BP BHEAD INT S [atlas:bill]

AN ACT Relating to charter schools; amending RCW 41.32.010; reenacting and amending RCW 41.40.010; adding a new section to chapter 41.56 RCW; adding a new section to chapter 41.59 RCW; and adding a new chapter to Title 28A RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. INTENT. The legislature intends to authorize the establishment of charter schools for the purpose of providing a unique setting for learning that will improve pupil achievement and provide additional public school choices for students, parents, and teachers.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Applicant" means a public benefit nonprofit corporation as defined in RCW 24.03.490 that has submitted an application to a sponsor to obtain approval to operate a charter school. The public benefit nonprofit corporation may not be a sectarian or religious organization.

(2) "Charter" means a contract between an applicant and a sponsor. The charter establishes, in accordance with this chapter, the terms and conditions for the management, operation, and educational program of the charter school.

(3) "Charter school" means a public school managed by a board of directors and operating independently of any school district board under a charter approved in accordance with this chapter.

(4) "Board of directors" means the board of directors of the public benefit nonprofit corporation that manages and operates the charter school.

(5) "Sponsor" means a school district, educational service district, the dean of any college or program of education at a regional university as defined in RCW 28B.10.016, or the superintendent of public instruction, whichever is applicable, that has approved a charter for a charter school.

NEW SECTION. Sec. 3. CHARTER SCHOOLS‑-POWERS. (1) The board of directors of a charter school may hire, manage, and discharge any charter school employee in accordance with the terms of this chapter and that school's charter.

(2) The charter school's board of directors may enter into a contract with any school district, or any other public or private entity, other than a sectarian or religious entity, also empowered to enter into contracts, for any and all real property, equipment, goods, supplies, and services, including educational instructional services.

(3) Charter schools may rent, lease, or own property, but may not acquire property by eminent domain. All charters and charter school contracts with other public and private entities must include provisions regarding the disposition of the property if the charter school fails to open as planned, closes, or the charter is revoked or not renewed. Charter schools may accept gifts and donations from other governmental and private entities, excluding sectarian or religious organizations. Charter schools may not accept any gifts or donations the conditions of which violate this chapter.

(4) Charter schools may not charge tuition, levy taxes, or issue bonds, however they may charge fees for optional noncredit extracurricular events.

NEW SECTION. Sec. 4. LEGAL STATUS. A charter school is a public school including one or more of grades kindergarten through twelve, operated by a public benefit nonprofit corporation, according to the terms of a renewable five-year agreement granted by a sponsor.

NEW SECTION. Sec. 5. CHARTER SCHOOLS‑-EXEMPTIONS. (1) A charter school shall operate independently of any school district board, under a charter approved by a sponsor under this chapter.

(2) Charter schools are exempt from all state statutes and rules applicable to school districts and school district boards of directors except as provided in this chapter and in the school's approved charter.

(3) A charter school's board of directors may elect to comply with one or more provisions of the statutes or rules that are applicable to school districts and school district board of directors.

(4) All approved charter schools shall:

(a) Comply with state and federal health, safety, and civil rights laws and rules applicable to school districts;

(b) Meet or exceed the student performance and assessment standards as established for students in other public schools, including the essential academic learning requirements and performance standards developed under a performance-based education system according to RCW 28A.630.885;

(c) Participate in nationally normed standardized achievement tests as required in RCW 28A.230.190, 28A.230.230, and 28A.230.240;

(d) Employ certificated instructional staff in accordance with chapter 28A.410 RCW in requisite staffing ratios under RCW 28A.150.260. Charter schools may hire noncertificated instructional staff with money received from nonstate sources;

(e) Comply with the employee record check requirements in RCW 28A.400.303;

(f) Be subject to the same financial and audit requirements as a school district;

(g) Report at least annually to its sponsor and to parents of children enrolled at the charter school on progress toward the student performance goals specified in the charter; and

(h) Meet the obligation on other school districts to spend the allocations received under section 11 of this act for the purposes of funding basic education, special education, learning assistance programs, transitional bilingual instruction programs, and student transportation as required under this title and the state Constitution.

NEW SECTION. Sec. 6. ADMISSION REQUIREMENTS. (1) A charter school must enroll all students who submit a timely application. If capacity is insufficient to enroll all students who submit a timely application, the charter school must give enrollment priority to students who reside within the school district boundaries in which the charter school is physically located. Priority also must be given to siblings of students who are currently enrolled in the school. Students must be selected through an equitable selection process, such as a lottery, to fill any remaining spaces.

(2) A charter school may not limit admission based on race, religion, ethnicity, national origin, gender, income level, intellectual ability, disabling condition, proficiency in the English language, or athletic ability. A charter school may limit admission to students within a given age group or grade level.

NEW SECTION. Sec. 7. CHARTER APPLICATION‑-CHARTERING PROCESS. (1) An applicant may apply to a sponsor to establish a charter school as provided in this section.

(2) An applicant for a charter school must submit its application to the local school district board of directors of the district in which the proposed school is to be located before the applicant may submit an application to another sponsor.

