financial performance dashboardbased on the most recent audit conducted under R7-5-504indicates a rating of “below standard” on two or moremeasures and indicates a rating of “approaches standard”on zero or more measures, then the charter holder shall beplaced in intervention tier 1 unless the charter holder isplaced in intervention tier 2 under subsection (D)(5).

3. If the charter holder’s financial performance dashboardbased on the most recent audit conducted under R7-5-504indicates a rating of “below standard” on one measureother than the going concern measure or default measureand indicates a rating of “approaches standard” on zero ormore measures, then the charter holder shall be placed inintervention tier 2 unless the charter holder is placed inintervention tier 1 under subsections (D)(4), (D)(6),(D)(7), (D)(8) or (D)(9).

4. If the report prepared by Board staff identifies a “No” asthe answer to the question identified in subsection (C)(4),then the charter holder shall be placed in intervention tier1.

5. If the charter holder’s initial financial response supportsthat the charter holder has cured the default, then thecharter holder shall either be:a. Removed from the intervention process if the default

measure was the only measure for which the charterholder received a rating of “below standard” basedon the most recent audit conducted under R7-5-504,or

b. Placed in intervention tier 2 instead of interventiontier 1 if the charter holder had received a rating of“below standard” on only one other measure basedon the most recent audit conducted under R7-5-504.

6. If the charter holder was required to submit a correctiveaction under R7-5-504(H)(1) based on the most recentaudit conducted under R7-5-504 for failure to pay taxes




or contributions due to the Internal Revenue Service, Ari-zona Department of Revenue, Arizona Department ofEconomic Security or Arizona State Retirement System,failure to have sufficient cash at June 30 to cover thecharter holder’s unspent Classroom Site Fund balance, orfailure to maintain worker’s compensation insurance orliability insurance, then the charter holder shall be placedin intervention tier 1.

7. If the Board has substantiated in the audited fiscal year,subsequent fiscal year or both at least one complaintinvolving late payroll checks to employees, or healthinsurance or liability insurance cancellation due to non-payment or if the Board has substantiated in the auditedfiscal year, subsequent fiscal year or both at least onecomplaint involving failure to make required retirementplan contributions or received notification from the Ari-zona State Retirement System of delinquent retirementcontributions, then the charter holder shall be placed inintervention tier 1.

8. If the charter holder has been required to make at leastone submission under R7-5-501(C) in the audited fiscalyear, subsequent fiscal year or both, then the charterholder shall be placed in intervention tier 1.

9. If the charter holder’s performance fluctuates from asummative financial performance rating of “Intervention”to a summative financial performance rating of “Ade-quate Standing” and then back to a summative financialperformance rating of “Intervention” within the mostrecent three-year period, then the charter holder shall beplaced in intervention tier 1.

E. Within 30 calendar days after receiving an initial financialresponse, Board staff shall provide the charter holder withwritten notice that includes the following:1. The charter holder’s intervention tier as determined under

subsection (D);2. The quarterly financial report requirements and submis-

sion deadlines;3. The availability of Board staff’s report specified in sub-

section (C); and4. Any differences identified between the calculations

included by the charter holder in its initial financialresponse and those completed by Board staff.

F. The submission deadlines for quarterly financial reports sub-mitted subsequent to the initial financial response are as fol-lows:1. October 30 for the quarter ending September 30;2. January 30 for the quarter ending December 31;3. April 30 for the quarter ending March 31; and4. July 30 for the quarter ending June 30.

G. For each quarterly financial report submitted subsequent to theinitial financial response and prior to the June 30 quarterlyfinancial report, Board staff shall determine the charterholder’s current performance and compare Board staff’sresults to the charter holder’s calculation results. Within 30calendar days of each quarterly financial report’s receipt,Board staff shall notify the charter holder in writing of:1. The submission deadline for the next quarterly financial

report; and2. Any differences identified between the calculations com-

pleted by the charter holder and those completed byBoard staff.

H. Within 45 calendar days after receiving a June 30 quarterlyfinancial report, Board staff shall:1. Determine the charter holder’s probation status under R7-

5-402(F)-(H);

2. Update the charter holder’s financial performance dash-board to reflect the charter holder’s probation status; and

3. Notify the charter holder of its probation status and, ifapplicable, the deadline for submitting the informationidentified in R7-5-402(K)(2)-(3).

