A bill requiring charter schools to turn over financial records upon request from the state charter school commission cleared both chambers of the Legislature, signaling potential changes to the way financial information is shared by these schools.

House Bill 622 will next go to the governor for his signature. The measure was significantly pared down by the time it was reported out of conference committee Friday.

The proposal initially would have set up a central banking system through which funds would be distributed to the 36 charter schools via the commission rather than to the schools directly. That version sent a shudder through many of the schools’ leaders and did not survive the conference committee.

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The revised measure shortens the “wait period” to one year before anyone affiliated with a charter school can serve on the voluntary commission, which serves as the authorizer and renewer of schools and whose members are appointed by the Board of Education.

A charter school would also need to give the state commission “full access to its fiscal and accounting books, documents and files,” upon request, the bill says.

In another departure from the current system, the commission would be responsible for selecting three independent auditors, one of which the school would designate to complete its required annual audit.

Under the current system, the schools select their own auditors.

When HB 622 was advancing through the Legislature, people were concerned it would cut off much of the autonomy these schools have. They are public schools but not part of the Hawaii Department of Education.

Charter schools are run by independent governing boards who choose school leaders, set curriculum and monitor the school’s finances.

Increased Scrutiny

Several recent incidents involving accounting irregularities at schools and the possible filing of federal investigations as a result caused the overall charter school network to come under legislative scrutiny this session.

“The overwhelming majority of charter schools don’t have any issues with their financial operations,” Rep. Justin Woodson, chair of the House Lower and Higher Education Committee, said. “We have not discovered any issues. They run pretty well. We definitely need to continue to support them.”

Nevertheless, the lawmaker added, “there are concerns with a small number of them with how they are handling their finances.”

Some charter school leaders who were vocal in their opposition to the prior draft of HB 622 said the attention the measure generated detracted from what’s most crucial for charter schools: more funding for services.

Steve Hirakami, founder and director of Big Island’s Hawaii Academy of Arts & Science, said he believed the bill was aimed at keeping the focus away from “the real missing ingredient: funding and facilities.” He called the bill “radically obnoxious.”

The perennial proposal to provide a separate facilities funding stream for charter schools — which must pay for their facilities using operational funds — once again didn’t get very far this session.

Another bill, House Bill 1526, which would have provided $892,000 per year for teacher incentive pay for hard-to-staff areas or for national board certification died in conference.