(3) The local school district board of directors must hold a public hearing in the school district on the application within sixty days of receipt of the application. The school board must either accept or reject the application within thirty days after the hearing. The thirty-day deadline for acceptance or rejection of the charter school application may be extended for an additional thirty days if both parties agree in writing.

(4) If the local school board rejects the application, the school board must notify the applicant in writing of the reasons for the rejection. The applicant may submit a revised application for the school board's reconsideration. The school board may provide technical assistance to improve the application. If the school board rejects the application after submission of a revised application, the school board must notify the applicant in writing of the reasons for the rejection.

(5) If the school board rejects the application, the applicant may submit an application for a charter school to another sponsor or appeal the local school board's decision to the superintendent of public instruction. The alternate sponsor must comply with the procedures specified in subsections (1) through (4) of this section for consideration of the charter application. The alternative sponsor is not bound by the local school board's findings or decision to deny the application.

(6) The charter application is a proposed agreement and must include:

(a) The identification and description of the public benefit corporation submitting the application, including the names and descriptions of the board of directors and the individuals who will operate the school;

(b) The public benefit nonprofit corporation's articles of incorporation, bylaws, and most recent financial statement and balance sheet;

(d) A description of the curriculum, the expected results, and the verified methods of measuring and reporting objective results, including but not limited to the assessment system developed under RCW 28A.630.885;

(e) The governance, bylaws, and management structure of the school;

(f) A description of admission policies and application procedures;

(g) The types and limits of insurance coverage the school plans to obtain;

(h) A description of the plan for evaluating student performance and the procedures for taking corrective action in the event that student performance at the charter school falls below established standards;

(i) Evidence that the plan for the school is economically viable, including a proposed five-year budget of projected revenues and expenditures, a plan for starting the school, and a description of major contracts planned for equipment and services, leases, improvements, purchases of real property, and insurance;

(j) A description of the proposed financial management procedures, including annual audits of the school's financial and administrative operations, which shall meet or exceed generally accepted standards of management and public accounting;

(k) A description of how the allocation of funds under section 11 of this act will be spent to meet the state's obligation to fund basic education, special education, learning assistance programs, transitional bilingual programs, and student transportation; and

(l) A description of the number of students the school plans to enroll the first year and each subsequent year until the year 2001 to comply with the cap on enrollees as provided in section 16 of this act.

(7) The sponsor shall grant the application if the applicant meets the requirements of this section.

NEW SECTION. Sec. 8. APPEAL PROCESS. (1) If a sponsor rejects a charter application, the applicant may submit a motion for appeal to the superintendent of public instruction within thirty days. The superintendent of public instruction shall accept the appeal of a charter school applicant whose application was denied by another sponsor. The rules of the administrative procedure act, chapter 34.05 RCW, apply to an appeal of a denial of application.

(2) If the superintendent of public instruction denies the application, the superintendent's decision may be appealed to the superior court according to the provisions of the administrative procedure act, chapter 34.05 RCW.

NEW SECTION. Sec. 9. CHARTER AGREEMENT‑-AMENDMENT. (1) A charter application approved by a sponsor constitutes a charter.

(2) A charter may be amended during its term at the request of the board of directors and on the approval of the sponsor.

NEW SECTION. Sec. 10. CHARTER RENEWAL AND REVOCATION. (1) An approved plan to establish a charter school is effective for five years from the first day of operation. At the conclusion of the first four years of operation, the charter school may apply to the sponsor for renewal.

(2) A charter school renewal application must include:

(a) A report on the progress of the charter school in achieving the goals, student performance standards, and other terms of the initial approved charter; and

(b) A financial statement that discloses the costs of administration, instruction, and other expenditure objects and activities of the charter school.

(3) The sponsor may reject the application for renewal if, in its judgment, any of the following occurred:

(a) The charter school materially violated its contract with the sponsor, as set forth in the initial approved charter;

(b) The students enrolled in the charter school failed to meet or make reasonable progress toward achievement of the student performance standards identified in the initial approved charter;

(d) The charter school violated provisions in law that have not been waived in accordance with this chapter.

(4) A sponsor shall give written notice of its intent not to renew the charter school's request for renewal to the charter school at least twelve months before the expiration of the approved charter to allow the charter school an opportunity to correct identified deficiencies in its operation or to apply to another sponsor for approval of the operation of the charter school. At the request of the board of directors of the charter school, the sponsor shall review its decision for nonrenewal after the charter school has corrected any identified deficiencies. If the charter is transferred by application to another sponsor, the five-year term of the charter shall be repeated.

(5) The sponsor may revoke a previously approved charter before the expiration of the term of the charter, and before application for renewal, for any of the reasons specified in subsection (3) of this section. In addition, the sponsor may revoke a charter after two years if the academic achievement of students is significantly below the academic achievement of comparable students in the school district. Except in cases of emergency where the health and safety of children are at risk, a charter may not be revoked unless the sponsor first provides written notice of the specific violations alleged, a public hearing, and a reasonable opportunity for the charter school to correct the identified areas of concern. The sponsor of a charter school shall provide for an appeal process upon a determination by the sponsor that grounds exist to revoke a charter.