I. For each charter holder placed in intervention tier 1 under sub-section (D), Board staff shall visit each school operated by thecharter holder to conduct a physical count of students andcompare the information observed and obtained onsite withthe number of students reported to the Department. Time per-mitting, Board staff may visit each school operated by a char-ter holder placed in intervention tier 2 under subsection (D).

J. The charter holder’s initial financial response, quarterly finan-cial reports and June 30 quarterly financial report and Boardstaff’s report under subsection (C) shall be posted on ASBCSOnline.

K. If a charter holder fails to submit or fails to submit timely arequired initial financial response, required quarterly financialreport or June 30 quarterly financial report, the failure shall benoted in the charter holder’s operational performance dash-board posted on ASBCS Online.



2019 (Supp. 19-3).

R7-5-510. Corrective Action PlanA. Board staff shall require a charter holder to prepare a CAP for:

1. Any issue identified during a site visit described in R7-5-502 or R7-5-505,

2. An issue identified through the audit described in R7-5-504, or

3. Actions taken by the Board to withhold up to 10 percentof the charter holder’s monthly state aid as described inR7-5-601 and R7-5-605.

B. Board staff shall provide written notice to a charter holderrequired to prepare a CAP. Board staff shall ensure the writtennotice includes the following:1. An explanation of why the charter holder is required to

submit a CAP,2. A description of the issue,3. A list of the specific information required in the CAP,4. The deadline for submitting the CAP to the Board,5. The time during which the charter holder is required to

implement the CAP, and 6. The consequences if the charter holder fails to submit or

implement the CAP.C. Within 10 days after receiving the CAP, Board staff shall pro-

vide written notice to the charter holder that:1. A complete CAP was received and implementation is

required; or2. Additional information is required and the deadline for

submitting the additional information to the Board.D. Board staff shall monitor, through site visits and review of

documentary evidence, the charter holder’s implementation ofthe CAP until the Board determines the issue has been cor-rected.

E. If a charter holder fails to submit a required CAP, fails to sub-mit additional information required under subsection (C)(2),or fails to implement the CAP timely, the charter holder maybe subject to charter oversight as specified in Article 6.






ARTICLE 6. CHARTER OVERSIGHT

R7-5-601. Charter Oversight: General ProvisionsA. Before the Board determines a charter holder is not in compli-

ance with its charter, other contractual agreements with theBoard, federal or state laws, or this Chapter and decideswhether to impose charter oversight, the Board shall providenotice to the charter holder.

B. The Board shall provide the charter holder with at least 72-hours’ notice of the date, time, and location of the meeting atwhich the Board will decide whether to impose charter over-sight. The Board shall include in the notice the purpose of themeeting and why the Board is considering imposing charteroversight.

C. In determining the appropriate charter oversight action to take,the Board shall consider the following, as applicable:1. Threat to the health or safety of children;2. Whether the charter holder’s historical compliance record

indicates repeated or multiple breaches of the provisionsof its charter, other contractual agreements with theBoard, federal or state laws, or this Chapter;

3. Whether the charter holder has failed to meet the mini-mum academic performance expectations specified underR7-5-401;

4. Length of time the issue has been occurring;5. The charter holder’s compliance with and response to

Board investigation by providing necessary informationand documentation within requested time frames;

6. Whether there has been a misuse of funds; and7. Any other factor that bears on the charter holder’s ability

and willingness to comply with its charter, other contrac-tual agreements with the Board, federal and state laws,and this Chapter.

D. Charter oversight actions available to the Board include, butare not limited to the following:1. Imposing a civil penalty, as authorized under A.R.S. § 15-

185 and described under R7-5-604;2. Requesting the Department withhold up to 10 percent of a

charter holder’s monthly state aid as authorized underA.R.S. § 15-185 and described under R7-5-605 andrequiring the charter holder to submit a CAP as describedunder R7-5-510;

3. Entering into a consent agreement with a charter holderas described under R7-5-606;

4. Issuing a notice of intent to revoke a charter as authorizedunder A.R.S. § 15-183 and described under R7-5-607;and

5. Revoking a charter as authorized under A.R.S. § 15-183and described under R7-5-607.



R7-5-602. Oversight of Charter Schools Assigned a LetterGrade of “F” by the DepartmentA. If the Department notifies the Board, as required under A.R.S.

