Dated September 26, 2005

Dr. Paul Ban

Director

Special Education Section

Hawaii Department of Education

P.O. Box 2360

Honolulu, Hawaii 96804

Dear Dr. Ban:

Thank you for your response of June 29, 2005 to the Office of Special
Education Programs' (OSEP) March 22, 2005 letter regarding Hawaii's
public charter schools. In the March 2005 letter, OSEP requested the
following information and determinations: 1) whether a free appropriate
public education (FAPE) was made available to students with disabilities
enrolled in certain public charter schools with personnel vacancies and,
if not, whether any students with disabilities that attended those
public charter schools are entitled to compensatory services; 2) whether
reimbursements were appropriate in cases where a public charter school
with personnel vacancies incurred additional costs for making FAPE
available to enrolled students with disabilities. In addition, OSEP
expressed concern about whether the proposed changes to Hawaii's New
Century charter schools statute were consistent with the Individuals
with Disabilities Education Improvement Act (IDEA) of 2004, including
the newly enacted provision at Section 613(a)(5)(A) and asked for
clarification regarding the State's compliance with 34 CFR §300.241.

The Hawaii Department of Education (HIDOE) reported, in its June 29,
2005 letter, that it identified special education personnel vacancies in
10 of Hawaii's public charter schools for the period between 2000-2004.
HIDOE made determinations for each of these charter schools as to
whether FAPE was made available to children with disabilities attending
these schools and whether the schools incurred additional costs in
ensuring the provision of FAPE. As part of that determination, HIDOE
reported that it reviewed individualized education programs (IEPs) and
other related school records, and conducted interviews with school
staff. HIDOE determined that FAPE was made available to children with
disabilities attending these public charter schools and therefore,
compensatory services were not required. In two of the 10 schools, Kihei
Public Charter High School and Kanu O Ka'aina, HIDOE determined that the
schools were entitled to reimbursement. Kihei Public Charter High School
received reimbursement in the total amount of \$49,121.28 for the
periods covering school year (SY) 2002-2003 and SY 2003-2004. Kanu O
Ka'aina was reimbursed \$11,914.00 for SY 2001-2002.

HIDOE reported that, in partnership with the National Association of
State Directors of Special Education, it is developing a primer to
promote communication and collaboration and provide technical assistance
and guidance on special education in Hawaii's public charter schools.
HIDOE also reported that the State's most recent Annual Performance
Report (APR) submission included information pertaining to Hawaii's
monitoring system including information on how the State monitors public
charter schools. Information and data in the APR will be addressed under
separate cover.

To address OSEP's concern regarding the provisions in the State's
statute, *HIDOE* submitted Sections 17 and 18 of Session Bill 1643, the
State's revisions to Section 302A-1188 of the Hawaii Revised Statutes.
HIDOE indicated that this bill was enacted as Act 87. The submitted
language includes a provision specifying that HIDOE shall be responsible
for the provision of FAPE and setting out that a New Century charter
school that enrolls or identifies an enrolled student with disabilities
is responsible for providing the services on the child's IEP, but that
where the charter school is unable to provide these services, then HIDOE
is to provide the IEP services, through a collaborative process that may
include an offer of staff, funding or both. The programs and services
are to be determined collaboratively with the student's IEP team that
includes the student's parents or legal guardian. Although the submitted
revisions appear to address OSEP's previous concerns, it is not clear
whether this provision is also intended to cover the distribution of
federal Part B funds. Therefore, OSEP is interested in learning more
about HIDOE's interpretation and implementation of this provision.

In its June 29, 2005 letter, HIDOE also reported on its review of
compliance with the requirement at 34 CFR §300.241 of the current Part B
regulations (34 CFR §300.209 of the proposed regulations). Although
HIDOE has designated school districts for local administrative purposes,
Hawaii is a unitary system for IDEA purposes. Therefore, HIDOE is
responsible for meeting the relevant requirements that apply to both the
State and local education agency (LEA). Under 34 CFR §300.241, where
Part B funds are distributed to other schools of the LEA, Part B funds
also must be distributed to its public charter schools in the same
manner. Likewise, where the LEA provides services under Part B to its
other schools, it must provide services in the same manner to its public
charter schools. HIDOE reported that prior to SY 2002-2003, Part B funds
were distributed to both charter and non-charter schools in the same
manner, consistent with 34 CFR §300.241. For SY 2002-2003, HIDOE offered
public charter schools an opportunity to write project proposals for
Part B funds, similar to the district offices, in an effort to provide
the public charter schools greater fiscal flexibility, but concluded
that this was not done in a manner consistent with 34 CFR §300.241.
HIDOE indicated that it "will resume distribution of Part B funds to the
school districts and provide Part B services in the same manner to both
charter and non-charter schools." Because, as noted above, Hawaii is a
unitary system, it is not clear what is meant by the statement that
HIDOE will "resume distribution of Part B funds to the school
districts."

It is important to note that in addressing a 2003 audit of public
charter schools in New York by the Office of the Inspector General
(ED-OIG/A09-C0025), the Department concluded that it is not inconsistent
with the requirements of 34 CFR §300.241, for a State to provide public
charter schools that are schools of the LEA greater flexibility than
that offered to other public schools of an LEA with regard to the
receipt of Part B funds and/or services. For example, where other
schools of the LEA receive Part B services from the LEA, the State may
allow public charters schools to chose between receiving Part B services
in the same manner as other schools of the LEA, and other options such
as receiving Part B funds or receiving a combination of services and
funds. To the extent that the language in Section 18 of Act 87, above,
contemplates the distribution of Part B funds (rather than State funds),
it would be consistent with the requirements of 34 CFR §300.241 for
HIDOE to allow public charter schools to chose between receiving Part B
services in the same manner provided to other schools, and other options
such as receiving Part B funds or a combination of funds and services.
Regardless of the choice that the public charter schools make, the State
must ensure that students with disabilities attending public charter
schools and their parents retain all their rights under Part B. Given
the longstanding concerns regarding how FAPE is made available to
students with disabilities enrolled and attending public charter schools
in Hawaii, and the ambiguities in the new State statutes noted above,
OSEP staff would like to schedule a teleconference with the State staff
to better understand how HIDOE is addressing federal requirements at 34
CFR §300.241 and HIDOE's interpretation and implementation of Section 18
of Act 87.

*W*e appreciate the information provided in the June 2005 letter
addressing OSEP's concerns regarding Hawaii's public charter schools.
OSEP looks forward to our continued collaboration with Hawaii regarding
public charter schools' services to students with disabilities. Please
contact Debra Jennings at (202) 245-7389 to schedule the teleconference
or if you have questions.

> Sincerely,
>
> /s/
>
> Troy R. Justesen
>
> Acting Director
>
> Office of Special Education
>
> Programs

cc: Honorable Patricia Hamamoto