NEW SECTION. Sec. 11. FUNDING. (1) The superintendent of public instruction shall separately calculate and allocate to charter schools moneys appropriated for basic education under RCW 28A.150.260. The amount of funding for charter schools shall be determined by the number of full-time equivalent students enrolled in the school multiplied by the estimated state-wide annual average per full-time equivalent student allocation under RCW 28A.150.260 and applicable rules.

(2) State funding to charter schools for students who are eligible for special education under chapter 28A.155 RCW; the learning assistance program under chapter 28A.165 RCW; and the transitional bilingual instruction program under chapter 28A.180 RCW shall be determined in accordance with applicable statutes and rules that apply to school districts.

(3) State funding for the transportation of students who are transported shall be based on the average full-time equivalent student transportation allocation for transported students in the district in which the school is located or on the allocation formula used by school districts.

(4) For each annual full-time equivalent student enrolled in a charter school, the charter schools shall be entitled to an amount equal to two-thirds of the maintenance and operation excess tax levy rate per annual average full-time equivalent student of the district in which each full-time equivalent student who attends the charter school resides.

(5) The superintendent of public instruction shall establish rules for the calculation and payment of state and school district funds to charter schools.

(6) Charter schools are eligible to apply for education grant programs and special education safety net funding.

(7) Transportation of students attending a charter school may be provided by the sponsoring school district, if applicable, through a cooperative agreement with another school district, through a contract with a third party, or by parents of students attending the school.

NEW SECTION. Sec. 12. VACANT BUILDINGS. The superintendent of public instruction, in conjunction with the department of general administration, shall annually publish a list of vacant and unused buildings and vacant and unused portions of buildings that are owned by this state or by school districts and that may be suitable for the operation of a charter school. The superintendent of public instruction shall make the list available to applicants for charter schools and to existing charter schools. The list shall include the address of each building, a short description of the building, the name of the entity that owns the building, and the name of a contact person. This section does not require the owner of a building on the list to sell or lease the building or a portion of the building to a charter school or to any other school or to any other prospective buyer or tenant.

NEW SECTION. Sec. 13. CHARTER SCHOOL ASSISTANCE ACCOUNT. The charter school assistance account is created in the custody of the state treasurer. All receipts from appropriations shall be deposited into the account. Expenditures from the account may be used only to provide financial loans to approved charter schools for start-up costs. Charter schools may receive up to twenty-five thousand dollars per building for start-up costs. Only the superintendent of public instruction or the superintendent's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures. Start-up moneys shall be distributed to schools with approved charters on a first-come, first-served basis. Repayment of loans provided under the program must be made within five years.

NEW SECTION. Sec. 14. RULES--LOANS. The office of the superintendent of public instruction shall adopt rules to implement section 13 of this act.

If an applicant for a charter school receives a loan under this section and fails to begin operating a charter school within the next eighteen months, the applicant must reimburse the office of the superintendent of public instruction for the amount of the loan plus interest calculated at a rate of ten percent a year.

NEW SECTION. Sec. 15. CONVERSION SCHOOLS. A public school currently operated by a school district may apply for conversion to a public charter school by holding a meeting for the specific purpose of voting on the proposed conversion by secret ballot. The vote to convert to a charter school must be supported by a majority of the custodial parents or legal guardians of students enrolled in that school and a majority of the certificated employees at the school. Evidence of the results of these votes must be attached to the application. If the parents and teachers vote to convert the school to a charter school, the parents and teachers must become incorporated as a public benefit nonprofit corporation to qualify as an applicant. Teachers who do not want to remain employed at the charter school may be reassigned to another school within the district without any loss of benefits or status. If a parent does not want his or her child to attend the charter school, the child may attend another school within the district.

NEW SECTION. Sec. 16. CAPS ON CHARTER SCHOOLS. (1) Until January 1, 2001, no more than a total of five percent of the annual average full-time equivalent students eligible for enrollment in the school district in which the charter school is located may be enrolled in a charter school or schools in the district.

(2) The cap on enrollments in the charter school shall not apply to public schools that convert to charter schools under section 15 of this act.

NEW SECTION. Sec. 17. LABOR RELATIONS. (1) Employees of a charter school are public employees and have a right to enter into collective bargaining agreements with the board of directors of the charter school under chapters 41.56 and 41.59 RCW, as applicable. The employee bargaining unit is limited to the employees of the charter school and must be separate from other units within the district.

(2) Teachers of charter schools are eligible for and retain their status in the Washington state teachers' retirement system under chapter 41.32 RCW.

(3) Classified employees of charter schools are eligible for and retain their status in the public employees' retirement system under chapter 41.40 RCW.

Sec. 18. RCW 41.32.010 and 1996 c 39 s 1 are each amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1)(a) "Accumulated contributions" for plan I members, means the sum of all regular annuity contributions and, except for the purpose of withdrawal at the time of retirement, any amount paid under RCW 41.50.165(2) with regular interest thereon.