§ 15-241, that a charter school has been assigned a letter gradeof “F,” the Board shall require the charter holder to appearbefore the Board for consideration of whether the Board willissue a notice of intent to revoke the charter under R7-5-607 or

restore the charter to acceptable performance through a con-sent agreement under R7-5-606.

B. Upon receipt of the Department’s notice under subsection (A),the Board shall provide written notice to the charter holder thatthe school has been designated a failing school.

C. Within 30 days after receipt of the notice provided under sub-section (B), the charter holder shall:1. As required under A.R.S. § 15-241, provide written

notice to the parents or guardians of all students attendingthe school that the Department has assigned the school aletter grade of “F” because the school is demonstrating afailing level of performance. The charter holder shall pro-vide to the Board a copy of the notice required under thissubsection;

2. Provide the Board with a list of the names and mailingaddresses of the parents or guardians of all studentsattending the school; and

3. Ensure the charter school’s public communications thatmake a statement concerning the charter school’s aca-demic performance, including the charter school’s website and promotional materials, accurately describe thecharter school’s most current annual achievement profileassigned by the Department.

D. The Board shall provide the charter holder with at least 72hours’ written notice of the date, time, and location of the pub-lic meeting at which the Board will consider whether to restorethe charter to acceptable performance or revoke the charter. Inmaking this decision, the Board shall consider all relevant fac-tors including:1. Whether the charter holder complied fully with the provi-

sions of subsection (C);2. Whether the charter holder failed to meet the minimum

academic performance expectations based on studentachievement measures specified in the Academic Perfor-mance Framework;

3. Whether the charter holder has demonstrated, under R7-5-508, sufficient progress toward achieving the minimumacademic performance expectations;

4. Whether the charter holder meets the minimum financialperformance expectations:

5. Whether the charter holder timely complied with Boardrequests for information and documents;

6. Whether the charter holder’s historical compliance recordindicates repeated or multiple breaches of its charter,other contractual agreements with the Board, federal orstate law, or this Chapter; and

7. Any other factor the Board determines has a bearing onthe charter holder’s ability or willingness to comply withthe provisions of its charter, other contractual agreementswith the Board, federal and state law, and this Chapter.

E. If the Board decides to restore the charter to acceptable perfor-mance, the Board shall enter into a consent agreement with thecharter holder as provided under R7-5-606. If the Boarddecides to revoke the charter, the Board shall issue a notice ofintent to revoke the charter as provided under R7-5-607.



2019 (Supp. 19-3).

R7-5-603. Oversight of Charter Schools Assigned a LetterGrade of “D” by the DepartmentA. Within 30 days after the Department notifies a charter holder

under A.R.S. § 15-241 that a charter school operated by the




charter holder has been assigned a letter grade of “D,” thecharter holder shall:1. Comply fully with A.R.S. § 15-241 by providing written

notice to the parents or guardians of all students attendingthe school. The charter holder shall include the followingin the notice:a. The Department has assigned the charter school a

letter grade of “D;”b. The charter holder is required under A.R.S. § 15-

241.02 to prepare an improvement plan within 90days after the charter school was assigned a lettergrade of “D;” and

c. The charter holder is required to present theimprovement plan to the Board at a public meeting;

2. Provide the Board a copy of the notice required undersubsection (A)(1);

3. Provide the Board with a list of the names and mailingaddresses of the parents or guardians of all studentsattending the school; and

4. Ensure the charter school’s public communications thatmake a statement concerning the charter school’s aca-demic performance, including the charter school’s website and promotional materials, accurately describe thecharter school’s most current academic performance rat-ing assigned by the Department.

B. The Board shall require a charter holder that fails to complyfully with subsection (A) to appear before the Board for con-sideration of the charter holder’s noncompliance and may sub-ject the charter holder to additional charter oversight.

C. Under A.R.S. § 15-241.02, the Board is required to revoke thecharter of a charter school if the Board determines theimprovement plan required under subsection (A)(1)(b) was notproperly implemented.



R7-5-604. Civil Penalty for Fingerprinting ViolationA. After identifying a violation of A.R.S. §§ 15-183, 15-512 or

both, Board staff shall provide the charter holder with writtennotice of noncompliance with statutory fingerprinting require-ments and the date, time, and location of the Board meeting atwhich the Board will consider whether to impose a civil pen-alty under A.R.S. § 15-185.

