SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Championing Honest 
And Responsible Transparency in Education Reform Act’’ 
or the ‘‘CHARTER Act’’. 
SEC. 2. PURPOSE AND FINDINGS. 
(a) PURPOSE.—The purpose of this Act is to ensure 
that each charter school that receives funding under the 
Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.) (in this section referred to as the 
‘‘ESEA’’) or the Individuals with Disabilities Education 
Act (20 U.S.C. 1400 et seq.) (in this section referred to 
as the ‘‘IDEA’’)— 
(1) complies with the intent of the requirements 
for funding under such Act; and 
(2) best serves the educational needs of stu-
dents by prohibiting such charter school and its 
charter management organization from entering into 
a contract with a for-profit entity under which the 
for-profit entity— 
(A) operates, oversees, or manages the 
charter school in order to exert influence in 
school management; and 
(B) receives a portion of school revenue in 
order to extract profit for itself or its related 
entities. 
(b) FINDINGS.—Congress finds the following: 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB
(1) An ‘‘elementary school’’ is defined as ‘‘a 
nonprofit institutional day or residential school, in-
cluding a public elementary charter school, that pro-
vides elementary education, as determined under 
State law’’ under section 8101 of the ESEA (20 
U.S.C. 7801) and section 602 of the IDEA (20 
U.S.C. 1401). 
(2) A ‘‘secondary school’’ is defined as ‘‘a non-
profit institutional day or residential school, includ-
ing a public secondary charter school, that provides 
secondary education, as determined under State law, 
except that the term does not include any education 
beyond grade 12’’ under section 8101 of the ESEA 
(20 U.S.C. 7801) and section 602 of the IDEA (20 
U.S.C. 1401). 
(3) The term ‘‘nonprofit’’ as applied to a 
school, agency, organization, or institution means ‘‘a 
school, agency, organization, or institution owned 
and operated by 1 or more nonprofit corporations or 
associations no part of the net earnings of which in-
ures, or may lawfully inure, to the benefit of any pri-
vate shareholder or individual’’ under section 602 of 
the IDEA (20 U.S.C. 1401). 
(4) In 2003, the Department of Education Of-
fice of Inspector General, upon auditing the Arizona 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB
Department of Education, concluded that the State 
educational agency in Arizona had improperly dis-
tributed funds under the ESEA and the IDEA to 
for-profit charter schools. 
(5) In 2006, the United States Court of Ap-
peals Ninth Circuit Court in Arizona State Bd. v. 
U.S. Dept. of Educ., 464 F.3d 1003 (9th Cir. 2006) 
found that the terms ‘‘elementary school’’ and ‘‘sec-
ondary school’’ in the ESEA and the IDEA were 
limited to nonprofit entities, holding that for-profit 
charter schools were ineligible for Federal funds 
under the ESEA and the IDEA. 
(6) In response to the decision in Arizona State 
Bd. v. U.S. Dept. of Educ., the appellant for-profit 
charter schools reorganized as for-profit operators of 
nonprofit organizations, enabling the appellants to 
continue to receive Federal funds under the ESEA 
and the IDEA. 
(7) Every student in a publicly funded school in 
the United States, including charter school students, 
is entitled to access education services without hav-
ing publicly funded resources depleted due to profit 
extraction. 
(8) Every taxpayer in the United States should 
be confident that public funds are responsibly 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB
stewarded and not funding the enrichment of for- 
profit charter operators at the expense of students 
and taxpayers. 
SEC. 3. ESEA DEFINITION OF CHARTER SCHOOL. 
(a) PROHIBITION
OF CONTRACTING WITH FOR- 
PROFIT ENTITY
FOR ESSENTIAL SERVICES.—Section 
4310(2) of the Elementary and Secondary Education Act 
of 1965 (20 U.S.C. 7221i(2)) is amended— 
(1) in subparagraph (L), by striking ‘‘and’’ at 
the end; 
(2) in subparagraph (M)— 
(A) by moving the margins of such para-
graph 2 ems to the left; and 
(B) by striking the period and inserting a 
semicolon; and 
(3) by adding at the end the following: 
‘‘(N) does not enter into a contract with a 
for-profit entity, or have a charter management 
organization or other nonprofit entity enter into 
such a contract on behalf of such school, under 
which the for-profit entity operates, oversees, 
manages, or otherwise carries out the adminis-
tration of such school, which may include cur-
riculum development, budget management, and 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB
faculty management (such as hiring, termi-
nating, or supervising school-level staff); and 
‘‘(O) may enter into a contract with a for- 
profit or nonprofit entity for the provision of— 
‘‘(i) food, payroll, facilities mainte-
nance, or transportation services; 
‘‘(ii) classroom supplies (such as text-
books); or 
‘‘(iii) ancillary services or supplies.’’. 
(b) GENERAL DEFINITIONS.—Section 8101 of the 
Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7801) is amended by adding at the end the fol-
lowing: 
‘‘(53) CHARTER
SCHOOL.—The term ‘charter 
school’ has the meaning given the term in section 
4310.’’. 
SEC. 4. IDEA DEFINITION OF CHARTER SCHOOL. 
Section 602 of the Individuals with Disabilities Edu-
cation Act (20 U.S.C. 1401) is amended by adding at the 
end the following: 
‘‘(37) CHARTER
SCHOOL.—The term ‘charter 
school’ has the meaning given the term in section 
4310 of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7221i).’’. 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB
SEC. 5. EFFECTIVE DATE; APPLICABILITY. 
The amendments made by this Act— 
(1) shall take effect on the date that is 3 years 
after the date of the enactment of this Act; and 
(2) shall only apply with respect to any contract 
entered into, renewed, or extended on or after the 
date of the enactment of this Act. 
Æ 
VerDate Sep 11 2014 
02:11 Aug 22, 2024
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H8886.IH
H8886
kjohnson on DSK7ZCZBW3PROD with $$_JOB