(b) "Accumulated contributions" for plan II members, means the sum of all contributions standing to the credit of a member in the member's individual account, including any amount paid under RCW 41.50.165(2), together with the regular interest thereon.

(2) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of such mortality tables and regulations as shall be adopted by the director and regular interest.

(3) "Annuity" means the moneys payable per year during life by reason of accumulated contributions of a member.

(4) "Member reserve" means the fund in which all of the accumulated contributions of members are held.

(5)(a) "Beneficiary" for plan I members, means any person in receipt of a retirement allowance or other benefit provided by this chapter.

(b) "Beneficiary" for plan II and plan III members, means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by another person.

(6) "Contract" means any agreement for service and compensation between a member and an employer.

(7) "Creditable service" means membership service plus prior service for which credit is allowable. This subsection shall apply only to plan I members.

(8) "Dependent" means receiving one‑half or more of support from a member.

(9) "Disability allowance" means monthly payments during disability. This subsection shall apply only to plan I members.

(10)(a) "Earnable compensation" for plan I members, means:

(i) All salaries and wages paid by an employer to an employee member of the retirement system for personal services rendered during a fiscal year. In all cases where compensation includes maintenance the employer shall fix the value of that part of the compensation not paid in money.

(ii) "Earnable compensation" for plan I members also includes the following actual or imputed payments, which are not paid for personal services:

(A) Retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wages which the individual would have earned during a payroll period shall be considered earnable compensation and the individual shall receive the equivalent service credit.

(B) If a leave of absence, without pay, is taken by a member for the purpose of serving as a member of the state legislature, and such member has served in the legislature five or more years, the salary which would have been received for the position from which the leave of absence was taken shall be considered as compensation earnable if the employee's contribution thereon is paid by the employee. In addition, where a member has been a member of the state legislature for five or more years, earnable compensation for the member's two highest compensated consecutive years of service shall include a sum not to exceed thirty‑six hundred dollars for each of such two consecutive years, regardless of whether or not legislative service was rendered during those two years.

(iii) For members employed less than full time under written contract with a school district, or community college district, in an instructional position, for which the member receives service credit of less than one year in all of the years used to determine the earnable compensation used for computing benefits due under RCW 41.32.497, 41.32.498, and 41.32.520, the member may elect to have earnable compensation defined as provided in RCW 41.32.345. For the purposes of this subsection, the term "instructional position" means a position in which more than seventy‑five percent of the member's time is spent as a classroom instructor (including office hours), a librarian, or a counselor. Earnable compensation shall be so defined only for the purpose of the calculation of retirement benefits and only as necessary to insure that members who receive fractional service credit under RCW 41.32.270 receive benefits proportional to those received by members who have received full‑time service credit.

(iv) "Earnable compensation" does not include:

(A) Remuneration for unused sick leave authorized under RCW 41.04.340, 28A.400.210, or 28A.310.490;

(B) Remuneration for unused annual leave in excess of thirty days as authorized by RCW 43.01.044 and 43.01.041.

(b) "Earnable compensation" for plan II and plan III members, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, and shall include wages and salaries deferred under provisions established pursuant to sections 403(b), 414(h), and 457 of the United States Internal Revenue Code, but shall exclude lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay.

"Earnable compensation" for plan II and plan III members also includes the following actual or imputed payments which, except in the case of (b)(ii)(B) of this subsection, are not paid for personal services:

(i) Retroactive payments to an individual by an employer on reinstatement of the employee in a position or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wages which the individual would have earned during a payroll period shall be considered earnable compensation, to the extent provided above, and the individual shall receive the equivalent service credit.

(ii) In any year in which a member serves in the legislature the member shall have the option of having such member's earnable compensation be the greater of:

(A) The earnable compensation the member would have received had such member not served in the legislature; or

(B) Such member's actual earnable compensation received for teaching and legislative service combined. Any additional contributions to the retirement system required because compensation earnable under (b)(ii)(A) of this subsection is greater than compensation earnable under (b)(ii)(B) of this subsection shall be paid by the member for both member and employer contributions.

(11) "Employer" means the state of Washington, the school district, a charter school as defined in section 4 of this act, or any agency of the state of Washington by which the member is paid.

(12) "Fiscal year" means a year which begins July 1st and ends June 30th of the following year.

(13) "Former state fund" means the state retirement fund in operation for teachers under chapter 187, Laws of 1923, as amended.

(14) "Local fund" means any of the local retirement funds for teachers operated in any school district in accordance with the provisions of chapter 163, Laws of 1917 as amended.

(15) "Member" means any teacher included in the membership of the retirement system, and includes teachers employed by charter schools. Also, any other employee of the public schools who, on July 1, 1947, had not elected to be exempt from membership and who, prior to that date, had by an authorized payroll deduction, contributed to the member reserve.