B. If the Board determines a charter holder has failed to complywith the statutory fingerprinting requirements in A.R.S. §§ 15-183 or 15-512, the Board may impose a civil penalty of $1,000per occurrence as provided under A.R.S. § 15-185.

C. Within 30 days after a civil penalty is imposed under subsec-tion (B), the charter holder may submit to the Board a writtenappeal of the civil penalty. The charter holder shall include thefollowing information in the written appeal:1. Name and address of the appellant;2. Concise statement of the reason for the appeal;3. Relief sought; and4. If the appellant will be represented by an attorney, the

attorney’s name, address, and telephone number.D. The Board shall hold a hearing to consider the appeal within

60 days after receiving the appeal.



R7-5-605. Withholding State FundsA. Under A.R.S. § 15-185, if the Board determines at a public

meeting that a charter holder is not in compliance with its

charter or federal or state law, the Board may request theDepartment to withhold up to 10 percent of the charterholder’s monthly apportionment of state aid.

B. If the Board decides to request that the Department withholdpart of the charter holder’s monthly apportionment of state aid,the Board shall provide written notice to the charter holder.The Board shall include the following in the notice:1. The reason the withholding is being imposed,2. The percentage of the charter holder’s monthly appor-

tionment of state aid to be withheld,3. The date on which the withholding will begin, and4. Actions required by the charter holder before the full

amount of state aid is restored.C. If a percentage of the charter holder’s monthly apportionment

of state aid is withheld for six months and the charter holderhas not completed the actions required under subsection(B)(4), the Board shall consider the charter holder’s noncom-pliance and may subject the charter holder to additional charteroversight including issuing a notice of intent to revoke underR7-5-607.

D. If a percentage of the charter holder’s monthly apportionmentof state aid is withheld for failure to submit an audit for twomonths, the Board shall consider the charter holder’s noncom-pliance and may subject the charter holder to additional charteroversight including issuing a notice of intent to revoke underR7-5-607.

E. When the Board determines the charter holder is in compli-ance with its charter and federal and state law, the Board shallrequest that the Department restore the full amount of state aidto the charter holder.



R7-5-606. Consent AgreementA. If the Board determines that a charter holder is not in compli-

ance with its charter, other contractual agreements with theBoard, federal or state law, or this Chapter, the Board mayenter into a consent agreement with the charter holder toresolve the noncompliance.

B. The Board shall include the following in a consent agreement:1. The reason for the consent agreement;2. The facts and conditions to which the Board and charter

holder agreed;3. The actions the charter holder must take to demonstrate

compliance and avoid further charter oversight;4. The time within which the charter holder is to complete

the actions specified under subsection (B)(3); and5. After approval by both the Board and charter holder, the

signatures of both the Board president and charter repre-sentative.



R7-5-607. RevocationA. If the Board determines that a charter holder is not in compli-

ance with its charter, federal or state law, or this Chapter, theBoard may issue a written notice of intent to revoke the charteras authorized under A.R.S. § 15-183.

B. When a charter holder receives a notice of intent to revoke andnotice of hearing, the charter holder shall:1. Within 48 hours after receiving the notice of intent to

revoke and notice of hearing, provide written notice thatincludes the following to all staff and the parents orguardians of all students attending the school:




a. A notice of intent to revoke has been received;b. The notice of intent to revoke may be inspected at

the charter school location; andc. The date, time, and location of the hearing set with

the Office of Administrative Hearings; and2. Within 20 days after receiving the notice of intent to

revoke, provide the Board with:a. A copy of the notice required under subsection

(B)(1), andb. A list of the names and mailing addresses of the par-

ents or guardians of all students attending theschool.

C. Both the Board and charter holder shall appear for an adminis-trative hearing before an administrative law judge at the Officeof Administrative Hearings on the date provided in the noticeof intent to revoke.

D. After the administrative hearing under subsection (C) andreceipt of the decision of the administrative law judge, theBoard shall hold a public meeting at which the Board shall:1. Decide whether to accept, reject, or modify the decision

of the administrative law judge; and2. Take action on the charter.




TITLE 7. EDUCATION CHAPTER 5. STATE BOARD FOR CHARTER … · 2019/7/1 · CHAPTER 5. STATE BOARD...

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