(a) Criteria for taking action. The action the commissioner of education takes under §100.1021(a) of this title (relating to Revocation and Modification of Governance of an Open-Enrollment Charter) to either revoke or modify the governance of a charter shall be based on the best interest of the charter school's students as it relates to the violation charged in the notice, the severity of the violation, and any previous violation the school has committed.
  (1) These criteria are not listed in order of importance. Rather, the commissioner shall assign weight to each criterion as indicated by the facts of the case presented. For example, serious or persistent charter violations may warrant revocation or non-renewal even if the violations benefited or had neutral effect on the students enrolled in the charter school. The state's interest in legal compliance is sufficient basis for action.
  (2) The "best interest of the charter school's students" is not a decisional criterion independent of the violation charged in the notice. Rather, the commissioner shall consider the best interests of students only as this criterion relates to the violation charged in the notice. For example, evidence of serious and persistent violations in one area of performance may not be offset or excused by evidence of benefit to students in an area of performance that is unrelated to the violation charged in the notice.
(b) Minimum academic performance required. Continuation of an open-enrollment charter is contingent on satisfactory academic performance as measured by the academic accountability ratings and accreditation statuses assigned under the Texas Education Code (TEC), Chapter 39, as well as any supplemental accountability requirements in the open-enrollment charter pursuant to TEC, §12.111(a)(3) and (4). Such supplemental requirements are in addition to, and may not supplant, satisfactory academic performance as measured by the ratings assigned under TEC, Chapter 39.
  (1) Consideration of campus ratings. The commissioner shall revoke an open-enrollment charter of a charter holder if all of the campuses operated under that charter have been closed under TEC, Chapter 39.
  (2) Determination of academic performance. For purposes of this subsection, required minimum academic performance shall be determined as follows.
    (A) An "unsatisfactory rating" shall mean an academic accountability rating that is "academically unacceptable" as defined in §100.1001(26) of this title (relating to Definitions). For any school year, if the Texas Education Agency (TEA) assigns no district-level ratings to open-enrollment charter schools generally, but does assign campus-level ratings in that year, then unsatisfactory ratings for a majority of the campuses operated by the charter holder in such year shall constitute an unsatisfactory rating for the charter holder at the "district" level.
    (B) A "satisfactory rating" shall mean an academic accountability rating that is "academically acceptable" as defined in §100.1001(26) of this title.
    (C) Ratings are "consecutive" if they are not separated by a rating period in which the TEA assigned accountability ratings to charter schools. For example, the TEA did not assign academic accountability ratings to charter schools for the 2011-2012 school year. Thus, the ratings for the 2010-2011 and 2012-2013 school years are consecutive both for charter holders registered under the standard accountability system as well as charter holders registered under the alternative education accountability (AEA) system.
    (D) If the performance of an applicant for renewal under §100.1031 of this title (relating to Renewal of an Open-Enrollment Charter) cannot be determined because the applicant's charter school has not received accountability ratings and/or accreditation statuses for a sufficient number of years to support a judgment on its student performance:
      (i) the commissioner shall make a decision on student performance under the discretionary review process under §100.1031(d) of this title; and
      (ii) the commissioner's review under this subparagraph shall include the charter's annual evaluation under the Charter School Performance Framework Manual established under TEC, §12.1181, and the criteria described in §100.1032 of this title (relating to Standards for Discretionary Renewal).
    (E) If the performance of a charter holder cannot be determined because the small numbers of students or the grade levels served by the program prevented, limited, or significantly impacted the application of the TEA's standard ratings and/or accreditation criteria, then the commissioner may evaluate substitute data chosen by the commissioner in taking action under this section.
      (i) Based on evaluation under this subparagraph, the commissioner shall determine whether the applicant has demonstrated a history of unsatisfactory academic performance. Any appeal under §100.1021 of this title of a determination under this clause may include the question whether the campus has had unsatisfactory academic performance.
      (ii) Regardless of whether the campus has satisfactory student performance, the commissioner may modify the open-enrollment charter to require the charter holder to serve additional students or grade levels that will cause the campus to receive academic ratings and/or statuses in the future.
    (F) If the performance of a charter holder cannot be determined because a high proportion of students served are in prekindergarten-Grade 2 or another grade for which an assessment instrument is not administered under TEC, §39.023, then the commissioner may evaluate the performance of the charter holder.
  (3) Finality of ratings.
    (A) Any appeal to a specific rating must be brought using the appeals procedures in the relevant accountability manual, which includes alternative education accountability, adopted under Chapter 97, Subchapter AA, of this title (relating to Accountability and Performance Monitoring).
    (B) Any challenge to a TEA rule, ratings standard, or process must be brought using the procedures outlined in Texas Government Code, Chapter 2001, for requesting agency rulemaking or challenging agency rules.
(c) Minimum financial performance required. Continuation of an open-enrollment charter is contingent on the charter holder satisfying generally accepted accounting standards of fiscal management.
  (1) Determination. For purposes of this subsection, generally accepted standards of fiscal management shall be determined as follows.
    (A) Any of the following constitutes failure to comply with generally accepted standards of fiscal management.
      (i) Payment is made in excess of bonafide compensation agreements. The payment of compensation to an individual in excess of the fair market value of the services provided is a serious unsatisfactory financial performance. For purposes of this subsection, the fair market value of the services rendered shall be based on the individual's education, experience, prior salary history, the job duties actually performed, and what a typical person with similar skills, experience, and job duties would earn.
      (ii) Rental or purchase of property is in excess of its fair market value.
      (iii) The charter school received a significant overallocation from the Foundation School Program based on data reported by the charter holder.
      (iv) The charter school becomes imminently insolvent as determined in subsection (h) of this section.
      (v) The charter school's financial auditor issues an adverse opinion regarding the school's financial statements or the school's financial auditor disclaims an opinion on the financial statements, and the issue resulting in the adverse or disclaimed opinion involves a significant amount of financial resources that were not properly documented or a material weakness that led to the misallocation of financial resources.
      (vi) The charter holder exhibits other instances of fiscal mismanagement, including, but not limited to, the loss of financial records or a material non-compliance with §109.41 of this title (relating to Financial Accountability System Resource Guide) or related supplement resulting in a significant wasting of financial resources.
      (vii) A final investigative report issued by the TEA finds material noncompliance with the standards of this subsection.
      (viii) The annual audit report required by TEC, §44.008, is more than 180 days delinquent.
      (ix) The charter holder's property is subject to a lien, levy, or other garnishment and that lien, levy, or other garnishment is not removed within 30 days.
      (x) The charter holder is subject to a warrant hold and that warrant hold is not removed within 30 days.
      (xi) The charter holder loses its eligibility to participate in child nutrition programs for a period of more than 30 days.
Cont'd...