(16) "Membership service" means service rendered subsequent to the first day of eligibility of a person to membership in the retirement system: PROVIDED, That where a member is employed by two or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service is rendered. The provisions of this subsection shall apply only to plan I members.

(17) "Pension" means the moneys payable per year during life from the pension reserve.

(18) "Pension reserve" is a fund in which shall be accumulated an actuarial reserve adequate to meet present and future pension liabilities of the system and from which all pension obligations are to be paid.

(19) "Prior service" means service rendered prior to the first date of eligibility to membership in the retirement system for which credit is allowable. The provisions of this subsection shall apply only to plan I members.

(20) "Prior service contributions" means contributions made by a member to secure credit for prior service. The provisions of this subsection shall apply only to plan I members.

(21) "Public school" means any institution or activity operated by the state of Washington or any instrumentality or political subdivision thereof employing teachers, except the University of Washington and Washington State University.

(22) "Regular contributions" means the amounts required to be deducted from the compensation of a member and credited to the member's individual account in the member reserve. This subsection shall apply only to plan I members.

(23) "Regular interest" means such rate as the director may determine.

(24)(a) "Retirement allowance" for plan I members, means monthly payments based on the sum of annuity and pension, or any optional benefits payable in lieu thereof.

(b) "Retirement allowance" for plan II and plan III members, means monthly payments to a retiree or beneficiary as provided in this chapter.

(25) "Retirement system" means the Washington state teachers' retirement system.

(26)(a) "Service" for plan I members means the time during which a member has been employed by an employer for compensation.

(i) If a member is employed by two or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service is rendered.

(ii) As authorized by RCW 28A.400.300, up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(iii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be applied solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(b) "Service" for plan II and plan III members, means periods of employment by a member for one or more employers for which earnable compensation is earned subject to the following conditions:

(i) A member employed in an eligible position or as a substitute shall receive one service credit month for each month of September through August of the following year if he or she earns earnable compensation for eight hundred ten or more hours during that period and is employed during nine of those months, except that a member may not receive credit for any period prior to the member's employment in an eligible position except as provided in RCW 41.32.812 and 41.50.132;

(ii) If a member is employed either in an eligible position or as a substitute teacher for nine months of the twelve month period between September through August of the following year but earns earnable compensation for less than eight hundred ten hours but for at least six hundred thirty hours, he or she will receive one‑half of a service credit month for each month of the twelve month period;

(iii) All other members in an eligible position or as a substitute teacher shall receive service credit as follows:

(A) A service credit month is earned in those calendar months where earnable compensation is earned for ninety or more hours;

(B) A half-service credit month is earned in those calendar months where earnable compensation is earned for at least seventy hours but less than ninety hours; and

(C) A quarter-service credit month is earned in those calendar months where earnable compensation is earned for less than seventy hours.

(iv) Any person who is a member of the teachers' retirement system and who is elected or appointed to a state elective position may continue to be a member of the retirement system and continue to receive a service credit month for each of the months in a state elective position by making the required member contributions.

(v) When an individual is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service for ninety or more hours is rendered.

(vi) As authorized by RCW 28A.400.300, up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.32.470. For purposes of plan II and plan III "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than eleven days equals one-quarter service credit month;

(B) Eleven or more days but less than twenty-two days equals one-half service credit month;

(D) More than twenty-two days but less than thirty-three days equals one and one-quarter service credit month;

(E) Thirty-three or more days but less than forty-five days equals one and one-half service credit month.

(vii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be applied solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(viii) The department shall adopt rules implementing this subsection.

(27) "Service credit year" means an accumulation of months of service credit which is equal to one when divided by twelve.

(28) "Service credit month" means a full service credit month or an accumulation of partial service credit months that are equal to one.

(29) "Teacher" means any person qualified to teach who is engaged by a public school in an instructional, administrative, or supervisory capacity. The term includes state, educational service district, and school district superintendents and their assistants and all employees certificated by the superintendent of public instruction; and in addition thereto any full time school doctor who is employed by a public school and renders service of an instructional or educational nature.

(30) "Average final compensation" for plan II and plan III members, means the member's average earnable compensation of the highest consecutive sixty service credit months prior to such member's retirement, termination, or death. Periods constituting authorized leaves of absence may not be used in the calculation of average final compensation except under RCW 41.32.810(2).

(31) "Retiree" means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer while a member. A person is in receipt of a retirement allowance as defined in subsection (24) of this section or other benefit as provided by this chapter when the department mails, causes to be mailed, or otherwise transmits the retirement allowance warrant.

(32) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(33) "Director" means the director of the department.

(34) "State elective position" means any position held by any person elected or appointed to state‑wide office or elected or appointed as a member of the legislature.

(35) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

(36) "Substitute teacher" means:

(a) A teacher who is hired by an employer to work as a temporary teacher, except for teachers who are annual contract employees of an employer and are guaranteed a minimum number of hours; or

(b) Teachers who either (i) work in ineligible positions for more than one employer or (ii) work in an ineligible position or positions together with an eligible position.

(37)(a) "Eligible position" for plan II members from June 7, 1990, through September 1, 1991, means a position which normally requires two or more uninterrupted months of creditable service during September through August of the following year.

(b) "Eligible position" for plan II and plan III on and after September 1, 1991, means a position that, as defined by the employer, normally requires five or more months of at least seventy hours of earnable compensation during September through August of the following year.

(c) For purposes of this chapter an employer shall not define "position" in such a manner that an employee's monthly work for that employer is divided into more than one position.

(d) The elected position of the superintendent of public instruction is an eligible position.

(38) "Plan I" means the teachers' retirement system, plan I providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977.

(39) "Plan II" means the teachers' retirement system, plan II providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977, and prior to July 1, 1996.

(40) "Plan III" means the teachers' retirement system, plan III providing the benefits and funding provisions covering persons who first become members of the system on and after July 1, 1996, or who transfer under RCW 41.32.817.

(41) "Index" means, for any calendar year, that year's annual average consumer price index, Seattle, Washington area, for urban wage earners and clerical workers, all items compiled by the bureau of labor statistics, United States department of labor.

(42) "Index A" means the index for the year prior to the determination of a postretirement adjustment.

(43) "Index B" means the index for the year prior to index A.

(44) "Index year" means the earliest calendar year in which the index is more than sixty percent of index A.

(45) "Adjustment ratio" means the value of index A divided by index B.

(46) "Annual increase" means, initially, fifty-nine cents per month per year of service which amount shall be increased each July 1st by three percent, rounded to the nearest cent.

(47) "Member account" or "member's account" for purposes of plan III means the sum of the contributions and earnings on behalf of the member in the defined contribution portion of plan III.

Sec. 19. RCW 41.40.010 and 1995 c 345 s 10, 1995 c 286 s 1, and 1995 c 244 s 3 are each reenacted and amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1) "Retirement system" means the public employees' retirement system provided for in this chapter.

(2) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(3) "State treasurer" means the treasurer of the state of Washington.

(4)(a) "Employer" for plan I members, means every branch, department, agency, commission, board, and office of the state, any political subdivision or association of political subdivisions of the state admitted into the retirement system, and legal entities authorized by RCW 35.63.070 and 36.70.060 or chapter 39.34 RCW; and the term shall also include any labor guild, association, or organization the membership of a local lodge or division of which is comprised of at least forty percent employees of an employer (other than such labor guild, association, or organization) within this chapter. The term may also include any city of the first class that has its own retirement system.

(b) "Employer" for plan II members, means every branch, department, agency, commission, board, and office of the state, and any political subdivision and municipal corporation of the state admitted into the retirement system, including public agencies created pursuant to RCW 35.63.070, 36.70.060, and 39.34.030, and includes charter schools as defined in section 4 of this act.

(5) "Member" means any employee included in the membership of the retirement system, as provided for in RCW 41.40.023. RCW 41.26.045 does not prohibit a person otherwise eligible for membership in the retirement system from establishing such membership effective when he or she first entered an eligible position, and includes classified employees employed by a charter school as defined in section 4 of this act.

(6) "Original member" of this retirement system means:

(a) Any person who became a member of the system prior to April 1, 1949;

(b) Any person who becomes a member through the admission of an employer into the retirement system on and after April 1, 1949, and prior to April 1, 1951;

(c) Any person who first becomes a member by securing employment with an employer prior to April 1, 1951, provided the member has rendered at least one or more years of service to any employer prior to October 1, 1947;

(d) Any person who first becomes a member through the admission of an employer into the retirement system on or after April 1, 1951, provided, such person has been in the regular employ of the employer for at least six months of the twelve-month period preceding the said admission date;

(e) Any member who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement becomes entitled to be credited with ten years or more of membership service except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member;

(f) Any member who has been a contributor under the system for two or more years and who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement has rendered five or more years of service for the state or any political subdivision prior to the time of the admission of the employer into the system; except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member.

(7) "New member" means a person who becomes a member on or after April 1, 1949, except as otherwise provided in this section.

(8)(a) "Compensation earnable" for plan I members, means salaries or wages earned during a payroll period for personal services and where the compensation is not all paid in money, maintenance compensation shall be included upon the basis of the schedules established by the member's employer.

(i) "Compensation earnable" for plan I members also includes the following actual or imputed payments, which are not paid for personal services:

(A) Retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable and the individual shall receive the equivalent service credit;

(B) If a leave of absence is taken by an individual for the purpose of serving in the state legislature, the salary which would have been received for the position from which the leave of absence was taken, shall be considered as compensation earnable if the employee's contribution is paid by the employee and the employer's contribution is paid by the employer or employee;

(D) Compensation that a member would have received but for a disability occurring in the line of duty only as authorized by RCW 41.40.038;

(E) Compensation that a member receives due to participation in the leave sharing program only as authorized by RCW 41.04.650 through 41.04.670; and

(F) Compensation that a member receives for being in standby status. For the purposes of this section, a member is in standby status when not being paid for time actually worked and the employer requires the member to be prepared to report immediately for work, if the need arises, although the need may not arise. Standby compensation is regular salary for the purposes of RCW 41.50.150(2).

(ii) "Compensation earnable" does not include:

(A) Remuneration for unused sick leave authorized under RCW 41.04.340, 28A.400.210, or 28A.310.490;

(B) Remuneration for unused annual leave in excess of thirty days as authorized by RCW 43.01.044 and 43.01.041.

(b) "Compensation earnable" for plan II members, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, and shall include wages and salaries deferred under provisions established pursuant to sections 403(b), 414(h), and 457 of the United States Internal Revenue Code, but shall exclude nonmoney maintenance compensation and lump sum or other payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay.

"Compensation earnable" for plan II members also includes the following actual or imputed payments, which are not paid for personal services:

(i) Retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable to the extent provided above, and the individual shall receive the equivalent service credit;

(ii) In any year in which a member serves in the legislature, the member shall have the option of having such member's compensation earnable be the greater of:

(A) The compensation earnable the member would have received had such member not served in the legislature; or

(B) Such member's actual compensation earnable received for nonlegislative public employment and legislative service combined. Any additional contributions to the retirement system required because compensation earnable under (b)(ii)((~~(B)~~)) (A) of this subsection is greater than compensation earnable under (b)(ii)((~~(A)~~)) (B) of this subsection shall be paid by the member for both member and employer contributions;

(iii) Assault pay only as authorized by RCW 27.04.100, 72.01.045, and 72.09.240;

(iv) Compensation that a member would have received but for a disability occurring in the line of duty only as authorized by RCW 41.40.038;

(v) Compensation that a member receives due to participation in the leave sharing program only as authorized by RCW 41.04.650 through 41.04.670; and

(vi) Compensation that a member receives for being in standby status. For the purposes of this section, a member is in standby status when not being paid for time actually worked and the employer requires the member to be prepared to report immediately for work, if the need arises, although the need may not arise. Standby compensation is regular salary for the purposes of RCW 41.50.150(2).

(9)(a) "Service" for plan I members, except as provided in RCW 41.40.088, means periods of employment in an eligible position or positions for one or more employers rendered to any employer for which compensation is paid, and includes time spent in office as an elected or appointed official of an employer. Compensation earnable earned in full time work for seventy hours or more in any given calendar month shall constitute one service credit month except as provided in RCW 41.40.088. Compensation earnable earned for less than seventy hours in any calendar month shall constitute one-quarter service credit month of service except as provided in RCW 41.40.088. Only service credit months and one-quarter service credit months shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter. Any fraction of a year of service shall be taken into account in the computation of such retirement allowance or benefits. Time spent in standby status, whether compensated or not, is not service.

(i) Service by a state employee officially assigned by the state on a temporary basis to assist another public agency, shall be considered as service as a state employee: PROVIDED, That service to any other public agency shall not be considered service as a state employee if such service has been used to establish benefits in any other public retirement system.

(ii) An individual shall receive no more than a total of twelve service credit months of service during any calendar year. If an individual is employed in an eligible position by one or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service for seventy or more hours is rendered.

(iii) A school district employee may count up to forty-five days of sick leave as creditable service solely for the purpose of determining eligibility to retire under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of plan I "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than twenty-two days equals one-quarter service credit month;

(B) Twenty-two days equals one service credit month;

(b) "Service" for plan II members, means periods of employment by a member in an eligible position or positions for one or more employers for which compensation earnable is paid. Compensation earnable earned for ninety or more hours in any calendar month shall constitute one service credit month except as provided in RCW 41.40.088. Compensation earnable earned for at least seventy hours but less than ninety hours in any calendar month shall constitute one-half service credit month of service. Compensation earnable earned for less than seventy hours in any calendar month shall constitute one-quarter service credit month of service. Time spent in standby status, whether compensated or not, is not service.

Any fraction of a year of service shall be taken into account in the computation of such retirement allowance or benefits.

(i) Service in any state elective position shall be deemed to be full time service, except that persons serving in state elective positions who are members of the teachers' retirement system or law enforcement officers' and fire fighters' retirement system at the time of election or appointment to such position may elect to continue membership in the teachers' retirement system or law enforcement officers' and fire fighters' retirement system.

(ii) A member shall receive a total of not more than twelve service credit months of service for such calendar year. If an individual is employed in an eligible position by one or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service for ninety or more hours is rendered.

(iii) Up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of plan II "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than eleven days equals one-quarter service credit month;

(B) Eleven or more days but less than twenty-two days equals one-half service credit month;

(D) More than twenty-two days but less than thirty-three days equals one and one-quarter service credit month;

(E) Thirty-three or more days but less than forty-five days equals one and one-half service credit month.

(10) "Service credit year" means an accumulation of months of service credit which is equal to one when divided by twelve.

(11) "Service credit month" means a month or an accumulation of months of service credit which is equal to one.

(12) "Prior service" means all service of an original member rendered to any employer prior to October 1, 1947.

(13) "Membership service" means:

(a) All service rendered, as a member, after October 1, 1947;

(b) All service after October 1, 1947, to any employer prior to the time of its admission into the retirement system for which member and employer contributions, plus interest as required by RCW 41.50.125, have been paid under RCW 41.40.056 or 41.40.057;

(c) Service not to exceed six consecutive months of probationary service rendered after April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of the total amount of the employer's contribution to the retirement fund which would have been required under the law in effect when such probationary service was rendered if the member had been a member during such period, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member;

(d) Service not to exceed six consecutive months of probationary service, rendered after October 1, 1947, and before April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of five percent of such member's salary during said period of probationary service, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member.

(14)(a) "Beneficiary" for plan I members, means any person in receipt of a retirement allowance, pension or other benefit provided by this chapter.

(b) "Beneficiary" for plan II members, means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by another person.

(15) "Regular interest" means such rate as the director may determine.

(16) "Accumulated contributions" means the sum of all contributions standing to the credit of a member in the member's individual account, including any amount paid under RCW 41.50.165(2), together with the regular interest thereon.

(17)(a) "Average final compensation" for plan I members, means the annual average of the greatest compensation earnable by a member during any consecutive two year period of service credit months for which service credit is allowed; or if the member has less than two years of service credit months then the annual average compensation earnable during the total years of service for which service credit is allowed.

(b) "Average final compensation" for plan II members, means the member's average compensation earnable of the highest consecutive sixty months of service credit months prior to such member's retirement, termination, or death. Periods constituting authorized leaves of absence may not be used in the calculation of average final compensation except under RCW 41.40.710(2).

(18) "Final compensation" means the annual rate of compensation earnable by a member at the time of termination of employment.

(19) "Annuity" means payments for life derived from accumulated contributions of a member. All annuities shall be paid in monthly installments.

(20) "Pension" means payments for life derived from contributions made by the employer. All pensions shall be paid in monthly installments.

(21) "Retirement allowance" means the sum of the annuity and the pension.

(22) "Employee" means any person who may become eligible for membership under this chapter, as set forth in RCW 41.40.023.

(23) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of such mortality and other tables as may be adopted by the director.

(24) "Retirement" means withdrawal from active service with a retirement allowance as provided by this chapter.

(25) "Eligible position" means:

(a) Any position that, as defined by the employer, normally requires five or more months of service a year for which regular compensation for at least seventy hours is earned by the occupant thereof. For purposes of this chapter an employer shall not define "position" in such a manner that an employee's monthly work for that employer is divided into more than one position;

(b) Any position occupied by an elected official or person appointed directly by the governor for which compensation is paid.

(26) "Ineligible position" means any position which does not conform with the requirements set forth in subsection (25) of this section.

(27) "Leave of absence" means the period of time a member is authorized by the employer to be absent from service without being separated from membership.

(28) "Totally incapacitated for duty" means total inability to perform the duties of a member's employment or office or any other work for which the member is qualified by training or experience.

(29) "Retiree" means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer while a member. A person is in receipt of a retirement allowance as defined in subsection (21) of this section or other benefit as provided by this chapter when the department mails, causes to be mailed, or otherwise transmits the retirement allowance warrant.

(30) "Director" means the director of the department.

(31) "State elective position" means any position held by any person elected or appointed to state-wide office or elected or appointed as a member of the legislature.

(32) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

(33) "Plan I" means the public employees' retirement system, plan I providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977.

(34) "Plan II" means the public employees' retirement system, plan II providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977.

(35) "Index" means, for any calendar year, that year's annual average consumer price index, Seattle, Washington area, for urban wage earners and clerical workers, all items, compiled by the bureau of labor statistics, United States department of labor.

(36) "Index A" means the index for the year prior to the determination of a postretirement adjustment.

(37) "Index B" means the index for the year prior to index A.

(38) "Index year" means the earliest calendar year in which the index is more than sixty percent of index A.

(39) "Adjustment ratio" means the value of index A divided by index B.

(40) "Annual increase" means, initially, fifty-nine cents per month per year of service which amount shall be increased each July 1st by three percent, rounded to the nearest cent.

NEW SECTION. Sec. 20. A new section is added to chapter 41.56 RCW to read as follows:

This chapter applies to charter schools as defined in section 4 of this act and the charter school's employees included in the bargaining unit. The bargaining unit of employees of charter schools must be limited to the employees of the charter school and must be separate from other bargaining units in the school district or educational service district.

NEW SECTION. Sec. 21. A new section is added to chapter 41.59 RCW to read as follows:

This chapter applies to collective bargaining agreements between charter schools and the employees of charter schools included in the bargaining unit. The bargaining unit of employees of charter schools must be limited to the employees of the charter school and must be separate from other bargaining units in the school district.

NEW SECTION. Sec. 22. CAPTIONS NOT LAW. Captions used in this chapter do not constitute any part of the law.

NEW SECTION. Sec. 23. Sections 1 through 17 and 22 of this act constitute a new chapter in Title 28A RCW.